Customer service in mortgage servicing used to be this quiet little behind-the-scenes activity. Mortgage servicers decided based on their own culture how much they would invest in people and technology to make the customer a priority. Most mortgage servicers “back in the day” did not make good choices in this regard. As an industry customer, hold times or average speed of answer (“ASA”), as it is often called, were typically in the 2-to-5-minute range and, in some cases, much worse. Have you ever sat on the phone waiting for 5 minutes? It requires a LOT of patience, and that was the goal. We wanted customers to drop off and drop out. That all changed with the installation of the Consumer Finance Protection Bureau (“CFPB”).
The CFPB was created by the Dodd-Frank Wall Street Reform and Consumer Protection Act enacted by Congress and formed on July 21, 2011. What would you expect after a major financial crisis? If you want to know more, watch the movie or read the book, The Big Short. I recommend watching it through VidAngel, but this will give you an excellent overview of the financial crisis and the winners and the losers. To sum it up, many people made a lot of money by making bad mortgage loans to anyone that could walk and talk. Eventually, these loose underwriting criteria created one of the world’s most significant financial crises. Naturally, after years of keeping companies from failing and bailing the economy out of this crisis, the US Government stepped in to take a stand on trying to prevent the future from repeating the past.
Consequently, the government created the CFPB to help consumers avoid being taken advantage of by financial services organizations. This objective may have gone off course. However, the CFPB did accomplish governance over the mortgage servicing industry. Before creating this agency, mortgage servicers were not regulated unless the organization happened to be attached to a bank. Bank regulators often floated right past the mortgage servicer, not understanding the industry or the risks. Today in the largest mortgage servicers, the CFPB has camped out auditing and evaluating servicer’s risk management practices daily. Remember that the CFPB is now led by and staffed primarily by attorneys – not experienced financial services people. So, as you can imagine, ensuring servicers comply with rules and laws is their number one priority. Many of the consequences of non-compliance are being created as we speak. The CFPB interprets rules as you go basis and is often in the harshest view against servicers. The unknowns surrounding CFPB regulatory audits, rule interpretation, oversight, and published disclosure should terrify most servicers. This oversight could result in extreme financial penalties and will result in the organization’s failures posted for the world to see.
One of the first things the CFPB did was publish for the world to see any consumer financial complaints. This included written complaints against mortgage servicers. As a servicing manager, I remember the first time I received a CFPB complaint letter and realized that others were published. The validity of the customer’s complaint is not the CFPB’s concern. They assume the servicer is guilty until proven innocent. Since these complaints are published upon receipt, the mortgage servicer stays guilty. Therefore, it quickly becomes the servicer’s objective to NOT end up with a customer complaint escalated to the CFPB’s website. Let’s talk about critical ways to proactively manage the servicer’s customer service unit to help stay out of the CFPB crosshairs.
First, let’s define what we would consider “customer service.” In our world, customer service means any medium that touches the customer. This typically includes the following:
- Inbound and outbound phone calls
- Websites and chat
- Email, and
- Inbound and outbound written correspondence.
Let’s talk about potential best practices for keeping politics out of your Customer Service for each of these servicing areas.
Inbound and outbound call management best practices:
First, there are no hard and fast rules for how quickly a phone call should be answered. The golden rule is probably the best rule to follow. Best practices depend on whether you are focused on retaining your servicing customers or not. If you are interested in maintaining your customers, we would expect high-end service and that you plan to answer calls in less than 30 seconds in your peak periods. A servicer’s peak period will be Monday and trend downward from there to Friday. The first quarter(ish) of the year is often a peak period as well, right after many accounts are re-analyzed (i.e., new payments are generated) after the big year-end tax disbursement. Keep in mind the peak days of the month of the 15th and 16th when customers rush to make last-minute payments. As a mortgage loan servicer, you should know these peak periods and staff accordingly. Now, let’s talk a little about staffing theory.
Since call volumes fall after Monday, staffing for this peak period will leave the servicer overstaffed for the rest of the week. Who can afford this? Therefore, two strategies arise. The most popular is to draw in staff from other units to help support the call centers on Monday. We prefer and recommend the opposite approach. We recommend the servicer staff in the call center for these peak periods and send the excess call center staff to support other units. This makes the call center the home base for these teams. Additional units can share the cost of these new part-time resources they can schedule for the non-peak call center days. We like this model because it puts the call center in charge of the staffing. Other units like it because the call center staff are often trained very well and see the big picture that other staff may not see. This approach takes a lot of communication and coordination, but it works exceptionally well overall. If you are the servicer not interested in customer retention, you might want to consider partnering with another company more focused on origination and retention. If this still does not work, you can get away with an “average” of a 30-second ASA. This means that your ASA on Monday and Tuesday will be closer to one minute or longer, but everyone may go home happy if the inpatient customer can call back on another day and get their call answered more quickly. These customers learn fast and then choose to call on a day they know you are less busy. This works as well and will be less expensive than peak staffing.
Furthermore, servicers should be aware of a borrower’s potential limited English proficiency. Best practices would suggest that borrowers should be able to communicate with the servicer without regard to their capacity for the English language. This is most often handled through vendors that can handle almost any language. The servicer’s responsibility is to provide the borrower with an option to be transferred to this vendor for handling. Otherwise, the call center agents should be trained on when and how to leverage these resources to help ensure the borrower’s needs are met. Lastly, an agent’s skill levels should be comparable to the question being asked by the borrower. Most servicers use skills-based routing to ensure that borrowers’ issues adequately match the borrower’s condition. Suppose this technology is not available in your organization. In that case, we recommend you find a more analog process for routing borrowers to the right agent if the borrower’s issue is out of the league of the agent answering the initial call.
Website and chat best practices:
Technology is critical here. Many servicers utilize the out-of-the-box solutions provided by the big box servicing solutions. These work fine as a repository of data and an essential tool for customer communication but often cannot be configured to maximize the customer experience. So, again, if customer retention is your priority, we recommend upgrading and customizing the customer experience. In these environments, we recommend transparency, particularly in customer requests. For example, if the customer has asked for a foreclosure prevention option, then what is the status? The status can be simple like “received,” “in-process,” or “complete.” These basic communication points with the customer give them confidence that they have been heard. When it comes to chatting, response times are critical. Advertising that these response times are fast and the resolution rates also help borrowers trust that you can help them. Of course, like you and I, most customers assume that anyone helping them in the chat room will be an overseas agent. So, to avoid this expectation, if it is true, advertise this fact. So, you might say in your chat pop-up something like – “Try our chat room for lightning-fast response times, where 99% of customers find resolution from our on-shore agents.” Stats speak volumes as well. Consider advertising key statistics regularly on your website to help borrowers understand things like the time of day or day of the week when call answer times are the lowest. Don’t forget the customer experience. Get feedback from customers, people inside the organization, and particularly your marketing team on how they feel about the look and feel of your website integration. Also, do not forget to test for accuracy. Ensure that what you send a borrower in writing they can find on your website and any data the borrower gets from any other source reconciles to your website. You would be shocked how often we see this NOT to be the case! Simplicity, accuracy, and transparency are keys to ensuring a healthy customer experience on your website. In the case of chat and website mechanics, there are no specific regulatory requirements the servicer must contend with.
Email:
Best practices suggest that email correspondence is contained where the borrower provides input through a controlled form. Also, on the servicer side, responses should be tracked and systematically evaluated, AND escalated when necessary. The need for escalation is like the need for skills-based routing utilized in a call center. An appropriately qualified subject matter expert should handle each situation. Responders should be adequately trained, and quality assurance should be layered into the response system. Naturally, turn times for emails should be communicated to the borrower and adhered to tightly. Exceptions should be escalated, and the borrower should receive notice of these delays where delays occur. Again, email communication becomes best of class when transparency and ongoing communication are managed with the borrower through a golden rule type approach.
Inbound and Outbound Written Correspondence:
CFPB does require specific turn times and other requirements, such as letter content for responding to a borrower’s qualified written request, a notice of error, or request for information. The servicer should be familiar with these rules and track compliance precisely. Outbound communication in writing must be complete and accurate and adhere to the CFPB response requirements. Therefore, a near 100% quality assurance review of written correspondence is recommended for any critical piece of correspondence. So, the servicer needs to classify, or risk rank, each letter received so that it may be responded to accordingly and maintain a good tracking and reporting platform. An efficient and accurate reporting platform is critical to show that you focus on customer concerns and how you address those concerns. If the CFPB comes to visit you regarding the hottest topic in servicing, Loss Mitigation, then be prepared for them to review all complaints about the topic as well.
Outbound communication best practices should consider limited English proficiencies (“LEP”). If you look at the CFPB’s website, you will quickly realize that this Government Agency is ready to communicate in 7 or more different languages just through their website. The CFPB will expect nothing less from your organization. The servicer should, thus, ensure that borrowers are provided with an adequate contact method for borrowers with LEP. We recommend a quick sentence advising borrowers in the same languages provided by the CFPB with a sentence telling the borrower how to reach your LEP call center if they receive this letter and do not communicate in the appropriate language.
Another key to passing the evaluation of the CFPB when it comes to customer service that crosses all mediums is documentation. Documentation from the servicer should be robotic. In other words, how the servicer documents its system and communication with the borrower should be comprehensive and consistent. Best practices suggest that the servicer utilize a form or specified format for reporting its borrower engagement. Training should be a priority to ensure that each servicing agent working directly with a customer understands the importance of documenting each borrower’s conversation. Again, quality assurance should also play a key role in ensuring that the documentation of the borrower contact is clean, clear, concise, and competent.
If you have further questions, our team has over 40 years of collective experience managing customer engagement. We would be glad to participate in a conversation with you and your team about ideas for keeping politics, particularly the CFPB, out of your customer service business.
