Servicing

The Home Affordable Modification Program became a national blueprint for loss mitigation in the last crisis, but changes in the servicing landscape and circumstances call for a new approach now.

Forbearance and loan-modifications programs implemented after the financial crisis left borrowers bewildered and angry. Now the mortgage industry wants to create a common standard for providing relief to homeowners whose livelihoods have been upended by the coronavirus pandemic.

As financial hardships mount with the COVID-19 outbreak, Fannie Mae and Freddie Mac released their plans for mortgage borrowers impacted by the pandemic.

A number of proposals have been floated for debt payment holidays and other types of moratoria, but such approaches offer solutions that are worse than the problems.

A proposal to tighten financial requirements for government-sponsored enterprise counterparties that sought to lower risk in a volatile market should be suspended, a group representing smaller lenders said, arguing it would aggravate current distress.

The pandemic has upended staffing plans, sparked concerns about servicers’ capacity to handle the expected crush of missed payments, and even raised questions about their ability to stay afloat.

The Trump administration is considering a plan to allow homeowners whose income was cut by the coronavirus to delay mortgage payments. Still to be decided is a mechanism for borrowers to catch up.

The Federal Housing Administration is making coronavirus adjustments while warning of possible delays as the industry anticipates a new wave of borrowing due to the Federal Reserve's latest short-term rate cut.

A national moratorium would be costly to lenders and servicers, but proponents say it's needed to help cushion the economic blow of the pandemic.

Impac Mortgage Holdings decided a year ago to emphasize its non-qualified mortgage lending operations and placed the company in position to succeed when the housing market returns to normal.