Mortgage lenders must offer digital servicing to remain competitive

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A recent Aite Group survey — A Blueprint for Creating Positive Behaviors — revealed 36% of Americans pay their mortgage late at least once a year. Of those late-paying customers, 63% said paying with a debit card would help them to pay on-time, while a whopping 79% would pay on-time if they could do so by text. No matter what is going on with the economy, there will always be customers who are past-due on their bills — and collecting more while spending less is a real challenge for mortgage servicers.

Customer expectations are changing faster than ever and one of the challenges when collecting mortgage payments is that the payment methods available have not kept up with customers. For example, while the Aite survey showed that consumers favored paying their bills with a debit card, only four of the top 20 mortgage service providers accept debit cards. As preferences change, so too must the methods for collection. By improving customer experience through faster resolution and easier online payments, mortgage servicers can increase the proportion of payers paying bills on-time.

Mortgage customers want the same convenience they get when paying their other bills such as their auto insurance carriers, credit card companies, doctor’s offices and pet sitters. When someone at an outdoor craft fair can take a debit card payment using their smartphone, consumers have a difficult time understanding why their mortgage company can't make payments that easy. Customers now expect options like paying by card, receiving email confirmations and getting text reminders.

Financial concerns weigh heavily on the minds of many consumers and empowering debtors to address their debts online provides one less obstacle to overcome. Providing a website where customers can create a plan for resolving their delinquent debts independently will not only increase collection volumes, but also cut down on more expensive methods of collections, such as collector phone calls. This issue led one lender to build the business case of six figure annual savings. Let's face it — talking to a debt collector is neither a welcome nor pleasant experience, even when speaking to the nicest most professional ones. While consumers tend to avoid phone conversations, many will spend hours a day online.

Most customers think that talking to a bill collector is the only way to resolve overdue bills. More than half of the respondents in the Aite Group survey had no idea they could even resolve past-due debts online. Once the option was presented to them, more than half acknowledged they would find it helpful. Also notable is that 75% of customers found a website helpful when resolving their past-due bills, while another 75% wanted to be notified whether they had the option of resolving their debts online — important notions to consider when improving the customer service program of one's business. The website doesn't just make it easier and more convenient; it also reminds them that they are still a valuable customer.

In a world where customers can manage so many aspects of their financial lifestyle via digital channels, empowering them to catch up on past-due mortgage balances with debit card, text message and online options is the next logical step. Mortgage servicers can cut down on traditional, less effective collection methods that come with large budgets while also improving the resolution of past-due debts and the whole customer experience. Servicers simply have to document customer feedback about digital payment options to find out that there are few and far between. Raising the issue internally and moving these initiatives to the top of the priority queue will help drive change.

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Servicing Mortgage defaults Digital mortgages Loss mitigation Delinquencies