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68 to building automated processes and seeing the benefits of systems that work together seam- lessly. For loss mitigation efforts, the ability to know that your borrower is headed down the path to delinquency in time to provide meaning- ful assistance is invaluable. at's the future (and present) of loss mitigation—quicker, better deci- sion making. Instead of waiting for a call from a borrower who is already in trouble, servicers can (in many cases) offer a modification that may end up allowing the borrower to avoid the entire default/foreclosure process (and save significant time/cost for all parties). TECH AS A HEDGE? From an operational perspective, having the ability to automate the collection, organization, and analysis of data, and tee it up for quick and accurate decision-making is a crucial hedge against market changes. It allows the company to more easily cross-train personnel and speed up the onboarding and training of new employ- ees (particularly tech-savvy millennials). In the case of a sudden increase or decrease in volume, servicers can deftly move folks from one space to another, maximizing efficiency. Additionally, it's a benefit to the employee to have a more well- rounded working knowledge of the business, rather than being siloed in a niche that may not be needed next year. Additionally, by ensuring that data is highly accurate and organized in an easily accessible format, servicers have a head start on ensur- ing compliance within an ever-expanding web of regulatory rules and guidance from 50 state regulators, the Consumer Financial Protection Bureau, and other enforcement mechanisms. THE POWER OF THE HUMAN TOUCH While advances in technology have been a boon, the most successful loss mitigation teams are invariably those that understand the value of human contact. When examining a borrower's reported hardship (think how hard it is even to verbalize that you can't meet your mortgage obligation), it is crucial to listen to the borrower's desires and work with them to accomplish their goal, whether it is to sell/liquidate the home or find a solution to stay in it. Further, the method by which servicers reach out to borrowers is critical. In 2019, servicers must have systems in place to contact borrow- ers in ways that will be successful. is is where technology and the human touch work well together. Knowing your success rate on phone calls, mail, email, or even text/social media is important, and the ability to spot trends and see where adjustments need to be made will yield success in finding solutions for borrowers. RIGOROUS TESTING AND EXPERIENCE ere is value in testing both internal systems and teams to ensure that servicers are best prepared for both market-based and natural disasters. Both proactive and reactive test- ing is required to thoroughly assess readiness. Proactively, for instance, servicers can examine their processor teams and note how many ac- counts they are typically assigned. After the adoption of any new technology or process, servicers can push the processor by adding a few more accounts to see if they can handle the extra workload in the same amount of time, without sacrificing quality of service. Knowing in precise detail how effective your team members are will allow for an incremental increase in efficiency. By doing more with less, companies can hedge against a market downturn. However, perhaps the best test comes in a re- active format. In just the past few years, servicers have faced countless natural disasters—fires, floods, hurricanes, and more. e knowledge, skill, and experience gained from working with genuinely distressed borrowers to find solutions will go to waste if there's no "post-mortem" evaluation. Ask the tough questions: was the team overworked? Despite the chaos inher- ent in a natural disaster, did we still provide a high level of customer service? What did our outcomes look like? While some disasters aren't predictable, those that are, provide the oppor- tunity to begin the loss mitigation effort well in advance. LOOKING AHEAD We are just on the leading edge of find- ing out how technology can positively impact mortgage servicing and loss mitigation. Keep your eye on how much faster and more accurate decision-making gets thanks to increased use of machine learning and API integrations between systems. is will benefit not only servicers but also borrowers. If you were in the midst of financial hardship, the last thing you want is a delay in the decision. You want a quick, accurate decision. From the company's perspective, the ability to do all this in a scalable, efficient pro- cess could mean the difference between success or failure in a rising-rate, low-margin environ- ment. Speaking of rising rates, one additional trend to watch is potential changes from govern- ment agencies (FHA, VA, and USDA) and the GSEs, if we start to see an increase in defaults, particularly from borrowers who have received a modification in the last decade. Since that modification likely came with a low interest rate, loss mitigation efforts now will almost inevita- bly result in higher rates. Agencies will have to revisit loan modification programs and revamp program mechanisms such as term extension and principal forbearance/forgiveness to reduce monthly borrower payments. Despite all the change servicers face, we have to keep in mind that our mission remains the same—utilize both technology and human empathy to reduce mortgage losses by keeping families in their homes when possible. The challenge will be to maintain a palatable cost per loan in a shrinking margin environment, while also preparing for future market corrections by improving processes and integrating technology to serve borrowers better.