Clarifire Conversations

“People will forget what you said, people will forget what you did, but people will never forget how you made them feel.” – Maya Angelou

Let’s pretend we’re having a conversation, and you can see that I’m not giving you my full attention.  Maybe I’m looking across the room, or I’m distracted by my cell phone or watch.  I look up and say, “Go ahead and talk. I can listen while I do this.”

Most servicers’ portfolios include a mix of mortgage programs, reflecting a diverse origination market. Last year, the government-sponsored enterprises, Fannie Mae and Freddie Mac, represented the largest sector having purchased roughly 40 to 50 percent of new originations. The Federal Housing Administration (FHA) and Department of Veterans Affairs (VA) are responsible for a little less than a quarter of the market, with private securitizations accounting for a small 2 percent of new originations, Small Business Administration (SBA), U.S. Department of Agriculture (USDA) and portfolio loans withstanding.

Over the past few months, Clarifire has published meaningful discussions on the numerous requirements mortgage servicers have taken on to manage disaster relief programs and support homeowners experiencing related financial hardship.  Amidst financial remedies, such as forbearance and disaster relief modifications, there is another critical area that servicers look out for in times of disaster…. ensuring property repair doesn’t financially burden borrowers or impair collateral.

The extent to which natural disasters are hitting the United States is beyond historical servicer casualty planning.  The three costliest natural catastrophes in the world occurred here in 2018. As all servicers can attest, navigating record-breaking natural disaster has epitomized operational disruption.  This year is likely to produce a whole new set of homeowners in need of disaster relief, continuing to put the onus on servicers to triage these issues in real time.  As this trend continues, servicers should take the lessons learned from 2018 to rethink and strategize how to more effectively manage the effects of future occurrences.

Over the past decade, mortgage servicers have had a front row seat to a dramatic transformation of the regulatory and investor landscape. Just about the only thing that has been consistent since the financial crisis is change. Simply identifying and staying abreast of ongoing updates has been an enduring challenge for servicers, who are trying to make the most of available resources.

With an unprecedented number of US natural disasters in 2018, servicers remain in the mode of assisting borrowers that have been impacted.  In addition to handling ongoing cases, every new contact necessitates that servicers immediately begin to triage borrower circumstances. With each government entity stipulating their own unique requirements, servicers face a conundrum as they endeavor to analyze and execute on different modification options across disparate timelines and qualifying criteria.

In previous blogs, Clarifire has discussed how servicers can successfully manage natural disaster relief. This month, however, servicers are faced with responding to a different kind of disaster – the government shutdown. With roughly 800,000 impacted government employees, servicers play a key role in helping borrowers navigate the challenges resulting from temporary loss of income.

2018 was a busy year for loan servicers and Clarifire was there to cover all the hot topics and emerging issues. Fluctuating market conditions, regulatory oversight and policy changes were all on the radar. Clarifire will continue to cover the challenges of 2019, sharing insights and guidance on circumventing issues as they arise.  After over a decade of collaborating with servicers to identify and solve problematic scenarios, we continue to work towards ensuring servicer readiness and responsiveness in today’s evolving financial landscape.

In the words of Florence Nightingale, “It may seem a strange principle to enunciate as the very first requirement in a Hospital that it should do the sick no harm”.¹ This seems like a no-brainer, right?  Do No Harm.  Expected or not, most of us being admitted to a hospital have a reasonable assumption that we will not be harmed during our stay.  For many, that’s exactly what happens, in and out with no surprises.  Sadly, that is not the case for everyone.

Three Patient Experience Leaders walk into a restaurant.  The waitress asks, “What are you having today?” They all responded in the same way, “I’d like the Patient-Centered Culture, Service Excellence, and Real-time Technology.” The waitress looked perplexed.

If only these items were made to order like a great meal at your favorite restaurant.  Creating a positive patient experience would be easier for large healthcare systems where value-based models are driving structure, profit models and clinical standards.

Earlier this year, the mortgage industry anxiously awaited the final confirmation of industry veteran and former Federal Housing Administration (FHA) Commissioner Brian Montgomery. Montgomery is well versed in FHA issues and brings deep industry expertise to a role held vacant for too long. At a time when servicers have a real opportunity to effectuate organizational change through innovation, Montgomery may be just the ally needed in 2019.

Rounding has proven to be an effective practice in determining the level of patient satisfaction and improving the overall patient experience.  Many organizations will purchase a rounding solution to support and analyze rounding activities. Did your organization make the investment, but you haven’t seen an increase in HCAHPS scores?  Were you able to sustain the scores from previous years?  If you answered no to those questions, does that mean you bought the wrong solution?

Industry experts say mortgage servicing is a “bright spot” for mortgage revenues. While slowing home price growth and compounding interest rate hikes may be challenging origination profits, mortgage servicing appears to be benefiting from the current landscape. This environment offers an incredible opportunity for mortgage servicers to invest in retooling and retrofitting their solutions, compliance and rules systems. Putting revenue to work in technical infrastructure also adds scalability and efficiency that can be leveraged when the market changes for the worse.  With many predicting a possible recession at the end of 2019 these benefits may be realized sooner than we think, and will help avoid having to staff up or add manual processes if the landscape changes faster than servicers can effectively respond.

Mortgage servicers, who continue to face scrutiny from oversight agencies, may have even more on their plate in the new year.  The Bureau of Consumer Financial Protection (BCFP) examiners continue to identify errors in servicer handling of trial modification conversions. The issue was significant enough to gain mention in the BCFP’s most recent Supervisory Highlights report and will almost certainly remain an area of focus during future supervisory examinations. Being subjected to penalties, fines, or even enforcement action can be extremely costly for servicers.  Conversely, errors in loss mitigation workflow can be easily avoided with the right workout rules management and automated workflow approach.

HCAHPS – who knew that six letters could have such an impact on an organization? Low HCAHPS scores can result in a  loss of revenue, an unfavorable reputation in the community, public reporting of unsatisfactory scores, and potential downsizing of programs and/or employees.  Are your patient satisfaction scores lower than you expected?  It’s time to take a look at the consistency of your nurse leader rounding.

The Federal Deposit Insurance Corporation (FDIC) is the latest regulator to express concern over the rise of nonbank servicing. For nonbank mortgage servicers, the growing attention from regulators and other industry stakeholders, that  include Ginnie Mae, whose concerns we spotlighted recently, could mean policy changes are on the horizon, as well as heightened scrutiny of rules and operational processes that align  with mandated metrics.

Servicers should expect to face tougher scrutiny from Ginnie Mae in the coming months and year ahead. As the interest rate and lending environment has evolved, the government-backed mortgage-backed security (MBS) guarantor has expressed increasing concern with liquidity management. Agency representatives have hinted at new standards, tougher evaluations, policy changes, and credit ratings in the works. With enhanced oversight seemingly imminent, servicers should ensure they have existing requirements under control and be prepared for a ramp up in associated agency rules, operational disruption, and the need for workflow automation.

Has the following situation ever happened at your hospital?  A patient, named Bob, comes in for heart surgery over 20 years ago.  Since then, he comes in as needed for “tune ups”.  Over the years, Bob has become very familiar with his care team.  It’s now that time for Bob to come in for his latest procedure.  When Bob arrives, his care team discovers that due to an error in ordering that they didn’t have the right supplies in the room for him.  The care team could not provide Bob with the care he needed, in that place, at that time.

Improving Patient Experience remains top of mind for most healthcare executives, but strategies and best practices are still being discovered and vary between organizations.  Two evidence based strategies often used to increase low patient experience scores are Hourly Rounding and Bedside Shift Reports.

The Federal Reserve has given mortgage servicers a long and gradual runway to adapt to the realities of a higher interest rate environment. As consumers experience an increasing cost to carry debt, are faced with the inability to refinance into a lower interest rate mortgage, or find themselves faced with an increasing adjustable rate mortgage payment, we can expect to see a rise in delinquency, default and loss mitigation activity. 

Interest rate increases, natural disasters, and seasonal changes can cause dramatic swings in delinquencies, oftentimes making it difficult for servicers to accurately forecast an uptick in foreclosure volume ahead of time. An annual September spike in mortgage delinquencies is one of the more predictable industry trends; however, this September’s figures, which were published a few weeks ago, may have caught some servicers by surprise, and could indicate a hefty ramp up in loss mitigation efforts is on the horizon.

Tis the season for cooler temps, pumpkin spice, time spent with friends and family….and the flu.  It’s the dreaded three letter word that we all want to avoid this season. According to the CDC, over 80,000 Americans died of influenza and its complications during the 2017-18 season.¹  This surpassed a previous recorded all-time high dating back more than three decades at 56,000 deaths.²

Nearly 21,000 U.S. healthcare organizations and programs are accredited and certified by The Joint Commission, making it a recognized symbol of quality nationwide.  It’s their vision that providers deliver safe, quality healthcare at the best value for all.  They determine this through regular, unannounced accreditation surveys¹. Think the comprehensiveness of a final exam with a pop quiz schedule.  How do you cram for that?  You don’t.  You plan!

Is hurricane season over? Not if you’re a loan servicer. Given the skyrocketing amount of devastation caused by hurricanes, wildfires, flooding and other natural disasters, loan servicers are faced with developing a complete process for relief that begins when disaster strikes. Historically, disaster relief was an infrequent and isolated issue, allowing servicers to manage assistance on a manual, ad hoc or one-off basis. In today’s environment, the volume of natural disasters, the geographic breadth, and extent of recent changes to investor requirements, make this approach a risky venture.

There are many issues defining the landscape of healthcare for 2018. According to the PwC Health Research Institute, strategic patient experience and tackling the opioid crisis are among the top 12.¹ Opioid use has been a hot topic of concern for decades. However, with the latest staggering statistics on opioid addiction and related deaths, finding a solution to the crisis has come front and center.

With the rise in value based models driving hospital reimbursements, a patient’s perception of care can have an impact to a hospital’s bottom line. There is concern that in tackling the opioid crisis there could be a negative impact on survey scores. So how do healthcare providers handle these two issues when they become competing priorities?