The Mortgage Banker's Association reports that the percentage of residential mortgages at least one payment past due or in foreclosure in the 3rd quarter dropped 1.15% from the same quarter last year and now stands at 12.42%. Despite this modest year over year improvement, this rate is more than double pre-recession averages.
There are an estimated 50 million mortgages in the US, which means there over 6 million delinquent loans.
Wow. No matter how you slice it, that's a lot of loans, and the workload implications for mortgage servicers are staggering.
Under their new servicing alignment initiative, Fannie Mae and Freddie Mac say mortgage servicers should be calling these borrowers every three days to try and work something out or if that's not possible, update them on the status of their foreclosure.
It works out to something like 150,000 phone calls every waking hour of every day of the year. Sorry, no Saturdays or Sundays off when there are that many calls to make.
Even with the help of predictive dialing systems, servicers would need 10,000 full time equivalent employees to do that work at an annual cost of over $300 million.
I say "would need", because there are alternatives. Many mortgage servicers rely on Varolii to deliver interactive communications to their borrowers. Varolii applications are designed to lead borrowers into either curing their delinquency by making a self-service payment or by engaging them in a discussion with a loan counselor of alternatives to foreclosure. By taking on the burden of proactive outreach, Varolii saves these servicers 50% or more of the costs they would otherwise bear.
Others had better start dialing.