The Case for an Independent COVID-19 Servicing Review

Servicing of consumer finance loans has been an “in-person” activity historically, with the ability to physically wave a hand or raise a flag and have a supervisor walk over to assist with a particularly nettlesome customer issue. Moreover, handoffs between different servicing groups—particularly bankruptcy, collections, and collateral recovery (foreclosure/repossessions)—have always been an area for heightened risk and often the root cause for operational and compliance breakdowns.

But this risk was mitigated when a member of the other department shared some physical proximity. Therefore, there is an increased likelihood for operations that have worked well to not perform and the same level now, especially considering new CARES Act and state law requierments.

Many banks and finance companies moved to a virtual work-from-home regime in mid-March, which as of this writing has extended for more than a third of the year. Moreover, with COVID-19 cases well above where daily rates were tracking when the initial March/April closures went into effect, remote work could continue in 2021. Some servicers have indicated that more than 90 percent of their workforces are still remote, and many banks do not expect employees to return to offices until sometime in the winter or even next year.