Helping Homeowners in Times of Financial Crisis, a case study recently released by Black Knight Inc., shows how self-service technology (SST) deployed by loan servicers during natural disasters can improve loss mitigation outcomes.
During the COVID-19 pandemic when millions of Americans were laid off or otherwise unable to work, the passage of the CARES Act and widespread adoption of forbearance options by servicers and borrowers averted a foreclosure crisis to rival – or even eclipse – that of the Great Financial Crisis.
The case study analyzes borrowers who use Servicing Digital, Black Knight’s consumer-facing responsive web and native app solution, which provides users 24/7 access to detailed, timely and highly personalized information and helpful tools about their loan.
Servicers can activate a devoted “disaster” capability to help them provide specialized assistance to consumers during times of exceptional need. This additional functionality allows servicers provide a broad array of forbearance options to borrowers impacted by disasters. They can respond quickly to anticipated spikes in payment assistance requests with appropriate solutions, including repayment plans, FHA partial claims, GSE payment deferrals, loan modifications and more.
Initially developed in response to market needs from the 2017 hurricane season, the capability was activated for the COVID-19 pandemic to give borrowers a direct, familiar and secure way to contact their servicer when it looked like they might miss or need to delay a mortgage payment due to economic hardship. Black Knight collected disaster data from a representative selection of 21 clients from August 2020 to September 2022 and found that approximately 342,000 borrowers interacted with the “disaster” option to initiate a self-service loss mitigation request, with results including:
- 139,000 homeowners committing to new forbearance plans.
- 49,000 extending existing forbearance plans.
- 112,000 committing to final loan modifications.
The COVID-19 pandemic provided an unusual opportunity to study the demand and efficacy of SST disaster assistance across a broad geography over an extended time. In addition to the positive borrower impact discussed above, Black Knight also discovered the following additional SST disaster assistance benefits based on its analysis of borrower actions:
- Accelerated borrower engagement, giving servicers more runway to work toward mutually beneficial mitigation solutions.
- Configurable workflows allowing for a rapid and adaptive response by servicers to borrower needs.
- Increased borrower engagement during a time of high anxiety when many borrowers avoid contact with servicers due to stress, embarrassment and fear of losing their homes.
“Natural disasters appear to be on the rise across the country,” says Joe Nackashi, CEO of Black Knight. “By proactively engaging homeowners who may be struggling to pay their mortgage and empowering them with tools that help them understand their options, servicers can expect positive outcomes that may include higher portfolio retention, increased customer satisfaction and loyalty, greater servicing efficiency and fewer third-party collections.”
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