As a member of the mortgage industry, we have seen both providers of mortgage services and mortgage borrowers be affected by the COVID-19 public health emergency. Fortunately, in cases where borrowers missed payments and needed financial assistance, the federal government passed the CARES Act and other programs to provide emergency assistance. However, since the CARES Act is expiring, you may ask how your loan servicer can assist you and your borrowers. LoanCare is here to help with proactive loan servicing programs.

The CARES Act Response

When the COVID-19 pandemic first entered our consciousness in 2020, our industry had no idea of the long-term impacts we would face. Beyond the healthcare response focused on disease control, an economic response was also needed. Millions of people were faced with profound losses; the economy was met with the unprecedented challenges of shutdowns, layoffs, and workers out sick themselves or caring for a sick loved one. The result was a significant shift in the financial landscape.

To aid those experiencing COVID-19 related hardship, Congress passed the Coronavirus Aid, Relief, and Economic Security (CARES) Act in 2020, to provide funding and resources to those in need. A direct result of CARES Act provisions was the mortgage forbearance program dictating a temporary pause in mortgage payments for those needing financial relief.

The program afforded the option to request up to one year of mortgage payment forbearance. Almost three years into the COVID-19 pandemic, President Biden announced in late January of this year that the national COVID emergency declaration would end on May 11, 2023. In February, the House of Representatives voted to approve the pandemic order immediately; in March, the Senate also voted that the emergency should end. With both the national and public health emergencies that began in 2020 set to end in 2023, where does that leave homeowners receiving, or still in need of, CARES Act borrower assistance?

Did the CARES Act Expire?

Homeowners still struggling to pay their mortgage have until May 31, 2023, to request forbearance from their servicer. Once the forbearance period ends, servicers will review additional recovery options to resolve any outstanding reduced or suspended payments. COVID-19 related forbearances are slated to end by the fall of 2023.

What Resources do Homeowners have now that the CARES Act is Ending?

Homeowners still needing assistance may be transferred to traditional Loss Mitigation plans through their servicers. While a specific federal grant program may have ended, some programs from the Small Business Administration, tax credits, and others are subject to certain deadlines.

Additionally, the Homeowners Assistance Fund (HAF), authorized by the American Rescue Act to provide relief to homeowners experiencing financial hardship associated with COVID-19, included $9.961 billion in aid allocated to provide support for mortgage payments, homeowner’s insurance, and utility payments, among others. The HAF program is designed to prevent defaults, foreclosures, loss of utilities, and homeowner displacement and focuses on homeowner empowerment through the implementation of housing counseling and plain language education materials. By the end of 2022, the United States Treasury reported that HAF-funded programs had assisted over 230,000 homeowners. Assistance is distributed by states and program details, eligibility requirements, and program application information is available on the Consumer Financial Protection Bureau (CFPB) and National Council of State Housing Agencies (NCSHA) websites. These guidelines show which factors such programs require. There are eligibility limits based on adjusted gross income and other requirements available as program administrators issue guidance.

How is LoanCare® Supporting Impacted Homeowners?

LoanCare remains committed to supporting our homeowners through every stage of the mortgage journey – especially when help is needed most. Since the inception of the Homeowner Assistance Fund (HAF), LoanCare has been consistently communicating with our homeowners through dedicated email and web campaigns to increase program awareness, provide information, and direct resources to those in need. Homeowners can quickly and easily apply for forbearance on the myloancare website as well as check their eligibility for HAF assistance through the NCSHA. Our goal is to make sure homeowners know their options and are empowered to make the best decisions for their home and family.

As your loan servicer, we also continue to invest in the resources and training that offer tailored solutions for our partners to support their homeowners’ needs. For example, LoanCare’s proprietary data-analytics tool, LoanCare Analytics™, is an all-in-one portfolio management tool capable of identifying loans within a portfolio that may be in need of additional support through an intelligent network of triggers. In addition, our clients have on-demand access to the platform with over 1,250 views and 15,000 data elements to stay up to date on any changes in their portfolio down to the loan level.

In March of this year, we renewed our contract with Black Knight to continue using its MSP servicing system and added the Black Knight Loss Mitigation Solution to support payment assistance programs. The Loss Mitigation module, in conjunction with the MSP system and LoanCare Analytics, will allow LoanCare to offer assistance to those having trouble making mortgage payments more proactively. View Press Release.

What if Homeowners Still Have Distressed Loans in Need of Specialized Plans?

For some homeowners, the journey to mortgage resolution may require additional steps through specialized workout options – including deed in lieu – to avoid foreclosure. In addition to the end of the CARES Act, other programs have ended such as federal pandemic unemployment compensation, which supplemented unemployment compensation benefits, the economic security act, other grant programs like the Paycheck Protection Programs. Borrowers that relied on these programs to avoid missed payments may now need other assistance to overcome the lingering economic effects of COVID-19.

In these cases, a standard loan program supported by a standard mortgage servicer is not an effective solution for you or the homeowner.

The Solution is Velocity Servicing

Your borrower relationships and your borrowers depend on your knowledge of every program, including deadlines and the effective date of each program.

That’s where Velocity Servicing, an independently managed division of LoanCare, can help. Velocity Servicing uniquely structures solutions tailored to homeowners’ situations, helping them understand their options and make decisions at a pace that puts the homeowners and client at ease. Velocity Servicing offers clients the talent and process rigor proven to address the unique challenges of specialty loan servicing, along with the ability to leverage the scale of LoanCare, including its best-in-class compliance processes, risk management infrastructure, and proprietary data analytics platform, which monitors and predicts risk and opportunity across a portfolio. Our partners maximize asset performance through high-touch servicing while helping their homeowners find mortgage resolution faster.

For more information about Velocity Servicing, a LoanCare division, click here.