Sponsored Content from SWBC: COVID-19 Disruptions Drive Tech-Focused Lender-Placed Insurance Programs

(Kathy Iseley is SVP Sales in The Financial Institution Group with SWBC, San Antonio, Texas.)

None of us could have foreseen the challenges we’ve all faced this year. The onset and spread of COVID-19 throughout the country interrupted daily life on an unprecedented level and left many families struggling with financial insecurity. 

While we have somewhat rebounded from the original shock of job losses in spring 2020, mass furloughs and layoffs have negatively impacted millions of Americans — between February and August last year, our country lost nearly 11.6 million jobs. The mortgage industry has been severely affected as well, as many homeowners are relying on federal relief through mortgage forbearance to stay afloat.

In February, the White House announced the following actions taken to extend help to individuals and families during the current “housing affordability crisis:”

• Extend the foreclosure moratorium for homeowners through June 30, 2021;
• Extend the mortgage payment forbearance enrollment window until June 30, 2021, for borrowers who wish to request forbearance;
• Provide up to six months of additional mortgage payment forbearance, in three-month increments, for borrowers who entered forbearance on or before June 30, 2020.

In addition to inducing a slowing economy, the COVID-19 pandemic has pushed adoption of digital technology to new bounds. Data cited by GetSmarter reveals that, in the two months of nationwide lockdowns during the spring of 2020, we moved five years forward in consumer and business digital adoption due to COVID-19, forcing many companies to digitize at least part of their business.

This is a challenging time for both mortgage servicers and their customers who are struggling with increased instability and financial uncertainty. Not only will homeowners struggle to pay their mortgages — they may also be more likely to let their mortgage insurance lapse.

Lender-placed insurance (LPI) is a tool that mortgage loan servicers rely on to help protect their assets in case a customer fails to maintain their required homeowner’s insurance coverage. Customers can lose their coverage for a variety of reasons — policy cancelation, the insurer withdrawing their policy, simple oversight, or non-payment.

In this article, we’ll discuss how electronic data interchange (EDI) and robotic processing automation (RPA) technology are helping mortgage servicers improve the efficiency of their LPI process and reduce unnecessary noise when it’s most important.

Electronic Data Interchange (EDI)

According to AcrESB, “Electronic Data Interchange (EDI) is the automated, computer-to-computer exchange of standard electronic business documents between business partners over a secure, standardized connection.”

Mortgage loan servicers who are able to leverage EDI technology can evaluate and process their loan data against their customers’ insurance data to identify which customers have homeowner’s insurance policies that have lapsed or are in danger of lapsing. The process enhances accuracy by eliminating human errors, such as data-entry mistakes, and significantly speeding up the process of checking your customers’ insurance status.

Robotic Processing Automation (RPA)

Robotic process automation, or RPA, is a type of technology that leverages computer software programs, or “bots,” to execute actions that a human would traditionally do, then replicates and integrates those actions with digital systems to perform a specific task.

RPA bots capture data and perform certain actions and execute data-based decisions incredibly effectively and efficiently. They can interpret information, integrate with or “talk to” other systems, and respond to multi-step commands that enable them to perform essential duties that are often time-consuming and tedious for humans.

Mortgage loan servicers are utilizing RPA technology to quickly identify potential gaps in mortgage insurance coverage in their portfolio.

Tactful Service and Communication During Challenging Times

“One year after the onset of the pandemic, many homeowners are approaching 12 months in their forbearance plan,” MBA’s Senior Vice President and Chief Economist, Mike Fratantoni, recently stated. “That is likely why call volume to servicers picked up in the prior week to the highest level since last April.”

Contacting customers — especially those struggling with financial hardship — can be a delicate task in the current environment. You don’t want to bombard them with yet another call from a financial institution. In fact, you don’t want to have to contact them at all unless it’s absolutely necessary.

At SWBC, because we leverage a multi-step process that includes EDI and RPA technology, combined with insurance agent and carrier calls, approximately 97% of our clients’ customers who don’t provide proof of insurance are never contacted directly. 

For those we do contact on your behalf, we utilize an omnichannel communication approach via email, text, interactive voice response (IVR), or phone call to allow your customers to communicate on their preferred channel.

For more information about how SWBC can help you increase efficiency and improve customer communication for your LPI process, click here.

(Sponsored content includes material submitted independently of the Mortgage Bankers Association and MBA NewsLink and does not connote an MBA endorsement of a specific company, product or service. For more information about sponsored content opportunities, contact Bill Farmakis at bill@jlfarmakis.com or 203/834-8832.)