Nonprime Servicers Concentrate on Customer Communications

Panel of servicing executives talk at MBA conference

March 9, 2005

By NEIL J. MORSE

Take Nigel Brazier, for example.

When the Select Portfolio senior vice president talks about the very same customers who the federal government alleged were overcharged and otherwise abused by Fairbanks, he purrs: “It was easy to forget [then] that ultimately we are here to service the borrowers’ mortgages.”

“One of the things we were faced with the last 24 months,” Brazier concedes, “was changing the mindset of our [employees] from thinking that the ultimate customer was the investor to thinking that the ultimate customer was the borrower.”

To ensure proper conduct, Select Portfolio records “a tremendous amount of our calls,” according to Brazier, who calls the practice, “a great training tool.”

“Our senior executives listen to CDs of the calls every week in their drive time,” he reports, noting wryly how much the company-customer interactions have improved. “Eighteen months ago, I’d be driving off the road from what we heard.” Now, says Brazier, “we’re looking for one-call resolution” of any consumer problems.

In Fort Worth, Texas, nonprime servicer Saxon Mortgage Inc. spends a considerable amount of time educating borrowers, says David Dill, president, because “many times, they don’t understand what their credit conditions are, so we turn more into a credit counselor.”

While the company tries to keep borrowers in their homes, Dill says candidly, “sometimes the best choice is not [doing that] — for their own peace of mind.”

It’s a slightly different attitude at Option One Mortgage Corp. where Fabiola Camperi, senior vice president, servicing, says “[our] focus is to try and keep borrowers in their homes. Ultimately [that] is one of the best ways to meet investor expectations.”

Camperi and the other executives spoke at a panel session during the recent Mortgage Bankers Association of American servicing conference.

Option One starts the contact process very early with delinquent borrowers, she says. “Out of the 1,000 associates hired to manage servicing portfolio, 600 exclusively are dedicated to reaching out to customers when they are facing financial adversity and have missed a payment or payments.”

Saxon, too, must be creative in retaining customers, says Dill.

Faced with “tremendous runoff,” the company focuses on inquiries to the credit reporting agencies, “so when another mortgage institution inquires about one of our borrowers we get the lead at the time of inquiry versus at the time of payoff. It gives us more chance to retain that loan on the books. We’ve gone from a 3% to a 13% increase in retention,” he reports.

What may help stem the runoff, adds Dill, are new products like interest-only loans “and a proposed, new 40-year mortgage that will keep the ‘churn’ going.”

Penalized by alleged aggression with delinquent borrowers when it was Fairbanks, Select Portfolio’s Nigel Brazier sounds conciliatory about pressing overdue accounts.

“We as an organization clearly failed with regard to meeting consumers’ needs. We had to be honest and face our shortcomings and change our organization.” As a result, he says, the company has stretched the boundaries. “Our standard foreclosure timeline is now 90 days, when it was 60 [before],” says Brazier.

Further reflecting the company’s unpleasant scrape with government regulators, Select Portfolio has put new emphasis on adhering to rules.

“From a prioritization perspective it’s simple: compliance, compliance, compliance; that has to come first and foremost.”

Related:

Fitch Upgrades Select Portfolio’s Servicer Rating
Improved operations at the company formerly known as Fairbanks Capital Corp. have led to an upgrade in its servicer rating.

Nonprime Servicers Concentrate on Customer Communications
Driven by recent rash of predatory servicing issues, nonprime lenders are shifting their focus to better communications with borrowers.

Neil J. Morse is a communications consultant and independent writer working exclusively in the mortgage finance industry. He resides in Newtown, Conn. and may be reached by e-mail at: morse@ntplx.net