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August 14, 2023

Digitizing Mortgage Default

The Federal Housing Administration (FHA) is looking to modernize mortgage default servicing processes by inviting more automation into the process and moving away from outdated face-to-face requirements. This illustrates another industry progression that has grown out of COVID-19 pandemic guidelines. From a modernization perspective, the Department of Housing and Urban Development introduced the corresponding proposed rule “to better align with advances in electronic communication technology and mortgagor engagement preferences.” The goal is to allow and encourage servicers to use a number of alternatives to face-to-face meetings and expand these revised meeting requirements to all borrowers in default.

Woman viewing her default servicing options on mobile device

New Communication Guidance

Mortgage servicers demonstrated their capacity to effectively interact with borrowers using electronic, remote communication tools during COVID-19 pandemic provisions that waived the face-to-face meeting requirements. The fact that vast numbers of distressed borrowers received loss mitigation assistance during this time is indicative of borrower satisfaction, workout results and, more importantly, servicers’ opportunity to communicate without meeting face-to-face.

Pursuant to FHA INFO 2023-60, if the proposed rule is finalized it will specifically:

  • Allow mortgagees (servicers) to utilize electronic and other remote communication methods for conducting interviews with borrowers to satisfy FHA’s early default intervention requirements.
  • Eliminate the requirement that mortgagees make at least one trip to the mortgaged property to schedule a meeting with the borrower; and
  • Expand the meeting requirement to include borrowers who do not reside in the mortgaged property or have a mortgaged property that is not within 200 miles of their mortgagee, its servicer, or a branch office.

Is your organization leveraging pandemic lessons learned?

This proposed change brings to light the ease and importance of fully embracing modernization and digitization related to loss mitigation. The benefits far surpass eliminating face-to-face engagement. Current innovative advancements offer a means to connect, categorize, and communicate with your borrowers in a personalized manner. When you see electronic and remote communication technology, think beyond old-school automation. Envision being able to proactively engage unique borrower needs before they even connect with you and so much more…

  • Use KPIs to tag your borrowers by creating customer profiles/characteristics that leverage loan-level events and behavior.
  • Reach out to your borrowers before they need to reach out to you. Smart solicitations including critical information for them to act on is imperative.
  • Engage distressed borrowers in mass with bulk communications that deliver accessible mobile electronic communication.
  • Don’t call your borrowers when you can send a current customized and timely email, text, and/or video link.
  • Connect and engage your borrowers through a robust user interface where they can begin to explore options on their own, obtain answers, and receive documents on their own terms. Self -service complete with personal preference is key. Automated workflow to fulfill their requests is critical. When they want it, how they want, the time they want is all a reality now.
  • Drive innovative and timely responses – and follow-up – using artificial intelligence that leverages multi-source data and smart workflow automation that consumes the AI and drives the operational processes that create results.
  • Implement process automation and AI where applicable to future proof your organization. Innovate your technical and remote communications today!

The Evolving Landscape of Default Servicing

Collaborate with FHA and fellow industry leaders in adopting progressive approaches to conducting business that encompasses, at the very least, the innovative competencies mentioned previously. Embrace the evolving landscape where borrower demands and expectations are transitioning from historic face-to-face engagement to contemporary communications techniques riding on lessons learned during the COVID-19 pandemic. This transformative shift can be additionally propelled by the power of artificial intelligence.

The present capabilities of AI are reshaping internal servicing operations, enriching educational endeavors, and expanding the horizons of information acquisition and application. If your organization taps AI as a component of FHA modernization, make certain you’re aware of the pitfalls that can arise. CLARIFIRE® is uniquely designed to deliver the underlying process automation ecosystem needed to ensure your communications and default operations are prepared to offer access to AI and new technologies. CLARIFIRE is experienced in facilitating innovation while minimizing risk exposure, including AI nuances that could negatively impact your customers and your organization. Position your organization safely with CLARIFIRE.

Don’t delay evolving your default servicing operations. As FHA and industry modernization usher in a new era of electronic, remote communication, the stage is set for more efficient, borrower-centric approaches. By leveraging the power of CLARIFIRE, mortgage servicers have the opportunity to showcase their ability to elevate borrower engagement with personalized, self-serve access to servicing of all sorts, including loss mitigation options, applications, workouts, and acceleration of results. Let CLARIFIRE create a seamless servicing experience for you and your borrowers by blending innovative communication tools, affirming AI utilization, and streamlining customer processes. 

It’s time to embrace the digital frontier and reshape the future of your organization with CLARIFIRE. Reach out to us directly at 866.222.3370 or visit us at

Let us show you how CLARIFIRE is truly BRIGHTER AUTOMATION.



Jane Mason | @janemasonceo

Jane has applied her vast experience (over 25 years) operating process-driven businesses to successfully redefine client-focused service. Jane has worked with expert programmers to apply cutting-edge web-based technology to automate complex processes in industries such as Financial Services, Healthcare and enterprise workflow. Her vision confirms Clarifire's trajectory as a successful, scaling, Software-as-a-Service (SaaS) provider. A University of South Florida graduate, Jane has received many awards related to her entrepreneurial skills.


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