Venture Blog

Top Takeaways from MBA Servicing 2024

Claire Henderson
by Claire Henderson

March 01, 2024

Although there are certainly challenges facing mortgage servicers in 2024, this year's MBA Servicing Solutions Conference & Expo was more optimistic than we were expecting just a few months ago. The experts and exhibitors shared their outlooks on the market and predictions for what is still to come and how we can all weather the storm together. Here are some of our insights from the conference:

State of the Market

  • With inflation slowing down and the potential for rate cuts through 2024, there is low probability for a banking crisis. Banks should stress test balance sheets, solve for liquidity problems, and have flexible options in place. Growth projections show inflation rates settling back to normal in 2026. 
  • Debt balances are growing, and the job market is cooling with employment projected at 4.5% in 2024 or even 5% in 2025, all of which points to increases in delinquency rates. The main concern for servicers will be in clearly explaining options available to borrowers well before they find themselves in need of those tools. This will also require proactive training of servicing staff since many who experienced the Great Recession have either left servicing or retired (turnover rates rose to 29% in 2021 and 2022), taking their knowledge and experience with them.
  • Refi activity remains tepid, and new purchase applications are lagging due to consistently high home prices. However, 2024 may see a slight increase in purchase if the projected new housing inventory hits the market as planned. There are good opportunities to find new homebuyers in the median 35-years-old range who are either currently renting or live with friends or family; these may be on the lower income end of the scale, but servicers can offer resources and support to help them not fall behind.
State of the Market
  • The low delinquency rates of the pandemic were largely attributable to the increase in self-service options where the customer had time to absorb, process, and respond to the situation they found themselves in. This is something that can be carried forward in the new landscape of loss mitigation and customer service options, especially with new tools like the payment supplement assistance program that buy time until the customer can rebound or rates improve and allow for more levers to pull. 
  • If delinquencies do increase through 2024 and into 2025, servicers may find themselves reevaluating the option to outsource servicing to a subservicer. This can be beneficial due to the larger vendor management oversight programs in place, access to greater resources and solutions, more favorable economies of scale, faster speed to market, and reduced system maintenance costs. In the interest of preserving good customer experience, though, servicers need to select a subservicing partner who can meet their requirements for the life of the relationship without sacrificing the needs of the customer. 

Compliance Concerns

  • As the VASP program has no go-live date yet but has been verbally promised to go forward, servicers should proceed cautiously if they are considering ignoring the voluntary moratorium through May 31, 2024. The reputational risk of not following the moratorium is high, so the most prudent avenue is to postpone resumption of foreclosures for now until there is a clearer timeline. 
  • Servicers can expect greater scrutiny from regulators over fair servicing, particularly for Limited English Proficiency (LEP) borrowers. For servicing, the main concern is to prove planfulness,” and fear of not executing right the first time will not be an excuse for not initiating a plan at all. The starting point will be understanding your customer base, figuring out the ways they need communication, training your teams to support those needs, and coordinating with other servicers/subservicers for smooth transfers of MSRs. The number of languages will be determined by each servicer’s customer base, so there is no “one size fits all” solution for sufficient LEP support. Having monitoring programs in place to capture data points across demographics will support identification of discrepancies in outcomes between different customer segments. Regulators are concerned with whether you have the data to show that you are consistent within customer segments in a way that produces equal outcomes across the board.
Compliance Concerns
  • “Junk” fee CFPB rulings do not directly target servicers for now, but the language being used to define unauthorized collection of fees leaves the door open. Servicers can best protect themselves by taking a hard look at their current fees and reevaluating whether they can prove the authority to charge them to customers. 
  • Climate change demands attention and needs to be handled as a collective between the agencies and servicers, now rather than later. The unprecedented increases in home insurance rates driven by climate disasters will only continue to put pressure on servicers by increasing delinquency rates. With the likelihood that other states will implement similar requirements as New York, servicers need to prepare now to ready their risk management programs as proof that they have plans in place to mitigate strategic, financial, and operational risks. Uncertainty and data gaps will not justify inaction to prepare for the effects of climate change, and servicers can count on requirements to provide data and reporting around their mitigation efforts. 
  • The relationship between compliance and customer service doesn’t have to be combative. In all cases, servicers need to ask themselves if compliance is separate—an afterthought—or if it is embedded in the mission to the customer. Changes to systems, processes, and culture need to keep the customer in mind, ultimately driving at protection and satisfaction; when making policies, servicers can’t be thinking abstractly about a distressed customer but rather need a personal awareness and acknowledgment of the specific customer experience to capture why these changes matter, understand the purpose, and anticipate the effects. 

Government Agency & GSE Updates

  • The FHA announced their payment supplement assistance program is ready, and partial claims can now be used to handle arrearages on behalf of the FHA for part of PMI payments to help reduce defaults. The other agencies will be following their lead soon with similar processes that accommodate their own requirements and regulatory oversights. 
  • Building out the loss mitigation toolbox remains a high priority for the government agencies; each is incorporating the lessons from the pandemic to creation options that work for the homeowner and continue reducing foreclosure through new standard waterfalls. 
Government Agency & GSE Updates

Technology & CX

  • Customers expect streamlined experiences, minimal tasks and documents required of them, and for their servicer to demonstrate they know them. Data should be pre-filled as often as possible without having to ask the customer for the same information over and over again, often funneling them through time and labor-intensive phone systems only to meet a dead end that can’t solve their problem. Customer service should be available in the channels that best fit the customer’s needs and should deliver real-time resolutions quickly and with clarity. 
  • AI has its place but needs to be implemented with careful consideration. In some cases, it’s already being used to aggregate and analyze data. Generative AI should not be used for high-risk tasks like writing policies; it is better suited for processes like automated information collection, reducing loss of customers through high-friction process like document requests, and supporting better quality customer service by identifying when a policy has not been communicated appropriately. Figure out where automation can be implemented to deliver an immediate resolution, like a request for a specific document or seeking out account information, that can be solved without involving a live representative.
Technology & CX
  • Leverage the technology within your systems to prioritize self-service options whenever possible. Use analytics to identify and predict why a customer might be reaching out for support and deliver a self-service option that preempts the need for hands-on assistance. This will likely involve a combination of vendors to produce a solution that accounts for the easily solvable requests and those more complex issues that require a human touch. Having the right data collection and reporting in place to verify the efficacy of each option is essential to keep building and developing the right-sized system for your customers. Data can also be used to create additional value in existing digital assets, such as including home value analytics within the same portal a customer uses to access their account information. 
  • Proactive communication is essential, but so is building a relationship of trust with the client that allows them to be receptive. Homeowners who miss payments experience shame and embarrassment, so it can be difficult at times to get them to answer the phone and respond, even though collaboration with their servicer is the best way forward and out of delinquency. Being creative in what communication channels you use to deliver helpful information in an approachable way can make the difference and help a customer figure out the right path for them to stay in their home. Servicing is unique in that the customer had no say in selecting their provider, so servicers need to put in the work to prove to the customer through positive CX why they are deserving of trust. 
  • Find new opportunities for customer education. This may require putting in the work to learn and truly know the customer. Onboarding is a great opportunity to introduce the tools and options available to new homeowners, but it does require thoughtful preparation by the servicer to prevent bad experiences. Servicers will likely also have to repeatedly communicate these key points until the customer is ready to receive them, but it is the servicer’s duty to avoid causing distress and effectively communicate options. It can be helpful to brainstorm how to get ahead of distressing situations, like escrow shortages; use the data available to identify when these are likely to occur and offer actionable, valuable options that the customer can use to lessen the impact.

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