Several loss mitigation servicers are evolving their strategies in order to stay competitive in high-touch servicing as more and more firms continue to enter the door knocking industry.
Last year, Freddie Mac
enlisted Titanium Solutions
, a loss mitigation provider, to go to homes with delinquent Freddie Mac mortgages
that weren't returning servicer letters or phone calls. Freddie Mac said sending someone in person would help borrowers overcome roadblocks preventing them from starting the Home Affordable Modification Program (HAMP) trail period.
Now many companies are following suit to provide high-touch loss mitigation services to other investors who hold delinquent mortgages.
Financial Asset Services, Inc.
(FAS), a firm that traditionally offered online loss mitigation services such as short sale processes and REO dispositions, is launching its own high-touch servicing platform. FAS agents will now go door-to-door to get hold of delinquent borrowers, in an effort to get people current again on their mortgages -- a move they say is due to strong client demand.
FAS boasts that servicers can potentially lower their loss severity on a delinquent mortgage with this face-to-face strategy because it motivates the borrower to consider options such as a short sale or deed-in-lieu instead of foreclosure.
"Utilizing door knocks is a cost effective way for mortgage servicers to reach out to homeowners that may have 'gone dark' in the default process," said Jeffrey Flory, director of Sales and Marketing at FAS. "If [agents] are fortunate enough to make contact and the homeowners is willing to talk, they can have a constructive discussion of some of the options that may be available to them."
And FAS isn't the only firm seeing the benefits in this platform. Field Choice
, a field service firm established in 2009, jump-started a high-touch servicing division two months ago. Ted Trapp, director of operations at Field Choice, said his company first sends a letter to notify the borrower that someone is going to come to their house.
"Door knocks in general raise the awareness of the delinquency to the borrower significantly," Trapp told HousingWire
. "The interesting part is that they recognize that they got our letter, so it does seem to give our agents a little more authority when they're talking to the person."
Field Choice offers lenders to send its agents a "trial batch" of 20 orders at a discounted rate, usually 50% according Trapp, to get clients in the door. From there on out, said Trapp, the service speaks for itself.
Success rates for high-touch servicing are varying. Trapp said Field Choice's client count has been limited to one in the past two start up months, but with that client the firm has an almost 100% success rate. Flory told HousingWire
that, even though FAS's first batch was around 400 orders, no statistical success rate will be available for four to five months.
High-touch servicing is different from agency debt collection in the fact that the servicers never take possession of the delinquent payments. Agents have to be compliant with the Fair Debt Collection Practices Act (FDCPA), but they are not licensed to handle delinquent funds.
Write to Christine Ricciardi
Additional reporting by Jacob Gaffney.