Distressed homeowners find relief in Fintech Services

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

However, the end of foreclosure moratoriums, forbearance and the dual threat of rising inflation and recession risk have caused many services to think about how best to ensure a healthy portfolio.

With about a quarter to go in 2022, data from service leaders shows financial concerns are on their radar and believe service policy updates are “likely” coming soon. Training mortgage servicers to keep up with the influx of demand has created additional costs and is known to be the biggest challenge. But the vast majority of officials say they feel confident in their ability to make proactive decisions and manage regulatory risk amid renewed pressure for faster responses and solutions.

“Constantly changing expectations of regulatory bodies and the increasing number of regulatory developments can degrade servicers, lengthen the loan modification process and create even more customer and market uncertainty,” said Nicholas Corpuz, Head of Compliance at Brace. “Looking ahead, the ability to keep up with the complexities and challenges of the regulatory environment will be a key component in avoiding a future housing crisis. The fact that we are starting where we are now is very promising – and it may be that a consumer-first approach to service is what pulls us back from a more serious situation.”

Brace also interviewed homeowners who themselves have endured the loss reduction process over the past 15 years. Many agree that the lessons learned from the housing market crash of 2008 combined with that from the Covid pandemic helped deliver higher standards of quality customer service and human interaction.

Response data also shows that homeowners felt a clear difference with the increasing use of digitized customer experiences of services. The biggest impact on homeowners has been a servicer’s ability to deliver training 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 service personnel by helping them keep pace with the challenges and complexities of the regulatory environment,” said Chris Eriksson, Brace Director of Sales, “but it can also be leveraged to fill communication gaps that can proactively serve homeowners and strengthen relations between services and investors.”

Despite advances 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 can still fall short when communicating service support options. Many consumers Brace interviewed said they had to contact third-party housing agencies to get answers or support regarding their rights.

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