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How Mortgage Servicers Can Turn COVID’s Biggest Challenges into Customer Retention

Mortgage servicers face two huge challenges in the COVID era: (1) how to prepare for more serious homeowner hardships as key relief policies expire in late-2020 and early-2021, and (2) how to retain 4 of 5 borrowers who currently get new loans from a new lender. Here’s how modern servicing technology is helping:

Tech Wins COVID Compliance & Customer Care in Summer 2020

July 1 was a giant deadline for COVID mortgage relief and a great example of how technology can ensure servicer compliance and great customer care.

This was the go-live date for Fannie Mae and Freddie Mac programs allowing borrowers who’d been in forbearance to defer missed payments to the end of their loan’s life.

Only one problem: many servicing systems didn’t even have COVID hardship statuses when the pandemic began, let alone real-time configurable compliance tools.

But Sagent had this ready to go on day one.

Not only could the servicers we power begin these deferrals for customers on day one, but they could also implement (and fully document for regulators, investors, and customers) the complex, non-interest-bearing second lien that’s due at payoff for this deferral program.

The results: Compliant, confident servicers. Relieved customers.

And relieved hardship customers become more loyal when you care for them like this.

Preparing for COVID Compliance Deadlines in December 2020 & April 2021

Next up, servicers face two more big deadlines:

COVID foreclosure moratoriums expire December 31 and CARES Act long-term forbearances expire April 2021.

New or extended relief policies will follow the political cycle and the path of the virus, but our approach is to make sure servicers are ready now—based on timelines dictated by today’s policy deadlines.

Both of these policies mean servicers must be ready for forbearances potentially escalating into default scenarios.

You can see from the chart below how total forbearances are declining, but there are still 3 million homeowners with forbearances, and not all of them will recover by December or April.

MortgageLoansInForbearance_Graph_Nov16_Decline

You can also see from the next chart below how a strong majority of homeowners in forbearance are extending forbearances.

This is happening because CARES allowed for two 180-day forbearance periods, but servicers implement forbearances in 90-day increments. So borrowers need more time, and this is why so many are extending forbearances.

LoansInForbearance_Graph_Nov16_2020

If servicers check-in with borrowers in November and find many are still not ready, that’s a signal some forbearances will escalate into default scenarios.

This is where Sagent’s servicer-facing Tempo default management suite and consumer-facing Account Connect suite combine to protect servicers while caring for strained homeowners.

How Smart Software Protects Servicers AND Strained Homeowners

Even the most strained consumers expect an easy bank-on-your-phone experience. They expect it even more when they’re stressed and need answers fast.

Enter Sagent’s servicer-branded Account Connect. This is where consumers can:

  • Actively manage homeownership from their phones,
  • Identify and act on faster payoffs and cheaper refis during good times, and
  • Immediately process forbearances and loan mods during strained times.

In this example, they’d be able to apply for hardship assistance in minutes.

Then the servicer uses Sagent’s default management suite Tempo to run proprietary or agency AUS to produce fully compliant options for every scenario the borrower is eligible for.

Think DU, LP, and proprietary origination AUS, but on steroids–because loan workout options are far more complex to underwrite while remaining compliant with existing loan commitments across all federal and 50 state requirements.

But Tempo’s deep sophistication makes it simple so the servicer can push options and conditions to borrowers right away to give them peace of mind when they need it most.

Here’s a quick demo showing how Sagent solves homeowner hardships.

Customer Retention Can’t Just Be in Good Times

Again, the results are: compliant, confident servicers. Relieved customers.

And as I noted above, relieved hardship customers become more loyal when you care for them like this.

This is how homeowner hardship quick care drives retention.

Customers spend mere months in the origination process but can be with their servicer for life—IF their servicer can nail customer care during good times, and especially during hardships.

More on customer care during good times in my next piece.

For now, please watch how Sagent powers homeowner hardship quick care and share your thoughts.

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About Author: Dan Sogorka

Dan Sogorka is the CEO and President of Sagent, a leading fintech company modernizing mortgage and consumer loan servicing. Sogorka has led digital transformation in housing for two decades. Previously he served as CEO of digital mortgage point of sale provider Cloudvirga, President of EXOS Technologies, EVP of Servicelink (a $1B revenue subsidiary of Fidelity National Financial), and Division President at mortgage servicing and data provider Black Knight.
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