Rodney Moss of LoanCare on the New Servicing Environment
Rodney Moss is Executive Vice President of Strategy and Business Development with LoanCare, Virginia Beach, Va. He leads continued growth of LoanCare’s portfolio of strategic subservicing relationships. In addition to leading business development efforts, healso directs product strategy for the organization leveraging his more than 25 years of experience in the financial services industry.
MBA NEWSLINK: Your company has been providing mortgage servicing and subservicing for more than 30 years. What is different about the industry in today’s environment?
RODNEY MOSS, LOANCARE: The servicing industry has changed dramatically over the last 30 years with compliance, technology, and borrower interaction being the most significant differences. Servicing in today’s market environment requires substantial investment to deliver an enhanced borrower experience while, at the same time, providing a transparent and compliant client experience. At LoanCare, we believe this starts by providing customers a best-in-class digital experience and offering clients enhanced portfolio oversight tools all while monitoring and adhering to an everchanging regulatory environment. To accomplish these goals, we stress transparency through the expanded use of data, constantly invest in technology, and stay better connected with the customer.
In today’s environment it is of paramount importance to stay ahead of regulatory changes and provide oversight of the full compliance landscape. At LoanCare, we incorporate industry best practices to manage operational risk, quality control, vendor oversight, and ongoing monitoring. We also stress the use of both internal and external audit processes to provide continuous insight and enhanced risk management.
Technology in the servicing industry, as in our lives, has continued to evolve over the years. Today we see a greater focus on data analytics and portfolio management tools that allow our clients to better manage their risk and optimize their asset performance.
As it relates to the customer experience, we feel today it is critical to offer a robust, personalized digital experience while providing all the safeguards and privacy controls demanded of today’s consumers.
At LoanCare, we see ourselves more than ever as a bridge between our clients and their customers and will continue to invest in the infrastructure needed to strengthen those relationships.
NEWSLINK: You have a lot of independent mortgage banks as clients. Why is this market so important?
MOSS: In the last 10-15 years we have seen a great shift in the mortgage origination business, with Independent Mortgage Bankers (IMBs) stepping in to fill the void left when the largest banks began reducing their mortgage footprint in the wake of the credit crisis. IMBs now constitute a much larger percentage of the origination market and as such have their own needs when it comes to servicing their portfolios. The complexity built into mortgage servicing is difficult to maintain alone so having the right systems, processes and vendors in place is critical and costly. Achieving scalability is difficult for any servicing platform so many IMBs look to subservicers like LoanCare to help manage the risks associated with servicing loans and controlling costs.
As we enter 2023, the severe rise in interest rates over the last 12 months has dramatically affected the IMB industry. While a substantial number of these lenders had been retaining mortgage servicing rights (MSR) in recent years, many are now being forced to consider selling their servicing portfolio to manage the slowdown in their origination volume and help preserve capital. This has created an interesting market dynamic where more MSR pools are changing hands and servicing transfers are becoming more commonplace. Like always, the market has adapted, and we have seen an efficient process emerge that connects investors, who have raised funds to invest in MSRs, step up to buy from the IMBs and utilize subservicers to manage the portfolios. We believe this trend will continue for the next 12-24 months and we will be there to help facilitate orderly transactions and transfers of assets.
NEWSLINK: How are client expectations evolving about mortgage servicing? What are they expecting?
MOSS: Mortgage servicing clients expect more transparency, more robust data, and more insight into their portfolios than ever before. What differentiates a subservicer is their expertise in strengthening portfolio performance for clients, not only in today’s volatile market, but in preparation for longer-term success. To ensure optimal results this requires a strategic partnership between lender and servicer to include transparency in business objectives, tailored servicing solutions, and a commitment to ongoing collaboration.
NEWSLINK: You place a lot of emphasis on customer retention for lending partners. Why is that so important, and what are some of the things you do to help your clients retain their customers?
MOSS: Brand loyalty is a primary goal for all lenders who aspire to establish life-long relationships with their customers. In today’s competitive lending market, borrower retention – which includes recapture and cross-selling additional products – is a primary goal of the industry and something clients are intensely focused on achieving with the help of their servicer. At LoanCare, we have invested heavily in making the borrower’s digital experience a priority as this is, for a lot of customers, the primary tool in managing their mortgage and communicating with their servicer. By offering the requisite tools for borrowers to manage their account in an updated, compliant, and easy-to-use online environment, we are helping our client strengthen their connection with their customer from day one of servicing.
One of LoanCare’s priorities is achieving a symbiotic relationship with our clients. To do that, we take the time to understand our clients’ perspectives, their business objectives, brand culture, and the customers they have in their mortgage portfolios so we can tailor their servicing environment. For many clients this results in a private or white label experience where their brand remains top of mind for their homeowners while we manage servicing strategies and operations. All outward communications, touchpoints, web pages, etc., have the branding, tone, and feel of the client’s organization for the homeowner. This seamless infrastructure behind the scenes means clients maintain strong relationships with their borrowers, while providing peace of mind that we’re handling the servicing level agreements, payment plans, regulatory compliance, risk management and fraud prevention to industry best practices.
We continue to innovate and provide new tools for clients to stay top-of-mind with their customers. This includes a variety of account-based marketing capabilities and a platform that allows for deeper interactions with customers to understand their financial goals. Both will help clients reach customers with the highest propensity to pursue a specific product message, offer, or content. This enables our clients to recapture their customers’ business for years following origination.
We also provide access to a marketplace of financial service providers, chosen by clients, to extend cross-sell opportunities. Their customers can explore offers from realtors and insurance companies, for example, based on their financial objectives.
NEWSLINK: How are you using data and analytics to improve performance?
MOSS: There is no shortage of data created in mortgage servicing – but connecting the dots for meaningful insight and being able to provide on-demand access has been an industry challenge. LoanCare saw this as an opportunity to develop LoanCare Analytics™, a proprietary data analytics platform that offers our clients self-serve access to all information throughout the lifecycle of a servicing asset.
Using the LoanCare Analytics™ platform, the servicing team and our client partners can access the same data while gleaning actionable insight in real-time. This single-source-of-truth platform connects the dots across the servicing journey providing our partners the data accuracy needed to make confident decisions and better manage their portfolio(s).
Through the aggregation of complex data sets and comprehensive sources, LoanCare Analytics presents the trends, comparisons, and patterns in easy-to-understand visual graphs and interactive dashboards. Stakeholders can quickly navigate among views, filter down to specifics and access loan level details to identify opportunity and risk – without requiring hours of spreadsheet manipulation or data scientist support. The time saved, accuracy in decision-making, and agility to optimize results is unprecedented.
Clients using LoanCare Analytics™ can similarly track loan onboarding, pull performance metrics, simulate mock regulatory audits, and review their portfolio data in as much or as little detail as they’d like. This flexibility and transparency can help clients keep a pulse on their portfolio at every stage of the loan lifecycle and even predict areas of potential growth or mitigate risk before it happens. For example, clients can identify the number of loans in their portfolio at risk of becoming delinquent to begin proactive outreach to those homeowners. Similarly, those loans already delinquent can be identified for outreach campaigns regarding possible workouts and modifications for which they’re eligible. For loans about to be paid in full, they can receive a targeted campaign to recapture business through another loan product.
NEWSLINK: Talk about your Velocity Specialty Servicing model. Why did you develop that model and how does it work?
MOSS: The simple answer is we launched Velocity because we felt we had something unique to offer the holders of non-performing loans we help our clients turn distressed loans into performing loans faster.
Velocity Servicing offers clients the ability to leverage the scale of LoanCare, its robust compliance and risk management infrastructure, and its operational capabilities, while also providing the talent and process rigor proven to address the unique challenges of specialty loan servicing. We have invested in and developed tools specific to this strategy and utilize a robust loss mitigation data model, Portfolio Arc™. Portfolio Arc™ is an intelligent network of SLA triggers, exceptions, and loan-level conditions used to prioritize work queues by focusing throughput where it matters.
We believe the key is to work with clients on establishing portfolio goals and then executing on a loan-by-loan disposition plan. Velocity can uniquely structure a solution tailored to a homeowner’s situation, helping them understand options and make decisions at a pace that puts both homeowners and clients at ease. Our results have been impressive. By providing the skillset and high touch service necessary to move distressed loans into performing portfolios sooner, our partners experience better resolution times with significant reduction in losses.
NEWSLINK: Where do you see the mortgage servicing market a year from now?
MOSS: The market is going to continue to ask more of mortgage servicers in the coming years. From data, technology, and servicing transparency to solutions for optimized portfolio performance, default management and consumer marketing, lenders will continue to want more support from their servicers. In addition, customers (and therefore the lenders who support them) are increasingly seeking self-serve convenience and personalization – options to manage loans when, where, and how they want to. This means mortgage servicers will need to continue to invest in the digital user experience, AI solutions, mobile applications, and workflow automation to support consumer demands.
We also see lenders continuing to explore alternative loan products to offer their customers in an effort to retain or recapture their business. With housing inventory levels remaining low, and interest rates on the rise, homeowners are more likely to stay in their current homes. It makes sense that borrowers will look to take advantage of their home’s equity through products such as a Home Equity Lines of Credit (HELOCs). We think the next year will see an increase in HELOC production and subservicing demand. Providers, such as LoanCare, who have expertise in managing the unique nuances of these types of loans, from payment schedules to regulations, will prove to be crucial partners of lenders seeking to broaden their product lines.
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