Having
built
and
led

mortgage
operations
for
nearly
three
decades,
planning
for
the
future
stands
out
amongst
the
most
challenging
components
a
leader
faces.
Accurately
predicting housing
trends,

mortgage
rates,

technology,
elections,
the
impact
of
the
broader

economy
,
or
how
consumers will
behave
tests
the
best
of
us
at
some
point
in
our
career.
The approach
I
find that
positions
us
best is
one
I’ve
used
on
many
of
my
outdoor
adventures:
Prepare
for
all
outcomes;
or
at
least
the
most
likely
outcomes.
The
best
way
to
do
this
is
to
understand
your
environment
and
assess
the
tools
you
have
at
the
ready.
So,
as
we
approach
mid-year,
let’s
refresh
by
answering
4
questions.  

Today’s
consumer
looks
a lot
like
pre-pandemic 

First,
how
prepared
are
mortgage
servicers
for
the
next
hardship
cycle? In
many
ways,
today
looks
and
feels
very
similar
to
January
2020.
The
consumer
and
the
economy
have
been
on
stable
footing
for
several
quarters,
with
many
predicting
a
downturn
just
around
the
corner. 

In
January
2020,
market
consensus
also
indicated
a
healthy
economy
with
concerns
that
the
consumer
was
poised
for
weakness.
What
transpired
was
nothing
like
what
we
had
ever
experienced:
the
pandemic
hit,
and
unemployment
shot
up
to
14.8%.
Uncertainty
ran
across
all
industries,
impacting
the
simple
day-to-day
life
for
everyone.
Our
industry
was
no
less
impacted
as
concerns
centered
on
the
relationship
between
high
unemployment
and
mortgage
delinquencies.
 

Mortgage
delinquencies
spiked
above
8%
briefly
but
then
quickly
reversed
thanks
to
smart,
fast
policy
responses
and
strong
execution
from
mortgage
servicers.
Technology
also
played
a
significant
role
in
readiness,
delivering
hardship
relief
to
consumers
through
an
efficient
and
effective
experience. 

Policies
included
low-document
forbearances
and
the
ability
to
defer
payments
(by
allowing
forborne
payments
to
be
due
at
payoff
or
refi
instead
of
increasing
payments
along
the
way). Since
then,
some
pandemic
policy
responses,
including
payment
deferrals,
were
made
permanent.  

Did
we
learn
from
this
experience?
Yes!
 
 

Learnings
to
leverage
for
the
next
cycle 

Second
question: Are
we
prepared
to
deliver
a
similar
performance
to
provide
fast
and
effective
responses
to
hardship
relief
in
the
next
cycle?
Our
history
would
indicate
yes. 

They
say
there
is
opportunity
in
crisis,
and
a
crisis
where
millions
suddenly
–
and
mostly
temporarily
–
couldn’t
pay
mortgages
taught
us
valuable
lessons.  

Lesson
1:
Give
consumers
and
lenders
the
ability
to
act
fast.
The
pandemic
fast-tracked
customer
self-serve
modernization
so
lenders
could
empower
the
homeowner
while
also
managing
compliance
and
investor
risk.  

Lesson
2:
Align
servicers,
investors,
policymakers,
and
regulators
around
consumer-first
protections
that
deliver
throughout
the
entire
cycle.
As
noted
above,
key
pandemic
policies
have
been
made
permanent,
due
to
the
industry,
regulators,
and
policymakers
working
together
on
systemically
safe
programming.  

Lesson
3:
Systems
that
power
servicers
must
be
flexible
and
operate
in
real-time
to
keep
up
with
dynamic markets
and
regulations.
This
delivers
capabilities
to
serve
homeowners
with
the
assistance
they
need
to
sustain
homeownership
and
provide
servicers
the
programming
for
timely
and
compliant
actions.
 

These
lessons
on
efficient
response
time,
precise
execution,
and
nimble
technology
bode
well
for
our
industry
handling
the
next
hardship
cycle
successfully.  

Unemployment,
delinquencies
and
hardships 

This
sets
up
our
third
planning
question: Will
the
next
hardship
cycle
be
limited,
or
more
protracted?  

Strong
employment
generally
aligns
with
well-performing
mortgage
delinquency
rates,
and
both
have
been
near
record
levels
since
the
pandemic
recovery.  

Right
now,
the
unemployment
rate
is
hovering
near
3.80%
and
MBA
reports
delinquencies
at
3.94%. And
while
this
is
a
great
place
to
be,
we’re
also
beginning
to
see
signs
of
financial
stress
and
fatigue
from
the
consumer. 

Much
of
the
non-housing
stimulus
from
the
pandemic
has
run
its
intended
course,
and
the
Fed’s
inflation
fight
is
intended
to
put
a
strain
on
the
job
market. 

So
far,
a
sharp
or
protracted
hardship
cycle
doesn’t
seem
likely. However,
as
discussed
above,
we
must
be
prepared
for
all
likely
outcomes.
One
way
our
Sagent
customers
are
doing
this
is
by
proactively
contacting
customers
who’ve
experienced
strain
in
recent
years.  

This
does
three
things:  

1. It
   goes
   a
   long
   way
   toward
   building
   trust
   with
   the
   homeowner.
     

2. It
   helps
   get
   ahead
   of
   any
   potential
   hardships
   homeowners
   might
   experience. 

3. It
   helps
   servicers
   determine
   whether
   short-term
   or
   more
   complete
   loss
   mitigation
   hardship
   paths
   are
   required.  

Homeowners who
thrive
in
all
economic
cycles 

A
large
population
of
homeowners
will
remain
stable
despite
the
volatility
of
the
market.
Whether
or
not
we
have
changes
in
our
political
leadership,
or
if
there
is
a
shift
in
housing
policymakers
and
regulators, the
majority
of
the
homeowners
will
continue
making
their
mortgage
payments
and
will
likely
want
access
to
financial
resources
via
their
home.
 

On
home
prices,
we
can
expect
relatively
low
appreciation
of
4.3%
to
4.8%
by
year-end,
per
MBA
and
Fannie
Mae
respectively. This
should
help
affordability
for
buyers
without
hurting
owners.  

It
should
also
preserve
the

$11
trillion
in
accessible
equity
held
by
homeowners
and
give
them
the
ability
to
address
financial
needs
through
their
home.
 

They
will
do
so
in
3
ways: first-lien
cash
out,
second-lien
cash
out,
or
a
sale
of
the
property,
which
will
likely
result
in
a
new
purchase.  

So,
a
significant
responsibility
of
mortgage
servicers
is
caring
for
these
customers
who
simply
make
their
payments
month
in
and
month
out.
But
without
regular
touch
points
or
needing
assistance,
how
can
servicers
ensure
they
retain
these
borrowers
when
the
opportunity
arises
to
earn
their
business
again?
 

Servicers
that
provide
homeowners
with
options
to
self-educate
and
self-serve
at
their
convenience
will
be
in
the
best
position
to
win
this
business.
This
is
the
technology
that
the
Sagent
team
is
developing
for
our
industry,
one
that
provides
real-time
data
across
a
unified
end-to-end
user
experience
that
both
supports
and
compliments
a
superior
consumer
experience.

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