Why servicers might not want to offer forbearance outcomes workers

With some strain from the easing pandemic likely to persist and service providers expected to shift the focus to costly workouts and away from handling payment suspensions, questions have been raised about whether companies need to budget for headcount increases.

However, a recent Fitch Ratings analysis of home-backed securities service trends in the first quarter suggests that so far, companies primarily plan to employ roughly the same number of employees as they move from indulgence to rating borrowers who have seen long-term declines their income.

According to the rating agency's RMBS Servicer Metric Report, the average number of full-time equivalents employed by banks with Fitch rating servicers fell slightly in the first quarter to 2,949 compared to 3,004 in the previous quarter. In the case of non-banks, there was only a small increase to 1,006 from almost 928.

Servicers have hired up to cope with demand from the pandemic and are now busy. “They will move people to where the demand is. When the forbearance agreements expire, these people will likely go back to their original departments, ”Fitch director Rich Koch said in an interview.

This analysis is supported by a decrease in the average number of loans processed by full-time employees. That had fallen to nearly 563 out of 850 for banks and 544 out of 408 for non-deposits, Koch said, noting that this is most likely a reflection of the decline in forbearance and concern of businesses, some capacity for handling exits to obtain.

"Right now there is less activity on the forbearance side and a declining number of phone calls, partly due to technology introductions and improvements to facilitate the forbearance agreement and extension request process," said Koch.

Many servicers trained staff who were busy achieving loss mitigation results for people struggling to pay their loans and transferred them to the call center to forbear them as their defaults increased. This would allow these employees to return to their original departments to help with deferral exits, Koch said.

Some firms also have cross-trained lending staff who are engaged in reassessing borrowers' incomes in light of possible changes in loan terms. The activity draws on some similar skills used in the initial lending process and may require the individual involved to be a licensed loan officer.

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