PUTTING THE HOMEOWNER FIRST. Providing care to the homeowner is the foundation of an effective loan servicing organization.

Transcription

1 default servicing in print and dsnews.com THE COMPOUNDING COST OF COMPLIANCE Exorbitant expenses continue to stay on the forefront of industry concerns. 62 NOT SO FAST PUTTING THE HOMEOWNER FIRST Providing care to the homeowner is the foundation of an effective loan servicing organization. No one is arguing against healing communities holistically, but varying opinions prevail in how to approach a solution begging the question, how fast is too fast when fast-tracking foreclosures?

2 M A R C H C o n t e n t s D S N E W S. C O M This Month BY VINCENT SPOTO Contributors FROM OUR DESK... 2 DS JOURNAL Asset class evolving into potential boon for investors, Tech boom impacted home prices, Yellen gets grilled during first hearing, CFPB announces new reporting tool, and much more... 7 MOVERS & SHAKERS STATE OF AFFAIRS The State of Affairs section presents impactful local market information at your fingertips INDUSTRY INSIGHT THE COMPOUNDING COST OF COMPLIANCE Exorbitant expenses remain top industry concerns. By Jan Duke POINT/COUNTERPOINT NOT SO FAST No one is arguing against healing communities holistically; but varying opinions prevail in how to approach a solution begging the question, how fast is too fast when fast-tracking foreclosures? By Alan Jaffa and Ilyce Glink MARKET PULSE THE SLIPPERY SLOPE OF SECURITIZATIONS: Will the sale of residential mortgagebacked securities ever rebound? By Sandra Lane PUTTING THE HOMEOWNER FIRST Providing care to the homeowner is the foundation of an effective loan servicing organization. 58 JAN DUKE is the president of and lead consultant at Firm Solutions. In this capacity, she provides strategic leadership for the company and utilizes her extensive industry experience to create customized solutions to resolve operational challenges for clients. Her primary focuses are audit/compliance consulting, business-process improvement consulting, business-development efforts, and operational leadership guidance. SANDRA LANE has extensive experience covering the mortgage and real estate industries. She has extensive knowledge of local market trends, the effects of macroeconomic shifts on market conditions, and big-picture analyses of industry-driving indicators. She is a former real estate broker and grew up in what she calls a real estate family. VINCENT SPOTO has more than 25 years experience in the financial services sector. He is currently a partner and managing director at RRMS Advisors, LLC (RRMS) where he provides advisory and consulting services relating to servicer and vendor surveillance, servicing operations, risk management, compliance monitoring, portfolio and MSR valuations, default management, and asset disposition. RRMS consists of a seasoned team of mortgage industry professionals and is headquartered in New York City. SPECIAL SECTION THE DEFAULT TITLE DIRECTORY DS News annual guide profiles the industry s top-rated Title firms and companies Join the Conversation Do you have a suggestion, story idea, or feedback you d like to share with DS News readers? Help shape our next issue and Editor@DSNews.com. 4

3 COVER STORY / VINCENT SPOTO PUTTING THE HOMEOWNER FIRST Providing care to the homeowner is the foundation of an effective loan servicing organization. 54

4 » VISIT US DSNEWS.COM The Consumer Financial Protection Bureau (CFPB), Fannie Mae, Freddie Mac, other regulatory bodies, and government agencies all place strong emphasis on servicers providing homeowners with robust customer service that is consistent, responsive, proactive, and recurrent. The initial creation of positive homeowner perceptions and opinions about servicers helps create a high level of trust and comfort that can only strengthen collaboration with homeowners relating to debt collection and loss mitigation practices that may occur at a later point in time. Delivering a superior customer service experience is a critical challenge mortgage servicers face. And, delivery of superior customer service can be a major differentiating factor among residential mortgage loan servicers in today s marketplace. The tenets of strong and effective customer service organizations are comprised of the following five principles: Transparency: Homeowners want to know who to call and where to get answers regarding questions they may have or points of clarification they may seek relating to their mortgage loan debt. As perhaps the single largest financial obligation homeowners may have in their lifetimes, mortgage debt is a major priority that warrants a transparent and easy-to-understand roadmap of available service assistance options. Ease of Access: Extended weekday hours, weekend/selected holiday hours, and dedicated language lines are critical customer service priorities for homeowners have of their mortgage servicer. In addition, homeowners place heavy emphasis on the immediacy associated with human versus automated interactions, and the simplicity associated with getting to and speaking with a live person. Responsiveness: The ability of servicers to respond quickly is critically important to homeowners; servicers are expected to respond rapidly to inquiries and questions that require further research. If further information is needed in order to respond to a question or if the information is currently unknown or is not readily available, homeowners should be promptly apprised by the servicer that the issue is currently being investigated, be given a target response date, and be provided with status updates on a consistent basis until the question has been addressed. Servicers should honor commitments made to homeowners and respond to them when promised, even if the response entails a simple, I m still working on resolving the issue, require additional time, and will get back to you by xxx date. Problem Resolution: Homeowners want to know they can speak with someone knowledgeable, capable of answering questions, and adept at resolving issues that may arise. To facilitate this, servicers may utilize interactive customer service portals, which immediately provide onscreen details regarding specific homeowner and loan-level information at the time a call is received. Consistency: For homeowners working with servicers to resolve a specific issue or for those homeowners who may be having difficulty paying their debt, who may be in default, or who are pursuing various loss mitigation alternatives, having a single point of contact (SPOC) at the servicer is critical and very common. There is anecdotal evidence from servicers across the industry that SPOC yields higher levels of success in reducing loan modification recidivism rates and holding homeowners to forbearance plans and other loss mitigation plans. In fact, the U.S. Department of Treasury mandates a SPOC for each homeowner who qualifies for and participates in the Home Affordable Modification Program (HAMP). From time to time, homeowners may directly contact loan originators and prior servicers with inquiries about current servicing practices. This can be due to the homeowner s lack of awareness that a servicing transfer has occurred and/or due to the homeowner s comfort level in dealing with the loan originator throughout the loan lifecycle. In either case, homeowner calls relating to loan servicing received directly by a party other than the current servicer should be brought to the existing servicer s immediate attention. This is critical to minimize or eliminate unnecessary response time lags, avoid risks associated with non-adherence to licensing and regulatory guidelines, minimize/eliminate homeowner confusion, and assist in changing homeowner behaviors. Institutions other than the named servicing receiving servicing related calls from a homeowner should warm transfer the calls and conference-in the appropriate individuals(s) at the current loan servicer. This immediate and direct involvement and notification of the current servicer provides necessary information so root cause analysis can be performed in order to assist in the identification of process impediments, define applicable process improvements, and aid in the prompt resolution of any specific process failures. CALL CENTER OPERATIONS Loan servicers generally have established call center operations to handle both inbound and outbound calling activities. Inbound calling provides homeowners with an opportunity to reach out to mortgage servicers and ask questions/request assistance on a variety of issues concerning their loan, make general inquiries relating to routine and administrative matters (such as where to send payments, amounts due, taxes, insurance and other escrow-related questions, requests made for forms, etc.). Homeowners will also make inbound calls to lodge complaints and initiate specific disputes. Questions or issues that go beyond general administrative matters and relate specifically to the actual debt (i.e., acceptance of partial payments, application of payments, loss mitigation options, foreclosure timelines and processes, etc.) are normally assigned to a servicing professional who serves as the SPOC for the homeowner. The intentions of a SPOC are good: to lessen homeowner confusion, prevent or reduce foreclosures, foster consistency, and improve high-quality customer service; however, execution places a significant strain on loan servicers and their call center staff. Outbound calling generally relates to debt collection, foreclosure, and loss mitigation activities. In addition, servicers will return inbound calls to homeowners for a variety of other reasons including, but not limited to: (i) responding to messages left, (ii) requesting clarification or additional information in response to correspondence received for prior inquiries made, and (iii) informing homeowners of completed research relating to a dispute or qualified written request received and applicable resolution of a specific issue. Regulatory bodies, including the CFBP, work to equip consumers with the knowledge, tools, and capabilities they need in order to make COVER STORY INDUSTRY INSIGHT POINT-COUNTERPOINT MARKET PULSE 55

5 better-informed financial decisions by engaging them at the right moments in their financial lives (i.e., moments when they are most receptive to seeking out and acting on assistance). To that end, the CFPB has established guidelines and standards that provide homeowners with targeted, meaningful, and accessible assistance and information. The CFPB framework for customer service requires mortgage servicers to organize their business so they can: Allow homeowners to access correct information about their loan; Respond promptly and correctly to problems; Pass along complete, correct, and timely information when loan servicing is sold or transferred to another company; Properly evaluate alternatives (i.e., loss mitigation options) for relief when homeowners encounter difficulties paying; and Maintain records for at least one year after loan payoff. TECHNOLOGY Servicers generally utilize an interactive voice response (IVR) system to validate callers, forward calls to the right party, allow callers to leave recorded messages, permit callers to access self-help menus, gather usage statistics, identify periods of high call volumes in order to plan staffing for peak periods, and balance the use of phone lines. IVR information can be passed along to call agents through screen pop-ups, eliminating the need for homeowners to constantly repeat information. At the same time, this cue helps give customer service representatives (CSRs) preparatory time for upcoming calls. In addition, an automatic call distributor (ACD) may be utilized to target information gathered by the IVR to route calls to the correct personnel and departments, making it much easier for homeowners to get a more immediate level of service they require without being transferred from agent to agent. IVRs help enhance servicer productivity by assigning inbound customer service agents to incoming calls through the use of predefined instructions. For calls routed to a specific individual, the CSR is responsible for updating the underlying servicing system concerning the nature of the call. Underlying servicing systems are updated automatically with a description of the inquiry for homeowners utilizing self-help menus (i.e., balance inquiries, requests made for forms, etc.). For homeowners who are current, calls are generally routed and cued to the next available CSR. For homeowners who are either delinquent, in foreclosure, in bankruptcy, or pursuing available loss mitigation options, inbound calls will be routed to the appropriate department and SPOC. Federal and state regulatory guidelines do not exist requiring servicers to utilize IVRs and ACDs. As such, specific metrics and key performance indicators (KPIs) relating to this topic are not required. However, a key consumer finance regulatory theme relates to maintenance by servicers of a robust customer service function that is responsive and provides accurate and timely information to homeowners. Therefore, proper and prompt routing by servicers of inbound homeowner calls to the appropriate individual/department is a critical goal. It is therefore reasonable to assume the utilization of technology is an appropriate enabler toward achieving this goal. METRICS Servicers should consistently capture and monitor customer service performance via critical metrics and KPIs, with performance reviewed opposite normal and usual industry practices. These metrics/kpis include, but may not be limited to: Call Abandon Rate: Generally, abandon rates for inbound calls should not exceed 3 percent of all inbound calls that are received on a given day; Homeowner Hold Time: Homeowners should not be placed on hold for more than 60 seconds; Average Speed of Answer (ASA): Inbound homeowner calls should be answered within 30 seconds; Average Talk Time: (i) For homeowners who are current and calling with general administrative matters, average talk time should generally not exceed one minute. (ii) For homeowners who are delinquent more than 30 days or for those homeowners who are calling to discuss specific loss mitigation or foreclosure protocols, average talk time will likely vary and therefore a specific standard may not be appropriate. (iii) For homeowners who are either current or who are delinquent, and also wishing to discuss an error or initiate a specific dispute, average talk time will likely vary, depending on the topic and issue raised and therefore a specific standard may also not be appropriate; and One Call Resolution: For homeowners who are current and calling with general administrative matters For both current homeowners or for homeowners who are more than 30 days delinquent or for homeowners (regardless of default status) who are discussing an error or initiating a specific dispute, one-call resolution (while it should remain the goal of each servicer) may not be appropriate, reasonable, or practical; therefore, a specific standard may not be appropriate. Random call listening is also an excellent means of quality control in order to monitor performance of customer service personnel. ROUTINE HOMEOWNER INQUIRIES Specific CFPB regulatory guidelines and standards do not exist over the timing associated with the handling of routine homeowner questions, inquiries, and correspondence. Routine homeowner questions, inquiries, and correspondence may include, but are not limited to: Balance inquiries; Payment due dates; Payoff balance requests; Tax, insurance, and other escrow inquiries and questions; Requests for forms and other documentation; Servicer s mailing address, location(s), and other contact information; Servicer s hours of operation; Status of payments sent; Inquiries and questions concerning monthly statements/coupon books received; Non-receipt of monthly statements/coupon books; Late fees and others service fees assessed; Change of address; NSF charges and related protocols; Adjustable-rate mortgage (ARM) inquiries (i.e., rates, reset dates, etc.); Privacy notices and other correspondence received from the servicer; Modification and other inquiries regarding government programs; and Changes in homeowner status (i.e., widowed, divorced, etc.). Servicers generally have specific personnel assigned to work with homeowners (sometimes called customer service expediters) to perform research and handle processes associated with these routine matters. As appropriate, expediters will refer items to the applicable internal servicing unit (i.e., collections, loss mitigation, bankruptcy, etc.). An expediter s job is to support and act as an extension of the CSR and perform necessary follow-up and research to answer routine homeowner questions and fulfill their requests. Any concerns, issues, problems, or errors associated with or arising from any routine homeowner questions, inquiries, and 56

6 » VISIT US DSNEWS.COM correspondence are considered a formal dispute or complaint and, once formally put in writing, are characterized by federal regulators as a qualified written request (QWR). QUALIFIED WRITTEN REQUESTS (QWRS) CFPB regulations have defined certain inquiries, requests for information, and homeowner claims that loan servicers have committed errors or complaints are classified as QWRs or covered errors. A QWR is written correspondence that is sent to the servicer from homeowner, or someone acting on his/her behalf, to ask for information relating to the servicing of a loan, to dispute errors that have been made to a homeowner s loan account, or to make a complaint. Specifically, as outlined in the Dodd-Frank Wall Street Reform and Consumer Protection Act, QWRs may include, but are not limited to, the servicer matters regarding: Acceptance of conforming payments; Application or allocation of payments; Payment of taxes, insurance, or other fees; Imposition of fees or charges without a reasonable basis; Disclosure(s) of accurate information regarding loss mitigation options and foreclosure; Disclosure(s) of final balances for purposes of a loan payoffs; and Disclosure(s) relating to steps that can be taken by homeowners to avoid foreclosure. QWR SERVICER RESPONSIBILITIES AND REGULATORY REQUIREMENTS: The following regulatory requirements apply to servicers: Acknowledge receipt from the homeowner of a QWR no later than five business days after receipt; Provide homeowners in writing with the information or clarification being requested no later than 30 business days after receipt; As appropriate, provide homeowners with a written notice of an additional 15-businessday extension no later than the 30-businessday requirement noted above; As appropriate, inform homeowners that the correction(s) have been made; As appropriate, inform homeowners why a correction will not be made and that the account information is correct, with appropriate supporting information referenced and/or provided; and As appropriate, provide to homeowners at no charge copies of documents and information relied upon in making the determination that no error occurred, within 15 business days of receiving the homeowner s request for such documents. In certain instances, homeowners may choose to direct or copy their correspondence describing the nature of the error(s) or complaint(s) to the president or CEO of the servicer or to a specific regulatory agency. Such homeowner correspondence is commonly referred to as a presidential complaint. Servicers across the industry generally have a dedicated unit assigned for handling these items. QWR HOMEOWNER RESPONSIBILITIES: QWRs must not be written on the monthly mortgage statement or monthly coupon book, but instead be summarized in a separate document. QWRs must contain: (i) a statement of the homeowner s reason(s) that their servicer has made an error (and the nature of the error and/ or complaint) with respect to the loan in question or (ii) a detailed explanation of other information being requested. (A sample QWR can be found on U.S. Department of Urban Housing and Development s (HUD) s website. In addition, homeowners may file complaints online at Help.ConsumerFinance.Gov. QWR Homeowner Transmission Responsibilities: QWRs sent by homeowners to servicers should: Be sent via certified mail, return receipt requested; Be sent to the appropriate address (the proper address may be different from where payments are sent or may be different from the customer service address); and Contain the words: This is a Qualified Written Request in accordance with Section 6 of the Real Estate Settlement Procedures Act (RESPA). In all cases, the servicer s written response in addition to details relating to the error, dispute, or complaint received must include the name and telephone number of the individual, office(s), or department(s) that can provide homeowners with additional assistance that may be requested or answer any questions. Homeowners should continue making their monthly payments while awaiting a formal response from the servicer. SOCIAL MEDIA The CFPB and other regulatory bodies are encouraging servicers to proactively and consistently review social media and related websites to identify homeowner comments and potential issues made regarding the servicer s operation and the handling of inquiries. To the extent servicers uncover comments on a blog or through other social media outlets where the author can be identified either through selfcontact information provided on the internet site or through a specific homeowner name/loan number reference made, the appropriate party should be encouraged to contact the servicer directly and (as applicable) submit a QWR in line with proper protocols. Servicers should not utilize social media forums or blogs to respond or offer rebuttals to specific issues that have been raised. Servicers may consider making a general statement on the applicable social media forum (or blog) that includes: (i) an acknowledgment that the servicer has seen the comment, (ii) a statement saying that the servicer takes such matters very seriously, (iii) a request asking that the author(s) contact the servicer directly at a specified telephone number to further discuss, and (iv) as appropriate, a statement saying that homeowners should avail themselves to the QWR process. On an increasing basis, servicers across the industry are expanding the responsibilities of CSRs to include the addition of social media surveillance. Furthermore, servicers across the industry are conducting customer surveys on a periodic basis either annually or every other year in order to obtain homeowner feedback and attain service/process improvement suggestions. At the present time, specific federal CFPB regulatory guidelines and standards do not exist over social media surveillance and the performance of periodic customer surveys. Instead, the above noted protocols are consistent with normal and usual practices that are being increasingly adopted by servicers across the industry. Servicers should have a dedicated and independent servicing oversight/surveillance unit to periodically review the customer service function. Alternatively, servicers may choose to engage the services of a third-party vendor to provide surveillance and monitoring, accordingly. Metrics and KPIs are critical to measuring and monitoring customer service performance, and random call listening is an excellent means of monitoring staff. Either way, servicers are encouraged to periodically ensure positive homeowner perceptions and opinions are consistently maintained in order to create a high level of trust and comfort that will strengthen collaboration with homeowners relating to debt collection and loss mitigation activities that may occur at a later point in time. Embracing consistent and superior customer service is a critical differentiating factor for loan servicers. COVER STORY INDUSTRY INSIGHT POINT-COUNTERPOINT MARKET PULSE 57