MReport June 2020

TheMReport — News and strategies for the evolving mortgage marketplace.

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30 | M R EP O RT EXPERT INSIGHTS C arissa Robb serves as President and COO of Constant. She most re- cently served as SVP and Head of U.S. Loan Servicing for TD Bank, overseeing operational units responsible for servicing a $150 billion dollar portfolio of con- sumer, residential, and commercial accounts. She joined TD Bank in 2009 to develop the loss mitigation pro- gram for distressed real estate and built the governance and control framework for TD Bank's Loan Servicing and Collections division. Robb recently spoke with MReport on whether the housing and mortgage industries are more prepared to handle a crisis than they were a decade ago, and what AI can do to assist the hardship process. M // What are some of the differences between the Great Recession and the challenges faced today? ROBB // While there are some similarities, there are also several differences, the biggest one being volume. In 2008, there was an equity challenge for homes. They weren't holding their value. This, coupled with the fact that adjust- able rates were causing homes to be unaffordable, meant many people were underwater. Also, unemployment wasn't nearly as severe as it is right now. Today, 33 million people have sought unemployment benefits. We saw a lot of short sales and loan modifications in 2008-2009. Yet many people still lost their homes. Then you add on the sheer volume of unemployment from this crisis, and the ability for people to purchase these homes becomes a question mark due to damaged credit and insufficient income. People, especially small business owners, are going to need more time to recover. How quickly they can return to income levels that support their existing monthly payments or a modification of that payment is something that is unclear. That's where a lot of my anxiety looking at this crisis and the duration of this crisis comes from. Will they have enough time to get back on their feet and will there be buyers for borrowers willing to sell their homes via a short sale. Mortgage forbearances have already doubled past the defaulted peak rate back in 2008. But the other interesting fact beyond the sheer volume that's different from the Great Recession is that investors moved fast this time. This was a real challenge in 2008. Relief was slow to come because the playbooks were still being written. But this time you saw a rapid approach to offer everybody relief in the form of short term forbearances, collection moratori- ums and extensions. In 2008-2009, a lot of people were dragged through a process that was frustrating and caused credit deterioration. I think they avoided that this time by acting quickly - although the pendu- lum may have swung too far in the opposite direction by not having some barriers around who qualifies for forbearance and who really needed the relief. That is another major difference from 2008-2009 as we look ahead with this pandemic. Are the housing and mortgage industries more prepared to handle a crisis than they were a decade earlier? ROBB // Truthfully, I wish we were a bit further along. The play- books feel very similar, and that's disappointing. If you were one of the folks in the trenches during 2008-2009, you're looking at this with the same sense of urgency to act now and prepare: don't wait, this is not short term. You've got to act now to sustain the servicing demands that are coming from customers. We've seen a few players respond with technology, offering self-service op- Preparing For a Crisis Carissa Robb, President and COO of Constant, discussed how the impact of COVID-19 differs from the Great Recession and how AI, automation and technology can assist in the hardship process.

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