Earlier this year, LoanCare, LLC, a top U.S. mortgage subservicer, launched Velocity Servicing, an independently managed division dedicated to delivering one-stop resolution for credit sensitive mortgage loans by carefully managing the borrower relationship and providing transparency into servicing performance. Utilizing advanced data analytics, Velocity Servicing puts distressed mortgage loans on the path to resolution significantly faster than traditional servicing. By analyzing an intelligent network of triggers, exceptions, and conditions at the loan level, it achieves a consistent return on investment earlier in the process. In addition, the division works with clients on establishing portfolio goals and executing on a loan-by-loan disposition plan. Velocity Servicing can uniquely structure a solution tailored to a homeowner’s situation, helping them understand their options and make decisions at a pace that puts both the homeowner and client at ease. Our editors talked with Kevin Cooke, Jr., Head of Strategy and Business Development at LoanCare, about the future of mortgage servicing. Here’s what he said:
QUESTION: How has the mortgage servicing industry evolved over the past decade, especially in response to regulatory changes and customer expectations?
KEVIN COOKE: As a result of the 2008 housing crisis, there has been an increased focus on consumer protection and improving their experience in the mortgage loan process, which has caused an increase in regulations and compliance management driven largely by the Dodd-Frank Act and Consumer Financial Protection Bureau (CFPB). The COVID-19 pandemic and related CARES Act added another layer of complexity with evolving programs, requirements, and timelines, the need for speedy implementation, expanded compliance rigor, and everyday support to help customers navigate through options.
The demand for digital self-serve has also grown exponentially in the last decade with digital natives entering the homeownership arena and a pandemic that drastically shifted behaviors online from retail shopping and media consumption to mobile payments.
While change is nothing new to the mortgage industry, the speed with which it has taken place in the past 10 years is extraordinary. In a decade, we came out of the Great Recession with home prices upside down for many, then moved into a period with some of the lowest interest rates of all time which made home buying and refinancing an easy sell. Followed by a pandemic that generated a remote workforce with a new opportunity to move to another location. And then just a few years later, we have interest rates at levels we haven’t seen in over 20 years and high inflation that has caused a sudden slowdown in home loan origination.
The most resolute companies in mortgage servicing, like LoanCare®, have decades of pragmatic experience navigating the cyclical nature of our business. When the dust settles, you will see the LoanCare team ready to help homeowners and clients through the next evolution. We do this by leveraging real-time data to learn and move with agility whether the topic centers around liquidity, default, customer experience, or any other that spans the mortgage ecosystem.
Consumer protections and regulations are here to stay. Therefore, it is imperative that participants in the industry maintain sufficient processes and controls to meet these demands quickly and effectively. For example, LoanCare uses advanced data analytics to add another layer through automated triggers to predict situations and scenarios before they happen. This elevated level of risk management rigor is paramount to be successful in managing regulations and providing clients with the protections they need.
Good customer experience is no longer a goal, but a baseline requirement. It starts with the use of technology and digital channels set up in a way that creates a frictionless journey for the customers. At LoanCare, this includes the use of data for personalized relevancy across servicing touchpoints which ensures the availability of self-serve tools to make mortgage management quick, easy, and convenient. When combined with proactive communications delivered through the customer’s channel of choice, we can extend support to them through every step of their journey – an experience we continue to optimize through data-driven insights, feedback mechanisms, and social media listening.
QUESTION: What digital platforms and software solutions are currently leading the mortgage servicing sector, and why have they gained prominence?
KEVIN COOKE: From a servicing operations standpoint, the efficiencies achieved through data-driven insights and automation are critical to increasing profit margins. Whether it’s pre-filling applications, sending personalized communications, answering calls with insight, proactively monitoring exceptions, or tracking portfolio performance, the benefits are significant.
From a consumer perspective, investing in self-serve tools and cloud-based services is necessary to meet today’s expectations and be able to continue to evolve over time. For example, LoanCare implemented an integrated customer service platform to connect the dots of interactions, provide real-time insight, and offer omnichannel engagement. We also put in place software platforms that support in-house communication design and fulfillment capabilities to develop letters and emails with automated workflow, enhanced personalization, and augmented tracking. Tools focused on delivering the right message at the right time with higher response rates and reduced costs. In addition, LoanCare has prioritized on-demand self-serve tools for homeowners with ease of use from a mobile phone. These proprietary digital services are unique to our industry and span everything from responsive web design to mobile applications, robust payment options, cloud document storage, hardship applications that can be filled online at any time or place, mortgage status dashboards, chatbots, language translations, and more.
For clients, the need for business intelligence and servicing transparency continues to grow. At LoanCare we developed a platform, LoanCare Analytics™, that offers the most robust data analytics in the servicing industry according to a top credit agency. We accomplished this by aggregating thousands of disparate data sources from across the enterprise into a centralized, cloud-based solution that provides an on-demand, single source of truth destination for real-time assessments. The intuitive design empowers stakeholders in any role or function to make confident decisions faster. From onboarding, compliance, and controls to financial decisions about liquidity or identifying new revenue opportunities, LoanCare Analytics connects the dots down to loan-level specificity. To support our white-label clients, we’ve also put in place marketing platforms, developed custom tools, and expanded partner networks to enable omnichannel recapture programs, including targeted account-based marketing, advertising, email campaigns, direct mail, and marketplace capabilities.
QUESTION: How are artificial intelligence and automation being integrated into mortgage servicing processes, and what benefits do they offer to both lenders and borrowers?
KEVIN COOKE: The process efficiencies available to LoanCare and other servicers through the integration of AI and automation allow for deeper and smarter connections between lenders and borrowers while removing inefficient processes and time-consuming tasks. For us, instead of ’stare and compare’ or extensive manual intervention, technologies such as OCR (Optical Character Recognition) and RPA (Robotic Process Automation) automate the process of data entry and backend functions. Digital dashboards and data visualization are continually refreshed and optimized to ensure teams are working from the same, accurate data source when making decisions. With automation tools comes tracking which provides a wealth of insight to understand what is working and what is not to continue to evolve the mortgage experience. AI in chatbots helps fine-tune the answers to match the questions more tightly as well as expand its inventory of options. Campaign automation is used to increase the reach and frequency of engagement between homeowners and servicers. Whether it’s a servicing update, informative content, client ads, or promotions these platforms offer personalized segmentation, behavioral tracking, and performance testing.
QUESTION: How are technology solutions enhancing the customer experience in mortgage servicing, especially in terms of communication, problem resolution, and ease of access?
KEVIN COOKE: Consumers expect to be able to choose from an omnichannel set of options on how they interact with their lender or any other service provider – with clear, simple messaging and interactions in each instance. The technology, often an integrated set of tools, needs to be predictive to anticipate customer needs with options to provide answers in the quickest method possible. In the mortgage servicing industry, this may manifest itself in easy-to-use search queries, chatbots, or frequently asked questions.
Generally, the first choice for consumers is not to make a phone call so paying attention to the support experience in those earlier touchpoints, such as a letter, text, email, online search, website, or mobile app, has become paramount for LoanCare through our cloud-based solution. In addition, making the communications work as an extension of our customer service team is critical. For example, emails that step homeowners through a servicing transfer or provide status on a loan modification process prove to be highly effective. They are a low-cost way to keep homeowners informed about what they need to know and when, so they don’t need to look for information on their own or make a phone call.
For many people, buying a home is the largest financial investment they’ll make in their lifetime. With that in mind, LoanCare has also invested in Spanish translation throughout the support experience from websites and mobile apps to customer service calls. We can reduce anxiety and provide additional comfort by discussing this important financial topic with customers in their native language.
QUESTION: With the increasing digitization of mortgage servicing, how are lenders addressing data security and privacy concerns? What technological solutions are being employed to safeguard sensitive customer information?
KEVIN COOKE: LoanCare and other servicers who prioritize data security are using tools like multi-factor authentication on website accounts and biometric authentication for mobile applications to ensure secure access to their mortgage loan accounts. In addition, there are steps that can be taken to further strengthen the protection provided. For example, engage proven vendors with specialized expertise for critical areas such as identity verification and authentication, and cloud document storage. Embed features within the digital experience that can prevent potential fraud such as stringent password requirements, session time-outs after several minutes of inactivity, and automated email notifications when personal information has changed in an account to ensure it was the actual customer. Tips, resources, and even formal employee training to inform and remind about security protocols, how to identify fraud, and ways to protect oneself can further educate as the volume of cyber-attacks grows and methods evolve.
QUESTION: Are there any notable applications of blockchain technology in mortgage servicing? How might distributed ledger technology streamline or secure various aspects of the servicing process?
KEVIN COOKE: It is interesting to see the potential of blockchain move in support of streamlining lending services, reducing counterparty risk, and decreasing insurance and settlement times on the origination side of things. As an example, the use of smart contracts in the real estate sphere can dramatically increase the speed and efficiency of managing loss mitigation and modification procedures, while ensuring they remain compliant. Blockchain can also facilitate secure and transparent mortgage payments, reducing the risk of fraud and errors. The technology can also automate the reconciliation of mortgage accounts, reducing administrative workload and errors.
As a subservicer, we’ll continue to track its potential and identify opportunities for this technology as it aligns with the type of support our clients need. By leveraging blockchain and distributed ledger technology, mortgage servicers can potentially reduce costs, improve efficiency, enhance security, and provide better services to borrowers. However, the adoption of these technologies also comes with challenges, such as regulatory hurdles, integration with existing systems, and the need for industry-wide standards and collaboration.
QUESTION: Given recent global events, how has the adoption of remote and cloud-based technologies impacted the mortgage servicing industry, and how might this shape its future?
KEVIN COOKE: The extremes of a few years ago have really started settling into a solid in-between or a hybrid working culture. Looking back, LoanCare was able to pivot quickly and successfully to a remote environment during those early months of the pandemic, relying on decades of experience in the cyclical nature of our industry. It was not an easy feat, especially while dealing with a CARES roll-out. It required seasoned leadership, a strongly aligned team, and the financial stability and strength of our parent company.
The cost savings from commercial real estate and the ability to recruit talent from across the U.S. have made the remote option appealing to LoanCare and servicers alike. The flexibility of working remotely, from the office or somewhere in between, is also a retention and recruiting driver for employees.
However, challenges remain in developing personal relationships without hallways, cafeterias, or water coolers, and the missed opportunities to learn through observations that watching and hearing others provide. The latter is why certain roles have come back to the office such as customer service teams that are handling some of the most complex conversations with homeowners. They have onsite coaching from leadership and being together provides an easier mechanism to learn from each other and optimize their approaches.
QUESTION: Are there any technologies or practices being adopted that promote green and sustainable mortgage servicing operations? For instance, how is the industry reducing paper usage or energy consumption?
KEVIN COOKE: Going remote has been a huge factor in promoting sustainable servicing operations. At LoanCare, we have been able to reduce our physical footprint and energy consumption, while expanding our workforce nationwide. As a company that is primarily paperless, internal functions are supported via electronic sources, and software solutions have nearly eliminated the need for physical copies of documents. We also support the eco-friendly campaigns of our clients through promotional and educational materials. For example, a campaign to educate homeowners on the benefits of going paperless resulted in a 20% lift in subscribers to electronic document delivery.
QUESTION: How is predictive analytics being employed in mortgage servicing to foresee potential defaults, manage risks, or even tailor services to individual customers?
KEVIN COOKE: In uncertain markets, and frankly any time, servicers with a comprehensive, intuitive data analytics tool have a real advantage. They can answer broader questions about liquidity, credit risk, and customer engagement, as well as provide predictive insight with specific performance trends in areas such as transfers, payments, natural disasters, fraud flags, compliance milestones, and more. It can help mine for leads to tailor services to those with the highest propensity of interest, enhance risk management with a layer of predictive triggers, and provide loan-level evaluations to mitigate risk and maximize opportunity at the source.
For example, LoanCare Analytics accomplishes this by aggregating over 15,000 data elements, 1,250 dashboard views, and 85 controls in an all-in-one servicing platform to help predict risk and opportunity faster. The data visualization tool is powered by a single source of truth database with interactive controls, filtering specificity, collaborative features, and flexible formats whether one wants to export for further data manipulation in Microsoft Excel or connect other data sources through API integration. The goal was to create something intuitive enough that any servicing stakeholder, no matter the role of function, can gain the insight they need to decide quickly without requiring a team of data scientists or days of analysis.
QUESTION: Based on current technological trends and the needs of the industry, what innovations can we anticipate in mortgage servicing in the coming years?
KEVIN COOKE: In an ever-changing market environment with high-interest rates, inflation, and new regulations arriving all the time, it will be especially important for lenders to know what’s going on in their portfolios, understand liquidity signals, see performance trends, and have support if default spikes.
With the slowdown in loan origination, lenders will want support from servicers to keep their brand top of mind, extend additional value, and market recapture offers to cross-sell other loan products and financial services. Customer experience and engagement will continue to be high priorities for lenders as well as controlling costs and benefiting from the protections and efficiencies outsourced servicing can provide.
The need for actionable, data-driven insight to respond quickly to industry fluctuations, financial trends, regulatory updates, new products, or lead generation opportunities will be critical to keep up with the pace of change. Solutions like those provided by LoanCare Analytics empower all servicing stakeholders, in every role and function, to analyze data. The visual dashboards do not require teams of data analysts to monitor performance metrics, mine for leads, simulate regulatory audits, stay ahead of liquidity trends, and more.
Kevin Cooke, Jr., is Head of Strategy and Business Development at LoanCare. He has 20 years of experience in the financial services sector where he has developed a specialized talent for building collaborative solutions that deliver significant impact to the bottom line of both clients and service providers. At LoanCare, Cooke is responsible for expanding lender relationships, building strategic partnerships, and driving business growth. Prior to joining LoanCare, Cooke was SVP of Strategic Partnerships for Auction.com. He’s also held executive roles at Altisource Portfolio Solutions, LenderLive, AMS Servicing, and Mortgage Outreach Services.
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