While the topic is old and familiar, the search for best strategies and a “new world order” in single point of contact borrower management continues.
“The power of single point of contact outreach somehow got lost in the conversation about how to build an internal operation,” says Jay Loeb, vice president and a principal owner, National Creditors Connection Inc., Lake Forest, Calif., who will speak at a session on “Borrower Communication in a Post-SPOC World” at the MBA National Mortgage Servicing Conference.
“It is the hot topic of the day for everyone,” Loeb says.
SPOC is an indicator of how the market is evolving going forward because it will affect how many and how fast the backlog of seriously delinquent accounts will be resolved. What has been neglected so far in Loeb’s view is: How is a single person going to handle all these files? How do you outreach to borrowers?
National Creditors Connection will present findings from a case study that focused on ways to assist the nation’s “aging delinquencies” that have not yet turned into foreclosures. Most of the home-retention-related conversation related to Fannie Mae and Freddie Mac is related to federal policies, he said, nobody is seriously talking about the over two million GSE borrowers who have been delinquent for over one year.
The debate is whether these loans should simply go into foreclosure since everything that could have been done has been done, or should the mortgage industry refuse to believe that everything has been done and instead renew its outreach efforts to ensure servicers or their representatives talk to these homeowners face-to-face.
“The point being: What happened to HAMP and all of the loss mitigation efforts?” he said.
The NCCI case study was based on data and feedback from a pool of 130,000 delinquent or seriously delinquent borrowers—which is statistically significant.
NCCI representatives contacted directly through regular mail, phone calls, or door knocking, 65% of these homeowners, or roughly 85,000 at-risk borrowers of which only 23,000 agreed to fill out necessary documents and file for a loan modification or other type of workout. It makes for little over 23% of all at-risk borrowers surveyed.
So far he says most of the attempts to engage borrowers were based on FedEx and phone calls and it did not work. As part of the case study NCCI contacted borrowers who had called in to ask for assistance.
A knock on the door to inquire whether all the documents needed for a workout were filed, the borrower understood the process, or why they were not responding to servicer’s attempts to communicate with them brought in additional data and a better sense of how much to expect from direct contact in either of the above mentioned forms.
In other words it is not easy to decide that everything that can be done has been done.
“What we learned from the case study is that you cannot just talk to the borrower over the phone to ask if they are interested but physically collect the documents, put people in the program and get the ball rolling, because a lot of people who get a FedEx say they do not understand the process.”
Servicers better be prepared for unexpected jumps in demand for SPOC and one-on-one assistance that can single handedly create staff shortages not only in house but also among special servicers and third-party service providers.
“Overall, one cannot make a blanket statement about 130,000 delinquent borrowers because ‘everything has been done’ to save them if you did not knock on their door,” he says, recalling how in one case the borrower quit efforts to pursue a modification “because the bank did not call back.”
After all common sense suggests the same borrower outreach/borrower contact approach cannot be equally efficient with over 100,000 people. So it is fair to say there are issues on both sides. Everything from honest servicer mistakes to documents lost through the cracks and pure borrower oblivion to where they stand may be the reason for an unresolved delinquency status.
“To be able to assist a borrower you have to be creative, not just send a letter and move on,” Loeb says.
As to what is fair to do and how far mortgage banks need to go in their pursuit of foreclosure prevention solutions, that is another issue servicers may never win in the eye of public opinion.