Michael Merritt, SVP, Default Mortgage Servicing with BOK Financial has approximately 15 years in the default servicing space. He began his career with Nationstar Mortgage (now Mr. Cooper) as a Loss Prevention Manager, eventually moving up to VP Operational Controls with the company. He moved onto Goldman Sachs for four-plus years before landing at BOK Financial where he has been since September 2020.
DS News had a chance to catch up with Michael and discuss how the default servicing industry has worked to keep the customer informed of their options during this once-in-a-generation type COVID crisis.
DS News: Now that we are two-plus years into the pandemic, what would you say the industry has done well during this time? Where did it excel?
Merritt: I think just rising to the occasion. Housing was one of the first areas that we looked at with COVID to see if we were going to experience another crash. The real estate market was strong pre-COVID, and we all wondered of that was going to continue. I think we truly rose to the occasion. We were flexible, probably more than we've ever been in our industry's history, and we've met every challenge that was thrown our way.
DS News: I know you said that every challenge was met, but were there any areas that could have been handled differently?
Merritt: I think the one area that we may have been able to do better job with, and not to nitpick, but we were forced to move to a remote environment, and everyone dealt with that well. I think we could have embraced that a little bit more. Not looking at it as much of a crisis response, but looking at the remote environment as a new way to work and better interact with employees. I think everyone is doing that now.
DS News: Are there any other critical lessons that you took away beyond just the hits and misses? Was there anything that you tried that worked better than you anticipated or simply gained a new perspective on that you could apply moving forward?
Merritt: I think everyone always says their employees and their people are their biggest asset, and I think COVID showed that is true, and not just a talking point.
Overnight, our teams had to shift from “status quo” to “go home.” We were dealing with the uncertainty of if they were ever going to return to the office. My team did that seamlessly, and really in every measurable way, performed better in crisis mode than they had been. They rose to that occasion and were dealing with the crisis. A critical lesson to me is you cannot ignore how critical your people are to your operation, and without them, you're just not going to be successful. Everyone built strength after the financial crisis, and we've all taken those lessons learned and have been able to handle this situation much better.
DS News: What does success at the end of 2022 look like? What are some of your primary goals?
Merritt: I think landing the plane on the tail of forbearances, continuing to handhold everyone through the process, and getting them to the finish line is a big goal … not just to get borrowers out of forbearance, but to get them a permanent solution.
When we look at reality and what “back to normal” looks like, we need to be more consultative than we have been in the past because it's a different environment than it was in 2008. We need to just make sure that we're giving the full picture to customers. Most of them have equity, so, it's not a “lose your house” situation … there are options there.
I just think we need to make sure that we continue to serve as consultative advisors for our customers as they navigate through the process. As an industry, we need to get out of this crisis, and get back to improving and perfecting. If we can do that by the end of 2022, I think we will be in a good place.
DS News: How have you been interacting with customers through all of this? Have there been any surprises? Have people been better educated than expected?
Merritt: I always looked back to the first financial crisis. The lesson learned this time around was that the government, regulators, and GSEs were quick to implement products that were consistent, and messaging was improved. We knew that forbearance was a term that not many understood, so the focus very early on was what “forbearance” means. We were a lot better communicating with customers.
I thought that anytime someone said, "Well, I saw this on the news during the financial crisis," it was a little cringeworthy. You never knew what they were going to hear, but I think everyone understood this was hopefully a once-in-a-generation type event and the communication stream was much better all-around.
Even information on the internet was better about what to do, and it has helped because customers have come forward with questions that I think are tailored to them, not just broad-based questions that end up confusing, and further muddying the waters.