There are been some good comparisons of the current recession to the 2008 Crisis here and here. I’ve narrowed the analysis to the Residential Real Estate/Mortgage industry. And add my take on possible future implications for the industry (as of time of posting!). Below, I provide five steps Mortgage Lenders need to take now in response.
Five risk management strategies mortgage lenders must start executing now:
1. People\remote work – After doing everything you can to ensure the mental and physical health of all employees, including properly resourcing remote working capabilities, develop origination and servicing volume scenarios. Map staffing levels against each scenario to maximize staff retention and cash flow.
2. Adapt UW, QC and Anti-Fraud policy and processes to current conditions and secondary marketing guidelines – originate only what you can verify and sell. GSEs will still review for compliance and ask for defect remediation. Accuracy before speed in times like these.
3. Third Party\Vendors – reach out to critical partners to negotiate how you can both survive including viability of offshore relationships. Conduct weekly counterparty exposure assessment. Adhere closely to third party performance standards.
4. New Customer Pipeline – over communicate as primary preservation strategy, under promise and overdeliver, rely on best efforts.
5. Servicing – Contact every customer, deploy high touch/distressed servicing tools. Adapt policy and process to new secondary market forbearance and modification policies.
It will be critical to designate a Change Management Officer to ensure the organization stays on top of the fast-changing conditions. SWS Risk Advisory LLC can assist your leadership team through these challenging times.