DSNews delivers stories, ideas, links, companies, people, events, and videos impacting the mortgage default servicing industry.
Issue link: http://digital.dsnews.com/i/1505571
August 2023 » thefivestar.com 35 August 2023 F E A T U R E secret the regulatory items we were tackling. We needed to get ourselves situated in a very structured manner so we could tackle some of the overarching issues that were upon us." Two years into that role, Thorn feels positive about the results, saying that she believes she has indeed put "the right people in place." "We've set up that structure, we've set up the routines, we've set up all our partnerships internally. Our next big priorities are part of the announcements that we put out at the be- ginning of the year, [working on] simplifying and reducing our overall servicing portfolio," Thorn continued. "Now we're executing that plan so that, within our servicing environ- ment, we can get down to a more simplified portfolio that becomes easier to manage, easi- er to service, and easier to serve our customers while also being flexible and nimble enough to make changes the investors, states, and so on require. Right now, we have a portfolio that [doesn't align with our] overall strategy, and so getting that narrowed and focused down is part two of where we need to go." If she makes it sound simple, it's not. After all, Wells Fargo is the nation's second- largest mortgage servicer and one of the largest originators, having funded around $94 billion in mortgages through Q3 2023 (per In- side Mortgage Finance). Servicing is complex, expensive, extensively regulated work even on the best days. And if managing that nearly trillion-dollar portfolio was challenging, it would also be challenging to scale all of those moving parts back down to the level the bank now had targeted. "Wells Fargo is a very, very large orga- nization—we're the largest servicer in the country—so that adds complexity to what we have to do and what we have to deal with when changes are hitting us," Thorn said. "As with most servicing, there are a lot of com- plications with our overall technology that don't make it easy to shift. That was probably one of the biggest reasons why I had to make sure that we had the right strategy as we work toward that more simplified portfolio, just because of the size and scale of Wells Fargo." As Thorn explained, "The more complex our portfolio, the more investors we have and the more we must change." The bank had over a million customers in forbearance at one point, and Thorn and her team needed to navigate a complex regulatory framework for helping those homeowners find a path forward. "It's about being able to ensure that every one of our customer service agents, everyone within loss mitigation, knows every single rule that is out there," Thorn noted. "That's where the complexity comes in when you have such a large and diverse portfolio." Next Steps A t the end of July 2023, the Federal Reserve hiked rates once again, settling (as of this writing) at a rate of 5.50%—a 22-year high. This often complicates mortgage servicers' jobs when it comes to finding workable solu- tions for struggling homeowners, as gone are the days when they could refi to a lower rate. "There are going to be situations where our customers are sitting at 2%, 3%, and 4% interest rates, but they're still going to need a loan modification. So, then it becomes a question of what do we do and how are we going to work these programs—and are there programs? HUD has started to come out with some new programs, and that has provided an opportunity for the industry to come to- gether because [some of these programs are] very difficult to implement." Thorn says she's grateful for the industry dialog happening between HUD and other agencies and industry groups such as the National Mortgage Servicing Association or the Mortgage Bankers Association. But as she pointed out, when it comes to mortgage servicing, "there's always another crisis"— and Thorn is already thinking ahead to those possibilities. "How are we going to address it if we get into a time where we have rising delinquen- cies and rising foreclosures again? Because we're not set up for that given the current interest rate environment." Thorn told MortgagePoint she's trying to take a proactive approach. "There are some proposals out there that we're trying to get our arms around, but that's going to be a big driver for us over the next cou- ple of years in the servicing space," she said. One area of focus is in automating what can be automated, working to remove inef- ficiencies or "stare-and-compare" tasks that can streamline things and make life easier for "There's a lot of technology and effort put into the origination space, and that's neither unusual nor strange. [When it comes to servicing tech,] there's no silver bullet out there unless you're going to just stick to one type of loan and that's it."