Lenders often view mortgages as one-time transactions, but with proper processes and platforms in place, they can significantly reduce the runoff risk and capitalize on valuable recapture opportunities through the lifespan of each loan. A strong recapture strategy hinges on personalized customer engagement and digital tools. They enable seamless, transparent and customized experiences that not only strengthen lender-borrower relationships, but foster loyalty and ultimately reduce the likelihood of borrowers refinancing with a different lender.
In this National Mortgage News Leaders episode, listen to Tim O’Bryant, Division Senior Vice President, Business Transformation at LoanCare discuss the role of subservicers in mortgage recapture, strategies for enhancing the borrower experience, and the growing importance of analytics as it relates to recapture.
Key points discussed include:
- How the customer experience can, and should, be enhanced by digital tools
- The importance of real-time analytics in a recapture strategy
- What the role of a subservicer looks like and how LoanCare is unique
Transcription:
Transcripts are generated using a combination of speech recognition software and human transcribers, and may contain errors. Please check the corresponding audio for the authoritative record.
Michael Moeser (00:10):
Hello everyone, and thank you for joining us. I’m Michael Moeser, senior content strategist at National Mortgage News, and I’ll be your host for today’s leaders episode. I’m excited to be joined by Tim O’Bryant, division Senior Vice President Business Transformation at LoanCare, to explore the role of sub servicers in mortgage recapture strategies for enhancing the borrower experience and the growing importance analytics play in successful recapture strategy. Welcome, Tim. Thanks for joining us.
Tim O’Bryant (00:40):
Thanks, Michael. Happy to be here. Looking forward to our conversation today.
Michael Moeser (00:44):
Super. Well, before we dive into the topic, Tim, do you mind sharing a bit about your background and role at LoanCare?
Tim O’Bryant (00:51):
Yeah, absolutely. So I am approaching about 30 years in the mortgage servicing industry. I started with HSBC back in college working nights and weekends, and I joined loan care about 14 years ago. Back then, we were a much smaller organization. We service less than about a hundred thousand loans. And since then we’ve grown to over about 1.5 million. I’ve done a number of different things working at loan care, but I’m currently responsible for our regulatory and enterprise change management programs, our outsource services, information services, data integrity, and also our customer digital experience, which includes our web and mobile applications.
Michael Moeser (01:29):
Well, that’s quite a history there, so thank you. Now to kick things off, why do some lenders often view mortgages as a one-time transaction, and what opportunities are lenders missing out having this mindset?
Tim O’Bryant (01:44):
So lenders can view these as transactional activities. Typically, this happens when they’re primarily focused on things like originations, acquisition strategies, purchasing, servicing portfolios, but what they’re missing out on is the long-term relationship that they could be building with the consumer as well as the retention opportunities. And through that, there’s additional cross sell opportunities that the clients may not be taking advantage of.
Michael Moeser (02:11):
Could you talk to me a little bit more about that cost that they’re missing out on that opportunity?
Tim O’Bryant (02:16):
Yeah, so one of the opportunities of building a long-term relationship is being able to retain the customer in your portfolio, as I mentioned, cross-sell opportunities. So there’s opportunities there for other types of products that may be available within the
Michael Moeser (02:30):
Portfolio. Home equity loans, for example,
Tim O’Bryant (02:32):
That’s exactly right. Home equity loans, not even if the customer may be refinancing. It could be that you’re looking to purchase a new property, sell investment properties, second homes. There’s a whole array of different products that are out there for clients to solicit to their customers.
Michael Moeser (02:48):
Super. Now, can you talk to me about what role does a sub-servicer play and how do they help build loyalty, reduce the likelihood of borrowers refinancing with another lender?
Tim O’Bryant (03:00):
Yeah, absolutely. So this is a very interesting topic. So LoanCare is a sub-servicing company, something that we’ve been focused on for years, and the main interaction that we have with consumers is that day-to-day servicing activity around collecting payments, performing escrow analysis, sending out monthly billing statements. So we’re that primary point of interaction for most customers on the day-to-day servicing of their mortgages. So there’s a little bit of a disconnect there from the lender to ourselves. And what we’ve been working on over the years is how do we better integrate ourselves with the lender and how do we see ourselves as the client servicing department? So a few ways that we’ve been doing that over the years is we’ve been working on our private label strategies whereby when customers interact with us, they see the lender or the servicers, branding, imagery, aesthetics. So it helps give that real feeling that with the lenders platform. And then we’ve also been working on our custom messaging and communications. We do things like account-based marketing where we provide more interactive messaging to consumers around what the client is trying to portray to the customer. And then we also work with our clients on real-time integration so that when there is activity on the website, mobile or other devices, we’re able to interact with the consumer real time and get that information over to the clients for them to action.
Michael Moeser (04:20):
Now, there’s an issue where there’s a runoff risk, and I’m curious how big is that risk, and especially if a lender doesn’t have the proper recapture strategies in place.
Tim O’Bryant (04:34):
Yeah, absolutely. I mean, that is a constant risk in a portfolio. Customers are continually being marketed through traditional social media, word of mouth, email, text, phone, it’s in front of you every day, even direct mail, I would say. Yeah, absolutely. So one of the things that most people would recognize is that acquiring new customers is a very expensive endeavor. So retaining customers that you’ve already brought onto your portfolio is going to be both cost effective and a great way to build your customer base.
Michael Moeser (05:05):
I imagine that also varies as rates go up and down in terms of that runoff risk.
Tim O’Bryant (05:12):
Well, absolutely. And if one of your strategies is to purchase portfolios of loans from others, one of the things you want to do is try to capture somebody at a high interest rate and then refinance ’em into a product that you’re offering at a lower rate to try to retain ’em over time.
Michael Moeser (05:25):
Well, what options do lenders have to mitigate this risk?
Tim O’Bryant (05:30):
Yeah, absolutely. So one of the things that we make available to our clients is around data analytics. So how can you view your portfolio, identify those customers who may be at risk, what interest rates are they at, how much equity have they accrued in their property? How do you engage with the customer? Do you have a call center strategy? To your point earlier, do you have a traditional print strategy, email communications? The one that I’m most fond of is what your digital recapture look like. All these things are things that clients should consider when they’re looking at their runoff risk.
Michael Moeser (06:02):
So Tim, are there specific processes or platforms that they should consider?
Tim O’Bryant (06:08):
Yeah, absolutely. So one of the primary ones that we use is our digital recapture program. This is going to be whereby we make available to the consumer when they log into our platform, information about their property value, how much equity they may have amassed in the property. We also pull in the client’s individual programs and offerings that are available to them. And through a mixture of information that we know about the lenders profile, what states they offer things in, we’re able to put specific products and information in front of a consumer that they can then action. And through those actions with realtime APIs and data analytics, we can send that information over to the client for them to then put that in the hands of a loan officer or put it into their lead generation system so that they can then reach out to that consumer and carry that journey forward.
Michael Moeser (06:54):
So I’m imagining I’m logging into my lender website or mobile app and I’m looking and I can see how much equity I’ve built up, or I can see other programs that may be more attractive than what I’m currently in. Is that really it?
Tim O’Bryant (07:12):
Yeah, that’s absolutely right. So we take a look at what the property value is today, we can take a look at what the current interest rate is on the loan, what the loan balance is going to be. We can then factor in things like LTV ratios at the lender, if they have minimum maximum cash out values that they’re looking to pursue, what products they have in their portfolio that they can offer to a consumer. And then through a mixture of those attributes, we can then prompt the consumer with those various products and see if any of them are of an interest to them.
Michael Moeser (07:44):
Now, what makes a recapture strategy successful? Can you perhaps talk about the importance of the borrower experience? Everybody seems to be talking about the customer experience, and especially in a competitive market that’s probably top of mind.
Tim O’Bryant (08:00):
Yeah, absolutely. So there’s several things that come to mind. The first one is going to be around brand recognition. So that’s where your private label strategies come into play. How do you get your logo, your information, your branding, your proposition in front of consumers on a regular basis so that way when they think about it’s time to refinance or I need another financial product, who do I go to first? It’s having that brand recognition out there in front of somebody so you’re top of mind when they’re looking for a financial product. The other thing that we like to make available is custom and dynamic messaging. So when you go on to a digital platform or you’re getting something from a consumer by email, how are you tailoring that message specifically to them? Are you introducing it by their name? Are you pulling in attributes about their property that’s specific to them?
(08:44):
It’s getting something in front of them that captures their attention and is specific to them in a way that’s meaningful and that the customer can then action. The other thing we like to do is make sure that we’re meeting customers on a platform of their choice. So as we progress, customers are more prone to be going to web and mobile as opposed to some of the more traditional print and phone campaigns, but we make it available across all our platforms, whether it be web, mobile, phone, text, email, we put it through all the different channels. And then last but not least would be making sure that we’re moving at today’s speed. Customers today are used to seeing things happen in real time, so we want to put those integrations in place that there’s a seamless customer experience, whether that be through APIs, SSO or other types of integrations. We want to make sure that we’re meeting the customer’s needs in the way they want them done.
Michael Moeser (09:34):
I can fully grasp that because I think what I think just whether it’s Netflix or Uber, you’re asking for something, you really want to see it available immediately and have it to be relevant to the specific need. Can you talk to me about more specifically, how important are real-time analytics in a recapture strategy? And maybe could you share some examples?
Tim O’Bryant (10:03):
Yeah, absolutely. So monitoring customer behavior is one of the key things to a successful recapture strategy. So what are customers doing? How are they contacting you? What are they doing while they’re on your digital platforms? Are they requesting payoff statements? Are they looking at loan calculation tools? What type of activity are they taking when they’re interacting with you? These are all leading indicators of someone who may looking to make a move, whether it be into a new property refinance or whatever the case may be. Having monitoring around those activities and then providing that information to our clients so that they can take action on that is a key way to make sure that you have the right analytics in place. The other thing is how do you identify and predict runoff risk? So as I mentioned earlier, identifying those customers who may be at a higher rate today than what’s available in the marketplace. Those are people who may be looking to take a refinance opportunity. Do you have customers who have a certain amount of equity in their property and would be eligible for a HELOC role? Right.
(11:08):
And then also identifying what other opportunities are out there. And then the other thing that we’ve recently put in place is around success metric and monitoring. So what happens after the loan pays off? Were you successful in recapturing that customer? That’s one of the things that’s always been very challenging as a sub-servicer is because we are not the ones who are originating that new loan. We don’t necessarily know what happens after the loan pays off. So were you successful in recapturing that person? So we have put a new process in place where we’re monitoring loans post payoff to find out did they go back to the lender? Were we successful in recapturing them? Did they end up paying off and going to someone else, or was it just that they sold the property and they moved somewhere else and they didn’t need the loan anymore? And then also did they take that new loan out with the same lender again? So really putting that type of success metrics in place to understand if small changes you make in your recapture program have a meaningful result in the end.
Michael Moeser (12:03):
That’s very interesting. I can imagine when somebody asks for a payoff amount as I’ve done in the past, that must send up signals or signal flares in your monitoring program and potentially decide that this individual needs some kind of messaging.
Tim O’Bryant (12:22):
That’s absolutely right. Whether it be because you yourself are asking for a payoff or perhaps a third party title company or other lenders request for the payoff, not only are we capturing that they’re requesting a payoff, we’re trying to figure out why they’re asking for it, where it’s going to, and when they’re going to be paying the loan off. And then, so from there, we have a couple of different options that we make available to our clients. We can either provide you a daily report of everybody who’s been requesting payoffs in your portfolio. We have real-time integrations where we can send you little API pings to let you know that there’s someone in your portfolio who’s on the website right now requesting a payoff. And then we also have
Michael Moeser (12:58):
That’s amazing.
Tim O’Bryant (12:59):
Yeah. We also have the ability for them to pull back that information and find out who that consumer is and more information about their accounts so that they can then take action on that.
Michael Moeser (13:08):
Well, Tim, as we come to a close for this session, any final thoughts you want to share with our listeners?
Tim O’Bryant (13:15):
Yeah, sure. So one of the things that we’re focused on is what is our roadmap going to look like for the next 12 months? And some of the cool things that we’re working on are around features like what we’re referring to as rate track. It’s the ability for customers to select a rate at which they’re interested in receiving communication from the client so we can convey that to them and they can take action on it when that rate becomes available to the consumer. We’re also looking at expanding our product offerings and information on our digital platforms in such a way that clients can market things, like I mentioned earlier, around new purchase, second homes, investment properties, how do they get those products out there in front of consumers that are not just focused on refinance? And then I was going to say, last but not least, we’re also working on more intensive integration capabilities with our clients. So today we’re working on improving our SSO or single sign-on capabilities so that there’s a more seamless transition back and forth from our client’s platforms to ours. But in the coming year, we’re also going to be looking at including new things like APIs of the services and features from our platform. So that way the client or customer may never have to leave that lender’s platform. They can perform all their mortgage servicing needs within that one environment, and it makes that overall transaction more seamless.
Michael Moeser (14:32):
Tim rate track sounds very interesting. Can you expand on that for our audience?
Tim O’Bryant (14:37):
Yeah, absolutely. So Rate Track is a new offering that we’re putting onto our website in the upcoming quarter whereby customers can select a desired targeted payment amount or a targeted interest rate that they’re looking to achieve their mortgage. We then take this information, compare it to their current payment or interest rate, and then convey that information to the lender so that they can then take action on it when they have a product offering that meets the needs of the consumer.
Michael Moeser (15:04):
Well, Tim, thank you for spending time with us and our listeners. We appreciate your attention. And so to learn more about loan care, please visit loan care servicing.com. Thank you.