Single point of contact requirements for servicers aren’t just another compliance burden, they’re an opportunity for improved margins and lower loss severity, according to Craig Focardi, a senior research director at consulting firm TowerGroup.
Speaking at this week’s SourceMedia Mortgage Servicing Conference in Dallas, Focardi said that when executed properly, the cost of staffing and building the infrastructure for a SPOC department can be offset by the efficiency gains and reduced loss severity of distressed mortgages.
“Don't just look at the operational cost but also the financial gain on the back end,” he said.
SPOC staff members are like loan officers, they have to be multitaskers skilled to negotiate, be sensitive to customers and their needs and serve as a trained advisor to borrowers.
A well trained staff with the proper systems and processes can reduce call center times and success rates for returning distressed mortgages to the performing loan bucket.
“If you do all this you get more consistent contact throughout the entire process and you're going to drive better resolution metrics,” Focardi said.
He added that it also provides an opportunity for servicers to reduce compliance sanctions from regulations and investors.
“If you’re collecting better data and documents and having improved processes and technology, you’re going to have fewer compliance sanctions,” Focardi said.
Still, changing systems and processes isn't easy. Many servicers are still in what Focardi called “Phase 1” of their conversion. They’re throwing bodies at the problem while they restructure operations, train and learn new requirements, and monitor and measure early results.
But after servicers begin to redesign operations and augment their IT, they enter “Phase 2,” which includes implementing new technology and improved measurement of success.
Like the comparison between loan officers and SPOC representatives, loan modifications processing systems have to serve multiple purposes. New technology that serves like a modified collections systems combined with a decisioning engine and tracking features are making it easier for servicers to comply with SPOC requirements with fewer staff members.
“Apply the lessons learned from loan originations in terms of documents and data collection,” Focardi said, adding that “SPOC could be a catalyst for investment in new technology.”
