FICO Reaches Out To Servicers

Minneapolis-Fair Isaac Corp. is reaching out to troubled borrowers that might benefit from a workout, and at the same time helping overworked servicers by launching the FICO Mortgage Recovery Initiative.

FICO MRI was developed to address the U.S. mortgage loan crisis. It combines the capabilities of FICO, the Homeownership Preservation Foundation (a national nonprofit organization providing a network of HUD certified counseling agencies), Money Management International (the nation's largest full-service credit counseling agency) and Equifax (a global leader in information solutions, offering the new FICO Mortgage Industry Score). The solution complies with the Making Home Affordable program under President Obama's Homeowner Affordability and Stability Plan.

"We created a consumer website for a consumer to come in to see if they qualify for help," explained Joanne Gaskin, strategic alliance director of global scoring, FICO. "As we listen to servicers, we see that they are inundated with calls so we created this site for consumers to go to themselves. In addition, we wanted to create a service for consumers to get more information before calling the servicer.

"The consumer can get through HUD-approved counseling. Further, for a consumer that goes through the website and gets the counseling, they can also get a free credit report. We've seen good pull-through from borrowers that are filling out the questionnaire so the counselor can get in touch with them. We're seeing a response of over 80%. We can then get that to the servicer."

FICO MRI components include Mortgage Relief Online, a consumer website (www.mortgagereliefonline.com) offering a free and confidential way for homeowners to ask for help; Mortgage Risk Analyzer, which helps loan servicers identify customers most imminently at risk of default; Mortgage Response Analyzer, which provides servicers with insights into the optimal outreach vehicle; and Mortgage Portfolio Optimization, which uses business rules that ensure both appropriate loan product offers to at-risk customers as well as preservation of loan portfolio value.

"Over 13,000 consumers have requested and are receiving housing counseling from our partner Homeownership Preservation Foundation in just six weeks. Of our site visitors, over 60% of the consumers complete the eligibility form," noted Ms. Gaskin. "In addition, we have created an analytic so servicers can determine who in their book of business is most likely to default so they can start the workout process earlier. The Response Analyzer is an area FICO has had a lot of expertise in. This helps with targeted outreach to make sure servicers are efficient and as effective as possible. With over 50% of consumers going into foreclosure and never having talked to the servicer at all, that's important. With Portfolio Optimization we help servicers maximize their business approach. Servicers can determine the optimal modification to offer the consumer."

And in comparing FICO MRI with other outreach services, Craig Focardi, senior research director for TowerGroup, said, "Most similar applications focus on selling products and services. What makes this unique is that the tool is proactive. Servicers are swamped and when they do reach out it's like a mass marketing initiative. This tool makes it more comfortable for consumers to reach out to servicers. It also segments the servicer's internal operations without bringing on new staff. Because of the counseling they get consumers that are prequalified for a certain workout.

"The tools are great as a complete suite, but servicers that have some of those capabilities can pick the ones they need and integrate those as needed. IT spending is down in the mortgage industry. It's the best of times and it's the worst of times in that we're in a refinance boom but companies are losing money due to servicing runoff. This solution comes at a good time."

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