Delinquencies have begun ticking upward, as many experts have been predicting for some time now. We began to see it quite clearly in the third quarter data released by the Mortgage Bankers Association, when “the delinquency rate for mortgage loans on one-to-four-unit residential properties increased to a seasonally adjusted rate of 3.62 percent of all loans outstanding.
The data came from the MBA’s National Delinquency Survey and was released on November 9, 2023. According to MBA, the delinquency rate was up 25 basis points from the second quarter of 2023 and up 17 basis points from one year ago. The percentage of loans on which foreclosure actions were started in the third quarter rose by 1 basis point to 0.14 percent.
Marina Walsh, CMB, MBA’s Vice President of Industry Analysis, pointed out that mortgage delinquencies and employment conditions are tracking very closely. The labor market has shown recent signs of weakening, with the unemployment rate increasing to 3.9 percent in October, the highest level since January 2022.
MBA has forecasted slower hiring and rising unemployment, with the rate rising to 5.0 percent by the end of next year. According to Walsh, this means: “The increase in unemployment will likely mean further increases in mortgage delinquencies, particularly for FHA borrowers.”
Dealing with additional delinquencies
Servicers are well versed in dealing with mortgage borrower delinquencies and have existing workflows to deal with this eventuality. Unfortunately, because much of the software the industry is relying on today to service these loans is outdated, many of these workflows are largely manual.
That’s going to add expense to a sector of the industry that is already dealing with razor thin margins. The additional regulatory scrutiny that is bound to follow closely behind any increase in delinquencies will add even more cost to that.
This is where the servicer’s software should really be providing a return on the investment. Sadly, older technology isn’t getting this job done.
We know this is a problem that many mortgage servicers will face because STRATMOR’s consultants have been speaking to it in their Tech Workshops. In a recent announcement for the offerings in Rob Chrisman’s blog, the company said:
“Let’s face it. The mortgage technology space is a complicated jumble of offerings from multiple providers with significant overlap as vendors move upstream, downstream and evolve into adjacent market segments. When lenders finally pull the trigger on a given solution, they are never sure they are getting a reasonable ROI if any ROI at all.”
What the servicers need is a better technological solution to help borrowers get back on track quickly. This is exactly why MortgageFlex built additional default servicing tools directly in our new mortgage servicing platform. This is a tool built to deliver ROI.
No other system on the market has the task and workflow automation that we’ve built into our software’s queues. People who have seen our demo will tell you that MortgageFlex has more default functionality built into our servicing software than any platform available.
If you’re ready to have powerful built-in workflows capable of driving your default servicing operation with efficiency and maximum effectiveness, it’s time for you to see a demo of what we have built.
Schedule a demo with John McCrea by calling 1-860-460-7418.