Challenges of Keeping Up With Scale
Altamonte Springs, FL-Keeping up to speed with changing legislation and scale of demand for loss mitigation products, Sterling Home Retention here has completed the development of its new end-to-end platform Touch Point.
Today servicers, especially top servicers, face several big challenges including unprecedented borrower phone call volume, Sterling CEO Ron Morgan told MSN. They need the capacity to respond, the resources to retract the information to determine what loan modification program these borrowers qualify for and technology of scale.
According to Mr. Morgan, Touch Point helps expand a lender's ability to contact borrowers for workouts and track down what the failure rate is on the implementation of the new Obama plan allowing them to handle two to three times the normal volume of loans without hiring new staff.
"It is a solution that starts with gathering financial information and on to submitting it to investors for approval, to communication with the borrowers that requires documenting the case and the finalization of the case using an end-to-end technology solution."
Market demand for loan processing capacity has changed dramatically, he says. "It used to be 75 loans per person, today the demand is processing 300 loans per person. We can do that now using the new technology. You can't do it using Excel spreadsheets anymore. Lenders are outsourcing to deal with the volume. For instance, Bank of America, Chase and Countrywide ended up getting egg on their face because they got poor performance cards from Fannie Mae, because they were not hitting the numbers they needed to hit to get people on the phone to try get them a workout."
Mr. Morgan says the average industry accepted "satisfactory" success rate in borrower contact is at the 60%-65% range or better. Lenders/servicers need to gather financial information on at least 30%-35% of these callers, and secure a workout on at least 60% of the people from whom all financial information is available.
The problem with knowing how successful the Obama plan really is in the fact that there is an unavoidable time discrepancy in data reporting."You won't know how successful a program is until they go to the prep period, which is three months, then you go to the next three months after the modification is made, and then you can see what your failure rate is." In other words, fast and effective loan processing helps increase data transparency and assessments on loan modification sustainability.
Touch Point brings an avant-garde unique solution to the market, he says. "It took nine months to develop, but we wrote a default product previously called Four Track so we were able to use some of the intellectual capital to recreate specifically the functionality required by the government, the investors and mortgage insurers today."
It means Touch Point is very scalable, he says, at up to 300% of a normal Excel spreadsheet or old legacy technology can do these days. "We were able to move very quickly because we're not saturated with politics when developing time lines. We actually have 80% of the original group of experts that originally wrote Four Track system back with us, so although it took about nine months to develop it was done parallel to what the requirements of the industry are today."
Such requirements include several focal points the company has embodied in Touch Point.The first step is what he calls the time and date stamp. "The calls that are required to contact the borrower, or the right party contact, meaning you cannot contact a borrower if you don't have a chance to work out the asset." Following, before starting a loss mitigation process, it is also required to gather all the appropriate financial information about these borrowers as required by investors, Fannie Mae, Freddie Mac, or other federal agencies to be able to determine whether the borrower is worthy of a workout option or not - which entails automated data processing. The third phase is submitting the information to investors and servicers so they can instantly review and analyze the data.
"The process is completely paperless from that standpoint," he says. "But we also have other options such as deed-in-lieus and short sales when the borrower cannot stay in the house or just wants to move out, we work with them through one of our partners, National Quick Sale. With a deed-in-lieu we relieve them from their liability, or short sale so they sell the property for less than it's owed but also have no federal income tax liability."
The partnership allows Sterling to help borrowers in the manner they see fit for their specific situation.