With single point of contact (SPOC) or similar terminology increasingly finding its way into discussions of servicing best practices, the industry finds itself racing to maintain regulatory compliance.
During a congressional hearing in July, Mortgage Bankers Association President and CEO David H. Stevens alerted lawmakers to the fact that no unified definition of SPOC truly exists. ‘A plain-English definition would imply that a single person would be assigned to each borrower and that the borrower would communicate only with this person,’ Stevens testified. ‘This is not feasible in the current environment and would create numerous problems, as servicer call volumes fluctuate significantly throughout the day, week and month.’
As SPOC discussions continue to persist, however, servicers and their technology providers have gotten to work, collaborating first on regulatory interpretation. The goal of SPOC, vendors agree, is to empower servicers with loan-level details so that they can provide more consistent communications, which, in turn, ensure a better customer experience.
‘One of the things that really drove [April's federal consent orders] for the 14 servicers was an endless series of frustrations on the part of borrowers being routed from one call center to another and one rep to another,’ says Scott Stein, president and CEO of Xetus, developer of the XetusOne Loan Management System.
But just how literal are servicers' interpretations of SPOC requirements? It depends on whom you talk to, says Jeff Cerny, vice president of professional services for GCC Servicing Systems. GCC's smaller clients are operating under the belief that SPOC will not pertain to them. Larger clients are interpreting the term as literally as possible.
‘At least from the 60-day process forward, I think they're taking it literally, saying that once they're past the delinquency, they need to assign a collector to a loan throughout the life,’ Cerny says. ‘That's what they're working toward, and it's been a work in progress once they've had that mindset.’
In its purest sense, the SPOC conceit is interesting but impractical, says DepotPoint President and CEO Joe Filoseta. He reiterates a central point raised by Stevens and others in objection to a strict SPOC interpretation – that servicers cannot guarantee a SPOC will be available around the clock to answer borrower inquiries. Customer-service representatives will take lunch breaks and vacations and sick days, which is why it is necessary to make loan file details, including a log of previous servicer-borrower communications, available to a broader group of employees.
‘In an efficient servicing operation, you want to have technology that's transparent enough for a group of people to be that single point of contact, with the objective of better customer service,’ Filoseta says.
Sanjeev Dahiwadkar, president and CEO of IndiSoft, says the true spirit of SPOC – to provide a knowledgeable transfer of information from one employee or department to another – gets bogged down by the semantics of a literal SPOC interpretation.
‘More importantly, it's not just assigning one person, but empowering the user to have access to the information that's needed to have a meaningful conversation with the homeowner,’ he says.
IndiSoft's servicing application is what Dahiwadkar describes as ‘a centralized case management system,’ which he says can provide all servicing departments with visibility into a loan's history. Technology from Commerce Velocity, a ServiceLink company, similarly contains a communication log that, according to company CEO Umesh Verma, can help bring customer-service reps up to speed on the status of an account (e.g., identifying workout decisions that have been rendered or loss mitigation documents that are still outstanding).
Servicer confusion over the status of a delinquent loan can be fixed via a well laid out system, Verma says.
‘It's not something that you can just handle purely at the procedural level,’ Verma says. ‘There is a lot of knowledge that is tied to a borrower, and to transfer that knowledge to the next round in a single point of contact and then make that contact effective in their communication with the borrower – that's all driven by a system that supports single point of contact.’
The delivery of knowledge is, in fact, what the Obama administration wants from servicers, adds Jane Mason, president of software developer eMASON. Although SPOC mandates are causing servicers to re-examine their staffing levels and distribution of work, she notes that the solution is not as simple as adding more bodies to collection units. Hiring large numbers of full-time equivalents could worsen an already bad situation if the new personnel lack proper training.
‘I think the servicers are asking more questions about how technology could be the heart of their solutions first before doing all of this manual work, which could compound the problem,’ says Mason.
The ability to electronically document any and all informal interactions that a servicer might have with a particular borrower or loan file is critical not only in keeping SPOCs abreast of past activity, but also in supporting audit reports, tech vendors say. During a recent meeting with a servicer client, DRI Management Systems Executive Vice President and Chief Operating Officer Fred Melgaard was told that the shop was in a perpetual state of being audited.
‘There's always someone auditing,’ Melgaard says. ‘You're either cleaning up from the last one, setting up for the next one, or you have an auditor in your office.’
He pegs much of the industry's technological snafus on the largely disparate systems that servicers use. He estimates that 80% of servicers use more than one technology platform to handle default-related tasks. ‘The silos, even if you go best-of-breed in all those pieces, all need to receive or send assignments to all the other pieces, and then statuses have to be collected by windowing from one system to another,’ he says.
Filoseta places much of the blame on bad workflow.
‘You can't just have the data processing systems without strong linkage to process and touch points, and most servicing platforms today don't operate that way,’ he says. ‘They are full of data, but they are sorely lacking in their ability to provide a best-practices-compliant workflow.’
Regardless of what the true culprit is, technology providers say the frenzied pace of new regulations and foreclosure-prevention programs are the key drivers of system enhancements. This has caused a change in developers' mindsets, says GCC's Cerny. Regulators are now dictating the speed to market of new system upgrades.
‘It's no longer 'this is how long it will take it,'’ he says. ‘Now, it's 'this is how long you have.'’
As Melgaard sees it, servicers need to be taking a longer-term perspective to procedural and technological evaluation.
‘We're constantly on the lookout for Band-Aids,’ he says. ‘What we really need is a well-coordinated process where the borrower feels like they're talking to a professional.’