Servicers May Change Attitude Towards Automation
Many agree that the mortgage servicing market is rapidly changing. At least one insider sees these changes affecting servicer attitudes and their relationship with mortgage technology and automation.
As recently as a year and a half ago many servicers "were very adverse" to loss mitigation outsourcing, recalls Sterling Home Retention Services, Orlando, Florida senior vice president Chris Sabbe, they were scared of change and wanted to do everything on their own.
"Now it's the exact opposite. If you talked to 10 servicers a year ago, maybe one or two would be willing to do outsourcing. Now if you're not doing outsourcing in some way, shape of form, if you're not working on new technology for loss mitigation, you're the outcast." These changes are indirectly encouraged by the government effort to ease the mortgage crisis following specific goals - such as a Nov. 1 deadline to complete up to 500,000 loan modifications. That goal is aggressive, "but we are in the middle of the implementation of the Home Affordable Modification Program and I think it's working," Mr. Sabbe told this publication.
If until recently the main reason for change has been market demand, with "the Treasury coming on board," he argues, more servicers are admitting they need help and are much more open to outsourced borrower contact, loss mitigation, even short sales fulfillment, and the use of a third-party technology platform.
"When the Treasury invites the top 20 servicers to report on how well they are doing on the HAMP program and basically gives them a big slap on the wrist, it wakes up a bunch of people. In a way it does help companies like ours, but in the end we all are in this together. There is business out there for 20 Sterlings. I mean there's not enough trained people out there to handle this wave of default. It sounds like a cliché but we do have to work together."
Sterling sees that change in attitude reflected in demand for its recently introduced TouchPoint loss-mitigation tool. The PDA system allows field inspectors, who typically conduct two site visits, to maximize the efficiency of those visits by providing a paper document to the borrower and at the same time file all the data online using their mobile phone connection. Servicers also appreciate having the option to choose only one segment of the program, for example: door knocking or the HAMP program support.
"We really want to push the envelope and change the industry and be at the forefront of paperless mortgages and automation of the borrower contact. Not just door knocking but borrower outreach programs, since if you don't reach the borrower you cannot work at that loan."
Most servicers either have very little technology or have very outdated technology and they do not have enough resources to handle the current volumes of default, he says.
"Where I see the industry going? Servicers either are going to have a shell loss mitigation department and they are going to outsource the rest, or we may have servicers who will not have a loss-mitigation department at all. But it will take probably another 18 to 24 months for the sort of early adapters to say, 'Let's do this!'"
TouchPoint is just one of many "technology gadgets" available to servicers.
The software allows anyone with a BlackBerry or Web browser to electronically input the data into a lender/servicer database system in real time as they are working with a customer, Mr. Sabbe says. Door knocking is just one of four phases of the borrower contact but it is key since the lender/servicer cannot complete a workout before the borrower has been contacted directly. Other bonuses include data input labor is not duplicated and loan processing is paperless.
The four phases consist of an outbound and inbound call campaign through the call center, the skip-tracing process that researches for alternative phone numbers and ways to locate the person, two door-knocking inspections, and if all the above fail, a network of retired FBI and IRS agents help locate the borrower. Sterling has worked with tens of thousands of HAMP loans achieving an 80% all borrower contact rate, he said.
While the tool is available to all, he says only about 60% of field inspectors actually use it. "We don't want to beat them over the head with, 'You have to enter the data via PDA today.' That's because we think that over time we will make it a mandate for them to use it if they want to work with us. But after all it's a strategic thing. We will slowly roll out the program so people get familiar with the technology, probably in the next 90 days."
Mr. Sabbe stressed, however, that his firm is not willing to let go of some of its most savvy and experienced field inspectors because they belong to a generation that may be slow in embracing technology. The goal is to reach up to a 95% usage rate. "We don't want to lose those inspectors who may be some of the best out there. If I have to take faxes all day because that guy is the best inspector we have in rural Montana, then I'm going to keep him. But over time we will try to have a 90% to 95% penetration rate on all of our field inspectors."