Timothy G. Massad
Our country is in the midst of recovering from an unprecedented housing crisis. At the start of the crisis, the mortgage industry was not prepared to help the number of homeowners in need of assistance. Mortgage servicers were focused primarily on collecting payments on behalf of investors rather than providing customer service to struggling homeowners. When the crisis hit, many homeowners were not getting the help they needed and customer service was often dismal. There were no standardized processes for assisting homeowners to prevent foreclosures. These challenges presented themselves as the Obama administration took steps to get relief to homeowners.
Today the U.S. Department of the Treasury is releasing a special report called “Making Contact: The Path to Improving Mortgage Industry Communication with Homeowners” that details the steps Treasury and other federal agencies took to get the mortgage industry to improve customer service in the Federal government’s Making Home Affordable Program, including through Single Point of Contact requirements. The report offers the most detailed information published to date on implementation of Single Point of Contact requirements which are now becoming standards across the mortgage industry. The Single Point of Contact requirements represent one of the largest operational changes required of mortgage servicers to improve their communication with struggling homeowners who may be eligible for assistance to avoid foreclosure. The report offers a snapshot of efforts underway by the nine largest servicers who participate in the program (Bank of America, Citi Mortgage, GMAC Mortgage, Homeward Residential, JPMorgan Chase, Ocwen Loan Servicing, One West Bank, Select Portfolio Servicing and Wells Fargo).
While it is still too early to draw conclusions about the most effective ways to implement Single Point of Contact requirements, and while further improvements in servicing are still needed, this report is intended to help shape discourse about the best ways to continue to improve communication between mortgage servicers and homeowners seeking assistance.
Some of the key findings of the report include:
- Through Single Point of Contact requirements, servicers have had to increase staff and resources to ensure that homeowners now have dedicated personnel to work with them. The nine servicers profiled in the report now have more than 12,000 individuals whose primary, if not sole, responsibility is to communicate with homeowners seeking assistance. Nearly 6,000 additional personnel are assigned to help these contacts collect and process documents from homeowners.
- Three primary implementation models have emerged. Of the nine servicers, seven use a “Direct Model,” one uses a “Pod Model,” and one uses an “Appointment-Based Model.” Regardless of the model, Single Point of Contact requirements direct servicers to assign homeowners dedicated personnel to work with throughout the complex process of resolving their difficulties with their mortgages. Servicers must also make sure that the Single Point of Contact is accessible to respond to inquiries, is knowledgeable about the homeowner’s current status and communicates all options available to the homeowner to avoid foreclosure.
- Servicers communicate with homeowners in different ways. While all servicers make their Single Points of Contact available to homeowners by phone, some also utilize email or web-based communications. Servicers also vary widely in the alternatives offered to homeowners attempting to contact a Single Point of Contact who is currently unavailable—for example, some use voicemail, while others route the call to another contact.
- Challenges remain in improving how servicers communicate with homeowners. The Single Point of Contact model, as applied to mortgage servicing, is still in the process of maturing and servicers will likely continue to experiment with different concepts and new practices. While the changes discussed in the report have begun to improve the likelihood of better outcomes for homeowners, it is still too early to tell whether the changes will prompt the industry to improve its customer service to the desired levels.
As with many of the servicing standards and homeowner protections developed under the Making Home Affordable Program, Single Point of Contact requirements were also included in the servicing standards agreed to in the National Mortgage Settlement, and a similar requirement (referred to as “continuity of contact”) has been included in the servicing standards recently proposed by the Consumer Financial Protection Bureau (CFPB). The changes represent a broad effort to implement the Obama administration’s Homeowner Bill of Rights.
Timothy G. Massad is the Assistant Secretary for Financial Stability at the U.S. Department of the Treasury.