Empowered Mortgage Counselors Keep Borrowers in Their Homes
Foreclosure rates are down at Indiana-based National City Mortgage, where keeping borrowers in their homes is both a mantra and a reality. The loan counselor staff manages 1.1 million loans with CSC’s EarlyResolution loan default management system, resulting in better workout plans for troubled borrowers.
The quest to help mortgage companies, or servicers, lower collection costs and prevent loan defaults drove the collaboration among Freddie Mac, Revolent Technologies, CSC and a consortium of banks to create EarlyResolution in 2000. Having hosted the application since its inception, CSC acquired EarlyResolution in 2003 and recently announced an expanded version of the system that automates default management processes such as collections, loss-mitigation fulfillment and foreclosure.
Before using EarlyResolution, National City Mortgage was challenged by the need to obtain consistent financial information about borrowers. Experience levels among loan counselors varied, as did their ability to remember guidelines established by various lending institutions stating how loans should be managed. These guidelines range from the duration of the repayment plan to the borrower’s monthly financial cushion to the number of payments scheduled. "The inconsistencies would happen here because loan counselors had to remember and find the servicing rules from all of the investors when talking to borrowers,"says Leslie Zeiter, assistant vice president for National City Mortgage.
Counselors have more time to counsel
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Related Information: Read a feature story about the previous version of EarlyResolution. Find a CSC service for your lending needs. Contact us and let our experience help you produce results. |
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EarlyResolution guides National City Mortgage’s loan counselors through conversations with borrowers with question prompts based on loan portfolio guidelines. Counselors are able to gather consistent, complete information about a borrower’s situation, and route the information accordingly to help the borrower resolve the issue with payment.
National City Mortgage’s loss mitigation department, reserved for extenuating circumstances such as natural disasters and temporary financial problems, used to be flooded with all kinds of borrowers. With the new version of EarlyResolution, loan counselors send the loss mitigation department only profiles of borrowers whose financial pictures warrant its assistance. "We’re more able to process a higher volume of delinquent loans, evaluate borrowers’ circumstances and devise strategies to help them continue payment," says Zeiter.
As a result, National City Mortgage has increased staff in the loss mitigation department and reduced training time. The foreclosure rate has dropped and the duration of loan counselors’ calls with borrowers has been reduced by 30 to 45 seconds.
Bottom-line results
National City Mortgage has increased the number and quality of retention workouts (plans created to keep borrowers in their homes) since adopting EarlyResolution in 2002. For example, it completed 64 percent promises to pay (borrowers’ promises to pay delinquent loans). In 2003, the number jumped to 70 percent, and in 2004, 80 percent. "We saw delinquencies decrease over the past two years and the flow of loans referred to foreclosure decrease by 350 loans per month during the last 12 months [ending August 2004], " says Zeiter.
A payment plan is more likely to succeed if the loan counselor has loan portfolio guidelines in mind. EarlyResolution’s management controls tap into those guidelines and deliver a consistent and efficient conversation, leading to more workouts that ultimately cure the delinquency. In 2002, National City Mortgage achieved 34 percent completed plans, in 2003, 50 percent and in 2004, 52 percent.
Financial institutions are taking notice as well. EarlyResolution provides a complete audit trail of the conversation with the borrower. This allows servicers to demonstrate compliance with loan portfolio guidelines. "Since adopting EarlyResolution, our investors tell us how consistent and thorough the loans have been worked," says Zeiter.
He notes that some mortgage servicers might see even more improvement, depending on how they were operating before they use EarlyResolution. "If you have nothing in place, you may see even bigger pickups," Zeiter says.
EarlyResolution’s impact on National City Mortgage’s business goes beyond statistics. National City Mortgage presently conducts demonstrations for prospective servicers to hear and see EarlyResolution at work. Servicers are invited to listen to counselors ask borrowers questions, get answers and come to a qualified solution. "That’s when they get impressed," says Zeiter. "They can see how the management controls allow you to fine-tune your service and operation."
Related Information:
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