Keeping Borrowers Engaged Still Tough
SAN DIEGO-The traditional methods of contacting troubled borrowers - face-to-face and by telephone - are the best strategies for servicers striving to improve the trial-to-permanent loan modifications' ratio.
But many servicers might be missing the point, an expert said.
Wade Comeaux, president of Fay Servicing, a specialty subservicer created in 2008 to service distressed properties, attended various sessions at the Mortgage Bankers Association's National Servicing Conference here. He finds that while emphasis on technology, understanding FICO deterioration, negative equity in the home is very important, "at the end of the day, you also have to have a person on the phone that has the savvy and the expertise to help that borrower make the best decision." The debate over when and how to choose a third-party specialty servicer remains open. In his view many servicing shops are not even aware of the fact that they are being stagnant and prey of the old collectors mentality so staff requirements are not updated to respond to market demand today. Often it is a tough call since employees who may have been an asset for a traditional shop may not be up for the task in today's marketplace. "A lot of those people are lower-educated people who can really just handle one part of the job." And here is where smaller specialty servicers like Fay come into play. He says his staff is not only 100% college educated but also has anywhere from five to eight years of mortgage market experience. "Because if you don't have someone who can make a decision and steer people down the path to resolution, then they become frustrated, and then you don't get them on the phone anymore, contact rates drop, etc."
And everyone in the servicing industry knows how hard it becomes to re-engage a dropped borrower.
Cary Sternberg, president of Excellen REO, a new full-service asset management unit of Titanium Holdings Inc., agrees that it is a problem to reckon with. "We are experiencing that because we get in the embarrassing position of saying to the borrower, 'OK, we have been sent out by your lender to help you and here's what we're going to do.' Then we pick up the phone and call to say, 'OK, Mr. Lender.' And the person on the other end of the line says, 'Who are you? What are you calling about?'"
It implies that unless staff is trained to understand the changes in their job requirements borrower-servicer communication efficiency is negatively affected, to say the least.
Steven Horne, president and CEO of Wingspan, agrees that servicers in general, and especially specialty servicers, need to combine the intellect with the technology to be able to offer "a more focused decision and a quicker turnaround." On the other hand, he says, "only concrete results can be convincing" to the parties involved in the mortgage transaction so specialty servicers need to fight for attention. "You have to be specific. Here's what we do and here's the outcome, which one would you rather have? Right now, it is more of a classic case where both parties are advantaged if we get this done right."
Quality borrower contact may turn into a servicer's nightmare in states where face-to-face mediation is mandated by law. In such cases the shortfall may not necessarily be in the quality of the initial contact, says Scott Goldstein, president of National Default Exchange, Addison, Texas, that operates in California, Georgia, Michigan, Indiana and Minnesota, because letters sent to borrowers are short and carefully drafted by the legislature. The law is designed to assist borrowers who were not able to get a face-to-face meeting with the servicer because they were stuck in a phone queue. In Michigan, where such a law was passed recently, that face-to-face mediation with their servicer or their servicer's representative, which in most cases is an attorney, he said. "Yet the take rate is 30%, which is very low." And the reason is not that borrowers do not want the face to face contact, he added, but they've been getting so many phone calls and letters about programs they do not understand, that they are too tired to try make sense of it.
Stopping marketers or fraudulent callers is not an easy task, but it makes it imperative to have experienced staff, component servicers or counselors capable to understand the dynamic of the conversation and then do something at that moment, while on the call, says Mr. Comeaux.
Statistics old and new have shown that getting re-engaged is, at best, a very challenging circumstance. Servicers who do not have the business rules and the technology in place to make the best decision on behalf of the borrower, says Jim Satterwhite, COO of National Quick Sale/Infusion Technologies. "Then as sad as it sounds" they have a negotiation with a business-rules engine, as opposed to a person on the end of the phone.