REQUIRED READING: The federal consent orders signed by 14 of the nation's biggest servicers included a slew of new servicing standards, but at least one of the guidelines – the establishment of a single point-of-contact (SPOC) case management system – has been in the works at major servicing organizations for some time.
The regulators' orders call for servicers to create ‘an easily accessible and reliable single point of contact for each borrower so that the borrower has access to an employee of the bank to obtain information through the loss mitigation, loan modification and foreclosure processes.’ The Federal Deposit Insurance Corp. (FDIC), which participated in the federal interagency review of foreclosure processes, pinpointed the SPOC requirement as particularly noteworthy, saying it would help lessen borrower confusion, provide greater servicer employee accountability and ensure that modification and foreclosure actions comply with federal and state law.
"Having a single point of contact will not prevent all foreclosures, but it will reduce the numbers of avoidable foreclosures, as well as operational risks, associated with foreclosure processes that violate the servicers' legal obligations," the FDIC said in a statement.
Perhaps anticipating the regulatory actions to come, several large shops began implementing SPOC systems well in advance of the consent orders. Wells Fargo began moving customers over to SPOC last June. CitiMortgage has an SPOC in some areas of its loss mitigation operations, and is exploring ways to expand it, according to spokesperson Mark Rodgers.
Starting last spring, JPMorgan Chase borrowers entering loss mit were referred to relationship managers, which now total 2,100 at the bank. Customers who were already in loss mitigation were transitioned into SPOC over a period of time, Chase spokesperson Tom Kelly says.
"It's part of the evolution of servicing over the last three years," Kelly says. "I think the default part of the business has evolved to meet the growing demand. We've invested more in technology, people and space."
Weeks after the consent orders were signed, Chase announced it would be adding 1,000 servicing employees in Ohio.
SPOC has long been a standard for many smaller shops and outfits that work primarily with high-touch assets. Special servicer Residential Credit Solutions (RCS) has used an account ownership model since it opened its doors in 2006. RCS employees, who average about 150 accounts each, establish borrower relationships at a loan's 60th day of delinquency and manage the process through liquidation or an early resolution, says CEO Dennis Stowe.
"Once somebody's in trouble, you need to understand their situation, and they need to trust that you're going to respond to it and do what you say you're going to do," he comments.
RCS' case management model has gotten a lift from technology and what Stowe refers to as "very disciplined growth." The company uses Overture Technologies' Mozart for Special Servicing loss mitigation. RCS provides third-party servicing, as well as services whole loans that the company purchased in 2007 and loans acquired through an FDIC joint venture. "We've just never had the scale or the pipeline where we needed to worry about how to handle a tsunami of bad accounts," Stowe says.
Bank of America, which acquired Countrywide Financial in 2008, is on the other end of the spectrum. Rebecca Mairone, the bank's executive in charge of national mortgage outreach, says the goal of SPOC is to deliver a more consistent message.
"It helps give the customer a sense of relief that they don't have to go through another broader customer center organization, start over or get other types of information that may not have aligned with prior information," she says.
Bank of America began implementing SPOC in the fourth quarter of 2010. The effort currently focuses on two areas – loan modifications and short sales – but was slated for expansion to the foreclosure process even before the Federal Reserve and the Office of the Comptroller of the Currency announced their actions against servicers. The short sale piece is both consumer- and Realtor-facing, Mairone explains, so that agents have somebody to contact throughout the negotiation and closing of a sale. More than 300,000 borrowers in Bank of America's modification process have a customer relationship manager, and the number is close to 80,000 in the short sale space.
Mairone describes SPOC as a de novo process for the servicing industry – at least to servicers on Bank of America's scale. The technology that Bank of America needed to accommodate the modification process was built internally, and it is still under development, she explains.
The quickly evolving nature of mod guidelines over the past two years made it difficult to build a process and technology around the programs. From a staffing perspective, the bank was able to shift more than 2,500 associates from its origination platform into loan modification work. Associates from the lending side of the house have experience in borrower communication and application intake, as well as understand a refinance transaction, "which is probably the closest thing, program-wise, to a modification," Mairone says.
These factors have sped up the bank's SPOC overhaul. "We couldn't afford to spend six months training, so we just lifted part of our organization and moved it into the modification/servicing area," she explains.
One-on-one contact is helpful when it comes to educating borrowers about their options and setting their expectations, servicers say. Because many delinquencies are tied to low- or no-document loan products, borrowers who apply for loan modifications may never have had to submit financial information before entering loss mit.
"There's an education process for some of those borrowers," Stowe says. Mairone says that Bank of America's next objective is to extend SPOC to foreclosure processing. The effort will focus on providing consistent communications and notices, as well as assisting borrowers who end up having to transition out of their home.
