But due to the complexity of the forbearance expiration timelines across different federal agencies, Black Knight Data & Analytics president Ben Graboske is worried that this post-forbearance scenario will put servicers in a tough spot.
“Over the course of just two months this fall, the nation’s mortgage servicers would have to process up to approximately 18,000 expiring plans per business day, guiding borrowers through complex loss mitigation waterfalls directed by changing regulatory requirements,” he said.
Graboske explained that the “tiered forbearance plan lengths are designed to help shorten the overall window during which expirations will be taking place, and they do. But the current structure also results in the stacking of expiration activity upfront in the fall and noticeably increases the volume of expected forbearance expirations in late 2021 and early 2022, especially among FHA borrowers who may face heightened challenges in re-performing on their mortgages post-forbearance.”
Graboske warned servicers to prepare for operational challenges related to the large volume of post-forbearance loss mitigation efforts.
“The operational challenge this represents is staggering, even before noting the oversized share of FHA and VA loans,” Graboske said. “Given the heightened challenges those borrowers may face in returning to making mortgage payments as compared to those in GSE loans, effective loss mitigation efforts and automated processes become even more critically important.”