A Guiding Light for Borrowers in Forbearance

This piece originally appeared in the October 2022 edition of DS News magazine, online now.

As CRO at Selene, John Vella is responsible for driving revenue generation through ongoing leadership of sales, marketing, client management, and product innovation. Vella brings over 20 years' experience leading organizations and delivering exceptional results across multiple industries.

Prior to joining Selene, Vella served as Chief Revenue Officer of Altisource. Before that, he served as COO of Equator, LLC. Vella began his financial services career with the FDIC and Freddie Mac. He later served as Chief Sales Officer for H&R Block's mortgage company, CEO of Household International's Automotive Business, President, and CEO of Bear Stearns' EMC Mortgage Company, and as EVP for Special Servicing of GMAC/RESCAP. He holds a Bachelor of Science in English from Springfield College.

Vella recently spoke to DS News about the state of servicing in 2022, and how Selene is working to excel amid a challenging industry landscape.

How did you get your start in the mortgage servicing business? What attracted you to this field?
Vella: My mortgage career started after college when I was released by the New England Patriots, and had no idea what I was going to do. I received a call from a friend of a friend who said he had a job for me in Oklahoma City. Coming from New York and living in Boston, I had almost no knowledge of Oklahoma City, but I took a shot. Little did I know that I would be working for the FDIC on one of the biggest bank failures in history, Penn Square Bank. At a young age, I moved from collecting on Quarter Horse and oil and gas loans to running bank closings all over the country for the FDIC. The myriad of responsibilities from lending, servicing, secondary marketing, and working with various regulators and partners was very challenging and exciting.

A year into your role as CRO of Selene, what have been some of your greatest accomplishments to date?
Vella: Over the last year with Selene, we have positioned the company to compete aggressively in the subservicing, diligence, and title business lines. The team that has been built under focused and determined leadership at the top and, with our parent Pretium, has allowed us to grow our business in a very controlled and strategic manner. The client focus and portfolio management approach has allowed us to expand products and volume with existing clients while adding new clients.

What trends are you observing in the servicing space these days?
Vella: In the servicing business, we continue to see the after-effects of borrowers coming off forbearance plans and loan modifications, along with the post-moratorium foreclosure activity. These events have led to increased borrower engagement, dealing with tighter borrower cash flow due to economic conditions.

The Mortgage Bankers Association (MBA) recently reported that 360,000 homeowners nationwide are currently in forbearance plans. How has Selene handled this volume of borrowers entering and eventually exiting forbearance?
Vella: Selene has been very successful in working with borrowers who were and continue to be in forbearance plans. The dedicated teams and single points of contact have allowed Selene to manage through forbearance inventory with no major issues. The culture of listening and working with borrowers has resulted in successful resolution of forbearance plans.

What are some of the challenges or headwinds facing the servicing marketplace that most occupy your focus? How should the industry overall be working to address them?
Vella: The current economic conditions continue to put stress on the borrower’s net income, which could lead to defaulted loans, broken modifications, and in-flows into foreclosures. With home appreciation slowing down, the ability to refinance out of a problem will become more difficult. This situation will require deeper assessment of a borrower’s ability to pay throughout the loan servicing process.

How did Selene navigate the challenges presented over the past 24-plus months from the pandemic?
Vella: Very early in the pandemic, Selene implemented a strategic plan that involved rapid deployment of technology to all associates, allowing them to effectively work from home. Productivity standards were immediately set to ensure our clients and borrowers were continuing to receive best-in-class performance. Constant communication channels were open with structured meetings and check points to make sure the strategic plan was being followed.

How has Selene kept up with and navigated the regulatory changes handed down to protect homeowners over the past few years?
Vella: Selene has a highly experienced compliance and risk management team with years of expertise working with regulators and counterparties. Our systems, reporting, and proactive interfaces with the business and legal have allowed Selene to react quickly to regulatory changes. The compliance and risk management teams work hand and hand with inside legal counsel to ensure that the protection of the borrower is at the forefront of everything we do.

Where do you see the servicing space heading over the next 12 months?
Vella: There is always going to be pressure on becoming more efficient using technology and artificial intelligence. Interactions with the borrowers will be more targeted based on data mining and analytics. With borrowers coming off forbearance plans and loan modifications, we could see redefaults due to the current interest rate environment and the inability to place borrowers into loan modifications. Regulatory pressure will continue to mount, requiring resources, automation, and full transparency throughout the process. Servicers may continue to struggle with the hybrid environment of working from home, which could lead to higher turnover and an unstable operation.