Navigating the Surge in Mortgage Delinquencies: Strategies for Servicers to Stay Ahead

Introduction

Mortgage servicers continue to face some unique challenges. A lot of them see a cut in their budgets and manpower because of lower volume of loans being originated. Yet service delivery expectations have not changed, causing a squeeze on already depleted resources.

The Mortgage Bankers Association's National Delinquency Survey reported that the delinquency rate for mortgage loans on one-to-four-unit residential properties rose to a seasonally adjusted rate of 3.88% by the end of the fourth quarter of 2023. Consequently, with the rise in these delinquencies, a lot of industry experts are projecting an increase in loan modifications and related loss mitigation activity.

What should the mortgage servicers be ready for and how should they be dealing with these challenges?

What You Need To be Prepared for while Managing Surge in Mortgage Delinquencies

In 2024, default servicing is likely to see rising volume of loans alongside a spike in delinquencies. Servicers need to talk more with customers and find new ways to deal with late or missed mortgage payments.

Now more than ever, servicers must seize the moment to harness the power of partnerships and transformative technologies. By embracing essential strategies and cutting-edge technologies, the industry can reshape default servicing, forging a robust and adaptable framework capable of navigating the complexities of today's landscape. This proactive approach not only positions servicers to meet current demands but also lays the foundation for sustainable success in the face of future uncertainties.

Visionet’s mortgage servicing experts equip you to manage these uncertainties. We ensure rigorous quality and governance through a milestone-based examination of mortgage servicing activities.

The following points talk about how we assist mortgage servicers in managing challenges with respect to mortgage delinquencies:

· Improving Collections and Optimizing Repayments

In the face of challenging times ahead, promoting automatic loan payments has become crucial for managing mortgage delinquencies effectively. Setting up automatic payments entails specifying a date and amount for funds to be automatically transferred to cover the loan.

It can be facilitated through either a checking account or a credit card, and can also be directly initiated from the borrower's bank. Implementing an efficient collection

and repayment system can significantly decrease payment discrepancies and alleviate the burden on default mortgage servicing.

· Precise Analysis and Summarization of Default Cases

Data analytics assumes a pivotal role in addressing an upsurge in mortgage foreclosures or default cases. Predictive modelling and business intelligence dashboards are utilized to anticipate potential delinquencies. This is done through the examination of historical data and the detection of patterns preceding default occurrences. Further, a robust data capability serves to mitigate instances of loan modifications granted to ineligible borrowers, thereby averting long-term losses.

Moreover, data analytics possesses the capacity to provide recommendations on mitigating risks and forestalling foreclosures thorough analysis of servicing data.

· Efficient Data Management for Audit Purposes

The integration of Intelligent Document Processing (IDP) solution offers a way to reduce reliance on manual intervention for various tasks. As anticipated, it leads to a higher average number of loans handled per team member and a decrease in the proportion of non-producing staff. It ensures thorough oversight to prevent any default scenarios from being overlooked and facilitates the timely processing of all claims.

A straightforward illustration of this technology involves the ingestion and analysis of unstructured documents. The data extracted from these unstructured documents is cross-referenced and validated against pre-established rules within the rules-engine framework.

The reports that are generated include outcomes such as Pass or Fail scenarios along with Fail Reasons, eliminating the necessity for manual quality control and compliance checks across multiple functions. Consequently, it substantially enhances the accuracy and efficiency of servicing operations.

· Automation of Mortgage Servicing

The integration of automated AI assistance in servicing not only streamlines customer interactions but also enhances efficiency in addressing their inquiries and accessing pertinent information from extensive databases.

Prepare Now for the Future of Servicing with Visionet

By implementing the above-mentioned strategies, mortgage servicers can bolster their risk management protocols and make better-informed decisions on loan portfolios. Visionet, leveraging its premier IDP solution DocVu.AI and over 25 years of mortgage domain expertise helps organizations by streamlining servicing operations and delivering improved efficiencies. This is done by leveraging process automation, digitalization, and data & AI-guided decision frameworks.

Visionet’s hybrid delivery model ensures round the clock support to reduce cycle time and improve customer satisfaction. We offer various services in loss mitigation, which includes foreclosure support, bankruptcy support and claims management.

The future of mortgage servicing hinges on embracing technology-infused solutions that streamline servicing operations and ensure adherence to regulatory compliance, paving the way for quicker, more secure transactions.

If you're looking to optimize your servicing operations and default servicing while engaging borrowers effectively, Visionet stands ready to furnish the tailored assistance you require.