When the government announced last March that borrowers could take a three-month payment “holiday” to cope with the effects of lockdown, it came as much of a shock to many lenders as it did to the rest of society.
Lenders had to digest the news and react almost overnight. But have you ever thought of just what had to be put in place to achieve this?
After all, it’s not as easy as saying “OK Mr and Mrs Smith, off you go then, speak to you again in three months’ time”.
There were systems to put in place to cope with the who, where, when – and what happens to the payments at the end.
Does the mortgage term get extended for example, or do the borrower’s payments increase at the end of the moratorium period?
And what happens if the borrower doesn’t start paying again?
In the buy-to-let world, lenders were also faced with what happens if a landlord asks to take payment holidays across their whole portfolio of properties – and what then if they want to take out further mortgages?
Setting clear goals
While we cannot speak for every lender it may be interesting for intermediaries to understand what had to happen behind the scenes – particularly as we wade through our third national lockdown.
Implementing a new, untried system with everyone working at home for the first time was inevitably challenging.
For larger lenders with legacy computer systems, it must have been a nightmare, especially as these same systems made the challenges of staff home working greater still.
We managed it by setting ourselves three clear goals:
- To implement new processes to facilitate mortgage holidays which mirrored government and regulatory guidelines
- to enable fast, accurate decisions to be made after requests to enter, and later exit, a mortgage holiday
- to monitor mortgage holidays’ performance against the wider industry.
Fortunately, we had the ability to build solutions in-house which enabled our technology to do much of the heavy lifting – our IT team worked around the clock but delivered a facility which met all three goals.
The new system also allowed anyone in the customer service team to create reports and access up-to-the-minute data on our borrowers.
This was vital so we could assess each borrower’s situation and make decisions in agreement with them, always based on what was in their best interests.
With instant access to client data, the customer service team has been able to identify distressed borrowers and make fast accurate decisions on mortgage holidays rather than taking a more blanket approach, which some lenders had to do.
The outcomes from this have been better than we could have hoped.
It meant we were able to provide customers with decisions on payment holidays within 24 hours of receiving the required information and importantly implement the underlying data architecture to support these operations.
On an ongoing basis we have also used technology to support intermediaries and to stay within service level agreements.
Even though these had to be lengthened a little, it has given intermediaries a level of transparency that is essential.
So for those who thought all seemed calm, it is like seeing the swan on the pond – graceful and calm on the surface while paddling like mad underneath.