DS News - HSBC

68 ere are many ways to describe what 2020 was like for the mortgage industry, but "nerve-wracking" is probably near the top of the list. Between juggling health guidelines, shifting to Zoom meetings, and managing record refi volume, there was plenty of chaos to go around—and undoubtedly a lot of antacid tablets being swallowed. e waters haven't completely settled in 2021, but they are indeed calmer. Businesses are reopening, vaccinations numbers are increasing, and COVID-19 infection rates are on the way down. For mortgage servicers, however, this picture of relative tranquility could change fast. By the end of the year, we're likely to see an increase in defaults and foreclosures and an increase in borrower complaints. Meanwhile, compliance is taking center stage, as the Consumer Financial Protection Bureau (CFPB) again refocuses its attention on the servicing sector. Servicers will need strategies in place to meet the agency's new rules, and many are turning to technology for help. However, today's challenges are not the kind that can be solved by any one software or service. To address them, servicers will need a different approach—and a different outlook. WHY NOT THINK BIG? Earlier this year, Acting CFPB Director Dave Uejio said servicers should expect a "tidal wave" of distressed borrowers coming to them for help when forbearance plans come to an end. It's highly likely many of these borrowers who are still struggling financially will end up defaulting on their mortgages. From what we know about the last foreclosure crisis, an increase in borrower defaults will almost inevitably lead to a jump in borrower complaints to state and federal regulators. More than ever, a servicer's job is to ensure consumers are treated in an appropriate manner, and that servicers are not doing anything that could harm the consumer when the consumer is in the right. e problem is that most servicers don't have the proper systems in place to handle a rapid increase in complaints. In fact, most servicers are using systems that haven't been updated in years. is is not so much of a technology problem as a problem of mindset. Most servicers think compliance is about checking boxes to keep the regulators off their back. ey also look at compliance and all the investments made into it through staff, technology, and outsourcing as "sunk costs." In other words, the money has already been spent and can't be recovered. Both attitudes are problematic, as they prevent servicers from thinking differently about technology, and specifically automation, which have the power to do much more than they realize. Compliance shouldn't be all about controlling costs. It can—and should—be an opportunity for servicers to do a better job in the market by eliminating the problems that create complaints in the first place. Such an approach has the added benefits of creating happier borrowers, staying out of the crosshairs of regulators, and reducing reputational risk. Keep in mind, it's easy these days for a borrower to find out what kind of servicer they have. If I know that my loan is going to be sold to a certain servicer, it's simple to pull up their complaints and see what type of Feature By: Zaid Shariff A DIFFERENT OUTLOOK Here's how to turn servicer complaints into opportunities.

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