WHEN FORBEARANCE TURNS TO LOAN MODIFICATIONS
Without massive staffing campaigns, it's hard to see how servicers will keep up.
By Carissa Robb
Financial institutions of all sizes responded with relief options to proactively address banking related issues spurred by COVID-19. Banners were added to just about every website outlining various relief options from ATM and late fee waivers to automatic payment deferrals for 90 days.
Interested? Call the 800 number and start a new novel. You’ll probably finish the book first.
That’s not a slam on call centers - they’re doing the best they can. They didn’t cause the crisis; they just need help to unwind it. Call centers are actually very equipped for sudden bursts of activity due to somewhat bounded disasters. Overtime is authorized, call center hours are expanded, and outbound calling activity is suspended to make sure inbound calls are answered. Nobody is sitting there watching average hold times and hoping they go up.
Business continuity plans are documented, routinely tested and planned for. Hurricanes, snow storms, power interruptions have protocols and procedures to quickly redirect work to redundant operation centers, activate remote workforces for critical staff and return swiftly and soundly to business as usual.
This disaster is different. As the person responsible for developing and implementing these plans at a large bank, this scenario was not one we or any other bank planned for.
While best efforts to manage the volume, automate responses and get relief options out quickly are noted and applauded, the theme song for most financial institutions navigating this crisis is their hold music.
So when does it end?
Regulatory guidance around relief options following a natural disaster suggests a timeline of about 90 days. Consumer protection initiatives like collection moratoriums and repossession suspension are about the same, and may protect the consumer’s well being, but ultimately defer the negative impact.
For hurricanes, 90 days typically provides enough financial reprieve to allow things to settle. Assuming insurance claims and assistance checks get to families, most communities are cleaned up and order is restored enough for folks to return to work.
That’s probably not the case this time. It’s like applying a band-aid to an injury requiring a tourniquet.
When the spotlight turns away from financial institutions: credit reporting starts again, late fees are turned back on, overdraft and ATM charges start to pepper statements again, what will your banner say?
The reality is a fair amount of payments will not be coming in when you turn the lights on. The hold times will again be long and once again, they will wait because they have no other option.
What will you say?
This disaster lacks boundaries and end dates. It requires a thoughtful and intentional plan to evaluate what happened to the person on the other end of the 45 minute hold time and how to make life affordable for the unknown milestones up ahead. It requires an understanding of why the solution for the daycare owner that has no kids coming in but hopes to reopen this summer, will be different than another owner forced to permanently close their doors.
It’s complicated. But it's doable.
People are already burned out. In 90 days, they’ll be even more so. Consumers and call centers alike are begging for help to unravel this. Continuing to respond with 800 numbers and no real answer on how to help, is like replaying the hold music nobody wanted to hear in the first place.
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