In our experience, several key areas are ripe for using a low code workflow tool. We will outline the top four areas where servicers should strongly consider using these tools.

1. Cashiering – One of the more back office, high-risk areas of mortgage servicing involves the back-and-forth decisions required between default servicing units and cashiering when posting payments received on delinquent accounts. Volumes are not often that high, but these complex transactions never stop and are always time and compliance sensitive. Foreclosure and bankruptcy attorneys are just waiting to pounce on posting errors that may have caused the mortgagor to be confused or harmed. Examiners are constantly looking for transaction delays that create unnecessary fees or those that do not meet regulatory requirements. Payments come in from delinquent borrowers. These payments are immediately rejected by the servicer’s lockbox, where 99% of all transactions are automatically processed. These rejections appear in the cashiering department’s inbox, where they must then be designed to determine the appropriate servicing area that must help determine how to post this payment. The decisions could be made by loss mitigation, foreclosure, bankruptcy, or even in-house legal counsel if, for some reason, the borrower is in litigation. Can we all agree that this sounds complicated? It is, in fact, very complex. There are tasks within a typical servicing system where these transactional exceptions can be tracked, and communication can occur. However, the complexity of these tracking solutions does not compare to the complexity and rigor of the decisions required; therefore, experienced personnel, spreadsheets, policies, and procedures often help govern these decisions and communication. A low code workflow tool such as Decisions can help improve communication between departments, ensure policies and practices are built into the process, ensure compliance, and increase decision speed. Sometimes, a payment may meet specific pre-defined decision steps and can be automatically posted without going between departments for processing. Also, remember that a strong analyst can build and maintain most of the workflow actions required.
2. Loss Drafts: This name does not do this department justice. This is typically the servicing area where borrowers who have mortgages file a claim against their hazard or flood insurance policies and interact with the servicer to get the funds necessary to make repairs. In most cases, the insurance carrier will make any insurance proceed checks payable to the mortgage company AND the mortgagor jointly. The borrower will typically have to endorse the check and send it to the servicer. The funds are deposited and then remitted back to the borrower, typically in increments and slowly enough for the servicer to receive evidence that the repairs are being made. This area is so complex that it is often outsourced to a third party (where I am sure workflow tools are also engaged). Transaction volumes in this area are usually high or, at a minimum unpredictable because the volumes tend to follow the unpredictable nature of weather or natural disasters. Since many transaction decisions are manual and not supported by the servicer’s big mainframe, these peaks and valleys are incredibly difficult to staff. The complexity of the decisions requires subject matter experts. The compliance rules are often vague in this area and, therefore, must be supported by management decisions via policy. Workflow solutions such as Decisions can play a significant role in eliminating many of these issues. Staffing becomes less complicated because decisions can be mostly automated or closely guided with workflow decisioning tools (no pun intended). This way, resources from other departments can be easily taught how to jump in and help. Compliance risk can be virtually eliminated. Communication with the borrower improves dramatically, increasing customer satisfaction. Remember that activities surrounding these “loss drafts” are most likely emotionally charged situations. Borrowers want to repair their most prized possession, and their servicer is “holding out” cash from them. No one expects this to happen, and it gets frustrating. Contractors can also complicate matters when their demands for payment do not line up with the decisioning of the servicer. Low code workflow tools are a fabulous solution to help eliminate risk and cost in this low-profile but expensive component of the mortgage servicer.
3. Foreclosure prevention – Foreclosure prevention steps are many and varied in a mortgage servicing shop, similar to how originations activities work. The servicer communicates with a borrower, takes an application, follows up on missing information, underwrites the borrower for a foreclosure prevention option, communicates again with the borrower, prepares documents, communicates further with the borrower, communicates with the mortgage loan investor or insurer, completes tasks to file certain documents with states or counties, etc. Whew! A tool like Decisions can ensure that all required information is obtained from the borrower through built-in checklists. The tool can perform underwriting logic and move questions for the borrower and required documents inside and outside the company for approval and signature. Automation can materially reduce the experience level needed to perform these otherwise complex tasks. This alone can create immediate savings for the organization. Borrower satisfaction increases materially as transactions become more automated and communication with the borrower becomes more consistent, frequent, and transparent. Compliance becomes a non-issue because the steps performed through the automation create the necessary compliant audit trail to support and defend inquiries from even the most difficult examiners.
4. Foreclosure Timeline Management – This area reminds us of the television show, Wipeout. The competitors are up against the clock running through an obstacle course above the water. At the same time, outside forces constantly throw punches directly at the contestant, attempting to knock them into the water. Once in the water, the competitor starts again, but the clock keeps ticking. Foreclosures must often follow a specific path and timeline, but outside unpredictable events can easily knock the servicer off track and outside of this timing. Other particular actions must be taken to get the loan back on track.

In some cases, there are massive financial fines for any deviation from the regulations around this servicing area. Due dates can change, actions required, and who must take these actions can change on a dime. Many different servicing parts are involved, and exceptions to the rule are like lilies in the field. We could go on and on about the risks and rewards of foreclosure timeline management. Suffice it to say that the Decisions platform is a fantastic solution that solves a problem none of the giant mortgage banking systems have taken the time to solve.

Take some time today to think about some of the complex and ongoing problems that have been persistent in your mortgage servicing organization. These are often in and around areas of growth and change where chaos tends to live and breathe. Brainstorm how an automated workflow solution could help solve many of these pesky problems. 

Call us if you would like to discuss this further.