The State of Mortgage Servicing

At the risk of sounding redundant, 2020 was an unprecedented year for all of us.  And while every industry was impacted in some way from the repercussions of COVID-19, the mortgage industry is at the top of those affected. 

In order to curb negative economic impacts of government mandated lockdowns, regulators deployed the Coronavirus Aid, Relief, and Economic Security Act (CARES Act) which included provisions on forbearance for federally backed mortgage loans. While this legislation was created with the best intentions for consumers, many were unaware of what they were entitled to. This, combined with regulators encouraging the public to reach out directly to their lenders and servicers to request assistance, resulted in record high call volumes in the industry. In 2020, 71% of COVID-related complaints against mortgage companies in the CFPB’s database were associated with people struggling during the payment process and struggling to pay their mortgage.

On top of the incredibly high call volumes from regulatory relief packages, the Federal Reserve cut interest rates to near zero which resulted in record-low mortgage rates. As of January 2021, the mortgage rate for a 30-year fixed-rate loan was at 2.65%. Refinance rates followed home purchase mortgage rates, achieving near historic low levels in 2020.  Demand for refinancing increased 105%  as homeowners scrambled to take advantage of this opportunity...