MReport February 2021

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M R EP O RT | 23 SPONSORED CONTENT What President Biden's First COVID-19 Relief Plan Means for Servicers By Matt Tully N ow that President Biden's administra- tion is underway, we should see his American Rescue Plan for COVID-19 relief move quickly toward approval. All plans get adjusted before passing, but we can expect core themes to remain intact. Here are three takeaways from the plan for mortgage servicers. 1. Economic Stimulus May Not Reduce Forbearances Meaning fully The $1.9T Biden plan calls for additional stimulus checks and loans to support workers, small businesses, and local governments. This aid could provide a major lift to the faltering economy and worrisome unemployment rate. Total forbearance volume— which had decreased steadily since June 2020—hovered around 5.5% during November/December. As of January 19, the rate stands at 5.37%. Meaningful reductions in forbearance volume will depend on rapid economic recovery. But while vaccine distribution (and our collective optimism) acceler- ates, things may get worse before they get better. Even with another round of stimulus, servicers must be ready for an uptick in hardship requests. We won't see significant economic improvement until more of the population receives the vaccine and businesses can begin the slow crawl back to normalcy. Meanwhile, the unemployment rate stays steady, and we saw 140,000 jobs lost in December 2020—the first decline in this benchmark for economic health since April 2020. 2. Borrower Outreach & Quick Hardship Care Remains Essential for Servicers As Fannie Mae's Mortgage Lender Sentiment Survey recently revealed, two of the most press- ing COVID-related challenges for servicers are: • Explaining post-forbearance pay- ment plans to borrowers, and • Helping borrowers understand the implications of taking forbearance. We've already witnessed hundreds of thousands of need- lessly delinquent borrowers who didn't realize they needed to manually extend their forbear- ances. With every new policy out of Washington, the opportunity for confusion and complexity abounds. Self-service hardship care will continue to be crucial as bor- rowers grapple with new relief options, and borrower outreach remains paramount. Servicers must proactively edu- cate homeowners about the nuanc- es of forbearance programs, GSE payment deferral options, and loss mitigation strategies. Smart fintech can power compliant customer care faster in this cycle than in the post-2008 hardship cycle. Likewise, quickly disseminat- ing new policy information to customer-facing staff will be es- sential to distilling complex policy into easily digestible guidance for customers. Servicers must have the right fintech partners to power this. 3. President Biden's First COVID Relief Plan Signals More Changes to Come The American Rescue Plan is well-intentioned, albeit far from comprehensive. It would extend the foreclosure moratorium and move the deadline for requesting initial forbearance from February 28 to September 30, 2021. One critical flaw is the plan's failure to address the millions of aging CARES Act forbearances set to expire beginning in April. This suggests further relief may be forthcoming, challenging servicers to seamlessly adapt— once again—to a new set of rules. The Fannie Mae survey revealed 45% of servicers cited "keeping up with policy changes from inves- tors" as either their biggest or second biggest COVID challenge. With more COVID relief poli- cies and CFPB-driven regulatory shifts ahead, the strength of your fintech and regtech partnerships matter more than ever. At Sagent, our on-the-ground presence in Washington, deep GSE and Wall Street relationships, and easily con- figurable platforms help servicers maintain real-time compliance as the COVID and post-election regs come faster than ever. Partnership-Driven Success for Servicers in 2021 A s Biden's COVID policies and regulatory appointments accelerate, servicers must be at the top of their game informing, caring for, and communicating with borrowers this year. Sagent has been planning for a market and political cycle turn like this for years. We're plugged in on Capitol Hill and ready to guide our servicers—and by ex- tension, their borrowers—through this critical transition year where both scale and innovation matters. Our Washington team is working closely with agencies and the new administration to keep you updated on the latest policy changes while our modern servic- ing platforms keep your teams nimble, compliant, and fast with compassionate customer care. Stay tuned for my next piece with updates on this rapidly de- veloping transition in Washington. And reach out directly to get my Sagent Compliance Compass newsletter. . MATT TULLY is the Head of Compliance and Agency Affairs for Sagent. Total Mortgages in Forebearance Dropping Since June

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