When Dan Sogorka took over as CEO and president of mortgage servicing company Sagent in early March, the prevailing wisdom was that the industry would be hitting a cooling period within 12 to 18 months, giving companies in the space what they considered to be ample time to step up their online loss mitigation/loan modification tools before an anticipated spike in defaults and foreclosures made those tools necessary in 2021.
But two weeks after his appointment, with COVID-19 strangling the U.S. economy and driving millions into loan forbearance programs, it became clear to Sogorka that mortgage providers needed to fast-track their online approach to forbearance, provide more up-to-date information around their clients’ individual loan performances and provide borrowers with online options for modifying their loans.
“COVID accelerated all of that,” Sogorka says, “and created some new wrinkles.”
Tech innovation has been a priority on the origination side for years, Sogorka explains, dating back to the early Rocket Mortgage days when investment was pouring into front-end systems from every conceivable angle. Investment into the kinds of processes that carry negative connotations, like loan mods and forbearance, lagged far behind. With millions of Americans panicking over the fate of their mortgages, COVID-19 woke lenders and servicers to the gaps in the service they were providing their more distressed clients.
“What COVID-19 drove was, ‘We have to have the same type of engagement with consumers that have existing loans,’” says Sogorka, who adds that investment into these back-end processes would have evolved naturally over the next two years if COVID-19 hadn’t shortened the runway to just a few feet.
Maintaining engagement and increasing customer loyalty among homeowners is an ongoing struggle for all mortgage professionals. (Sogorka says only 15 percent of customers who service their loans retain their servicer for their next purchase or refi.) Providing them relevant, customized, and timely updates is one way to earn their ongoing business, particularly at a time when a homeowner’s financial situation could change from one day to the next.
Sogorka says there are three steps lenders and servicers can take if they want to provide relevant, real-time updates for their clients.
- Enable updates and allow actions from any device
The first step is for a lender to enable basic updates in the first place. Borrowers should be able to easily access their loan information, including their current loan status, LTV, the value of the equity they’ve built up, etc., a process Sogorka describes as bringing “data together with servicers and consumers at the right point in time to make the right decision.”
Customers should also be able to easily take actions such as making mortgage payments, signing up for forbearance or going into the modification programs provided by the nation’s GSEs. In many cases, says Sogorka, companies won’t be required to make major changes to their core systems in order to provide this expanded functionality.
“It becomes a more complex discussion the deeper you go down if you want to do everything with technology,” he says. “You could enable a consumer to do a one-click forbearance. That’s not hard to do. But what do you do when they come out of forbearance? How do you connect with them and tell them what their options are?”
- Share potential forbearance outcomes in real-time
Picture an add-on that allows clients to compare their forbearance options and then follow through on the one they’re most comfortable with in a few clicks, not unlike a forbearance-only version of a lender’s online mortgage calculator. It’s one of the initiatives Sogorka is currently working on with his clients.
“No more work for the servicer. No more work for the borrower. Pretty clean for the investor, as well,” he says.
Here’s where the data demands start increasing. For a company to provide up-to-the-minute forbearance advice in an online setting, it needs to have the appropriate data on customers, their employment situations, and their particular loans, as well as updated information around how certain mortgages will be allowed to come out of forbearance. Its systems will need to be robust enough to crunch all that data in a timely, accurate fashion, too.
- Deliver custom updates for the duration of a mortgage
This is where Sogorka feels mortgage professionals can take the biggest strides toward improving customer loyalty. Taking the updates mentioned above a step further, originators and servicers can combine all the data available to them into customized alerts and offerings, simultaneously displaying their comprehensive understanding of a client’s situation and providing options that take into consideration both market dynamics and a customer’s individual needs.
For this to work, however, companies need to access more than just client and lender data. They must also have access to MLS data for every neighborhood where their clients’ properties are located. This allows a lender to provide updates around local home prices, sales of comparable properties and other information clients can use to determine their next steps as homeowners.
“If you don’t have that yourself, you need to partner with people, bring it together, connect it in from a technology perspective and then deliver it in real-time when somebody needs it,” Sogorka says.
When the right data is flowing to the right places, Sogorka says lenders and servicers can then greet their clients with personalized messages and customized loan options, something he says might be along the lines of:
“Hello Sally. Glad to see you’re back. Thanks for making your payment. Did you know our rate now is 50 basis points lower than the rate you have? Click here. We might be able to auto-refinance you.”
Sogorka says it’s critical to remember that updates, while a nice addition on their own, need to be part of a system whose final step involves customers taking action, confidently and on their own. There’s little point in arming a borrower with all the information she needs and then forcing her to have to pick up the phone and be put on hold at a call center.
As with sharing real-time forbearance options, these custom updates require the sophisticated handling of multiple data streams. Offering that kind of functionality may be a considerable leap forward for some lenders and originators – it’s a work-in-progress for many of Sogorka’s clients – but it’s really the only option for companies hoping to keep pace with their forward-thinking competitors.
“The tools and the technology exist today,” Sogorka says. “It’s really about how do we bring it together collectively, as an ecosystem, to the benefit of the consumer and the servicer. That’s what we’re focused on.”