DS News

18 As First VP, Default Servicing Operations, Flagstar Bank, Courtney ompson is responsible for all consumer default assets at Flagstar, including the default call center and the design and operation of the bank's default servicing oversight model. Her role also encompasses management of the specialty servicing vendor partners who perform the front-line servicing for each of the functional areas of default (loss mitigation, foreclosure, bankruptcy, and REO), as well as Flagstar's cross-functional oversight team. During the Legal League 100 Spring Servicer Summit, ompson sat down with DS News to discuss streamlining communica- tions with borrowers, navigating compliance, and how Flagstar has evolved to thrive in a lower-delinquency environment. How has Flagstar shifted its focus to adjust to lower rates of delinquency post-crisis? Flagstar used the reduction in default volume to redevelop its data environment, with the goal of bringing ultimate transparency to its performance across all channels of default. All of this has been about positioning the company as a best-in-class servicing provider, and from a default perspective, to be ready for the next market dip. We know it is coming, the question is when. Our market advantage is that we don't just say, "We're ready"—we can show you. Our subservicing clients have the peace of mind that we know where every loan is—even at the "Mr. Jones" level. We have a deep confidence in our abili- ties and are comfortable with what is possible in the current market. We believe in our service, and we are able to have confident conversations about any performance expec- tation, whether compliance- or performance- based, because we simply do not believe there is a better offering. A key challenge in the default space now is whether we can, as an industry, scale up to service loans when called upon because, from servicers to at- torney firms, we've all had to scale way back. It's great to have transparency, but if every metric is being missed because you weren't prepared for increased volume, it doesn't matter. Having the staff, infrastructure, and technological efficiencies to handle volume with peak performance is what matters. As interim head of the Bureau of Consum- er Financial Protection (BCFP, formerly known as the Consumer Financial Protec- tion Bureau), Mick Mulvaney has been vocal that he is looking to revamp the Bureau's approach to regulation enforce- ment. Is it challenging for servicers not to know what may be coming down the pipeline? e organization I work for has a deep commitment to following the rules. So much so that they hired a consumer financial protection attorney to manage default—that's what I do. ese days, compliance needs to be just blocking and tackling. If you can't operate by the strict letter of the law—and we conser- vatively interpret the law—you shouldn't be in this business. We're happy to operate in an environment where we can look at asset performance and be more aggressive with collection strategies, but at the same time, there's always a balance with our commitment to compliance. By way of example, we recently redesigned our collectors' incentive program. Our collectors do not get paid extra for a compliant phone call. Instead, they auto- fail if they don't follow the rules, earning zero incentive for the month. We incent actual col- lections activities, particularly those that return borrowers to a performing status. at's Flagstar's perspective, and it's not changing regardless of the clout the BCFP may or may not have, the party in office, or any other factors. FIVE MINUTES WITH GET TO KNOW INDUSTRY EXECUTIVES BEYOND THE BOARDROOM "These days, compliance needs to be just blocking and tackling. If you can't operate by the strict letter of the law—and we conservatively interpret the law— you shouldn't be in this business." Courtney Thompson Director, First Vice President, Default Servicing Operations Flagstar Bank

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