It took a phone call from national reemployment solutions provider NextJob to Fifth Third Bancorp, one of the country’s largest mortgage lenders and servicers, to start rolling a unique partnership that only a few years ago would have been unimaginable.
Fifth Third Bank is assisting borrowers who become delinquent due to a job loss to remain current by helping them find a job.
At the Mortgage Bankers Association national servicing show in Dallas senior vice president and default servicing manager for Fifth Third Bank, Jon Meade, will be busy talking to peers and investors about a first-of-its-kind program for unemployed homeowners that probably is the industry’s first social investing approach to foreclosure prevention.
“Up to half of mortgage delinquencies are due to job loss,” said Steven Alonso, executive vice president and head of the Consumer Bank, Fifth Third Bancorp. “With NextJob, we immediately recognized an opportunity to go the extra mile” to help these Third Bank borrowers identify their transferable skills and regain the financial stability through a new job.
Neither the bank nor NextJob label it a social investing endeavor. However, this collaborative effort to offer unemployed mortgage borrowers job search assistance that includes one-on-one dedicated coaching, weekly webinars and online job search options fully paid for by Fifth Third Bank is the mortgage industry’s first of its kind.
The pilot program started in January 2012 with unemployed Fifth Third homeowners who were in serious risk of default on their mortgages after suffering long-term unemployment rates of up to 22 months. By June 2012 nearly 40% were fully employed giving good reason to Fifth Third bank executives to expand market testing to January 2013 and then to the multiyear contract with NextJob in February. Now the bank has moved the program into its regular business offering.
In addition to one-on-one coaching NextJob offers unemployed Fifth Third bank borrowers access to a job search engine, weekly webinars, instructions how to create an effective resume and cover letter, develop and carry out a detailed job search action plan, evaluate career choices and transferrable skills, and train for successful interviews.
Everyone in the mortgage industry agrees that neither party benefits from a foreclosure, said CEO of NextJob, John Courtney. Fifth Third Bank embraced an idea that is simple, yet big and timely for the banking industry.
And Meade is doing his part to spread the word.
He told this publication Fifth Third has already been approached by an investor and received phone calls from some other lenders who want to learn “a little bit more about the meat and potatoes of the pilot, its pros and if there’s any cons.”
Fifth Third is meeting with peers to introduce the program, as well as with an investor at the Mortgage Bankers Association's National Servicing Conference in Dallas to share the experience so far. “We’re more than willing to talk to any lender who’s interested.”
According to Meade, “The program has a lot of pros and not any cons.” What did they learned through the pilot? “It was clear that there was enough value in this project to assign some dedicated staff within the default area...It makes sense to have someone who’s eating, drinking and sleeping the product, now that we’re in the program phase.”
Meade is not shy to admit the whole staff is “really proud to be with an organization that is not just focused on profitability and is willing to do something that is more than dollars and cents related.” It was the right thing to do, he says. Even though a job search program can last up to 39 weeks, the success level was very high “with those customers who chose to take us up on our offer to have NextJob assist them. We had a high pull through from a job placement perspective.”
During the initial phase of the pilot, nearly 40% of the borrowers who went through the program were fully employed within six months. “I’m hoping that more customers are going to take us up on the offer,” he said.
After the official move from pilot to permanent, he said, the bank has already contacted several hundred newly unemployed borrowers who are at least 32 days past due on their mortgage loan. Pull-through can be anywhere from 8% to 14%, he said, but maybe if these borrowers hear that Fifth Third bank is working with NextJob and they see the results in black and white, “They may say: Wait a second, I just got a letter from them, making that offer, I’m going to take advantage of it! We’re hoping for higher pull-through.”
Feedback from participating homeowners “has been off the charts positive,” he said. In the end, loan performance more than covered program operation costs. Nonetheless borrowers’ skepticism still is an issue.
“I was surprised. I don’t know how I would respond if I was unemployed and got a letter from the bank stating they would help. I’d like to believe, I would take them up on it. Maybe it sounds too good to be true,” he added. “I don’t know what goes through the customer’s minds, but this program really works.”
Meade is looking forward to receiving feedback from his peers. Maybe other banks will follow suit and offer similar assistance for unemployed borrowers, he said. “It is a good product and I think people will see that banks are not there just to make a profit they’re also willing to do other things to offer them value. I’m hoping this idea will win.”