REQUIRED READING: Mortgage servicing is a cause-and-effect, process-based operation with many different departments dependent upon others to resolve varying pieces of the process. In order to achieve the greatest efficiency and increase profit margins, servicers need to step beyond task management and into a broader understanding of work management.
There are often one-off elements of mortgage servicing that fall outside of typical task management procedures. For these types of work, a portfolio-wide batch analysis and queuing regimen make the most sense, and can streamline operations immensely. It's a matter of having the right information, delivered to the right people, at the right time. And it all starts with exception reporting from the servicing platform.
Addressing the many
By scanning portfolios for exceptions, servicers can generate actionable intelligence that can help employees work smarter and more efficiently. For example, running a mass escrow analysis based on servicer-determined exceptions (e.g., missing adjustable-rate mortgage data, tax/insurance defaults) allows the servicer to take targeted measures on problem areas.
Of course, those sorts of exceptions are not "owned" by any one area of the organization. For example, the tax department must address delinquent taxes, the adjustable-rate mortgage (ARM) department is tasked with tracking down missing data and the default area deals with delinquent loans.
Scanning the portfolio for exceptions allows the servicer to segment and queue work items more efficiently. The servicing platform needs to go further and allow for delegating and tracking multiple work segments across differing departments.
Rather than the traditional approach of giving managers sections of a paper report and running a new trial to check the data again when work has been completed, work management allows the servicer to break work into segments more intelligently for each department to manage. Managers can then subdivide those exceptions further, into individual queues for their staff to address the issues.
Once this capability is in hand, the possibilities are practically limitless. If, after running a mass escrow analysis, the servicer discovers a large group of loans that failed because taxes in a particular county were delinquent, the tax department can address those exceptions in bulk rather than one at a time.
Or, the analysis could pull every loan with a given level of overage in the escrow account, allowing the cause of the overage to be determined. Perhaps the borrower overpaid escrow, or tax liability decreased (an increasingly more common event as property values drop). In some cases, the servicer will mark that exception as agreeable or justified, and future analysis will know not to duplicate the exception. Efficiencies increase greatly by eliminating such duplicate work items – a common problem with paper-based reporting.
In contrast to process-oriented tasks such as foreclosure, where there is a set of steps that must be followed, work management is concerned with automating one-off tasks across the portfolio. For example, a nightly lock-box analysis can find exceptions and feed them into a management queue for delegation the next day. It is not a process that has a given number of concrete steps. Any exception-based bulk analysis is going to create a group of loans that the servicer will need to address for one reason or another.
Managers benefit from this sort of servicing-platform expansion by having a unified dashboard that they can use to measure the effectiveness of their workers. If the organization offers some form of incentive pay, this information can feed that system. More importantly, it allows them to shift work quickly from team to team or individual to individual. For example, if a staff member with 500 items in his or her queue were to call in sick, the workload would need to be transferred immediately.
The work management setup also needs to be able to divide work across different security levels, depending on job function. From the manager down to line-level workers, the ability to alter work queues must be controlled, based upon the experience level of the individual. This leads to the issue of ownership.
Once a given loan has been delegated to a worker, he or she assumes ownership of whatever task is associated with that loan. With the appropriate security, the worker can refer it up to a manager to ask for assistance, or pass it on to someone with more expertise in handling a particular type of exception. But, by and large, the person assigned to the loan owns the loan throughout the process.
Managers need to be able to prioritize work items based on any number of criteria. A good work management system will, therefore, also provide the flexibility to reshuffle work queues according to changing priorities. All of this can be accomplished from a single dashboard, increasing control and efficiency and allowing managers to assign work queues more intelligently. They have complete visibility, by team and individual, of the different types of work, timelines to accomplish specific tasks and automated follow-up dates to manage deliverables.
There are benefits for the processors themselves, too. They are able to see – from within their own queue, based upon security level – what items are in front of them and gauge their own statistics. With the proper security clearance, processors can even measure their performance against departmental averages or other criteria. The processors are then in the position of being able to self-monitor and judge their own effectiveness.
The benefit of tiered queues
The importance of the ability to tier work items by security level cannot be overstated. The key is to realize that work items are not merely being categorized according to the type of extensions, but by responsibility for the subcomponents of the item itself. Let's return to escrow analysis again as an example: While there might be one manager responsible for escrow analysis, there are other managers who are responsible for working their piece of the exception.
Obviously, it would be counterproductive to require a manager to track each submanager's individual work. By breaking the escrow-analysis exceptions into multiple segments of the same errors, submanagers can handle their own particular responsibilities on a given group of loans. This is essential, because the escrow-analysis manager does not own all the various departments that would be part of addressing the issues of exception. It is extraordinarily difficult for that manager to hold these other groups or individuals accountable.
As previously mentioned, servicing is very cause-and-effect-based and integrated across a number of different departments. The escrow-analysis group may discover issues of delinquent taxes, but the tax department holds the responsibility for resolving that problem. Work management gives managers the ability to make sure all the work is properly integrated and that each piece of the resolution is being accomplished.
This same dynamic holds true across any number of exceptions. If ARM data is missing, and the organization is attempting to post a payment against that loan, it will trigger an exception. But the cashiering manager is dependent on someone in the ARM group to fix that data before the funds can be applied. Work management serves as a link for the entire organization, bringing servicing departments together on a task to ensure that the big picture is made whole by all of its corresponding parts.
At a time when the entire servicing industry is facing historic workloads and new responsibilities, effective work management is essential to operations. By working with their technology partners, servicing organizations can establish robust work management solutions based on the information in their servicing platforms.
Servicers stand to see great gains in efficiency by gaining the ability to properly delegate and track work items and integrating that ability across departments. Exception analysis and intelligent work management can help streamline operations and increase profit margins, while putting some much-needed controls on the ever-increasing volumes servicers face today.
George Fitzgerald is senior vice president of product strategy for Lender Processing Services' mortgage servicing division. He can be reached at exec.author@lpsvcs.com.
