Bonus: As he’s known to do, our CEO Dan Sogorka told a few engaging but also hyper-relevant stories to explain technical topics, and those are also called out below.
First, meet the panelists:
- Dan Sogorka, CEO, Sagent
- Jay Jones, EVP Servicing, Mr. Cooper
- Seth Sprague, Director, Richey May
- Moderated by Julian Hebron, Founder, The Basis Point
Going right to the topic of “is it really the golden age?”, session moderator Julian Hebron kicked off the webinar with a state of the industry question for Seth Sprague, who shared that in the current environment of slow prepayments, slow and low delinquencies, and good cash flow, this is a great time for servicers. The most common questions Seth receives are concerns about whether lenders should retain servicing or get into (or out of) servicing. His response:
“The answer… it’s important that your strategy aligns with your core competencies, your technology, and what your consumers are telling you.”
Jay Jones shared that the concerns from Mr. Cooper’s roughly 4M homeowning customers evolve constantly, but a common theme is that they expect instant access to their financial data, as well as the education, to understand what it all means:
“The consumer is wanting to be able to understand their financial position and have access to their information.”
To branch off of the above, Dan noted that in the last 20 years, the servicing customer was never “in the center of anyone’s bullseye” as far as technology was concerned. The industry wasn’t considering these customers—many of whom we spend a long time with—and thinking about how to engage with them to provide exceptional customer satisfaction. This is what he and Sagent are in the process of changing:
“We at Sagent saw an opportunity to differentiate ourselves and flip this paradigm, focusing on the consumer. And we think if you do that, you can actually make money as a servicer and this can be a good business for you.”
Dan went on to share some of the reasons for the landmark partnership between Sagent and Mr. Cooper, including the “secret sauce” of capturing and keeping customers by leveraging technology to drive excellent customer experiences and make the statement “customer for life” more than a buzzword. Check out Dan’s first-hand story about customer experiences at 13:37.
Pandemic Servicing Lessons
Julian asked the panel about the effects of increasing foreclosures, which recent ATTOM data says have risen in the first half of 2022 to pre-pandemic levels.
Dan observed that the forbearance situation will make servicers’ jobs more difficult than they have been in the last two years, but implementing the right consumer-facing tools is even more impactful during times of hardship.
“You don’t want to lose touch with the consumer… you want them to be able to get a lot of easy information… you want them to be able to do it at 11 o’clock at night when they can’t sleep and they’re nervous about what’s going on.”
Dan also shared another story at 16:00 in which he compares servicers to gambling grandmothers…we won’t spoil it, just watch for context.
When asked about how servicers reach these forbearance-affected customers early, Jay shared that it’s really about understanding our customers and using our technology and expertise to watch for indicators that they’re experiencing a challenge. Then, we can initiate contact to offer options very early rather than waiting until they’re already delinquent.
“Consumers interact with us today in so many different ways… we have to listen and hear our customers when they indicate they’re having a challenge.”
Closing out this section, Seth shared an insight about those customers who do experience foreclosure and are located in judicial foreclosure states. He comments about the cash implications that are intertwined with compliance, technology, costs, and revenue. You don’t want to miss this part.
Golden Age of Servicing Nuances
When discussing the marriage of meticulous compliance with wonderful customer service, Jay talked about leveraging data to deliver better homeowner experiences.
“You have to have a robust system that allows you to manage processes that are compliant… then using the data behind [that system] to understand what’s going on with the customers, what they qualify for… what your next topic is going to be… and is robust enough to handle all that complexity while you’re on the phone with a consumer somewhere in the neighborhood of 8-10 minutes.”
He notes that servicers have to spend the time to build the right system with the right compliance rules that protect not only you as a servicer, but the customer and their mortgage. And you have to train your staff to handle this complexity with empathy.
Seth remarked that having high-quality data is now a basic expectation, especially compared to a few years ago when FICO scores or statements might have been missing. Seth noted that this has a positive impact on everyone. This reliable data helps servicers understand the borrower and educate them about what options are best for them.
“We’re here to help the borrowers as a servicer, but by helping them… it’s a better outcome for everybody… lower costs, which is lower advances, which leads to better profitability.”
But this relies on having a modern servicing tech stack that enables synchronization to ensure a consistent response to borrowers’ questions.
Dan mentioned that the process of boarding loans to a servicing system (historically problematic) needs to be perfect, and Sagent is spending a lot of time on the technology to eliminate human error, get away from overwhelming spreadsheets, and solve this problem.
He also detailed how, historically, origination has been a completely different business from servicing, which has led to poor borrower experiences.
“What you had was this throwing over the fence [from originations to servicing] & ‘I’m done, I got my check, here you go, good luck,’ then we ask ourselves why only one out of five borrowers refinance with the same lender.”
Dan explained that Sagent is working to break down these silos for servicing customers to drive the continuous “origination-servicing-origination” loop. He said this is done by making the servicer a trusted advisor that the homeowner automatically reaches out to for advice by using technology that makes it easy to interact with the servicer.
HIGHLIGHT: Each panelist closed this section with advice for originators who now want to get into servicing.
Golden (Unprecedented?) Age of Servicing
As a servicer, Jay said that if you have the right technology, you can grow the relationship with the consumer.
“If you’re making the experience so beneficial to the consumer, they’re going to want you as a servicer… if you’re thinking about them personally, helping them with their assets, educating them about the things they can do to protect their home… all that data in your servicing system lets you provide that meaningful relationship.”
He also noted that with record low rates, people should be staying in their homes for longer, so the value of each homeowner should be going up.
Dan told us that, based on his daily conversations with customers, servicers are working hard to do the best they can for consumers while dealing with some very high compliance risks, and that without the right technology, there’s no safety net. He went on to explain how Sagent is working to create compliance guardrails in the context of consumer self-service with the documentation to help if/when an auditor asks questions.
Dan also pointed out that using technology to solve the compliance risks simultaneously benefits the consumer, which he illustrates with this story (at 43:38) starring his dad as the president of an HOA!
The Golden Age of Consumer Experience
Thinking about the “golden age of consumer experience” Jay said that, with people in the homes they love, at low rates and no big desire to move because they’re working from home, this really should be the golden age of servicing.
The challenges that are impacting our customers right now are outside the mortgage sphere: Inflation, spiking COVID numbers, and generational changes such as younger buyers who expect better technology. He also explained that consumer expectations regarding the experience during MSR transfers are something we have to come to terms with.
Seth agreed and mentioned that he’s aware of borrowers who have become very upset during transfers because they haven’t been proactively educated about what will happen and when, so they don’t understand the delays they perceive.
Dan chimed in on the same topic to say that Sagent has this problem in its crosshairs, and shared good news:
“This is getting data from one place to another, quickly, without friction. We’re not solving world hunger here. We can do this.”
He explained that, historically, servicers were simply “sending out letters and collecting money” so that’s what the underlying technology was designed for. This has all changed quickly based on regulations and customer demand, so the technology must adapt, and we’re well on our way down that path for a homeowner-first modernization.
Featured Audience Question
One visionary question received from the audience was:
“While it may seem foreign today, do you foresee a time in the future where borrowers are able to choose their servicer? Similar to how we are able to choose our energy provider. If servicers ignore their customers, that would be a logical regulatory change.”
The panelists have heard this question before, even as a comment from the CFPB. But Seth thinks this would require all originators to be servicers along with big changes to the economics of the origination industry akin to his example of offering a Honda engine in a Toyota vehicle.
It’s a thought-provoking question and the audience participation is appreciated!
On that note, please connect with us using the form below, and an experienced member of our team will get right back to you!