However, elevated levels of distress are expected to continue into 2022. The prolonged impacts of the Covid-19 pandemic are expected to be felt for some time, leading to higher delinquency, foreclosure, and forbearance rates than pre-pandemic levels. This is due in part to the economic recession caused by the pandemic, which has caused job losses and a decrease in wages for many Americans.
The National Mortgage News stated that loan origination is also expected to remain muted in 2021 as interest rate volatility creates an uncertain market. With that said, refinances are still expected to be a major source of demand, particularly if interest rates remain low. As the recovery progresses, first-time homebuyers are also expected to increase their mortgage activity, possibly pushing demand up toward pre-pandemic levels.
These predictions point to a continued need for lenders to focus on customer service in order to minimize the potential for borrower distress. Lenders should focus on providing borrowers with more flexible solutions during this period of uncertainty. For example, lenders may need to provide borrowers with longer repayment terms, loan modifications, or increased forbearance options to ensure they can keep up with their payments.
In addition, lenders should seek to develop relationships with more specialized mortgage servicing companies and potentially expand their capabilities to cover delinquency management and loss mitigation services. With elevated levels of distress expected into 2022, lenders need to be prepared to do whatever it takes to help borrowers avoid foreclosure.
Overall, 2021 is expected to be a stable year for the mortgage industry. However, high levels of borrower distress are expected to continue in the coming year, requiring lenders to remain vigilant and take proactive steps to protect borrowers from foreclosure. By focusing on customer service and developing working relationships with specialized mortgage servicing companies, lenders will be better able to serve their customers during the recovery process.
This article was contributed on Jul 01, 2023