New Name Caps Fresh Start for Fairbanks
Capping a year-long shakeup to address allegations of improper collection practices, Fairbanks Capital Corp. has chosen a new name: Select Portfolio Servicing.
The name change may be appropriate, because just about everything else about Fairbanks has changed over the past 12 months. The company is under the direction of an entirely new management team. And the company claims it now provides leading-edge customer service practices.
In the past 12 months, the company said it has implemented leading practices that are setting a standard in the industry for customer responsiveness while helping to responsibly manage the risk of the nonprime residential loan market.
And Select Portfolio Servicing CEO James Ozanne told MSN that the name is intended to reflect the company's renewed commitment to servicing quality. He acknowledged that the search for a new name had its frustrations because of the need to find a name that could be licensed in all 50 states.
He says that while the process improvements and controls added by Fairbanks before the name change have added to the cost of customer service in some regards, they have also created the potential to reduce costs over the long run. He compares it to enhancing procedures at a factory to reduce the scrap rate.
"Operationally, we have cha-nged a whole series of practices, some of which have helped us reduce delinquencies," he said.
And any move that eliminates errors in the servicing process saves costs in the long run, he said.
Those delinquencies have declined at a faster pace than the company's portfolio has contracted, he said. And because collections and default management account for a loan servicing shop's costs, reducing delinquencies should reduce operational costs.
Mr. Ozanne said that many of the company's operational changes are aimed exclusively at improving customer service and resolving disputes during one call have nothing to do with the settlement the company entered into with the Federal Trade Commission to settle a regulatory dispute.
"We have a real incentive for people who are answering the phone to resolve matters. No longer is there any voice mail used in any of our customer service areas."
Instead, Select Portfolio Servicing attempts to answer every call in "way less" than one minute. The company even has a yellow light that alerts senior management if a call has not been answered within 30 seconds. That light turns red if the call has not been answered within a minute.
Mr. Ozanne said that longer wait times mean that more borrowers hang up, which slows the process of answering questions and resolving disputes.
"The objective is to get the abandonment ratio down below 1%," he said.And once borrowers reach the company, Select Portfolio Servicing seeks to achieve "one call resolution" to settle complaints and questions.
Recently, several rating agencies have upgraded the company's ranking for residential loan servicing, and Mr. Ozanne said he hopes to get those rankings up above the average level in the near future.
Tying up the loose ends from the overhaul of its customer service and operations will probably keep company executives busy well into next year, he said. Any strategic decisions that might affect the future of the company and its ownership will likely be postponed until after that time, he said.
At a meeting in New York this spring, the company announced that it plans to start growing its servicing portfolio again, which had been shrinking due to the regulatory controversy and portfolio runoff. He said Select Portfolio Servicing is "very close to writing new business" and still hopes to grow its portfolio by 5% to 10% over the next 12 months. Fairbanks has also strengthened ties to some of the consumer critics that once criticized its customer service and collection practices.
The company's executives say that their experience working with groups such as the National Community Reinvestment Coalition and the Maryland Community Law Center demonstrate that there is no adverse relationship between good consumer practices and portfolio performance.
"We have shown the opposite. What works for the borrower also works for the business," Mr. Ozanne said, citing increased training and one-call resolution as keys to keeping the company's portfolio healthy.
Company president Matt Hollingsworth said in a statement that the company's approach to servicing its customers has changed dramatically over the past 12 months. "Today the company has a new, stronger and more positive relationship with consumers, bondholders, clients, community groups and regulators. One of the few things that hadn't changed was the company's name, and we wanted to create a name that matched the new company," Mr. Hollingsworth said. Select Portfolio Servicing continues to be owned by PMI Group, FSA, and other investors.
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