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in Mortgage Servicing > Collections

Servicing Management, August 2006.

In mortgage servicing, few words get tossed around as often as “communication.” It applies to nearly every process that an organization manages, and failing to make a connection - whether between systems, data or people - can have profound consequences for the bottom line.

In a most literal sense, servicers must communicate with borrowers. From routine customer service calls to complicated default management interactions, exchanging coherent and meaningful messages is a prerequisite. Today, many of those messages are exchanged in languages other than English.

If you cannot communicate with a borrower, your organization risks - at a minimum - jeopardizing the customer relationship. Within the collections space, you risk escalating delinquencies, default and, potentially, foreclosure.

“Obviously, if you can’t speak to borrowers in the language they understand, you’re not going to be able to collect,” says Astrid Rial, president of Arial International, a University Place, Wash.-based multilingual management consulting and training firm.

“Trying to explain to someone with whom you have a language barrier about loss mitigation, foreclosing on the property, a potential sheriff sale - you can do some serious damage to a borrower if you do not have the ability to effectively communicate,” adds Dennis Lauria, senior vice president with Popular Mortgage Servicing Inc., Cherry Hill, N.J.

Borrowers whose primary language is Spanish most often comprise the group that servicing organizations target. Because of the sales and marketing strategies among mortgage lenders, catering to the Hispanic population has become a necessity for progressive shops.

Originators have been tapping the Hispanic-borrower segment for some time, and lenders continue to expand activity in that space. Thus, there has been a need for servicers to adjust accordingly - which some have done, and others are scrambling to do.

“The companies are wholeheartedly going after U.S.-Hispanic borrowers and Spanish-speaking borrowers,” Rial explains. On the marketing side, lenders have translated all of their advertisements into Spanish. Bilingual loan officers fill origination branches from coast to coast, and lending documents are often available in Spanish.

“But they haven’t thought about the back office servicing,” she adds.

In recent years, many Spanish speakers closed their loans entirely in their native language. Based on those experiences, these home buyers came to expect all future communications with their lenders to be conducted in Spanish.

Into collections
To a certain extent, most servicers can accommodate that need. Routine customer service inquiries are relatively simple, and there is little at risk for an organization. But when collections-related calls come into and go out of a servicer’s office, the stakes are higher, and agents’ skill sets must be sharp.

“What we found was that with many of our agents, although they could speak Spanish, the Spanish that they spoke was not, grammatically, to a point where our borrowers’ needs were being serviced,” comments Teji Singh, chief servicing officer with Option One Mortgage Corp., Irvine, Calif.

Rial explains that it is typical for bilingual collections representatives to be trained in English. Once those staff members are up to speed on collections policies, procedures and strategies, management often expects bilingual representatives to hit the phones and apply those skills in Spanish.

However, it’s not quite that simple. The terminology associated with mortgage lending and servicing is not akin to translating street signs. Mortgage esoterica can be difficult for any borrower to grasp - let alone for an individual who cannot communicate in English. And if a mortgage is delinquent, the consequences of failing to communicate can be substantial.

Therefore, bilingual staff members should be trained in the intricacies of effectively relating complicated information in Spanish. Open-ended questions need to be presented carefully, and active-listening skills must be well-honed. Also, speaking colloquially with a Spanish-speaking borrower might be counterproductive, even if the representative has a firm command of the language.

On top of this, there are regional differences to which servicers must be attentive. For instance, California’s Hispanic population is comprised largely of Mexican immigrants, while individuals from Puerto Rico and the Caribbean often reside on the Atlantic seaboard. There is a huge difference, Rial comments, between the variations spoken by U.S.-born Hispanics and natives of Argentina or Columbia.

“What we’ve found effective is to look for a neutral ‘business Spanish,’” she says. That means employing formal language, exacting grammar and a neutral vocabulary.

Servicing organizations on the forefront of attending to Spanish-speaking borrowers’ needs had to drill down their portfolios and devise creative solutions. At Option One, Singh says an analysis revealed that 4% of incoming calls were conducted exclusively in Spanish, and the overall percentage of Spanish-speaking borrowers was higher.

“Based on the number of calls we were getting, we dedicated a large group of Spanish-speaking agents to receive only Spanish-speaking calls,” she says.

At Popular Mortgage Servicing, 9% of borrowers are Hispanic, and just over 13% of the operation’s incoming calls are conducted in Spanish, Lauria comments. Because of the large percentage of Spanish-speaking business interactions, the company maintains a 25% to 40% subset of bilingual collections, loss mitigation and customer service representatives.

“We think - by routing those calls to a specific pod, to that high percentage of bilingual speakers - we’ll always have ample coverage,” he notes. If there is an overflow of Spanish-based calls, the company does not re-route them back to the general call center. Those calls remain in queue for the bilingual center.

Singh comments that her company did not limit itself to increasing bilingual staff levels. Having warm bodies on site can only go so far toward accomplishing bilingual goals.

She says that Option One did some due diligence on how in-house agents were performing, and the company ultimately decided to secure an outsourced business partner based in Mexico - 60% to 70% of Option One’s Spanish-speaking borrowers are of Mexican descent. The company now has a site in Guadalajara that augments its domestic center. Borrowers tend to react very positively to reaching representatives located in their native nation.

“Their engagement levels have really increased,” Singh remarks.

Tech and talk time

Technology is also responsible for the successes Option One and Popular Mortgage Servicing have had. Option One offers a Spanish interactive voice response (IVR) unit that replicates all of the services offered by the English IVR. If a customer chooses Spanish, it is flagged as a preference and relayed into the servicing system.

Between this technology and agents’ fluid communications, Option One has maintained a Spanish-speaking abandonment rate of 2% to 3%, and the average speed of answer is about 15 seconds - the same as the figures found with English-speaking borrowers.

Similarly, Lauria explains that his company presents an English or Spanish option to incoming callers, and this has been a useful tool for borrowers.

“Our servicing platform has a language-preference tracking mechanism,” he says. “It has predictive memory.” So, when a borrower who has called through the IVR before inputs his account information, the system offers a message to ask the borrower if he wants to continue in Spanish. That information remains on the system, making future calls run more smoothly.

“When we develop an outbound calling campaign, one of the first things we do is back it up against the language-preference tracking mechanism,” he adds. “When they’re live outbound calls, the queues are specifically bilingual, and that is what that campaign is scheduled for.”

Singh notes that Option One recently leveraged its technology to do something similar: It enhances outbound collection calls by downloading all loans that have a Spanish preference indicated in the file.

Whether inbound or outbound, Spanish-language collections calls take time. This has been a rubbing point for many servicers, who are sensitive to the costs involved with spending too much time on the phone.

Rial explains that it takes, on average, 30% more words to say something in Spanish as it does to say the same thing in English. This applies to an ordinary conversation. If you account for the technical nature of mortgage terminology and the care needed to educate Spanish-speaking borrowers, calls can consume far greater numbers of words. Managers who do not speak Spanish or are unfamiliar with the realities of conducting business in the language must be malleable.

Singh says that the average talk time associated with a Spanish speaker is 10 minutes at Option One. It takes this much time to ensure that a clear message is being related, and to fulfill educational and counseling needs.

“All of that happens quite systematically if you have agents who are not rushed to the next call because of service-level issues,” she remarks.

Expending that extra time has evidently been good for the company. Singh notes that, historically, Spanish-speaking customers have had lower levels of delinquency than their English-speaking counterparts.

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