Mortgage Servicers Offered New Tools for Best Practices and Problem Resolution

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Certus LD today unveiled a process improvement program for mortgage loan servicing that includes not only a set of best practices but training and on-going performance monitoring features. The company also introduced their forensic loan analysis service that inserts trained professionals between servicers and borrowers whose situations may indicate a breakdown has occurred in one or more of the best practice areas.

Certus LD today unveiled a process improvement program for mortgage loan servicing that includes not only a set of best practices but training and on-going performance monitoring features. The company also introduced their forensic loan analysis service that inserts trained professionals between servicers and borrowers whose situations may indicate a breakdown has occurred in one or more of the best practice areas.

Mortgage servicers who subscribe to the "Vital Signs" program will have the advantage of an independent outsider's view into their firm's adherence to the best practices they adopt.

"There has to be more to best practices than just saying, 'OK, we're there,'" said Craig Kenney, the company co-founder. "And when there's a real problem with a borrower's loan it's a symptom that something went wrong somewhere."

Kenney and Brian Barr, co-founders of the new firm were among the first to call for major changes in the way mortgage servicers dealt with borrowers. The launch represents another step on the consumer-advocacy path they set out on in 2003 after a two-and-a-half-year series of legal battles.

"Ever since then, we've been working on ways to build consumer trust and confidence, and although it's taken a lot longer to get here than we thought, we think we have an answer."

Dave Mortensen, who joined the company in March of this year as the Director of Program Development and Training added, "We're going to put another pair of eyes on a problem loan situation. If we can intervene in the early stages before hostilities break out, we can help a company avoid not only some significant litigation expense, but the PR fallout that attracts attention from regulators and legislators."

According to Kenney, finding out about how your company is adhering to any set of best practices is something that has to be done from the outside-looking-in. The company's web sites include borrowerhelp.com, designed to help the consumer understand the often complex and confusing mortgage servicing business as well as act as a portal to reach an intervention specialist or even a local Forensic Loan Analyst if their situation warrants it.

"There has to be a gatekeeper but it has to be one that the consumer trusts," Kenney said, noting that the lack of confidence consumers may have in what a servicer may be telling them comes in part from the negative media attention that has been directed at the industry. "But the site also has to act responsibly toward the servicers and not just inundate the staff with cases where the borrower just doesn't understand something or is actually at fault."

Mortensen outlined the concept as a kind of "triage," where the site will, in effect, interview the borrower. A first-tier Intervention Specialist may be able to resolve the problem for both parties. But if the circumstances warrant a more thorough review, the borrower could end up being assigned to a Forensic Loan Analyst in their area who will work directly with servicer personnel - SME's (Subject Matter Experts), appointed from within the servicer's organization after the Vital Signs training.

"The SME's are crucial," Mortensen pointed out. "When you realize you're focusing on facts and figures and processes, you take the ego out of the equation. This level is diagnostic. It's causal analysis and process improvement, not argument and negotiation or customer service."

Barr added that companies in the industry have been reluctant to admit a mistake could even be made. "We've seen depositions where a lawsuit had been going on for months, maybe even years, and when someone is finally under oath and the plaintiff's counsel drills down into the figures, the witness says things like, 'I can fix that when I get back to the office.' That's an awfully expensive way to find a problem. I think we have a much less painful way."

In fact, the company's name, Certus LD (the LD stands for 'Litus Declino') is loosely-translated from Latin as "settled without litigation."

Both Kenney and Barr have seen litigation with the servicing industry first hand. "It isn't pretty," Barr said. "Somebody somewhere might be able to put a real number on how much is going out of the industry's pockets in legal expenses, but my guess is it's at least seven or eight figures every year if you take into account all the time and energy put into it."

The company has another program in the works that will try to prevent consumers from getting into credit trouble in the first place.

"I call it the 'put ourselves out of business program,'" Mortensen said. "We're going to take a message to an audience at a stage in their lives when they start developing buying and credit decision habits. We're going to try and balance the messages from product marketing people who are trying hard to lure them in to spending money they don't have."

He noted that consumer bankruptcies, foreclosures and CCCS (Consumer Credit Counseling Services) are end-game situations. "When you see a consumer in any one of those, it's too late to prevent the damage. A lot of these problems can be traced back to spending, credit and payment habits that take years to develop and maybe more years to break."

"Real Life, Real Money - No Lifeguard on Duty," is a ninety-minute live and multi-media presentation with Q&A sessions directed specifically at High School seniors. The company expects to begin touring the show in the fall and will be making video copies for distribution to schools where the live tour isn't practical. Updates will be re-shot "at least every year," to keep the program fresh and the question and answer sessions current.

"Imagine a cross between Dr. Phil, George Carlin and Gallagher with video, music and slides and a chainsaw," Mortensen said.

Certus LD expects the financial services industry to recognize the value in not only adopting measurable best practices and avoiding litigation but preventing consumers from winding up in sub-prime lending situations where financial habits multiply the likelihood of servicing problems.

Kenney said Certus LD was expecting not only servicers but the mortgage-insurers to be interested in supporting the Real Life, Real Money program, noting that current approaches don't seem to be making a large amount of headway in reducing consumer debt and mortgage loan failures.

"We think these tools are something the industry should have had a long time ago," Kenney said. "Here we are at a two-day conference in Washington D.C., with attorneys from all over the country worrying over the impact of a huge legal settlement with just one mortgage servicer that all told has probably had to spend a hundred million dollars just to survive."

Kenney was referring to the recently announced final court approval of a settlement reached in November of 2003 between the FTC, HUD and numerous class action cases against Fairbanks Capital of Salt Lake City, Utah. Several states still have pending issues with the company and there are still individual lawsuits that aren't affected by the court's approval. A significant part of the settlement addressed operational practices that were outlined in detail and are considered by many in the industry as a blueprint for what a servicer should adopt as "best practices."

Kenney, whose original consumer-issue website garnered over 340,000 visits during his battle with Fairbanks, likened the situation at some servicers as "Â┬ůsomeone tampering with the fire alarm. They tend to ignore what they think are small issues and don't realize there may be a fully involved fire in their future."

In the last twelve months since reaching a settlement with Fairbanks, Kenney has been actively working with the servicer by intervening on behalf of borrowers. "The change has been pretty remarkable," he said, adding "Things didn't change as fast as everyone wanted, but now it's like the fire alarm has been reconnected and we can put out the little fires before they get out of control."

"I use the example of the three-legged stool," Mortensen said. "You have to have the practices in place, but you also have to have a second leg, the intervention, measuring and reporting. The third leg is the consumer education part, but educating your borrower who's in financial trouble might be too little, too late. You have to get to them early."

Additional information about the Vital Signs program is available at the program's web site: http://www.servicer.us.

About Certus LD

Certus LD is a privately-held intellectual property holding company founded to develop and operate process improvement programs directed toward specific industries facing consumer issues and litigation.

CONTACT INFORMATION:

Craig Kenney

Certus LD

866-350-8500

craig@certusld.com

http://www.certusld.com

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