The Key To Servicing Innovation

Clarifire is a privately held, women-owned corporation that offers the CLARIFIRE business process automation software through their SaaS model, to the financial services industry. Started by a process-focused entrepreneur, the company is a group of workflow experts that created the CLARIFIRE workflow application to make a difference for businesses. Clarifire has over a decade of experience in both process proficiency and software delivery. As a Microsoft Gold Certified Partner, SOC 2 Type 2, and WBENC certified corporation, Clarifire guides organizations through the chaos and into organizational efficiency. The company’s CEO talked to our editors about process automation and the future of mortgage servicing. Here’s what was said:

QUESTION: How does process automation add controls and guardrails to bring more transparency and auditability to servicing operations?

JANE MASON: Process automation not only creates visibility into regulatory milestones, but it also eliminates manual work and increases efficiencies in servicing operations. It’s done through intelligent business rules that are easily configurable to automate the ways servicers do their work. For example, every action servicers make related to a borrower is captured in real-time dynamic workflows based on business rules and user interaction. Executives and teams worried about compliance risks, for instance, can easily see the processes being displayed and worked through on real time dashboards, meaning that processes and results are synchronized, so that as users click, they have pre-emptively entered the regulatory milestones. Over the past year, operational risks have literally cost mortgage servicers millions of dollars in CFPB penalties and fines, which could have been easily avoided by leveraging the right process automation technology.

For technology professionals, process automation uses dynamic KPIs (which can be as simple as tagging zip code data in disaster zones or as complex as forecasting milestone issues so they can be resolved) that power processes so all are executed with consistency, which is critical for mitigating operational risks. For example, when changes in regulations occur, a servicer’s automation platform can be quickly updated to adopt new requirements with technology doing the heavy lifting. Controls—also known as business rules aligned with KPIs that display the critical information to the users at the right time—prohibit actions like going to a foreclosure sale when a borrower has an active loss mitigation in progress. These guardrails that process automation adds to the servicer arsenal are a compelling, modern imperative for servicers to scale and thrive.

Basically, process automation significantly enhances guardrails for processes to flourish in a more risk-avoidable environment. This leads to the comfort of being auditable and responsive to both regulations and borrower demands, with powerful technology making it all easier for servicers and their staffs.

QUESTION: How can workflow automation help make processes more consistent and prevent monetary and reputational risks?

JANE MASON: Workflow automation is the foundation of achieving consistency in servicing processes. By embedding predefined rules and protocols into the servicing workflow, automation ensures that each step that aptly applies to each scenario is performed uniformly and adheres to the business rules that serve as guardrails to the servicing guidelines. This consistency is vital for preventing the kinds of errors that can lead to regulatory examination, potential penalties and financial losses for a servicer.

Workflow automation empowers servicers to standardize responses to similar scenarios in real time. For example, it intelligently performs interactions and processes with borrowers and triggers business rules using the same criteria across all cases. This means increased reliability in handling borrower inquiries, requests, and processes, such as loss mitigation, as well as a reduced likelihood of discrepancies and errors that can lead to enforcement actions and penalties.

Once again, we’re talking about the risk of potential losses in the millions of dollars. Mortgage servicers could consider both process and workflow automation as an insurance cost against not only regulatory penalties, but borrower lawsuits as well.

For example, workflow automation enhances the traceability of a servicer’s decisions and actions. When each step in the process is logged and time-stamped, servicers have a clear audit trail that can be invaluable during a regulatory review or audit. It also makes it easier for servicers to identify and fix issues before they escalate.

From a risk management perspective, having robust automation in place makes it easy for servicers to respond to and have visibility into regulatory changes quickly. This agility protects servicers from operational risks and the associated monetary penalties. Process automation not only streamlines processes but consistently and proactively displays upcoming deadlines and exceptions that demand resolution and prevents financial and reputational risk.

QUESTION: Are mortgage servicers, including banks, non-banks and credit unions, investing in automation more aggressively, or have they been slow to update their technology and add new capabilities?

JANE MASON: Traditionally, mortgage servicers as a whole have lagged behind originators when it comes to investing in automation. The old habit of depending solely on LOS systems with legacy software is dangerous. But that’s starting to change, particularly since the COVID-19 pandemic, when servicers were facing historic volumes of forbearance requests coupled with the continuing threat of natural disasters.

Granted, the level of investment in automation varies significantly across banks, non-banks, and credit unions, depending on the unique challenges and priorities each type of institution faces and the level of vision that their executives have. Recently, however, more non-bank servicers have been embracing automation to cope with the rapid growth of their loan portfolios. Over the past two years, as interest rates skyrocketed, servicing became much more profitable for non-banks. But it also increased pressure on them to optimize operational efficiencies and improve customer service. Because these organizations often lacked the sort of capital resources that large banks might have, automation became a much more important strategy for managing growing volumes of borrower requests effectively.

Credit unions, at least the ones that retain their own loans, are increasingly recognizing the benefits of automation as well. While many credit unions have more limited budgets compared to banks and non-banks, they have always been highly motivated to deliver an exceptional level of service to their members. Many see that investing in automation can enhance their member services and back-office operations to improve speed and accuracy, which in turn helps maintain member loyalty and satisfaction.

QUESTION: How can servicers manage risks and costs through automation? What type of ROI can they expect?

JANE MASON: Here’s an example using CLARIFIRE. Your organization has 50 people reviewing and managing the creation of documents and the QA of manually created letters. Having CLARIFIRE generate the documents in seconds from the validated data eliminates the time and handoffs and creates a successful result in seconds. The automation also enables servicers to better manage risks and costs by streamlining workflows, creating more uniform processes, and reducing manual errors.

When you add up these benefits, the ROI can be substantial. As I’ve said before, this technology can save millions of dollars in regulatory penalties and fines and prevent reputational risks as well.

For example, we have found that the average CLARIFIRE user has experienced a 50% reduction in manual tasks and has been able to eliminate nearly 80% of all document-related tasks. They also remove the angst of having to deal with failures and the risks of having to review, correct, and resend required documents. The ROI is easy to see once the current state is captured and the automation impact is communicated. Basically, automation is the game changer that paves the way for servicer success.

Adopting automation that is easy to use by all is a key component. Not only does it allow servicers to seamlessly reallocate their resources to areas that require more attention, it also enables them to scale their operations more quickly and effectively during periods of high demand—such as a landslide of claims following a wildfire or hurricane—without having to hire and train more staff. This drives down operational costs even further while simultaneously improving the level of service borrowers receive. While some of these benefits are difficult to qualify, overall, the ROI for servicers who invest in workflow automation is clear: increased efficiency, reduced risk, and better financial outcomes.

I’ll make the analogy again to insurance. Wouldn’t a driver want to pay for auto insurance that not only reduces unexpected accidental and liability risks, but provides a means to make the car they own run better and for a longer time? I sure would. 

QUESTION: Are end-to-end digital process automation platforms, from origination through servicing, the future? If so, what does the servicing industry need to know to implement ever-changing regulatory complexity management processes within these platforms?

JANE MASON: I believe end-to-end digital process automation is absolutely the future of mortgage servicing. As the regulatory landscape becomes more complex, flexible workflow automation technology that eliminates the gaps between origination and servicing, as one example, is essential for servicers to strategically mature and modernize. Simply put, mortgage servicers that remain tethered to manual processes and legacy systems will be left behind if they don’t move forward with more modern, proven technologies. I have an old saying, “Even if you are on the right track, you will get run over if you just sit there.”

This is where automation comes in as a critical component of success. Seamlessly connecting processes from origination through servicing adds power to servicers through borrower retention and happiness and creates impactful results. Workflow automation enables servicers to centralize, aggregate, and gain visibility into their workflows, so they can proactively dodge challenges, adeptly navigate changes, and delivering compelling service. Additionally, when servicing platforms connect across the lifecycle of the loan, servicers can implement changes more efficiently and gather data more effectively because all process updates are interactive and made in real time across their entire ecosystem. It bridges the gaps like never before.

QUESTION: What long-term benefits can mortgage servicers expect from integrating advanced automation technologies like CLARIFIRE into their operational workflows?

JANE MASON: As we’ve discussed, integrating advanced automation technologies offers many long-term benefits. For CLARIFIRE, specifically, it makes servicers ready for anything. Process automation, not hard coded legacy systems, gives servicers the flexibility and power to easily adapt to any future regulatory requirements, regardless of how large or small their operations are. It also lets servicers choose from a wide range of proven processes or create their own processes that align with their specific needs or business goals. It expands automation and brings end-to-end seamless servicing within reach of any organization.

The ability to bulk process large volumes of like requests is another critical benefit. As we saw during the pandemic and recent disasters, many servicers struggled under the weight of thousands of forbearance requests. Servicers that had already adopted advanced automation technology, on the other hand, were able to handle them quickly and efficiently. During the pandemic, for example, CLARIFIRE enabled servicers to perform no-touch deferral approvals in less than 30 seconds and thousands no-touch bulk solicitations every day.

At any time, borrowers can also request mortgage assistance on their own, check the status of their requests, and submit documents as needed from any browser or device in real-time. This level of transparency and accessibility drastically reduces borrower frustration especially during already stressful times.

Yet another long-term benefit is that advanced automation technologies integrate with other systems seamlessly. Again, using CLARIFIRE as an example, we connect with loan origination systems, document management platforms, and other third-party tools. This creates a unified ecosystem that streamlines the flow of data across an organization and ensures that all relevant information is available in real time.

The bottom line is that advanced automation technologies arm servicers with the ability to scale operations quickly, maintain controls and visibility with ease, and offer borrowers greater transparency. Over the past several years, we’ve all seen how drastically the U.S. economy and housing market can shift. We’ve seen mortgage servicers severely penalized for unintentional errors and costly litigation that can easily be avoided through automation. At some point in the future, the market will shift again and regulations will continue to change. And when they do, the servicers that have embraced automation to create a more sustainable and resilient servicing model will be firmly in the driver’s seat.

INSIDER PROFILE

JANE MASON is CEO and founder of Clarifire and the visionary behind CLARIFIRE®, an innovative process automation solution that seamlessly provides businesses a way to control, elevate, automate and compete. With many years of experience as an entrepreneur and innovator, Jane is a recognized leader in technology solutions that add the power and capabilities for organizations to gain visibility and accessibility in an advanced, digital way. This enables enhanced productivity, improved customer experiences, and strategic results. Jane has received many prestigious industry and local business awards and accolades, including the Mortgage Bankers Association’s Tech All-Star Award, Most Powerful Women In Fintech from the PROGRESS in Lending Association, and the Tampa Bay Business & Wealth Apogee Award.