BLOG VIEW: It began as a well-intentioned effort to address legitimate concerns about the handling of troubled loans during the initial painful throes of the mortgage crisis. Surely, the thinking went, optimal resolution of troubled loans can be best achieved if each borrower is assigned a single point of contact (SPOC).
Borrowers with a SPOC will be assured of consistent contact, they won't have to re-educate multiple representatives about the nature of their default, and they will receive consistent information about available loss mitigation alternatives.
So the thinking went.
SPOC was first imposed on 14 large servicers through a settlement involving the U.S. Department of Justice and the attorneys general of multiple states. Since then, SPOC requirements have been extended to most servicers by various state and federal regulators, but the lofty goals of SPOC have largely not been achieved. Servicers' efforts to implement SPOC have been stymied by the real world limitations of staffing and older contact center technologies that never anticipated SPOC.
For many servicers, the initial response to SPOC edicts was to overstaff to ensure compliance, but while staffing up demonstrated a good faith effort to comply, few believe that it has achieved the goals of either regulators or servicers.
Consumer Financial Protection Bureau (CFPB) complaints, state attorney generals' actions, and reports from consumer advocate organizations all attest to widespread failure of servicers' SPOC implementations to meet expectations. The consequences are significant, both from a compliance perspective and in the effectiveness of servicers' default and loss mitigation operations.
Is SPOC an expensive exercise in futility, a painful compliance requirement, or is there hope that it can actually become that idealistic solution it was hoped to be? Can SPOC provide measureable improvements in the management of troubled loans? The answer lies in rethinking the SPOC proposition.
Maintaining Focus In The Midst Of Imposed Change
First, servicers must not lose sight of the core purposes of default and loss mitigation operations – to restore delinquent borrowers to current status wherever possible or to achieve the optimal result for resolution in loss mitigation in the shortest time possible.
Any SPOC implementation must be designed and evaluated for its effectiveness in achieving those goals. If compliance is viewed as the only driver in implementing SPOC, servicers will miss the target, a costly and avoidable mistake.
Clearly, compliance is critical, but servicers must strive to build workable SPOC business models that function within regulatory guidelines. Each operational decision must be measured against the twin goals of operational efficiency and regulatory compliance.
For example, when SPOC was first imposed, many servicers responded by ‘throwing people at the problem,’ deliberately overstaffing to demonstrate compliance. However, they limited their focus to minimum compliance without developing effective workflow processes and call management tools that would achieve the business objectives. It was an expensive and inefficient approach to SPOC implementation.
Today, many larger servicers have begun the process of re-evaluating their efforts. The focus now has become ‘right-sizing,’ reducing headcount by using new technology that aims toward greater efficiency. They are seeking to address the requirements of their business models while ensuring greater levels of compliance.
Defining The Problems
There are a variety of real-world reasons why SPOC has been so difficult to implement effectively. Some are easily overcome, while others are somewhat more difficult.
The first challenge for servicers was the assignment of SPOCs to borrowers. Regulators have generally been willing to allow SPOCs to be defined either as individual agents or as small groups of agents working in ‘pods’ that share responsibility for a group of loans. Across the industry, loss mitigation agents are assigned on average about 200 loans.
Servicers have generally been successful at developing mechanisms for the ongoing assignment of loans to SPOCs. However, some servicers still fail to think beyond this basic requirement. Beyond the fundamental structuring task of assigning loans to SPOC agents, management must also consider the more difficult tasks of workflow, contact management, mechanisms for handling situations when a SPOC is unavailable, audit trails and a host of other real-world issues.
Managing The Workload
Loss mitigation SPOCs face some enormous workload hurdles. They must reach out to borrowers at defined intervals, but they also must deal with inbound calls and voicemails from their borrowers. In addition, they are interacting with other departments, updating the system of record with contact details, responding to emails and attending mandatory training.
All of these responsibilities are critical to success, but often they conflict with one another, disrupting the agent's efforts. Each disruption in the agent's workflow impacts effective communication with borrowers and drags out the process of loan modifications and other loss mitigation remedies.
Agents must be given tools that prioritize contact tasks to ensure that critical contact opportunities are not lost in the daily cacophony of calls, voicemails, emails and other activities. If tasks are not prioritized, an inbound call from a borrower less than a month from foreclosure can be missed while the borrower's SPOC is tied up with a relatively trivial call.
Call management tools must ensure that all contact tasks (inbound calls, various outbound campaigns, voicemails, scheduled call backs, promised follow-ups) are detailed, prioritized and, ultimately, taken care of. Agents who must juggle these various tasks and deal with inevitable interruptions will lose focus and will see their efficiency decline in the absence of well-structured call management tools. Give them the proper tools, and their borrower contacts will be demonstrably more effective.
Planning For SPOC Absences
It turns out that SPOCs are human beings. They leave for lunch. They get sick. They go on vacation. They get unexpected calls from school when little Johnny is sick and has to be picked up. But even when they're not there, their borrowers still must be contacted. Inbound calls have to be answered. Voicemails have to be listened to.
Even if an absent SPOC's inbound calls roll over to a ‘buddy’ or into a queue, what of those mandatory outbound contact efforts that must be attempted to ensure regulatory compliance? Do those fall by the wayside, when an agent is out of the office unexpectedly?
For a SPOC to succeed, tools must be available to managers to quickly re-assign all contact tasks to other agents when a SPOC is absent. Managers should be able, on-the-fly, to determine which available SPOC or SPOCs can absorb the additional contact tasks and make the re-assignment without having to contact IT or telephony support for help. Managers should also be able to take over tasks themselves when other SPOC resources are not available.
Once again, without a defined strategy for dealing with absences and without the tools to instantly manage the re-assignment of tasks, opportunities will be lost and compliance will be jeopardized.
Addressing Reporting Challenges
With the increase in regulatory oversight, new challenges have emerged. Borrowers now may file complaints with CFPB, states' attorneys general, government-sponsored enterprises, or even their congressmen. Not uncommon are the complaints that ‘my assigned representative is never available’ or ‘never returns my calls.’ Frequently, borrowers have complained about sitting on hold for lengthy periods of time without being able to reach their SPOC. Another common complaint is that the SPOC didn't keep the borrower advised during a loan modification effort.
These kinds of complaints fall easily into two categories: (1) the borrower has a legitimate complaint, and the servicer needs to fix the problem, or (2) the borrower is lying to try to gain some advantage in the loss mitigation process. The only way to determine which is the truth is to have robust reporting mechanisms in place.
Traditional reporting from automatic call distributors and systems of record have fallen short in providing sufficient detail to defend against many complaints, leaving servicers the task of sifting through disparate reports and files in an unproductive attempt to come up with answers.
To provide a sufficient window into SPOC operations, new reporting tools must deliver more granular reporting. Managers should be able to produce on-demand reporting for any loan and any date range that details all contact attempts (and their dispositions), including the following:
- Inbound calls from the borrower;
- Outbound calls to the borrower;
- Voicemails left by the borrower;
- Voicemails listened to by the SPOC;
- Requests for a call back from the SPOC; and
- Borrower's abandoned calls to the SPOC.
Assessing Agent Performance
The SPOC model also demands new models for measuring loss mitigation agent performance. Periodic employee reviews are facilitated by a broader range of performance metrics. New systems should be implemented that will measure the following:
- Effective rate of quality right party contact (QRPC);
- Timeliness of outbound contacts;
- Timeliness of accessing voice mails;
- Traditional average speed of answer on inbound calls; and
- Number of days to loss mitigation outcome (loan modification, short sale, foreclosure, etc.).
The SPOC requirement imposed upon servicers has created a whole host of complex management issues, but thoughtful implementation of solutions specifically designed for SPOC holds the promise of yielding significant improvements in performance for both default and loss mitigations operations.
Barry Hays is senior vice president of TeleVoice Inc. and a lead designer of TeleVoice's patent pending SpotLight SPOC call management solution.
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