A federal law passed on March 27 provides protections for homeowners with certain mortgages that are federally or GSE-backed or funded. The Coronavirus Aid, Relief and Economic Security (CARES) Act takes a two-prong approach. It allows borrowers who are experiencing financial hardship due to the pandemic to request and obtain forbearance from their loan servicer for up to 360 days, and it also prohibits the lender or servicer from foreclosing on any covered mortgage until at least Aug. 31, 2020.
But with the Mortgage Bankers Association reporting that 7.8% of all mortgage loans were in forbearance as of July 12 – translating into 3.9 million homeowners – and delinquencies expected to rise due to job losses and the expiration of government stimulus programs, are servicers capable of handling the increased call volume and responding to the needs of their customers? And what will happen when the moratorium on foreclosures ends and servicers are faced with an onslaught of workout requests?
Many industry experts feel that servicers have responded well to the challenges they face from the coronavirus pandemic. “I don’t know that anyone could have prepared for this,” said Craig Martin, managing director, wealth and lending intelligence, of J.D. Power. “I think they’ve done a fairly good job in a very complex situation.”