The COVID-19 pandemic has caused extensive economic concerns among individuals as well as businesses worldwide. The mortgage industry is no exception to the rule. Although the majority of the lenders and mortgage servicers have business-continuity plans in place. Such plans might not completely address the Coronavirus threat and its dynamics.
Although contingency plans take natural calamities and cybersecurity attacks into account. Those contingency plans may not address unmitigated business closures, extensive quarantines, income disturbance, and mass loss of employment.
According to an article published on Forbes.com, mortgage-related purchases saw a significant dip in the state of New York, right after the state saw a huge number of COVID-19 cases and a statewide lockdown order was imposed on March 22, 2020. Consequently, purchase applications plummeted by a whopping 35%.
Eric Dalius on government involvement and reduced customer payments
The Coronavirus crisis and its mammoth impact on the mortgage sector have triggered considerable government reaction. Let’s look at an example. The Consumer Financial Protection Bureau (CFPB), Federal Bank regulatory bodies and the Conference of State Bank Supervisors (CSBS) have come up with an inter-agency declaration motivating financial organizations. This will allow them to work productively with concerned borrowers plagued by the coronavirus pandemic.
Any harm to borrowers as well as enhance credit risk and loan performance.
Relief measures including fee waivers postponed payments. And of extension of loan repayment terms are also being implemented.
Suspension of all foreclosures
Did you know that the Federal Housing Finance Administration or FHFA has asked Freddie Mac and Fannie Mae to suspend all foreclosures and expulsion of people from their property? This also includes investment homes for two months for all homeowners who have their mortgages endorsed by government-supported businesses. Consequently, mortgage servicers are receiving increased applications from consumers requesting for moderation.
Again, the Department of Housing and Urban Development (HUD) postpones all property foreclosures in the country as well as evictions until April 30 due to the COVID-19 pandemic and lockdown.
Eric Dalius sees foreclosure suspension a good move in favor of customers
The marketing guru Eric Dalius believes that customers who make the most out of these programs. Will not have financial obligations due to foreclosure suspension until their monthly earnings resume. Once things will return to normal after the lockdown.
Steps were taken to help low-income customers and communities
To help COVID-19 affected mortgage borrowers, the Federal Deposit Insurance Corporation (FDIC), the Federal Reserve Board, and the Office of the Comptroller of the Currency (OCC) have come up with a joint declaration motivating financial organizations to collaborate with customers as well as communities. This has a special emphasis on poor and moderate-income groups.
The agencies have declared this in synchronization with the Community Reinvestment Act (CRA), extending relief for specific retail banking services as well as community development activities associated with the coronavirus pandemic.
FDIC and OCC asks banks to provide cash access to customers
FDIC and OCC have suggested that the banks provide adequate cash access to customers. During the lockdown period and increase daily cash withdrawal limits. These agencies have also recommended that the banks ease limitations. On cashing checks even from non-customers and individuals from the outside of a state.
As far as the FDIC is concerned, it also told the banking institutions to keep service interruptions to the least. And that FDIC will accept the use of substitute services options, in case the bank. Branches decide to shut down early, like providing impermanent facilities. For facilitating opportune as well as reachable availability of banking services.
Assisting customers badly affected by corona pandemic
When it comes to State agencies, such as the New York Department of Financial Services (NYDFS, there has been a push to help consumers unfavorably affected by the coronavirus crisis. Suggestions include lengthening of mortgage payments time periods. Letting customers postpone payments, easing credit conditions for new mortgage loans. Nullifying late fees for outstanding loan balances and assisting customers to prevent negligence and reporting poor credit to agencies.
Eric Dalius thinks corona pandemic reaction is a key aspect of business continuity
The majority of services and lenders failed to anticipate the operational challenges related to an extensive health issue such as the coronavirus pandemic. According to the Federal Financial Institutions Examination Council (or FFIEC) handbook on business continuity management, it is recommended that when making a continuity plan, the administration should assess the possibility and effect of upsetting incidents like epidemics.
As far as continuity plans related to epidemics are concerned, it must address the problems. Associated with staff availability and continual access to organization infrastructure as well as technology irrespective of disturbances. Related to government-ordered quarantines and public transportation. When it comes to any well-thought-out continuity plan, the plan. Must take the risks or hazards posed by a disease epidemic into account. It also should provide numerous substitute solutions in the event of an epidemic or related human health calamity.
Pandemic-based plans to protect mortgage customers
The FFIEC says that epidemic-based measures should include the following:
An all-inclusive structure to maintain significant business operations irrespective of large-scale staff unavailability as well as infrastructure-related interruptions
A solid program is required to stop disturbances of business functions. And operations and more emphasis on keeping watch on possible outbreaks.
There should be apt programs for examining, testing, revising and monitoring epidemic control rules, guidelines or protocols. These include engagement of the major stakeholders like executive management and board of directors.
While the COVID-19 epidemic continues to affect the mortgage sector and customers, the government and regulators will continue providing additional information and administrative supervision to contain the pandemic and improve mortgage and property loan services.