MBA Newslink Q&A: Toby Wells, President of Cornerstone Servicing

Toby Wells is president of Cornerstone Servicing, a division of Cornerstone Capital Bank, SSB. He has nearly 30 years of experience spanning mortgage servicing, originations, capital markets and asset management. Throughout his career, he has led profitable mortgage servicing organizations through challenging economies and transformational mergers and acquisitions, cultivating organizational cultures that attract and grow high-performing teams. Wells can be reached at twells@cornerstoneservicing.com.

Mortgage delinquency rates are at their lowest level since the Mortgage Bankers Association began collecting data in 1979, largely due to a strong job market and people hanging onto the low interest rates they had before rates skyrocketed.

Yet, mortgage defaults still occur for various reasons and servicers need to be prepared in case the market suddenly shifts. In fact, according to the MBA’s latest statistics, delinquencies across all loan types rose in the third quarter. Delinquencies on FHA loans rose to 9.5%, indicating some low-income and first-time borrowers are struggling under the weight of high rates.

MBA NewsLink interviewed Cornerstone Servicing President Toby Wells about technology advances that improve default servicing operations and borrower communications.

MBA NewsLink: How has technology improved efficiency and accuracy when handling mortgage defaults?

Toby Wells: Servicing technologies have come so far from the old days when we had to create proprietary systems to meet specific needs and wrap them around the base servicing system.

For example, a module within our online portal helps homeowners impacted by a financial hardship request mortgage assistance. If they have trouble finding or completing the application, a virtual assistant within the portal is programmed to help 24/7. The data feeds into our loss mitigation system, where a decision engine matches homeowners to programs based on agency, insurer and compliance requirements. Our loss mitigation system integrates with our claims and loss analysis technology, which leverages real-time monitoring and automation to identify and prioritize advances eligible for reimbursement.

When technologies across a servicer’s platform talk to each other, all parties are going to see efficiency and quality gains. As another example, our subservicing clients benefit from full visibility into their portfolio and how the loans are being serviced. They have 24/7 access to complete analytics dashboards with capabilities to drill down to loan-level data as needed, empowering informed portfolio management and oversight. 

MBA NewsLink: Can you provide examples of innovative solutions that have improved default outcomes, particularly in the context of borrower communication and outreach?

Toby Wells: First, we focus on minimizing delinquencies across the portfolio. Servicers can leverage predictive analytics to identify homeowners who are at a higher risk of default and automation technologies to proactively offer resources and support with a higher degree of personalization. Our goal at Cornerstone Servicing is to help homeowners stay on track, and these technologies help us keep our delinquency rates below industry averages.

Getting on a mortgage assistance plan early can help us secure the best program available to a homeowner based on their unique situation and mortgage, while minimizing the effects missed payments may have on their credit score. For a variety of reasons, however, many homeowners hesitate to connect with their servicer when they are behind on payments, which delays the process. Being able to complete the process independently online can alleviate some stress and anxiety.

The module guides homeowners though the entire application process, beginning with a simple online form. From there, they gain access to a dashboard with a status tracker, a list of required documents to upload directly into our system and trial plan steps. The final decision and agreement are provided within the portal. The experience is simple, convenient, efficient and transparent. Homeowners can log in anytime to see the current status of their application, outstanding actions they need to take and what to expect next. Eliminating snail mail and minimizing data entry, thanks to integration with our other default systems, shaves more time off of the process.

MBA NewsLink: Based on your experience, how can data analytics and artificial intelligence be utilized to predict and mitigate mortgage defaults? What were the results?

Toby Wells: Analyzing data points like payment history, property tax and insurance expenses, credit score, employment status and debt-to-income ratios can help servicers identify patterns and create predictive models. Regional trends such as changing property values, insurance costs, and unemployment rates can also help us forecast defaults. Identifying populations at high risk and why helps us engage homeowners proactively with relevant education and other helpful resources.

Additionally, when a significant number of mortgages may be impacted by a certain event such as a natural disaster, data intelligence can help us predict the volume of inbound inquiries so we can adjust our staffing levels accordingly. We can also ensure the contact center agents working during that period have the relevant skills to efficiently resolve the types of inquiries we anticipate. As a mortgage partner, we want to remain easily accessible to homeowners in need of support. Removing barriers like long hold times helps us mitigate defaults.

MBA NewsLink: Why should organizations think about improving default servicing processes when delinquencies are at all-time lows?

Toby Wells: Our industry is seeing an uptick in delinquency as more borrowers become stretched due to factors like inflation, rising property taxes and rising insurance costs, which are here to stay for the foreseeable future. Homeownership is becoming more expensive—not just for new homebuyers, but for those with existing mortgages as well. As expenses rise, homeowners with little padding in their budget are at higher risk of default.

In any case, implementing new default technologies is easier when delinquencies are low. Servicers will have more capacity to be thoughtful and tailor the technologies in smart ways to maximize their value. There’s time for trial, error and improvement. Integrating the new technology with the broader platform, as well as building effective processes and communications around them, also takes time.

Big picture, even the smartest technologies require human brainpower and time to implement, integrate and refine. Servicers doing this now will be better positioned in a more challenging environment.

MBA NewsLink: What are the typical challenges that servicers face when integrating new technology into their default servicing processes?

Toby Wells: Data integration is the most complicated piece. Servicers need to determine how to best aggregate and analyze data and make it available across their servicing platforms in real time. Legacy wrap-around systems and proprietary solutions can be very challenging to integrate with other servicing technologies like enterprise customer service systems and homeowner portals, and they are often less efficient and effective compared to newer technologies available in the market today.

Proprietary systems also need constant in-house maintenance and support, which requires significant ongoing investment. Even so, organizations can be reluctant to give these systems up because they were expensive to develop and implement. But over the long haul, leveraging newer technologies that better integrate with a servicer’s ecosystem can provide servicers with long-term support and regular enhancements at a lower cost.

MBA NewsLink: What best practices or strategies would you recommend to those looking to leverage technology for better default management and customer satisfaction?

Toby Wells: First and foremost, servicers should begin building strong relationships with homeowners the moment their loans are boarded, when mortgages are healthy. This starts with people who care and want to serve others, combined with a robust technology platform built to drive engagement. Offering intuitive digital services and tools that make homeownership easy and convenient will help drive adoption, and the value will snowball from there. When homeowners like and use these digital solutions, servicers will have more data to help them identify populations at risk for default and engage them with relevant support to keep their mortgages current.

Equally important, don’t let the homeowner experience slip when mortgages fall delinquent. Continuing to provide high-quality service to those who are behind on payments will yield better default outcomes while deepening trust and brand loyalty.

Third, don’t skimp on technology integration. A fully integrated platform offers countless advantages, from improving operational efficiencies and elevating homeowner experiences to intelligent risk management and heightened transparency with stakeholders and regulators. Being able to aggregate and analyze data from across the platform helps servicers predict and minimize delinquency across their portfolio, which will also support higher retention and better financial performance for the long-term.

Lastly, never stop improving the servicing technology platform, data integration, and engagement mechanisms. Beyond continuous investment and strong, in-house expertise, this requires a forward-looking vision that aligns with a servicer’s mission, strategy and culture. Servicers that get this right will be positioned for success in any environment.  

(Views expressed in this article do not necessarily reflect policies of the Mortgage Bankers Association, nor do they connote an MBA endorsement of a specific company, product or service. MBA NewsLink welcomes your submissions. Inquiries can be sent to Editor Michael Tucker or Editorial Manager Anneliese Mahoney.)