Technology Can Make All The Difference
While servicers struggle to be successful with the Home Affordable Modification Program, there are those that say it's possible to do HAMP well, just not with traditional business practices. For example, Sterling Home Retention Services, a loss mitigation fulfillment firm, has released year-to-date results indicating success rates far above the industry average for HAMP. To date, Sterling has been successful in helping borrowers avoid foreclosure in almost 60% of its cases, as compared to the U.S. Treasury's reported industry average of 9%, according to figures released by the company. The company credits its innovative methods, highly-trained teams of specialists and its technology platform, TouchPoint - provided by its sister company, Sterling Technology Solutions - for its achievements with HAMP.
The detailed metrics tell the story. One of the most difficult tasks in beginning the HAMP campaign, or any home retention effort, is finding the homeowner and making "right party contact", called "RPC" in the industry. Borrowers in default often ignore mailed offers or phone calls, believing their cases to be hopeless, and even move out of the home in anticipation of foreclosure. Through a multi-phased approach, Sterling Home Retention has created a methodology to far exceed the industry averages for right party contact using a combination of outsourced services, proprietary contact databases, and technology. As of September 2009, Sterling Home Retention has succeeded in making right party contact in 85% of its cases, over double the typical success rate. Once contacted, current financial information must be captured in order to qualify delinquent borrowers for the HAMP program. Working with discouraged homeowners and gaining their cooperation has proven to be challenging for most servicers today. Informal polls show the industry's result so far is only about 25% success in obtaining financial information from all delinquent borrowers. Sterling Home Retention reports it has collected the required financial information in 80% of all cases assigned to the firm. More importantly, as of the August 2009 report issued by the U.S. Treasury, the industry has only extended offers for HAMP modifications to 15% of eligible borrowers, while Sterling has done so in 76% of its cases. The real key, though, is getting the troubled homeowners to accept offers under the HAMP initiative. As of August, the Treasury report shows that only 9% of eligible borrowers have accepted offers from the industry, while 47% have accepted offers made by Sterling Home Retention Services.
Sterling Home Retention Services CEO and co-founder Ron Morgan believes their success is a combination of both methodology and using the right tools for the job. "It takes much more than sending a letter informing borrowers of the HAMP program," he says. "We've found that it takes a persistent, proactive and highly personal approach to find the right contacts and communicate the HAMP message effectively. It takes trained people, lots of them, and nationwide there just aren't enough of them to address the problem. So we created a technology platform that enables fewer people to perform the work of many."
Going forward, Mr. Morgan believes the HAMP effort is doomed to failure unless servicers can adapt or supplement their tactics, because traditional methods, systems, and power dialers simply aren't enough. "You have to be relentless in educating the borrower you are there to help, whether it be finding new phone numbers, or knocking on doors to deliver the initial message personally," he explained. "Once borrowers understand you are there to bring hope and not to collect debts, you can establish an open dialogue that can lead to success. Our TouchPoint technology application helps structure modifications based on investor requirements, so our modification specialists can offer real-time solutions very quickly. We are proud to have instilled a sense of trust and optimism in each borrower we assist."