Fannie Likes Servicer-Vendor Links
Dallas-A Fannie Mae executive encouraged servicers to move up home retention efforts and take advantage of vendor services, especially face-to-face borrower contact, so they can manage the scale of loss mitigation demand.
"I cannot tell servicers how to run their business," Javid Jaberi, Fannie's vice president of national servicing and a keynote speaker at the SourceMedia Best Practices in Loss Mitigation Conference here, told over 200 attendants.
"But we recommend they use vendors for face-to-face contact."
He recognized that asking whether the country's top servicers are taking advantage of vendor services to handle the unprecedented demand for borrower contact is imperative to home retention efforts and the success of the Obama administration's Home Affordable Modification Program.
Servicers are not using enough vendors, he said.
"We encourage servicers to do that. Fannie promotes that and even provides incentives for face-to-face borrower contact," which is widely recognized as the best, most effective way to achieving a sustainable loan modifications.
It is a well-known fact that many servicers, especially large-size servicers, have a tendency to resist outsourcing. Various vendors of end-to-end technology created to facilitate home retention and non-retention efforts have expressed concern stating their products are underutilized in times when they can instead be used to increase the rate of successful modifications.
"A lot of servicers do not have a sophisticated game plan, and they are resistant to change," says Ronald Morgan, CEO of Sterling Home Retention Services and Sterling Technology Solutions, a mortgage servicer and mortgage default management services provider. The 32-year industry veteran agrees with Mr. Jaberi that technology has outpaced the industry and its loss mitigation services.
New readily available technology can instantly increase a servicer's loan processing capacity up to 300% and ensure an up to 90% efficiency rate on face-to-face borrower contact significantly reducing abandonment rates, he says.
Using its proprietary technology platform, TouchPoint, his company offers that type of access to servicers for free.
Mr. Jaberi stressed that the volume of loan modifications not yet processed is much higher than the modest 138,000 loans that have been modified so far.
If one adds to that the fact that given HAMP's short lifespan many trial modifications remain in "the gray zone" for 90 days, it is too early to determine if they will be successful or not.
So the ability to process high loan volumes and front-end risk management remain challenges vendors can help servicers to overcome in a more efficient manner.