The Path to Improving Mortgage Industry Communication with Homeowners

In 2011 the Department of the Treasury, in an attempt to alleviate some of the problems borrowers were having trying to take advantage of its Making Home Affordable (MHA) program (the parent of HAMP and other foreclosure mitigation program) instituted a new requirement called Homeowner Single Point of Contact or SPOC.  Wednesday it issued a report, Making Contact:  The Path to Improving Mortgage Industry Communication with Homeowners which provides an overview of how and why the SPOC guidelines came about and describes the implementation of the guidelines by the nine largest MHA services of non-GSE loans. </p

Report data was collected through a survey of the servicers, discussions with their personnel and through observations of performance.  The authors say it does not offer a conclusion on the best way to implement SPOC as “there may not be is not one ‘right’ answer.”   It is intended as a snapshot of the approaches being taken across the industry.</p

Mortgage servicers were ill-equipped to deal with the wave of mortgage delinquencies that began to hit their servicing portfolios in 2007.  Their contracts are with and fiduciary duties are to the investors who own the loans and their job is to collect mortgage payments, manage escrow accounts, and remit mortgage proceeds to investors; thus their customer service was oriented toward the investor.   Homeowners cannot choose their servicers and have few rights in the relationship and until recently had few opportunities for redress when they were ill treated.  To quote the report, “It is not surprising then that many struggling homeowners, who tried unsuccessfully to communicate with their servicers, stopped opening mail, or responding to phone calls from those servicers.”  </p

As delinquencies grew servicers were unprepared for their new role.   There was no standardized process for assisting homeowners and when mortgage modifications did occur, they often increased, not lowered, monthly payments. </p

In attempt to mitigate the growing foreclosure crisis, in March 2009 the Obama Administration launched what is now called the MHA and set a number of requirements for participating servicers to establish standards for modifications and improve their customer service relationship with  potential and actual program participants.  Still the complaints from borrowers and from those attempting to assist the borrowers such as housing counselors, Congressional office staff, and legal representatives, continued to mount, and some of them were tragic and grabbed media attention.  Borrowers told of hours spent on the phone, being shuffled from department to department, lost documents, foreclosures completed by one servicing division even as modifications were proceeding with another. “In this crisis, when millions of homeowners had trouble paying their mortgages, whether or not servicers were able to communicate effectively with homeowners has mattered a great deal.”</p

In May 2011, in an attempt to improve communicationrnwithin the servicing industry, Treasury issued a directive requiring thernlargest servicers participating in MHA to implement SPOC and to assign a singlernpoint of contact for each homeowner potentially eligible for MHA to work withrnthe homeowner through the entire application and resolution process.   The directive became effectivernon September 1, 2011 andrnNovember 1, 2011, for new and existingrnloss mitigation cases, respectively.</p

A SPOC requirement was alsornincluded in the servicing standardsrnagreedrnto in the National Mortgage Settlement,rnand a similar requirementrn(referredrnto as “continuity of contact”) has been includedrnin the servicing standards recently proposed by the Consumer Financial Protection Bureau (CFPB).rn ThernTreasury report says that the factrnthat the National MortgagernSettlement and thernCFPB, as well as other Federal and state regulators,rnare adopting similar SPOCrnrequirements will helprnensure that more personalized helprnforrnhomeowners will continue afterrnMHA expires. </p

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The report offers the following general summaryrnof the program as it exists today.</p<ul class="unIndentedList"<liHomeownersrnnow have dedicated personnel who will work with them from their first contactrnwith the program. Servicers have reorganizedrntheir homeowner communicationrnareas and expanded staff capacity.rnAcross the nine servicers surveyed for this reportrnthere are more thanrn12,000 individuals whose primary, if not sole,rnresponsibility is to communicate with homeownersrnseekingrnassistance. Nearly 6,000rnother personnel are assignedrnto helprnSPOCs collect and process documentsrnfrom homeowners. </li<liThree primaryrnimplementationrnmodelsrnhave emerged. Seven servicers use a "DirectrnModel" whereby an individual SPOC servesrnas the relationship manager, onernuses a "Pod Model" whereby there isrna team of SPOCs available to assistrnthe homeowner, and onernuses an "Appointment-Based Model" whereby a customer service representative takesrninbound calls and schedulesrnanrnappointment withrnthe SPOC. </li<liServicers communicate with homeowners in different ways. While all servicersrnmake their SPOCsrnavailable tornhomeowners by phone,rnsomernalso employ email orrnweb-based interaction capabilities. To insure contact when a SPOC isrnunavailable some servicers use voicemail,rnwhile others route the call to another SPOC.SPOCs are expectedrnboth to handle incoming calls fromrnhomeowners and to initiate outbound calls to homeowners, as circumstancesrnwarrant;</li<liSPOCs are responsible for discussing liquidationrnoptions (short sale or deed-in-lieu ofrnforeclosure) with homeownersrnin the event a home retentionrnoption is not feasible, with thernSPOC remaining asrnthe primary or secondary point ofrncontact for the homeowner for 30rnto 60 days after the close of the shortrnsale or the foreclosure process.</li<liThere isrnno standard caseload for SPOCs either as a target or in practice. Across servicers,rnactual caseloads range from 64 to 210 homeowners per SPOC.rnServicers are developing differentrnmethods of calculating SPOC caseloadrnto optimize their effectivenessrnsince not all casesrnrequire the same level of effort.</li<liThe metricsrnbyrnwhich SPOC performance isrnmeasured appear to vary widely, and include traditional call center metrics suchrnas volume of callsrnand call abandonmentrnrates,rnas wellrnas newer metrics such asrnaverage days from thernreceipt of initial homeowner documents to completion ofrnmodification package or the number of loss mitigation resolutions per SPOC.</li</ul<ul class="unIndentedList"<liChallengesrnremain in improvingrnhow servicers communicate withrnhomeowners. The likelihoodrnof better outcomes for homeowners has improved but it is still too early to tellrnwhether the industry will improve its customer service to therndesired level.rnThe SPOC model is in the process ofrnmaturing and there isrnlikely to be a dynamic environment, with servicers continuing to experimentrnwith different conceptsrnand new promising practices.</li<liThere are programs to provide trainingrnforrnSPOCs, benchmarks for managing SPOCrncaseloads, and performance metrics to measure SPOC effectiveness.</li</ul

There are manyrnsimilarities and as many differences among the ways servicers are approachingrnand managing SPOC. The report details, servicer by servicer, the approach eachrntakes in its service model, staffing levels, assignment of responsibilities,rnand training.  </p

The report concedes there are a number of questions withrnrespect to best practices for SPOCrnthat are yetrnto be answered.  Theserninclude the timing of SPOC assignment, SPOCrncaseloads, howrnSPOCs communicate with homeowners,rnand SPOC compensation andrncareer path.rnAlthough it is outside the scope of this report, the advent andrnmaturation of SPOCrnin the servicing industry may also play a role in,rnand be affectedrnby, a broader conversationrnabout changes in thernoverall servicing industry asrnwellrnas the methods by whichrnservicersrnarerncompensated.

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