Mortgage Servicing News

November 2005

A Key Skill for Field Services Success:  Communication

By Robert Klein, CEO

Safeguard Properties, Inc.

When a mortgage loan servicer becomes responsible for the condition of an asset the company has loaned money against, it depends on field services vendors to protect that asset. Utilizing a good field services vendor improves the likelihood that the mortgage servicer's primary asset will be protected during the foreclosure process.  This risk is further reduced when the field services vendor and the servicer practice the most important skill in the industry: communication.

Everyone in business will tell you that effective communication is one of the keystones of a profitable enterprise, but when it comes to the mortgage field services business, poor communication doesn't just hinder the operation, it shuts it down. To show you why this is true, let me first define what I mean by effective communication.

When a loan servicer and a field services vendor employ good communication skills, the servicer knows as much about the condition of the property as when the loan was initially written. The field services company literally becomes the servicer's eyes and ears, sending back all of the data that the servicer would gather about the property as if one of its employees was standing in front of the home.

During the default process, the servicer is called upon to make critical decisions as to how it needs to proceed. The time frame that the servicer receives this information in is another critical factor in the default decision-making process. Based on the information provided by the field services company, the servicer will make the decisions that will determine its level of success. The better the information about the collateral, the better the decisions are likely to be. Having a vendor on the ground that the servicer can trust when a property goes into default can spell the difference between a satisfactory resolution or a heavy loss.

Fortunately, opening channels for effective communication is much easier today than it was in the past. Technology has introduced e-mail, Internet file transfer, spreadsheets, instant messaging, digital cameras and conference calls. But it's still up to the field services vendor to utilize these tools. It is critical that information is received from the field and transmitted to the servicer in a short period of time. Once again, technology is the key factor.

Safeguard Properties serves mortgage servicers across the nation, requiring our teams to send data back from all over the country. Technology makes this possible. In rare instances, the effective use of technology by the field services vendor is the only way to keep the servicer and its investors safe from massive losses. A terrible case in point was provided by Hurricane Katrina.

Since the disaster struck, many thousands of flood insurance claims have been filed with the Federal Emergency Management Agency. Thousands of families were forced to evacuate their homes, with the vast majority of these properties still serving as collateral for mortgages.

Even before the storm subsided, servicers across the country began sending downloads and spreadsheets to their field services vendors, filled with information about every property in the affected ZIP codes. Of course, this information was all hopelessly out of date. It fell to the field services companies to provide the most current property condition information and get that data back to the servicers quickly so they could make effective decisions.

At Safeguard we scheduled a series of conference calls to identify and attempt to resolve servicing issues in the mortgage field service industry that occurred as a direct result of the damages caused by Hurricane Katrina. The calls were attended by hundreds of participants from all sectors of the servicing industry, including investors, servicers, field service providers, forced place insurance carriers and representatives from the Department of Homeland Security, Freddie Mac, Fannie Mae and HUD. These calls were an essential communications strategy. They aligned everyone on the same page to formulate a consensus in the industry on how to handle a crisis of this magnitude.

Our central staff was able to update the thousands of records our clients were sending by learning everything we could from our crews in the field (whether the properties had light, moderate or severe damage; whether they were accessible or inaccessible; etc.) and relaying that information to our clients in a spreadsheet format that could be sorted by category and applied to their entire portfolios. Frequent e-mail updates back to the servicers and special Web pages completed the communication loop.

The disaster response continues. In all my years in this industry, I have never witnessed such cooperation on the part of everyone in this business. The industry is now in the process of re-writing the book on how we deal with a disaster of this magnitude. Success in this difficult endeavor will hinge on how well we all communicate. In that respect, field services companies must be well equipped, as their successes have always depended upon this important skill.

We will feel the impact of this disaster for years to come (if not forever) and effective communication between the field service vendor and the servicers will be a key component of this national disaster recovery process. While a single foreclosure cannot be compared to a disaster like Katrina, the same skills are employed by the servicer and field services vendor to ensure the servicing process moves smoothly and the recovery process can be an organized and successful one, for the field service vendor, the servicer, and the investor or insurer.