As coronavirus lockdowns ease across the nation, Americans are looking toward the future and wondering when things will get back to normal. I don’t expect they will. Here in the mortgage industry, where low interest rates have kept business brisk, many of us have been insulated from the pandemic’s financial fallout. Last week, another 1.3 million Americans filed for unemployment, bringing the total number of unemployment claims in the last 13 weeks to nearly 45.5 million. Among them are customers, neighbors and friends who will emerge from this pandemic much worse for the wear. I often ask myself whether we are doing enough to support them.
I applaud how quickly legislators and industry leaders mobilized to streamline property appraisals, employment verification, remote online notarization and more — all decisions that would have dragged on for months or years under more typical circumstances. As the founder of a company that works with sensitive consumer financial data, I understand as well as anyone the importance of due diligence. At the same time, I can’t help but wonder if
the mortgage industry would have been better prepared to help borrowers weather this crisis had we taken a more proactive approach to adopting technology all along. The origination solutions advanced in recent weeks weren’t invented on the fly in response to coronavirus; companies like FormFree and others have been building them over the last five to 10 years or more.
Industry leadership has also shown great initiative in responding to the servicing needs of borrowers under financial strain, from forbearance and loan modifications to moratoriums on foreclosure. I have been in contact with the CFPB, the Urban Institute, the FHFA, the MBA and others to identify ways FormFree can collaborate on this front, because we believe there are things we can do to streamline and enhance programs for borrowers in stress.
For example, forbearance programs are designed for borrowers who have been financially affected by the crisis and need time to rally resources. Those who need forbearance should seek it, but it’s better for everyone — especially borrowers — if those who can still pay their mortgage, do. So why don’t we have standards in place for qualifying borrowers who request forbearance? It would be child’s play to review borrowers’ asset, income and employment data — all of which can be sourced straight from the financial institution in a single pull. Doing so would enable us to prioritize assistance for those borrowers in the greatest financial peril.
When the Fed lowered interest rates in March, borrowers glimpsed a tantalizing opportunity to refi their home loans at a lower rate and reduce their monthly cash outlay. But just as quickly, mortgage rates rebounded, and the market moved away from consumers.
That weekend, I joined other financial services experts, all of whom weathered the last financial crisis, to propose a solution. What we envision is a streamlined refi program — we’d call it the Coronavirus Assistance Refinance Program, or CARP for short — that keeps incumbent lenders in the mix. Similar to the HARP program, it would be a federal program benefitting homeowners whose mortgage payments are current, but who cannot refi due to current market conditions. With today’s technology, there would be no justification to put borrowers or servicers through a 20-page hardship application. Instead, with the push of a button, the lender-servicer could qualify the applicants based on factors like whether they’ve been gainfully employed for the last 60 days, whether they have made any late payments to their creditors, how much income they bring in and whether they have enough cash to close a refi.
For many households, a refi could mean a couple hundred bucks a month in reduced cash outlay. Not only would that aid consumers now, when they need it most, but it would also continue to stimulate the economy as consumers recover and put that extra cash into local businesses.
Whatever our industry’s next move is, we ought to exhibit great sensitivity to the financial challenges being faced by millions around the country — and an appreciation of the long-term economic impacts of our actions.
BRENT CHANDLER — BIO
Brent Chandler is a widely recognized innovator in mortgage and financial services technologies who has 25 years’ experience on the leading edge of trading, personal finance, wealth management and consumer financial services. Brent created AccountChek® by FormFree® in 2007 after his own frustrating homebuying experience fueled an obsession with making loans simpler and safer for everyone. Prior to that, Brent was part of the team that created the world’s first online trade while at CheckFree (acquired by Fiserv). He later ran several startups in the online and algorithmic trading spaces and was instrumental in leading the “aggregation revolution” while at CashEdge (acquired by Fiserv), where he oversaw sales and development of the CashEdge Wealth Management platform. He’s also held senior-level positions on Wall Street at Merrill Lynch and Fidelity, where he became an expert in the mechanics of finance, witnessed the infancy of online trading and learned how to use algorithmic black boxes to enhance the performance of institutional and personal portfolios through more efficient exchanges.
Brent serves on the advisory board of Jawdrop, is a member of FourAthens Tech Incubator and is an active mentor for Georgia’s Terry College of Business Entrepreneurship Program. He also serves on the board of directors for the American Red Cross of Northeast Georgia.