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» bills. Servicers need to raise the priority of the mortgage payment by making early and frequent contact with delinquent borrowers. The GSEs' guideline of contact "every three days from the third day of delinquency" is a good start. So are welcome calls before the first due date, which help set the expectation of communication and, when executed correctly, reduce the likelihood of first-payment default. Don't forget the "what's in it for me?" incentive. | With early calling you have the opportunity to introduce the pending late charge as an incentive to prompt payment. After the late charge has been assessed, let borrowers know they can limit damage to their credit history by avoiding being reported two payments past due. And if things get closer to default, shift gears to encourage foreclosure avoidance alternatives. Reach borrowers on their terms. | By the end of this year more than half of consumers worldwide will own a smartphone. In a smartphone-majority world, servicers should take immediate steps to acquire email addresses, mobile phone numbers, and consent to communicate with the borrower by either means. For new borrowers, this can be done by adding slots for email and mobile phone to the loan application and including consent language in the standard terms and conditions language. For existing borrowers, servicers need to train their call center agents to ask for this information. Remember, customer preference is everything these days, so make sure you not only have multiple ways to contact your borrowers, but that you also know which method they prefer. "If you build it, they will come" isn't a guarantee. | To stay relevant in today's digital age, mortgage servicers need proactive, online and mobile account management applications that support enrollment in auto-debit and payment reminder services. These cost-effective servicing channels also need to be promoted during the origination process, at portfolio acquisition and throughout the borrower lifecycle. Next year will be a battle of apps vying for consumer attention. Those four mantras of borrower communication will carry servicers through 2013. Until the level of past-due accounts significantly decreases, the winners in the servicing game will be those who can most effectively and efficiently manage high volumes of delinquent borrowers. Make sure you are one of them in 2013. Chris Carlisle began working with Varolii Corporation as a technical consultant in 2007 and now holds a senior leadership role helping to manage the company's suite of solutions tailored for the mortgage industry. Varolii specializes in proactive customer interaction management (CIM) throughout the loan lifecycle. B O R R O W E R O U T R E A C H STEVEN HORNE CEO AND PRESIDENT Wingspan Portfolio Advisors, LLC The improved success of refinance and modification programs experienced in 2012 has shown primary servicers that they can increase positive results when they employ a more integrated approach. This often includes using component servicing resources that are designed and structured to provide a blend of multiple strategies, technology, and focused efforts. We can expect to see more of these methods used in 2013. Why are specialists often called in? Component and special servicers have—in the now-iconic words of Liam Neeson's character in the film Taken—"a particular set of skills." This skill set is complementary to those of the primary servicer and is matched with a compensation model that is geared toward success rather than being a cost center within a larger, more traditional servicing environment. Based on the success of the component servicing sector over the last two years, mortgage servicers are realizing that it makes sense to pay for success rates instead of adding to fixed costs. Successful outreach requires a comprehensive approach. In the early days of the foreclosure crisis, blanket modification offers descended upon distressed homeowners in official looking envelopes and courier packages. When they failed to provoke the desired response, specialists got involved and employed methods that have yielded greater results. In 2013 we will see continued outreach by mail, but also more door knocking, personal phone calls, and follow-ups via courier delivery. The importance of personal calls cannot be overstated, and they illustrate the main difference between the traditional approach and the component/special servicer's alternative. Primary servicers tend not to have the luxury of time for their associates to spend on the phone with distressed borrowers, and time is an essential requirement for building trust. Component servicers encourage their resolution specialists to take more time on calls rather than less, and this capability leads to greater insight on each situation. Technology figures into these scenarios, too. By having a wealth of information available during a phone call, the resolution specialist can run through multiple economic and payment situations with borrowers. Highly delinquent homeowners are generally very motivated to stay VISIT US ONLINE @ DSNEWS.COM in their homes but may also be greatly discouraged. A calm, knowledgeable voice on the phone with information on the valuation trends in their neighborhood and a manageable payment plan is like a lifeline. This approach understandably has a better result than a call from someone perceived to be yet another bill collector. Additionally, technology is the key to keeping the process as transparent and as accessible as possible to all constituents involved. Having real-time reporting and data available for business use and for keeping stakeholders informed has proved highly effective, benefiting borrower outreach and the overall distressed servicing effort. The servicing industry will likely see many innovations from component servicers over the coming year. In 2013 the industry will be employing more strategies involving specialists with aligned compensation structures, improved technology, and methods that utilize a full range of contact techniques—bolstered by time and high-touch. As the economy gradually improves, more distressed borrowers out there have a greater ability to make their payments. Investors and mortgage insurers are eager to keep these families in their homes and are quite willing to augment primary servicers' efforts with performance-based providers who possess that "particular set of skills." Steven Horne has spent his career creating and executing strategies to mitigate losses in real estate portfolios of all types. His specialized area of concentration is the most difficult aspect of servicing—defaulted and seriously delinquent loans. P R O P E R T Y P R E S E R V A T I O N GEORGE MEHOK CHIEF INFORMATION OFFICER Safeguard Properties We hold a hidden treasure in our computer systems. It is called data, and the mortgage field services industry has a lot of it. Safeguard Properties alone has data on tens of millions of properties in every city and every state in the country. And every month we learn more. As contractors perform more than a million inspections and deliver on hundreds of thousands of maintenance and repair requests each month, we add to the treasure trove. But data is only a treasure if you actually analyze it and do something with what you learn. So what do we learn by looking at billions of points of information about inspections, grass cuts, lock changes, debris, boarded windows, secured pools, vandalism, leaky roofs, wet basements, mold, hazardous materials, and myriad other 53

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