Language barriers and mortgage servicing employees who struggle when the conversation goes offscript with troubled U.S. borrowers remain top concerns for credit ratings agencies that are setting the ratings for servicing shops.
"I have personally listened to an extensive number of calls from overseas," said Diane Pendley, managing director of the operational risk group for Fitch Ratings.
"I have a very strong opinion about it not working as well, and you have to be careful," she said, adding, "these servicers are working to put their best foot forward."
Todd Niemy, a director at Standard & Poor's, agreed ratings firms are listening closely to calls and making assessments about how well the servicing firms are performing when conducting borrower outreach.
"We are listening to calls and making judgments," Niemy added.
"When it comes to loss mitigation, they are dependent on scripting. It's hard to teach that when their tenure is pretty low."
Yet, with so much on the line for servicers who want to make the grade when it comes to the ratings issued, Pendley at Fitch sees issues in the offshore servicing model.
"Every call that I have listened to from overseas, I felt was not of the quality that you could get in the U.S.," Pendley asserted while speaking at the HousingWire REperform mortgage servicing conference in Dallas.
"Many more from the U.S. operations are of better quality." Pendley suggested the negative result if overseas servicing shops cannot get off script and gather specific details from troubled borrowers is the potential for a lower rating.
Issues stemming from the overseas servicing model include borrowers unable to understand what the servicing point-of-contact is saying and the risk that overseas employees are too scripted and cannot gather the specific details needed to assess a particular borrower's predicament.
While at least one panelist found the servicing workforce in India working at a proficient level and highly educated, the servicing panel conceded cracks in quality do exist when offshoring servicing.
As for what they are looking for in every servicing call onshore and offshore, Richard Koch, senior servicer analyst with Morningstar Credit Ratings, says the employee needs to have empathy for the borrower.
"Empathy is important. I want to know how accurate and thorough and complete a call is," Koch said. "Ultimately is the borrower being served?"
Koch noted that he's not a fan of scripting servicing calls and when he's evaluating U.S.-based interactions he still finds himself making notes of areas where the servicing employee could have dug deeper to more accurately document the borrower's predicament and situation.