American Banker: March 17, 2020, Coronavirus Testing Loan Services’ Mettle
The U.S. loan servicing industry, easily overlooked during good economic times, is now facing its most challenging moment since the financial crisis of 2008 and 2009.
Seemingly overnight, the COVID-19 pandemic has upended staffing plans, sparked concerns about servicers’ capacity to handle the expected crush of missed payments, and even raised questions about the ability of many servicers to stay afloat.
One immediate problem for loan servicers is how to staff their call centers at a time when government officials, in an effort to slow the spread of the virus, are either banning or strongly discouraging mass gatherings.
Jesse Van Tol, the CEO of the National Community Reinvestment Coalition, gave a similar assessment. “This could be bad. And you could see cascading impacts that put a lot of borrowers in foreclosure,” he said.
Bank of America is already seeing a flurry of activity from customers seeking debt relief, according to a spokesman. During a national TV appearance on Sunday, Chairman and CEO Brian Moynihan said that borrowers who are affected by the outbreak and cannot make their payments can call the Charlotte-based bank.