Trevor Gauthier of ACES Quality Management on Early Payment Defaults

Published November 09, 2020

MBA NewsLink | Nov 9, 2020

MBA NEWSLINK: Because of COVID-19, early payment defaults (EPDs) are on the rise. How will such a large volume of EPDs affect lenders or servicers and what resources are there to help them navigate?

TREVOR GAUTHIER, ACES QUALITY MANAGEMENT: COVID-19 has created unusual circumstances for lenders and has caused changes that we typically don’t see in the market, one of which has been a rise in early payment defaults. An EPD is defined by the Agencies as any loan that goes 60-days delinquent within the first six contractual payments due. When we look at this rise, it’s important to remember that unemployment due to COVID-19 began to grow in February 2020, meaning that loans originated way back in August were still within their first six payments due. This also extends to loans originated since mid-last year, which puts into perspective the exact volume of loans we’re discussing.

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