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Borrower satisfaction is undoubtedly still a challenge for mortgage loan servicers. J.D. Power reported in their Primary Mortgage Servicer Satisfaction Study that mortgage servicer ratings remained stagnant in 2018. Furthermore, overall ratings have hovered around 758 points on a 1000-point scale for three consecutive years.[1]
The first opportunity for servicers to positively influence borrower satisfaction is during the loan boarding process. This task is often viewed as just a data map for IT or operational teams to manage and can be easily overlooked as the first true borrower touchpoint. The same JD Power survey went on to support that notion and say that enhancing the onboarding experience was an area of opportunity for servicers to evaluate.
In order to move the needle on satisfaction and retention, the transition of loan file data from origination to servicing must prioritize accuracy and efficiency.
Automation can put this into practice.
Without it, bad data and document defects create a recipe for downstream servicing challenges. Time spent clarifying misinformation becomes a prime cause of costly frustration for both servicer and borrower.
Why Quality Matters
According to the Mortgage Bankers Association between 2016 and the first half of 2018, servicers witnessed roughly a 10-point drop in customer retention rates. In fact, less than one in five will use their servicer to refinance their loan or buy a new home. Marina Walsh, the MBA’s vice president of industry analysis research and economics, was recently quoted in an article saying, “There’s not enough of a ‘wow factor’ in servicing for the borrower to go that direction and call their servicer and say, ‘hey can you give me a better offer.'” [2]
During the origination process, borrowers are continually being asked for ‘just one more thing” while they work with their lender to lock in a rate. This poor, back-and-forth experience of asking for more documentation during origination frustrates borrowers and can be extended into servicing when file discrepancies and missing documents leave servicers holding the bag.
While several different strategies can be deployed to nurture borrower relationships (i.e. omni-channel communications, proactive assistance, educational tools etc.), the onboarding process should be viewed as the first critical step in borrower retention and it must start with special attention to loan quality.
Servicers and subservicers need to ensure borrower communications are accurate, on-time and satisfaction remains high.
How to Onboard with Quality
To onboard with quality, we must first acknowledge the LOS is not the single source of truth and 100% accuracy is hard to come by. Data contamination is presently unavoidable, particularly as information passes between disparate systems and manual, error-prone processes are used for data entry and validation along the way from close through servicing.
Breaking apart loan files, searching for missing documents, indexing, extracting data and validating information manually can be normalized through automated technology that cross-verifies and validates data and document quality irrespective of file format or source, with minimal manual intervention.
Customizable, automated rules and machine learning enabled technologies have the power to recognize both structured and unstructured documents within a borrower’s loan file and then extract the data required by the servicer with great confidence. In fact, servicers can experience a 99% data accuracy rate for loan file data, getting their borrower care programs off to a strong start.
Next, managing time-consuming data formatting tasks is perhaps the most challenging part of the process if done manually. For example, the servicing system may be looking for a descriptor for property type (single family, condo, multi-family), while the origination system uses codes. This can degrade the entire onboarding process.
Instead, automation can easily help normalize this data without manual intervention. It can also address custom stacking orders and quickly prepare files for a seamless physical transfer into the servicing system.
Prominent industry servicer, CMC Funding, once struggled with servicing transfers and loan boarding. On average, it was taking CMC Funding 65 – 70 minutes to process a loan file with only a 50% accuracy rate. Additionally, it was taking an estimated 3 – 6 months to board new sellers onto CMC Funding’s platform.
Once they instituted a process that could…
- Receive loan document images in any order
- Extract data from the documents to produce a file ready for import into their servicing system
- Rename and order the documents into their custom stacking order
- Deliver a file ready for import
LoanLogics IDEA™ (Intelligent Data Extraction & Automation) platform helped the company reduce loan file reviews to under 12 minutes. This automation also led to a faster resolution of data exceptions, fewer borrower complaints, increased borrower satisfaction, faster new seller boarding time and the reduction of future transfer and loss mitigation issues.
… CMC Funding saw dramatic results.
By driving more efficiency and accuracy into the loan boarding process, servicers can start their relationship with borrowers off right, and set themselves up for long term success and high customer retention. Quality data makes a difference.
Streamlined onboarding to improve the borrower experience is possible with a flexible, automated solution. Contact LoanLogics today for more information on our onboarding technology and be sure to tune in to one of our recent podcasts about the benefits of streamlining mortgage servicing rights transfers.
[1] https://www.jdpower.com/business/press-releases/2018-primary-mortgage-servicer-satisfaction-study
[2] Mortgage Bankers Association
