Today, mortgage servicers around the country are preparing for the next installment of a series of economic and regulatory changes that have the potential to drastically reshape the market. In the wake of the 2008 financial crisis, servicers have been increasingly focused on risk management and remain highly attuned to shifts in the market.

A major focus of both national and state-level servicers is to increase operational effectiveness while also tackling major challenges such as rising defaults, delinquencies and foreclosures. This requires high-touch servicing with clear and consistent communication to borrowers. Technology has been used to streamline origination, but the end-to-end servicing process remains human-driven when addressing complicated accounts.

Servicers will also face additional hurdles due to rising home values and the consequent demand for re-performances. The main refinancing boom in 2021 has slowed the re-performing loan volume, but the uptick is expected later in the year, resulting in additional complexity for servicers. The focus is on working with compliant investors and avoiding extension risk while allowing investors to receive timely proceeds within the required timeframe.

The pandemic has also caused servicers to adjust their process to accommodate borrowers with financial hardship by providing forbearance and loan modifications, which vary widely depending on the state of residence and type of loan. As servicers focus on delivering an optimal customer experience across all channels, they are also exploring options to use digital technologies to improve efficiency, reduce cost and supplement their core in-house servicing operations. It is expected that the focus on using digital technologies and the implementation of new regulations will help the industry better prepare for the future, resulting in increased market stability and a more robust customer experience for all stakeholders.

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