Has the Spark Gone out of your Relationship with your Default Servicer?

The relationship between lender and default servicer starts the way most business relationships start: either the lender realizes they need a partner to efficiently handle the default side of the business, or the lender’s current partner isn’t fulfilling some part of the relationship and it’s time for a change. It’s a familiar pattern in life, as it is in business.

In an ongoing successful relationship, both parties’ interactions should be as open, honest and transparent during the later stages of the relationship as they are at the beginning. At the beginning of lender-servicer partnership, servicers are eager to assure clients they made the right choice: every client inquiry is handled quickly and efficiently, business development and client service teams assigned to the account eagerly shepherd files through each phase of the foreclosure process to its completion, and the client begins to see the light at the end of the tunnel in the backlog of default files clogging its servicing pipeline.

What lenders usually encounter, however, is disillusionment as their relationship with their servicer continues to unfold --- or unravel. Quick status updates to inquiries soon languish into lagging responses. The VIP treatment they received as a new client is soon forgotten as processing delays mount due to servicer missteps. And to add insult to injury, lenders sometimes find monthly billing statements riddled with ancillary internal charges usually not covered on the initial contracts that are supposedly justified as “the cost of doing business.” There are many cottage industries supporting the default servicing business, but relationship counseling is not one of them. Lenders find themselves trapped in a relationship with their servicer that at best, no longer meets their needs and at worst, insults them with terrible service and unreasonable fees.

Good default servicers must embrace one key principle if they are to enjoy a fruitful relationship with the lender through the tough default files and the routine servicing activities: never take your partner for granted. It’s a simple concept based on two simple factors:

1. Keep lines of communications open. Default servicers must be accessible when clients have questions. Accessible does not mean a voice mail message or delayed email response. It means real people in real time. And if there are processing or procedural delays, servicers initiate the conversation with clients on how they intend to resolve the problem.

2. Set the vows and then honor them. Experienced servicers know the comprehensive costs they must charge to process a file. Make sure their new business partner is aware of all charges at the beginning of the process, and preferably that the fee structure developed for the client is a comprehensive one free of “al-a-cart” pricing that typically blindsides the client during the billing process and ultimately proves to erode the relationship.

The goal of the default servicer should be to forge a long-lasting partnership with clients by providing them efficient servicing on files with no surprises and full transparency. If lenders feel their servicers have lost sight of the obligation to be response, have taken advantage of fee structures, or a combination of both, it’s time to play the field.

You Have Options

As a professional, it’s reassuring to have the option to work with a company that allows me to track business transactions online utilizing an easy-to-understand interface. I want to log on to a web site, and check the status of my business whenever I want 24 hours a day 7 days a week. This may not seem like such a big deal, but I don’t always remember the particulars of my transactions, and like to get a quick update with a minimum of fuss. I know calling is always an option, but when I simply need to check a balance or check the progress of a transaction requiring only a few seconds, why bother with a phone call when a mouse click will suffice? It makes more sense to me to be able to do my work when I want to do it and check my work when I need to. It’s reassuring to be able to use state of the art systems to make my work easier and more efficient, and secure.

When a delinquent mortgage passes that “point of no return” and ends up on the foreclosure fast track, it’s clear that the borrower has run out of options and foreclosure is the inevitable conclusion. When the default servicer is brought into the picture, sometimes investors and lenders may feel they lack options in following up on the status of the file. While a phone call to a client service representative can answer all questions, it’s more efficient to have an online option for at-a-glance check of file status, fees / expenses to date, and other files specifics. Additionally, the online option provides an more efficient, robust alternative that allows clients “instant gratification” if they need to download pertinent documents.

In choosing a default servicing solution, investors and lenders should look not only for flexible solutions in pricing and service, but flexible solutions that provide access to their file information on their terms and on their time frame.

The Human Touch

In these days of telephone automation, it’s not uncommon to hear an electronic voice telling the caller to push a number that corresponds to the caller’s spoken language. I don’t know what you think, but I would rather speak to a live operator. That’s why I like doing business with a company that thinks like me. I want to speak to a live person answering the phone, a person who says hello and how may I help you? WOW, what a concept. I want a person that is capable of listening to my question and competent enough to get me to the correct source. I don’t want to push a button nor "speak an option" to begin a business transaction.

How many companies in the good old USA still have that personal touch I would rather experience? I’m tired of listening to an electronic voice that asks too many questions and still seems to direct my call to the wrong person, or worse, a voice mail that I know will never return my call. I would rather do business with a company that treats me like a human being, and appreciates my call and my business. I know many companies handle so many calls they need to have this automated system or outsource this process. I just don’t want to be that person that makes that call. I want to call a company that cares enough to have one of their employees answer the phone so I feel wanted.

Many default service companies these days seem to have embraced these automated channels as standard operating procedure. But customers I'm sure would much prefer that “human touch" for complex transactions that absolutely require real contact with real people in real time.

It’s important that the relationship starts with a voice, and not a touch tone. It's to your advantage to find a default specialist that takes a more relationship-oriented approach to the tough business of foreclosure transactions.