Is Your Servicing Shop Ready for SPOC?
In its October edition, MortgageOrb published an article on loss mitigation, titled Is Your Servicing Shop Ready for SPOC?
Is Your Servicing Shop Ready for SPOC?
The CFPB’s single point of contact rule will be both a burden and a benefit for servicers.
Among the Consumer Financial Protection Bureau’s (CFPB) new mortgage rules going into effect this January is the single point of contact (SPOC) rule requiring servicers to have a dedicated agent or team of agents for each borrower who enters early-stage default. This dedicated agent or team is required to work with the borrower to avoid foreclosure by assisting with, if applicable, a loan modification or other alternative, such as a short sale, with an ultimate goal of mitigating loss for both the borrower and loan investor.
SPOC (i.e., the “continuity of contact” rule) is one of several CFPB rules that aim to fix the customer service problems that arose when servicers were blindsided with a flood of foreclosures in the aftermath of the financial crisis. Due to the sheer volume of delinquencies, many servicers became backlogged with requests for modifications, resulting in long delays, lost documents and a deluge of consumer complaints. In some cases, homeowners who otherwise might have qualified for a modification ended up in foreclosure. As a result, the U.S. mega banks were last year subject to the $25 billion National Mortgage Settlement, from which SPOC sprung.
So, how much of a burden has SPOC been on mortgage servicers so far? It depends on whom you ask. Small boutique firms that service, on average, under 5,000 loans at a time are exempt – and the mega banks that were subject to the mortgage settlement are already in compliance, as per their agreement with regulators. (Furthermore, the big banks have the luxury of ample budgets, advanced technology and their own internal compliance departments.)
That leaves the small- to mid-tier servicers, including subservicers, who are arguably the most burdened by SPOC, as they face costly implementation of new technology, processes and training. Many of these servicers have limited budgets, yet they have been cutting checks to technology vendors, training companies and consulting firms to help them get their systems, processes and people in compliance.
“The bigger servicers have had ample time to figure out how they’re going to deal with [SPOC],” explains Brian Moore, financial services industry practice director at contact center technology firm Varolii Corp. “That doesn’t mean it’s easy for them – it just means that they’ve had some experience.”
In fact, that experience is what helped the big banks inform the CFPB’s rulemaking.
“If you look at Regulation X (in the CFPB mortgage rules), the CFPB actually stopped short of requiring SPOC,” Moore adds. “They refer to it as ‘continuity of contact.’ The rule requires dedicated personnel to work with borrowers in loss mitigation – but without saying it has to be the same guy every single time.”
The ‘pod’ approach
Indeed, the CFPB states in its rules that it is up to each servicer to “decide whether to assign a single person or a team of personnel to respond to a delinquent consumer.” What’s more, this person can be “single-purpose or multi-purpose,” or in other words, doesn’t have to be dedicated solely to working on delinquencies. Moore says this softening of the initial rule was the result of industry stakeholders arguing that a single agent cannot realistically be available to borrowers 24/7.
The additional agents, along with the primary point of contact, make up what is called a “pod.” In effect, all agents in a pod qualify as a SPOC under the CFPB’s revised rules.
“Each member of that team is familiar with all the files that the team is handling,” Moore explains. “Usually they have a primary relationship manager who serves as the primary contact for each loan – but any member of the pod can back them up.”
The agents in a pod might be scheduled, for example, using a split-shift approach, where one agent works regular business hours while another works an evening shift. An additional agent might work during the off-hours; however, “the CFPB isn’t crazy enough to say ‘you have to have people available 24/7,’” Moore says.
“At the same time, you do have to let your at-risk borrowers know when the hours of communication are,” he says. “And it must be reasonable; for example, it can’t be from 2 to 3 p.m. only on Mondays.”
While the pod model provides some flexibility, it also presents challenges, including the need for systems that track borrower interactions and transactions among the different agents within a pod. To accomplish this, the borrower’s account, or profile, along with all related documentation, must be shareable among the agents within the pod. This requires integration between a servicer’s loan servicing platform, case management system and contact center system – and it is crucial, as servicers must be prepared to furnish documentation showing what happened throughout the entire lifecycle of a loan, should the CFPB conduct an audit.
A staffing conundrum
Another major concern for servicers is the impact SPOC will have on contact center staffing. Servicers will need to hire additional agents to handle SPOC interactions, as these delicate and complex calls require increased handle time. This, in turn, will have an impact on contact center operating budgets.
And what happens if a SPOC ends up quitting or getting fired – and then the replacement quits two months later, resulting in a customer complaint? Does a servicer risk CFPB enforcement action as a result of high employee turnover? According to Kelli Himebaugh, corporate vice president of technology provider Mortgage Builder Software, this is another one of servicers’ major concerns.
“The burden of proof will be on them to prove what may have occurred on a particular day when a SPOC was unavailable,” Himebaugh says. As a result, servicers are “going to have to start tracking things like time cards and sick hours – and I think that is what is making them nervous.”
Himebaugh says some technology vendors are now offering systems that provide all the agents within a pod a “single point of contact screen.” This enables a borrower’s profile, including recent interactions and related documents, to be readily accessed and shared among the agents in the pod. “This way they all have access to the same info,” she says, adding that most systems track “which agent took which actions” and allow for complete transparency.
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Safeguard Properties is the largest mortgage field services company in the U.S. Founded in 1990 by Robert Klein and based in Valley View, Ohio, the company inspects and maintains defaulted and foreclosed properties for mortgage servicers, lenders, and other financial institutions. Safeguard employs approximately 1,700 people, in addition to a network of thousands of contractors nationally. Website: www.safeguardproperties.com.