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Report: Market Downturn Won’t Yield 2008 Market Crash Results

Brace has observed in its latest Mortgage Servicing Pulse that changes in Servicing regulations following the Great Recession, coupled with accelerated digital adoption during the Covid pandemic, have engendered a fairer, more transparent and stable mortgage ecosystem.

However, the end of foreclosure moratoriums, forbearances and the dual threat of rising inflation and recession risk has many Servicers thinking about how to best assure a healthy portfolio.

With about only one quarter left in 2022, data from Servicer executives shows that economic concerns are on their radar and believe servicing guideline updates are “likely” on the way soon. Training mortgage servicing professionals to keep pace with the influx of demand has created additional costs and is noted to be the biggest challenge. But the vast majority of Servicers say they feel confident in their ability to make proactive decisions and manage regulatory risk amid new pressures for faster responses and resolutions.

“Constantly shifting expectations of regulatory bodies and the increasing number of regulatory developments can bog down Servicers, lengthen the loan modification process and create even more customer and market uncertainty,” said Nicholas Corpuz, Head of Compliance at Brace. “Looking forward, the ability to keep up with the complexities and challenges of the regulatory environment will be a key component to avoiding a future housing crisis. The fact we are starting where we are now bodes really well—and it could be that a consumer-first approach to Servicing is what pulls us back from a more dire situation.”

Brace also interviewed homeowners who have endured the loss mitigation process themselves within the last 15 years. Many agree that lessons learned from the 2008 housing market crash combined with that of the Covid pandemic helped to deliver higher standards for customer service and high-quality human interactions.

Response data also shows homeowners felt a clear distinction with the increasing adoption of digitized customer experiences by Servicers. The greatest impact on homeowners has been a Servicer’s ability to deliver workout options in a window that fits within 60 to 90 days when previous processes used to span 18 months or more.

“Not only can digitization benefit Servicers by helping them keep up with the challenges and complexities of the regulatory environment,” said Chris Eriksson, VP of Sales at Brace, “but it can also be leveraged to fill communication gaps that can proactively serve homeowners and strengthen Servicer-investor relationships.”

Despite advancements in digital mortgage servicing, Brace’s interactions with homeowners and mortgage originators point to a lack of education regarding consumer servicing rights. While relationship banking improves the interaction process, the mortgage ecosystem, as a whole, may still be falling short when communicating servicing support options. Many consumers Brace interviewed said they had to reach out to third-party housing agencies for answers or support concerning their rights.

To read the full release, click here.

About Author: Demetria Lester

Demetria C. Lester is a reporter for DS News and MReport magazines with more than eight years of writing experience. She has served as content coordinator and copy editor for the Los Angeles Daily News and the Orange County Register, in addition to 11 other Southern California publications. A former editor-in-chief at Northlake College and staff writer at her alma mater, the University of Texas at Arlington, she has covered events such as the Byron Nelson and Pac-12 Conferences, progressing into her freelance work with the Dallas Wings and D Magazine. Currently located in Dallas, Texas, Lester is an avid jazz lover and likes to read. She can be reached at [email protected].
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