In the coronavirus forbearance wave, customer care is paramount
The government relief act's offer of 12 months of mortgage forbearance to American homeowners was a decisive and essential response to the economic stresses of the coronavirus pandemic.
Besides homeowners themselves, the group most impacted by this provision is perhaps mortgage servicers, who are on the front lines of both processing forbearance requests and dealing with their economic fallout.
In spite of — and in part because of — lingering uncertainties around the practical and financial details of how forbearances will play out, now is the time for mortgage servicers to prioritize customer care for the homeowners they serve. In fact, customer care may be the most crucial element of operations to focus on in the coming months.
The following is what customer care should look like and how prioritizing it now can benefit mortgage servicers in the long term.
Borrower self-service options
As of this writing, 4.7 million or about 8.8% of mortgage borrowers have entered forbearance. At the start of April, when homeowners were calling in the initial crush of forbearance requests, average hold times were up to 13 minutes, straining servicers' call center staff and homeowners' patience.
Wait times have since decreased, but this is only a short-term reprieve. In the coming months, servicers will have to start discussing next steps with borrowers. And whereas processing a forbearance request can take as little as seven minutes, talking through a loan modification can take up to five calls of 30 minutes each.
That's not ideal, given that these conversations typically happen when homeowners are already experiencing financial distress and its attendant anxiety.
The solution is to provide self-service options that eliminate the need for borrowers to go through a call center. Such functionality, made available to customers via an online portal, can save everyone time requesting forbearance and handling follow-up transactions.
For servicers, self-service portals can also streamline back-end operations. Once requests come in, servicers can stay in the system to flag borrowers' files for any follow-up that will be necessary — for example, as an initial forbearance period expires.
The CARES Act was passed quickly, without full implementation details. Initial uncertainty about how forbearances would be implemented led to misconceptions (e.g., around balloon payments) and accusations that some mortgage industry players were acting in bad faith.
Even as some uncertainty lingers, it's imperative that mortgage servicers communicate regularly with borrowers. Clear, direct, and ongoing communications are essential to customer care. Even if your main message is that you're still waiting for details, sending that message can build trust and demonstrate that you've got borrowers’ best interests in mind.
Ideally, servicers' communication platforms should enable them to securely communicate factual updates, such as about the terms of a forbearance; send and receive documents, like those needed for a loan modification; and make product status visible to borrowers for loans, applications and more.
The goal is to eliminate uncertainty. The more certainty customers have, the less stress they'll experience, which is crucial in times of financial distress.
Brand loyalty isn't just built in good times. In fact, showing borrowers you've got their back in a crisis is one of the best ways servicers can demonstrate long-term commitment to their customers.
Tech that enables efficient processing
Both self-service functionality and secure communications are easy to implement with the right software. The right software should also enable back-end functionality that makes processing more efficient so servicers can update data in one place and have those updates flow to anywhere else the data is used, stay in compliance with state and federal regulations, and set up automatic workflows based on various borrower behaviors and scenarios.
The right software can also make it possible to process both forbearances and other adjustments (loan modifications, foreclosures, etc.) more efficiently, thus easing the burden on servicer teams, who will face an increased workload in the coming months.
Realistically, this software should also be able to be implemented fast. Organizations in need of these functionalities today can't afford to wait five months for software onboarding. To be truly functional right now, the best technology must also have a reasonably short onramp.
Good experiences create better outcomes
Mortgage servicers were thrust into the center of the financial crisis touched off by COVID-19. While the financial implications of being required to offer forbearances to millions of homeowners may seem daunting, the most successful servicers will keep the long view in mind and prioritize customer care throughout the process.
By providing borrowers with the tools and information they need to stay in their homes, servicers improve not only borrowers' quality of life but also their own bottom line. And as the economy recovers and borrowers return to work, the technology that powered excellent customer care during the crisis will position servicers to maintain efficiencies and deliver the kinds of experiences that drive loyalty for years to come.