Q. Will the rule that all mortgage servicers must designate one employee as a single point of contact for every borrower requesting a loan modification make the process easier for borrowers to navigate?
A. The rule to which you refer was issued earlier this year by the Office of the Comptroller of the Currency. It was part of a package of enforcement actions taken against eight of the largest national bank mortgage servicers for unsafe and unsound practices related to mortgage servicing.
This particular action required the servicers to provide each applicant with the name of a single point of contact (SPOC) along with "one or more direct means of communication with the contact." Shortly thereafter, the Treasury Department announced SPOC would be the rule for all servicers participating in the Making Home Affordable Program.
Since poor communication between servicers and borrowers has been a core problem bedeviling the mortgage modifications problem, leading to more foreclosures, SPOC seems like a sensible idea. In fact, SPOC will not improve communication with borrowers. For example, informing a borrower that "Henceforth, Jane Doe is your contact person and her email address is jdoe@lenderZ.com" won't actually help the borrower unless Jane has quick access to the most current information about the status of the modification application, which today is very unlikely.
The crux of the communication problem is not the lack of an SPOC -- it is inadequate systems for capturing in one place all the information needed to resolve an application for a modification, and for making it available to all the persons involved.
If the servicer has an easily accessible system that shows what has been done, what remains to be done, and what additional information is required from the borrower, any customer service representative can provide the same information to the borrower. In such case, the requirement that each borrower can communicate only with an SPOC can only reduce efficiency. The SPOC may be busy when the client calls, or having lunch, or perhaps on vacation, while other SPOCs are idle.
If the system isn't adequate, on the other hand, an SPOC is not going to be able to answer the borrower's questions without making the rounds of those who have been working on that borrower's case, which will take time while other calls stack up. The SPOC cannot remedy system deficiencies.
The best system is an Internet-based portal available to borrowers as well as authorized employees of the servicer. The portal is the SPOC in the sense that borrowers can access it at any time to see the exact status of their application. But it is also a multiple point of contact in the sense that borrowers can communicate with any of the employees involved in their case by sending and receiving messages through the portal.
Two portals now exist, one from Default Mitigation Management, a private firm that recently opened its portal to borrowers. The second is the Hope Loan Port, which is a nonprofit associated with Hope Now, the nonprofit consortium of servicers, loan counseling agencies and others. The Hope Loan Port is more widely used by servicers than DMM, but it is not open to borrowers. I have no financial interest in either.
The DMM portal works in the following way: The borrower opens an account with DMM, selects the servicer from a list on the portal, and receives the complete set of documents required by that servicer. The borrower fills out the documents and sends them to the portal, which delivers the files to the servicer. The borrower receives a dated acknowledgment of submission through the portal. If the servicer finds a deficiency in or omission from the submission, a message to that effect is sent back to the borrower through the portal. Corrections by the borrower are returned through the portal.
At any time, the borrower can access the portal for an update on what has been completed and what remains to be done. The servicer employees working a particular file are assigned to the borrower on the portal. This means that a borrower who has a question or issue is automatically directed to the employee involved in her issue. All such communications are time-stamped and remain in the portal as a transparent record of borrower/servicer exchanges. As an important side benefit, the portal provides all the means for establishing the accountability of servicers for results.
The government's decision to require a human SPOC rather than a systems SPOC is difficult to understand. A systems SPOC would solve both the communications problem and the accountability problem. The human SPOC is costing an enormous amount to provide little more than PR window-dressing for regulators.
• Contact Jack Guttentag via his website at mtgprofessor.com.
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