Managing CARES forbearance: Providing a clear path for borrowers

Back in March, when it became clear that COVID-19 was creating financial hardship for a considerable number of Americans, the federal government enacted the CARES (Coronavirus Aid Relief and Economic Security) Act. Part of this legislation was passed to protect homeowners, allowing them to obtain mortgage forbearance for an initial period of 180 days.

Nearly 3.5 million consumers were granted forbearance — but their initial forbearance periods are coming to a close with many people still struggling.

Existing processes for borrowers to choose a path forward can be murky and often confusing, and the information available to them isn’t always easily navigable. The worst case outcome here is that borrowers are not receiving the help they need in time.

Lenders may soon be overwhelmed as they face a surge in forbearance restructure volume. Their goal is clear: work to develop loss mitigation strategies and support their customers as they navigate an emotionally fraught process. Lending teams need ways to educate borrowers, providing them with accurate and relevant information that clearly outlines potential paths forward, and then route them through their chosen options.

As the first forbearance periods end, Blend is partnering with lenders to ensure consumers have access to all options that can help them stay in their homes and support their financial futures.

Adapting our platform to educate borrowers and reduce operational lift

We’ve heard the call from our customers: they need help managing an often complex process at scale while providing a transparent path for their borrowers. So we’ve developed a simple, digital way for them to manage the incoming wave while supporting their borrower’s specific needs.

The process significantly decreases operational lift for lenders while helping them deliver a streamlined customer experience complete with the necessary education. This self-serve model is easy for borrowers to navigate; it presents them with comprehensible information about the situation, provides them with their options, and guides them through the process so they can make their choice.

Borrowers can apply for extended forbearance if they are still experiencing a COVID-related hardship, reinstate their mortgage, opt into a number of repayment plans, choose payment deferral, or modify their loans to make payments more affordable.

We’ve automated this process so the system and the bank’s staff can easily handle all the requests of demand spikes as forbearance periods end. This new feature set wasn’t an existing offering of ours. We tapped into the flexibility of our platform to develop something brand new, making it possible for us to help our lender partners adapt to this volume while continuing to offer quality customer service. Tweaking our platform’s functionality will continue to enable lenders to adapt to the needs of the market and their consumer bases.

See it in action: Managing forbearance volume

The diligent work our team put into these forbearance features is paying dividends for our lender partners and their consumers. Through these partnerships, we’ve embarked on this journey more than with 18,000 consumers.

Due to COVID-19, Navy Federal Credit Union saw a significant increase in the number of forbearance requests. That kind of increase wouldn’t have been manageable just a year ago, but the world’s largest credit union was able to handle the volume with Blend. Their highest volume day for forbearance requests would have been very difficult to handle with just their call center, but utilizing an advanced digital tool allowed Navy Federal to help members without disrupting normal business operations.

We also worked with M&T Bank to serve customers and streamline the process. About 50% of borrowers who received a Blend-powered email regarding loss mitigation options opened it, indicating a large impact in customer education. Despite modifications to FHA rules throughout this time period, M&T was able to adapt their process with Blend to keep up with these changes.

Our median completion time for borrower completion of the loss mitigation process is one minute fifty seconds. In less than two minutes, borrowers are able to consume the relevant information and come to a decision, without much operational lift from the lender.

Scaling impact to keep borrowers in their homes

Having a flexible platform helps lenders manage the chaos, and in the best cases, keep borrowers in their homes. When unexpected events arise, the Blend platform allows lenders to better serve their borrowers.

In this case, lenders were able to offer clear and digestible information to borrowers so they were able to make informed decisions that best served their current needs and financial futures during a time of hardship. We look forward to continuing to work with lenders to support as many borrowers as possible.