National Mortgage News--Elina Tarkazikis; Austin Kilgore
Mortgage servicers are shifting gears away from seeing themselves as bill collectors and instead, increasing their focus on the customer experience. While on the origination side, lenders are streamlining processes and improving education to borrowers about loan options and offerings, these efforts haven't taken as strong a hold in servicing.
But that's starting to change, as servicers realize they must do more to improve borrower engagement and retention. For example, only a small share of mortgage borrowers plan on using their same servicer when originating or refinancing their next loan, according to a study by the Mortgage Bankers Association.
Innovating for the borrower was a consistent theme during the MBA's 2019 Mortgage Servicing Conference in Orlando, Fla., this week. Whether through greater investments in technology and talent, or streamlining back-end processes to improve the consistency and speed of the decision-making process, servicers are doing more to prioritize borrowers in their businesses.
Here's a look at seven ways borrower-focused initiatives are reshaping mortgage servicing, according to conference speakers and industry professionals attending the MBA Servicing Conference.
OK servicers, now let's get in formation
Image: Larry Glenn, Photo-Op, Inc.The MBA is continuing its push for greater consistency among servicing standards across federal mortgage insurance programs, the government-sponsored enterprises and private-label portfolios, President and CEO Robert Broeksmit said during a speech that opened the conference.
Of particular concern is Federal Housing Administration requirements, which differ greatly from those of Fannie Mae and Freddie Mac. A more consistent approach to tasks like loan modifications and foreclosures will make it easier for servicers to help distressed borrowers, he added.
"Adopting a unified foreclosure timeline would make FHA servicing far more efficient and effective, while still holding servicers accountable for minimizing taxpayer exposure," Broeksmit said. "And while a direct conveyance model may be far in the future, we can still make the process better for consumers and lenders along the way."
FHA Commissioner Brian Montgomery has previously said improvements like servicing alignment are coming as part of the Trump administration's overall deregulation efforts, adding late last year that the FHA is also planning a variety of technology improvements to eliminate paper and modernize its core systems.
Broeksmit, who came to slay as the MBA's new CEO last fall, also said the trade group will up its lobbying efforts this year. The association, whose political action committee reached new fundraising records in the last election cycle, will bring servicing executives to Washington for a variety of meetings with regulators and policymakers.
"We need you with us, connecting with and educating a new Congress, working with regulators in reshaping policies, reminding them of our shared goal and our shared responsibility of helping borrowers," he said.
All about the borrower
Less than one in five borrowers plan to use their same servicer to originate or refinance a mortgage, illustrating that servicers should be doing more to keep them around, according to the MBA.
While customer retention for servicers may be down, consumer interaction is growing. Web and mobile logins, as well as calls and other forms of outreach per loan are on the rise in recent years, providing more opportunities for servicers to get in front of borrowers.
Servicers can leverage growth in consumer touch points to offer assistance, education and even cross-sell products, which will hopefully help grow the mere 17% share of consumers who return to their same servicer for another loan, according to the MBA.
Setting the table
The technology table stakes for servicers continue to grow in both number and complexity. In the past, servicers only had to worry about accepting online payments via a desktop website. Now, servicers must operate with a mobile-first mentality. But the degree to which servicers are meeting these expectations varies.
What's more, as regulators continue to scrutinize the effect of loan sales and servicing transfers on borrowers, concerns about privacy and data control continue to present challenges for servicers when trying to get borrowers to sign up for automatic payments — particularly when a loan changes hands.
During a panel moderated by NMN's Austin Kilgore, one audience member — a technology professional from a small bank servicer — lamented that his firm doesn't currently accept any online payments. He asked the panel for advice on whether the bank should wait for its current vendor to enable online payments (which the vendor says is on its product roadmap), or move forward with finding a new technology vendor.
Any vendor migration requires significant due diligence and cost, the panel acknowledged, but inaction can often be just as risky, the speakers said.
Picky about payments
Consumers are all over the map when it comes to payment method preferences. With more than 10 preferred ways to pay their monthly mortgage, customer choices are proliferating, according to MBA research.
While auto-pay is the most widely-used payment method for mortgage borrowers, only 28% of them choose that route, followed by paying via a servicer's website in close second. The myriad options that consumers use to pay their mortgages present both a challenge for servicers to offer a variety of choices, but also an opportunity for them to expand and enhance their offerings.