Daily Briefing Weekend Edition

Fiserv Seeing Renewed Interest in Contact Technology

By Ted Cornwell

With delinquencies rising and the economy slowing, it's no surprise that lenders are showing keen interest in any technology that promises to help ease the burden of default management.

And one area where lenders are especially eager to upgrade their systems is contact technology, according to Joe Dombrowski, executive sales consultant at Fiserv Financial Institutions Group.

Many are turning to "blaster communication" that allows automated phone calls to be quickly transferred to a live credit counselor if a borrower answers the phone. Lenders want technology that helps them get the borrower on a phone so the servicer can let them know what the servicer offers in the way of workouts and repayment plans.

Another area where servicers are investing in technology involves managing the different loss mitigation and workout options they can offer to a borrower, Mr. Dombrowski said. Once a servicer has contacted a delinquent borrower, they want to be able to quickly analyze home retention options such as repayment plans and modifications. Also, if no retention plan works, they want to be able to analyze liquidation options as well.

In addition, he says servicers want to employ technology to enhance the "valuative components" of functions they have outsourced. Rather than just sending files to an attorney or contact center and waiting for feedback, for instance, Mr. Dombrowski says they want real-time updates to their core servicing system, which requires bidirectional online communication with vendors.

The emphasis on default technology is not only an offshoot of today's foreclosure headlines, Mr. Dombrowski says. In fact, lenders are also looking ahead to the potential "next wave" of delinquencies that may occur as adjustable-rate alt-A and pay-option loans begin to adjust to higher monthly payments. Some believe the foreclosure crisis may spread beyond subprime loans to borrowers with higher credit scores as that happens.

Predictive technology that will help servicers understand what may happen to these loans is increasingly popular, Mr. Dombrowski said. That allows them to take anticipatory and preventive action before a default occurs.

But with many lenders facing a challenging market, companies are eyeing technology spending closely, he acknowledged. Even relatively small investments are receiving more scrutiny than in the past. "We're starting to see a lot more emphasis on return-on-investment," Mr. Dombrowski said.

Fiserv has leverage workflow tools that are built into its loan servicing platform, allowing users to enhance and customize collection contact features and loss mitigation analysis.

The design helps users ask questions that determine a borrower's qualification for different workout scenarios and the borrower's intentions with regard to home retention.

When asked what's on the horizon, Mr. Dombrowski said that lenders are likely to be looking for compliance-focused technology that guides "best practices" to avoid running into regulatory trouble. He noted that recently, state attorneys general have increased their focus on the home loan servicing industry. Bankruptcy courts and state legislatures have also weighed in on issues such as the disclosure of fees in bankruptcy cases.