Distressed Borrowers Want to Know…

Who is this distressed borrower? It's not the strategic defaulter we've heard so much about. Distressed borrowers care about maintaining their credit, keeping their home, honoring their obligations and doing what is right. But they need our help.
By
borrower_help1

That’s all. They just want to know.

They want to know if they’ve qualified for a loan modification or if they’re going to lose their house to foreclosure. Can they make an interest-only payment this month, or perhaps skip a payment altogether?

They want to know any of a variety of things which not knowing causes them to lose sleep.

Who is this distressed borrower? It’s not the strategic defaulter we’ve heard so much about. Distressed borrowers care about maintaining their credit, keeping their home, honoring their obligations and doing what is right. But they are under some sort of economic hardship that is making these things hard to do.

Sometimes the hardship is their own fault. They bought too much house, borrowed too much money, or got a loan on terms that were never going to work in the long run. In other cases, they’ve lost their job or had unplanned expenses.

Either way, they are worried.

And that’s why they want to know.

How do I know?

Varolii works with several of the largest mortgage servicers, hosting a variety of borrower interaction management applications that help them cost effectively communicate with their borrowers on a range of issues. Some of these applications are pure collections – the mortgage is past due and the Varolii application reminds the borrower to make a payment. But others are what we call “loss mitigation statusing” applications, and it’s these that demonstrate the distressed borrower’s need to know.

When such a borrower engages with their servicer in a discussion of alternatives to foreclosure, its almost never a one-and-done conversation. The process begun in a single call will proceed over the next several weeks or even months as the servicer requests documentation from the borrower that may qualify them for a loan modification or other form of forbearance. Varolii applications in loss mitigation follow up on these requested documents and also keep the borrower informed of the status of their request.

Comparing average borrower response rates to interactive voice messaging applications in collections and loss mitigation, we see a significant increase in the level of borrower engagement for loss mitigation. As shown in the chart below, borrowers who are working with their servicer on foreclosure avoidance are 40% more likely to answer the phone when called, 50% more likely to identify themselves as the right party and 25% more likely to choose an interactive option in response.

collections_vs_loss-mitigation2

This is not to say that the collections communications are ineffective – they work very well at prompting payment from the delinquent borrower. But because they also provide an option to connect to the servicer’s call center, they proactively offer distressed borrowers a way to engage their servicer in a discussion of why they missed a payment and what they can do about it.

Because distressed borrowers really want to know…

Let’s work together
Engage us

Tags: , ,

Let’s work together
Engage us
Brian Moore

About Brian Moore

Brian Moore, senior principal, industry solutions of Nuance's Enterprise division, brings more than 25 years of experience in financial services, mortgage and collections operations and technology to the company. He is also our resident compliance expert, advising companies on how to comply with TCPA, CFPB, TSR and other customer communications compliance regulations.