I embedded myself with a reverse mortgage servicer this year—voluntarily. After spending the last nine months deep in the throes of the business, it feels like the more I learn, the more questions I have about standards and processes. So I’d like to ask a few of those questions to everyone in the industry, because it sure seems like we have an enormous opportunity to build a better process.
Sitting with a servicing analyst recently, I wanted to learn how delinquency status codes were changed in a default reverse mortgage portfolio. Yes, this is what I do at work sometimes. She manually entered a number of data fields that were read from a scanned document, that were sent to her via an email queue, that were scanned into a TIF document by a document department that exists somewhere in the same building, received via fax from the customer.
Then she logged into a system called HERMIT to manually re-enter the same information into that system. I asked her why she had to enter the same data, manually, into two different systems. She didn’t know, and she didn’t know what HERMIT was either, or why she had to enter data there, and she’s been in her role for more than a year.
Her manager then educated us about HERMIT, and that the data is entered manually because that’s how their system is set up. OK, OK, all you reverse industry veterans are snickering that I didn’t know what HERMIT was, but think about it: Here’s a person entering critical information into the reverse mortgage servicing machinery, manually entering data into systems because that’s what she’s told to do, yet she has no idea why she’s doing it. Oh boy…
What happens when that manual process breaks down, and a servicing analyst calls a borrower who actually sent in their occupancy certification documents, under the supposition that this now-active borrower is in default? Or worse, what happens when an active loan doesn’t get marked delinquent, and then no call or notification informing the borrower of their default status is made in accordance to CFPB, HUD and investor delinquency notification guidelines?
I’ve observed many manual processes over these past nine months, and maybe they don’t need to stay that way…
Why isn’t more customer information automated?
Think SnapTax for reverse mortgages. Documents filed by the borrower could be pushed through an OCR process, with the data automatically placed into a servicing platform. Utility companies like PG&E have established APIs that enable access to customers’ data. Why couldn’t the borrower grant their mortgage servicers access to this account data, effectively automating the occupancy certification process?
How is the industry standardizing data?
I talked with a manager this week after her two-hour conference on data-mapping for the transfer of a reverse portfolio. The seller didn’t track half of the fields that the purchaser tracks. So does the new servicer deploy their established servicing process when only half of the data they usually have is available? MISMO is growing for most other areas of the mortgage industry: servicing rights, appraisals, eMortgages and others. Yet there’s not even an active MISMO reverse mortgage workgroup. Can you imagine an inactive originations group at MISMO?
Could there be a single origination and servicing platform, designed and built specifically for the reverse industry?
The reverse industry suffers from an overall lack of technology, in large part because of lower volumes compared with the forward side. Of course there’s probably an easy debate that the forward side doesn’t have much access to technology either. Many reverse lenders and servicers have built their own homegrown systems, or have no real system at all aside from spreadsheets and basic databases.
What about a single technology platform built as part of a consortium? The platform could enable data to pass from originators to investors to servicers in a uniform way, and where modern software applications that we need to run the industry are built and hosted—like Salesforce for reverse mortgages.
What about an automated library of origination and compliance rules engines that could be plugged into this platform?
Every company grapples with interpreting and adhering to investors and regulatory guidelines. Building on the universal data model and a single platform, could the industry work with HUD to establish an automated rules engine that informs every market player exact how to originate and service a reverse mortgage? Right now, I have to go to HUD’s website and remember which of its updates informs on each important detail. For example, if I need to review the time limits for setting up a repayment plan, I need to remember or somehow find page three of their 2011-01 release for this information. It just seems to me that many of these rules could be automated into a workflow library of some kind.
There you have it—my questions after nearly a year thinking about and processing reverse mortgages every day. My hope is that these are new questions that stimulate new thinking. If not, then shame on us as an industry for focusing on what is, instead of what could be.
