DS News

66 Consumers are demanding more loan transparency today, as well as easy access to their information, said Jay Jones, EVP of Servicing at Mr. Cooper. ey expect servicers to perform at a certain level, regardless of what's going on in the environment. Sagent saw an opportunity to increase focus on consumer needs and expectations, as a way to differentiate the company in a crowded market, said Dan Sogorka, President and CEO of Sagent. "If you do that, you can actually make money as a servicer. is can be a good business for you." GIVING CONSUMERS WHAT THEY NEED (AND WANT) With foreclosures back at pre-pandemic levels, servicers can now help consumers resolve their payments by offering customer-facing tools that offer them easy access to their information, Sogorka said. "You want them to be able to self-service." "We have to listen to our customers," Jones added. ey need to be able to indicate when they're having a challenge, while servicers need to understand the borrower's situation. "We've had default cycles and rising rate environments," Jones said. But there hasn't been this much equity in the market before, meaning borrower behavior may be different than it has been in the past. If a borrower has had a modification in the last couple of years, it may be difficult to get another one. If they're already at very low rates and have already deferred some principal, it may be time to discuss selling their home, Jones said. "It's really about listening to that consumer, understanding where they are currently in this environment, and then understanding what their options are." Simply having a few delinquent loans in a judicial foreclosure state or a high-tax-insurance state that happens to be judicial can really have a negative impact on the cash flows, Sprague said. ough servicing values have increased, prepayment speeds have slowed. It's important to look at the actual cash received from servicing—real cash, real expenses, real advances, Sprague added. "You need to look in more detail at what is the true advance and what could be your advances in the future. Are you ready for that? Do you have enough cash to handle that? What are your contingencies? Understanding that cash implication of servicing is critical." MARRYING COMPLIANCE WITH CUSTOMER SERVICE "Servicing has gotten complex," Jones said. "Some of the compliance rules are complex. You need technology that allows you to understand what the rules are, what the options are, and how you move to the next step." According to Jones, the 2008 market taught servicers some important lessons in handling compliance. "You have to have a robust system that allows you to manage processes inside of it that are compliant. We are always going to have exceptions, but taking that system and using the data that we have behind it to understand what's going on with the customers, what they qualify for, what they may have already been denied for, and what your next talk step is going to be [is critical]. You need a system that's robust enough to handle all that complexity while you're on the phone with a consumer." e consumer is expecting and demanding that the servicer have all this information readily available. ey may want to know what their options are, to understand what they should do next to make sure they stay in their home, which is what everyone's goal is going to be at the end of the day, Jones explained. Servicers need to have the right system in place, with the right compliance rules, in order to best service the customer while also protecting the servicer and informing the customers of the next steps in the process, Jones said. DATA QUALITY e industry's data quality has improved tremendously. Sprague noted that consumers are now being contacted quickly after a payment is late, rather than seeing that contact occur after day 45 of a delinquency. "You have to make sure that the servicer is the trusted advisor in this space. I know Mr. Cooper and others are very proactive in trying to get to those borrowers and say, 'We're here to help you.' e industry, to a degree, has overcome some of its past sins. We've got good- quality borrowers, we have good-quality data, and we have better-quality systems than we've had in the past." Better outcomes lead to lower costs, lower Cover Story "Servicing has gotten complex. You need technology that allows you to understand what the rules are, what the options are, and how you move to the next step." —Jay Jones, EVP Servicing, Mr. Cooper By: Phil Britt

• Cover