The Mortgage Bankers Association says that after slowly declining over the past year, national mortgage delinquency rates ticked up in the second quarter. Mortgage servicers may have begged for better news, but you know what they say about wishes and horses...
In discussing the report, Jay Brinkmann, MBA’s Chief Economist said:
“Mortgage delinquencies were up only slightly over the last quarter. Perhaps more important than the small size of the increase, however, is the fact that it reversed the trend of fairly steady drops in delinquencies we have seen over the last year. This is consistent with the slowdown in the economy during the first half of the year and our stubbornly high unemployment rate. Whether this is just a temporary blip or a sign of a true change in direction for mortgage performance will fundamentally depend on the direction of employment over the remainder of the year.”
So if this historically high level of past due accounts is the "new normal", how should mortgage servicers equip themselves to not only survive but thrive until the economy improves?
Here are three suggestions:
- Leverage cloud-based systems - Cloud-based systems, especially those delivering software as a service (SaaS), require little upfront investment to obtain the latest innovations in servicing automation. These pay-as-you-go solutions can offer dramatic improvements in operational efficiency while at the same time improving borrower satisfaction...something we've had precious little of in the past 5 years.
- Communicate early & often - Getting a jump on struggling borrowers is also key. The earlier a problem with repayment can be identified, the more likely you are to reach a solution that works for both the borrower and the investor. And don't forget that the Treasury pays a premium for modifications begun within the first 120 days of delinquency.
- Don't leave borrowers hanging - Once you've engaged a distressed borrower in a discussion of alternatives to foreclosure, the need for timely information about the process goes way up, and so do your inbound calls. This can lead long hold queues in your contact center and borrower frustration. But not every one of these calls needs to go directly to the borrower's single point of contact (SPOC). Make sure you've got the information they are seeking about status, missing documentation and next steps available to the borrower through easy to use self-service applications on your interactive voice response (IVR) system.
I'm sure we'd all like to see a lot less color and much more white on the MBA's quarterly delinquency chart, but until that happens the winners in the servicing game will be those who can most effectively deal with high volumes of delinquent borrowers. Make sure you are one of them.
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