At a time when inflation hits a 40-year high and mortgage rates witness a rise, it is becoming clear that loan modifications will see a sharp spike in the coming months.
In the month of June, foreclosures and delinquencies were up across the board, breaking months-long patterns of improvements. As per data from Black Knight, the number of borrowers with a single payment past due rose 5%, while those with serious delinquencies broke a 21-month period of decreases, with a 1% uptick from May. The number of borrowers in active foreclosure surged by 16,000. This happened most likely because of the lifting of 2020 and 2021’s moratoriums and forbearance protections, which caused record lows.
Given this situation, most lenders are actively looking at loss mitigation options as they try to work with borrowers to help the latter avoid foreclosures. After all, foreclosures are detrimental to homeowners as well as lenders which is why it is best to try different ways to prevent them. More and more borrowers are demanding loan modification which is a somewhat win-win situation for both borrowers and servicers.
However, handling a high volume of loan modifications can be a challenge for servicers. They may face issues trying to deal with the load of work involved in successfully completing modifications. Often, shortage of resources and lack of standardized business processes are tough to manage for lenders.
Loan modification is a process that requires speed, accuracy and efficiency that are essential factors impacting the servicer’s standing in the market. Servicers need to develop an effective plan of action that focusses on easing the process. Once the volume of loan modifications starts rising, servicers may not have the scope or time to suddenly swing into action to increase scale. This is why it is critical to take steps to respond at the right time.
How Servicers can Streamline High Loan Modifications Volumes
One way to handle this is by partnering with third parties to manage increasing borrower requests. Partnerships for mortgage loan modification services is profitable both for scaling up or scaling down since servicers do not have to incur additional fixed costs.
Associating with third party trusted partners will also provide mortgage servicers with access to robust technology. This will help increase business productivity. Tech solutions drive long term efficiency through borrower self-service and automation. Automation options powered by AI tools, RPA and intelligent chatbots are the need of the hour to resolve borrower demands more effectively, quickly and without human intervention.
Considering the volume of loan modification requests could be high, leveraging the power of omnichannel analytics and AI can also offer myriad benefits. Some of them include enhanced customer experience, accuracy in decisions, and cutting down on paper documents. In this too, third-party partners can support servicers to increase capacity via the addition of technological resources. Such measures can be seamlessly integrated into servicers’ systems.
Nonetheless, even with good infrastructure and technology, larger volumes may sometimes lead to excess documentation and rigid compliance regulations. To deal with this, servicers need to engage effectively and communicate with borrowers for proper documents, so that things remain smooth. Third party partners can conduct the process of reviewing a loan file before sending it ahead to underwriters which can help identify anomalies early on.
Most importantly, reliable partners for mortgage loan modification services can provide access to the right domain-sensitized skill. They can offer the right combination of teams with specific industry knowledge related to mortgage. Superior expertise about the tools and technologies to meet loan modification volumes matter a lot. Moreover, with domain sensitized resources, the advantages are seminal. Right from the time required to scale up to training requirements, servicers will see significant benefits with domain skilled default mortgage servicing.
PrivoCorp offers well-developed process-based protocols to help servicers reap the benefits of the mortgage loan modification process. With our tried and tested standardized default mortgage servicing, servicers are enabled to work with high volumes of loan modification requests. We provide end-to-end mortgage servicing support right from Loan Boarding, loan modification, loan servicing to managing default operations, and loss mitigation.
The loan servicers who have partnered with PrivoCorp have been able to better manage the influx of documentation and streamline the adjustment process with zero-error. Another benefit is reduced costs for servicers which allows them to dedicate their internal resources to profit-generating operations. PrivoCorp is uniquely positioned to help servicers of all sizes to transform and scale their mortgage default servicing operations.
Need assistance with managing loan modification requests? Get in touch with us today!
