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Mortgage servicers seek to reach distressed borrowers 'ghosting' them

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The housing finance industry is planning to engage in a campaign to reach homeowners with coronavirus-related financial difficulties who went delinquent when they likely could have opted to enter forbearance plans instead.

"I think we're all kind of puzzled by customers who haven't raised their hands for help," Dana Dillard, executive vice president at Mr. Cooper, said at a virtual event hosted by the Mortgage Bankers Association on Wednesday. "There is a pocket of customers we're having trouble reaching."

As a result Mr. Cooper and others in the industry plan to do more to reach out to these borrowers, who have "ghosted" them, Dillard said.

As of the end of July, there were more than 1 million past-due mortgages not in forbearance, according to Black Knight. The majority of those loans were federally backed and likely would have qualified for up to a year of forbearance under the terms of the CARES Act, Black Knight found.

Sixty-two percent or 680,000 of the 1 million-plus delinquent loans that were not in forbearance were federally backed mortgages, of which 405,000 were mortgages either insured by the Federal Housing Administration, or guaranteed by the Department of Veterans Affairs.

These last two categories of mortgages have experienced higher levels of distress because they are aimed at serving borrowers who typically face more affordability challenges than others.

Some servicers who are hoping to help these missing, likely struggling borrowers, are working with companies who provide job placement services for those whose previous employment was derailed by the pandemic.

Other options these servicers also are finding helpful where borrowers are concerned the simple "deferral" repayment plan added earlier this year by the government sponsored enterprises, said Candace Russell, a vice president at Carrington Mortgage Services.

"I love the deferrals," she said of the option, which allows forborne payments to be tacked onto the end of the loan.

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Servicing Mr. Cooper Mortgage Bankers Association CARES Act FHA The VA Distressed
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