Servicers are changing the way they do business, but so far the catalyst for change has been regulatory fiat, not cultural changes designed to prevent past errors from happening again.
Servicers must change their conduct to fit the times and regulatory environment, and some of the largest have done that. For instance, Citi, Chase, Wells Fargo and Bank of America completed $15 billion in credited relief through yearend 2012, according to the “Interim Crediting Report: A Report from the Monitor of the National Mortgage Settlement” released Oct. 16. Also, the servicers complied with non-creditable requirements, and accurately reported gross relief in state reports.
To their credit, these organizations satisfied the mortgage servicer oversight committee and demonstrated compliance with the letter of the law. I’d prefer, however, that the motivation to comply was because servicers were finding creative ways to comply that improves the experience for borrowers.
It’s as though servicers acted like the student that completed his homework, received passing grades, but failed to even try the extra credit. In the case of the banks, that would mean starting with a discussion of how the borrower experience has changed—as a result of the billion-dollar settlement the servicers made, the poor publicity, and borrowers with long memories.
For instance, ensuring that transactions can be completed and viewed through a smart phone. Or how technology has been deployed to make transactions faster, less expensive, more accurate—while at the same time ensuring compliance.
Moreover, the report does not examine if complying with the regulations is considered an opportunity to improve the borrower experience and build loyalty. That can happen through improved technology, better customer service, or an improved experience of some sort.
That is, unfortunately, outside the scope of the report. Servicers could release that information—of their own volition—as a way to distinguish their offerings, and perhaps, provide a reason for borrowers to trust them. So far, none of them have done so.
To be sure, compliance is a potential branding opportunity and a way to attract customers; servicers could bill themselves as the compliant and tech savvy servicer that borrowers have been waiting to work with. Over time, the bank could develop a brand that borrowers are keen to do business with, because, for instance, they offer excellent customer service or a forward-looking technology platform.
It’s a matter of finding ways to tie regulatory compliance to improved services, upgraded technology, enhanced customer service, and putting the borrower first—because they recognize those factors as ways to “create and keep customers.”
That’s a cultural change that would demonstrate that lessons have been learned—and past transgressions will not be repeated. Otherwise, complying with the settlement agreement strikes me as a regulatory patch job, a sleazy bid to appease regulators, only to revert back to past misdeeds when they can get away with it.
It’s the decision to make a quick buck rather than making the investment in developing dedicated clients that enjoy doing business with the bank.
I recognize that borrowers can’t pick the servicer they use—but the experience they have with the bank does become part of the organization’s brand. It will be considered when the borrower selects a lender to buy a mortgage from in the future, as well as for other loans and banking services.
Matt Strickberger is the managing partner of OnPoint PR and Consulting LLC, a public relations firm that represents lenders, servicers, technology companies and others. He was editor of Mortgage Technology magazine from 1997-2000. If you have comments or suggestions for future columns, email him at email@example.com.