MReport April 2021

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26 | M R EP O RT FEATURE How Digital Mortgage Processing Can Keep the Industry Afloat Lenders will need the efficiencies provided by automated document collection and review to help deal with increasing workloads. By Christopher Hussain W e've all been talking for months about the housing bubble we're in. There has been a record number of home sales and refi- nances due to both unprecedented low interest rates and the ongoing movement of individuals and families leaving metropolitan areas for more afford- able suburbs. At the same time, the global pandemic has taken a significant toll on millions of people who have either lost their job or had their income reduced. While home sales have been soaring in many parts of the country, the number of home- owners behind on their mortgage has doubled since the beginning of the pandemic. According to the CFPB, 6% of mortgages were delinquent in December 2020, up from 3% in March 2020. Of these, 2.1 million borrowers were more than three months behind on payment, an increase of over 250% since March 2020. Combined, these households are estimated to owe almost $90 billion in deferred principal, interest, taxes, and insurance payments. Additionally, one in five renters is behind on rent. As a result, both President Biden and the FHFA have extended moratori- ums on single-family foreclosures and real estate-owned (REO) evictions through the end of June. The FHFA has also stated that people who have mortgages backed by Fannie Mae or Freddie Mac can apply for a three-month extension of COVID-19 forbear- ance. This means borrowers can potentially be in forbearance for up to 18 months. While these actions can certainly help many homeown- ers and renters, there are legal challenges underway to determine whether these moratoriums are constitutional, and within the federal government's power to enforce. Even if they do remain in place, there are restrictions, and not everyone who needs help will qualify. Still, others may find the terms and financial assistance not worth their time and may opt to bypass these options altogether. Furthermore, even with the extensions granted, June is just around the corner. Yes, the U.S. economy is gradually rebounding, but millions of Americans are still out of work and are struggling to make ends meet. It won't be long before millions of homeowners, as well as renters, will be expected to resume their monthly hous- ing payments, and may also find themselves owing a lot of money in back payments. Because of this, I unfortunately believe that we will soon begin to see a flood of foreclosures hit the market. Preparing for the Flood N obody wants to see rent- ers evicted or homeowners going into foreclosure. However, the truth is that property owners and banks can't afford to keep granting deferrals and taking the hit on their bottom lines. At some point, they will stop being flexible. At the same time, banks want to work with people as much as they can and avoid taking measures that will erode their customers' credit. Logically, when an individual's credit is good, banks can offer them more services. Overall, more consumers having strong credit is good for the economy—and good for lend- ing institutions. So, while banks and lenders are trying to preserve their financial positions, they also want to help their borrow- ers. In order to accomplish both goals, they are likely going to start enforcing stricter requirements for documentation and proof of hardship. As those who are still af- fected by the pandemic attempt to qualify for refinancing into new loans with lower monthly pay- ments or take cash out from their equity to make ends meet, they may not all be eligible. Lenders and processors will be flooded

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