Increasingly, residential servicers are facing a pivotal moment in meeting regulatory directives aimed at setting up a “single point of contact” for troubled borrowers seeking a loan modification or other workout option.
The Treasury Department issued specific guidance in May on what is expected of "relationship managers" who will serve as the mortgagor's single point of contact through the entire delinquency and default resolution process.
Under the Home Affordable Modification Program, servicers have to start assigning new borrowers to these relationship managers soon, if they haven't already.
Borrowers who are in the process of being evaluated for a HAMP trial or permanent modification, short sale, or unemployment forbearance as of Sept. 1 must be assigned a relationship manager no later than Nov. 1, according to Treasury.
Federal banking regulators also imposed the single point of contact requirement on major banks as part of enforcement actions handed down in April. Under the Office of the Comptroller of the Currency's consent orders, national banks are required to create an "easily accessible and reliable single point of contact for each borrower."
Major servicers have been working all summer to set up their SPOC contact systems. "From what I understand most servicers are meeting the deadlines," one advisor said.
Setting up a single point of contact system is “a significant undertaking,” according to Gregory Ramsay, a partner at PriceWaterhouseCoopers.
It involves changes to telephone systems to properly route calls, as well as servicing systems so the SPOC has access to all of the borrowers' records.
Servicing employees are going through six to 10 weeks of intensive training to become SPOCs. These contacts have to be a “jack of all trades” that are fully knowledgeable about loan products, loss mitigation solutions, underwriting and processing, Ramsay said at a recent American Institute of Certified Public Accountants conference. (PWC is working with servicers to set up these systems.)
One servicer may expect a single point of contact to handle 75 cases, while another might expect the worker to handle 300 cases or more. “It varies across companies due to the complexity of the loans and cases that they are dealing with,” the PWC partner said.
He also noted servicers are generally taking employees from call centers, collections and other areas where they are used to dealing with customers and training them to be the single point of contact. At the same time, they are hiring new workers to staff their call centers and collection departments.
Most servicers are using the Treasury guidance to set up their single point of contact systems, according to Faith Schwartz, executive director of the Hope Now servicer alliance. However, she is concerned about a proliferation of SPOC standards.
The federal banking and GSE regulators are engaged in an interagency effort to develop new servicing standards. In addition, there are ongoing settlement talks between 20 major servicers and the state attorneys general that could lead to another set of servicing standards.
"To be effective and run a business and do a good job for consumers, we need uniformity," Schwartz said.
