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Remember the games we played as children? Remember how we would hide until we had a chance to get back to “home base” without being caught? How about when we were in trouble and would put our hands over our eyes, as we thought we became invisible and no one could see us? The latter is a cognitive behavior that is natural for most of us. When things do not necessarily go as we planned and we do not really want to face reality, we go into hiding.

Unfortunately, from time to time, bad things happen to good people. That is just a fact of life. Circumstances change, and sometimes that has a negative impact on us at the given time. Many of the homeowners who became delinquent on their payments did not plan on going into default - rather, circumstances in their daily lives led them down this path. It can become extremely stressful, overwhelming and embarrassing. These feelings can lead one to want to go into hiding and not speak to others - even though assistance may be available.

Mortgage servicers do all they can to reach out to these borrowers and attempt to keep their dream of homeownership alive. There is never a scenario where a mortgage servicer wishes for a homeowner to continue in default and eventually become foreclosed upon. That is not a winning situation for anyone. All mortgage servicers aim for the homeowner to remain in the home and for the loan to once again become performing.

But, what if the mortgage servicer cannot reach the borrower? What if the limited data that it has does not put the servicer into contact with the borrower? What if the borrower has gone into hiding and cannot be found?

To maximize their success, many servicers are using independent third parties that specialize in skip tracing and data solutions. In past years, the information available to servicers to help them keep up with borrowers - such as ever-changing phone numbers, addresses, military status, financial position, etc. - has been very limited. However, during the past couple of years, the amount of available data has taken a quantum leap. What’s more, the quality of the data has improved greatly, which, in turn, has done much to assist servicers in the end goal of reaching borrowers.

Before signing a contract with one of these independent third-party providers, however, a servicer must be sure that the provider is stable, sound and secure. Importantly, a provider should be thoroughly investigated by a servicer’s legal and compliance team to ensure it has the proper security in place to protect sensitive customer data. Not only must skip tracing providers have a proven history of success and undergo constant monitoring, but they should also have SOC 2 Type 2 attestation at a minimum. These companies must also comply with the Gramm-Leach-Bliley Act and be able to demonstrate their adherence.

The best third-party providers should have the ability to aggregate data from multiple data providers and know how to compile that data to deliver a high-quality result back to the mortgage servicer. Not only do they need the ability to aggregate data from multiple sources, but there is also the need for testing and scoring of the data. Providers must routinely test for both accuracy and frequency.

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At our firm, we have found that most data vendors excel in particular subsets of data. For example, company X may have great phone numbers, but company Y is best for public records. There are also regional variances, found especially within credit data that’s not covered under the Fair Credit Reporting Act. The nature of process serving, as our core business, gives us the unique ability to verify the data in person by way of hand delivery, which takes out all of the guesswork.

Licensed investigators tend to gain the best results when tracking down correct phone numbers and addresses. That’s because investigators must undergo an intensive internship and training program that focuses on combining data mining and analysis with outbound calling campaigns.

Our investigators look for patterns of life to help determine where a homeowner might have gone or to provide leads on other individuals who may have information. As social media has become more prevalent, new information is sometimes available to provide insight on an individual’s whereabouts. Our firm uses standardized or customizable scripting to help prevent disclosure to third parties and enhance borrower contact opportunities.

 

Security, security, security

This cannot be stressed enough. Due to the nature of the data being utilized, it is of the utmost importance that it be protected. Due diligence on a third-party skip tracing vendor must be extremely thorough and evidenced. There are typically two major security reviews that need to be completed: physical security and systems security. Security at our skip tracing site in Tampa, Fla., for example, is handled much like the cash room at a servicing shop. All employees are required to put all personal items in lockers before entering. The facility, which is monitored by video surveillance, requires separate card access and limits its printing capability just to supervisors. Unlike most vendors, our proprietary skip tracing system is fully integrated with our system of record, Tracker, and uses XML feed technology to access permissible data. This application limits data access to authorized investigators and ensures data is being obtained only on specified targets for permissible purposes.

Although regulatory requirements continue to put more responsibility on mortgage servicers, the end solution continues to remain the same for everyone involved: A borrower continues to live in the property, and the servicer manages a performing asset. Someone I know who works at a major servicer once told me that a servicer could have the best loss mitigation/home retention teams in the nation; however, if it could not contact the borrower, it would all be for naught. Best practices are evidenced by the utilization of qualified, independent third-party providers that can maximize quality right party contact waterfall solutions. A successful waterfall process includes the following:

Anyone who falls behind on his mortgage may feel embarrassed - which, in turn, can lead to withdrawal. Although talking through the issues can bring clarity, the fear is still real. It is incumbent upon mortgage servicers to reach out as much and as early as possible to let a borrower know it is OK to talk about the problems and try to find solutions.

All mortgage servicers want homeowners to succeed and live out their dreams in the home they purchased. But should a homeowner become delinquent or go into foreclosure and then withdraw, the servicer must ramp up its efforts to contact that borrower. Often, the best way to achieve that is to utilize the services of an independent third-party provider. Because these firms have access to the best data and technology for tracking down homeowners, they can often assist servicers in resolving matters of delinquency and default much faster than if a servicer attempted it on its own. That, in turn, creates a win-win scenario for all.

 

Victor Draper is executive vice president for ProVest, a provider of skip tracing solutions and other services to the mortgage servicing industry. He can be reached at victor.draper@provest.us.

Skip Tracing

Hide-And-Seek Is No Longer Just A Child’s Game

By Victor Draper

Today’s skip tracing providers have access to the accurate data and advanced technology tools necessary to help servicers track down and contact “missing” borrowers faster.

 

 

 

 

 

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