Collections

CSF: 7.1.4.1 Borrower Outreach: Establish contact with the delinquent borrower using various communication media and support tools. Manage operations to identify borrowers who have the highest risk of default and the greatest likelihood of benefiting from early intervention. The deployment of appropriate technologies, tracking effectiveness of specific strategies, and managing quality standards is critical to reducing delinquencies.

Assessment: Borrower Outreach

The telephone remains the most commonly used outreach vehicle; however, for a more effective outreach strategy, servicers should also use other communication media, such as letters, website, and emails. When these measures prove ineffective in contacting certain borrowers, servicers should leverage alternative methods, such as face-to-face contact and skip tracing, and track the effectiveness of these methods.

The basic call campaign measures indicate a servicer's ability to track metrics and effectiveness in handling call campaigns. An advanced servicer should be able to decompose portfolios into risk tiers, apply differing treatment strategies and measure penetration in each tier.

Prioritization tools, such as behavioral scoring models, and predictive analytics, when integrated effectively with outreach policies, improve results. Effective outreach policies may involve prioritizing calls to borrowers with unsuccessful prior attempts and escalating calls to borrowers who break a promise to pay agreement.

 

Collections: Borrower Outreach: Campaign Prioritization

Evidence Description documents on the behavioral scoring model or predictive analytics tool used by the servicer   Servicer analysis on model effectiveness   Work prioritization policy documents including methodology used (e.g., product, age of delinquency, geography, single point of contact, investor, risk)

Evaluation and Recommendations

Measurements are in place to target outreach campaigns to the greatest impact.

• Statistical and numerical models are used to strategically identify potential delinquent (or higher risk) borrowers and prioritize outreach campaigns. Many servicers augment these models with “best time to call” analytics to maximize contact rates.

Outreach campaign strategy is documented and ensures all eligible loans are targeted.

• Established outreach campaign calendar is in place and is reviewed frequently by management.
• A combination of outreach methods and measures are used.

Late notices provide clear information on the borrower’s requirements to cure default and offer alternative methods to communicate with the servicer.

• Notices are distributed in a timely manner to all eligible population.
• Late notices are reviewed annually for clarity and content.
• Skip tracing is conducted when delinquent borrowers cannot be located following a predefined number of attempts or immediately upon determining invalid contact information.

Assessment: Collections Reporting

Standard call center reporting allows the servicer to consistently monitor call center activities. Agent and department level call center scorecards provide insight into call center and agent performance relative to benchmarks. Month-over-month historical reports that include key metrics (Average Speed to Answer, Abandonment Rate Percentage, and First Call Resolution) allow management to identify and track changes in trends and measure servicer levels.

Using management reports to monitor call center performance is necessary to ensure timely resolution of issues to meet borrower and investor satisfaction.

 

Collections: Collections Reporting: Call Center Reporting

Evidence Sample call center management reports and scorecard  Sample agent level report and scorecard    Vendor performance scorecard, if applicable

Evaluation and Recommendations

Call handling procedures include:

• Escalation processes are used to manage key inbound call center metrics when thresholds are not met.
• Performance of key metrics aligns with Servicing Alignment Initiative (SAI).

Call center reports are in place to measure call center performance at the department and agent level.

• Scorecards consist of a balanced set of metrics that are updated frequently. Leading servicers assign a management group or compliance team to review key metrics or “gap” reports on a regular basis.
• Scorecards include performance indicators and variance to set benchmarks.
• Call center staff has visibility into performance indicators throughout the day.

Call center trend reporting is produced monthly, at a minimum, to effectively manage performance.

CSF: 7.1.4.2 Workforce Management: Integrated set of processes used to optimize productivity by managing staffing levels to support collections activities, matching employee skills to specific tasks, and aligning incentives to drive behaviors and outcomes. Servicers need to effectively monitor and assess call volumes in real time to determine call patterns and proactively manage changes in demand. In addition, servicers should monitor and assess the impact of call volumes on staffing levels.

Assessment: Staffing Optimization

Staffing capacity models should be used to effectively match staffing needs to call volumes. Using a balanced capacity approach provides insight into estimated staffing levels and gaps relative to headcount and creates a basis for forecasting staffing needs as call volumes change.

 

Collections: Workforce Management: Staffing Models

Evidence Staffing model inputs   Process describing use of the model to drive staffing decisions and analysis   Documentation for validating / normalizing the model Employee incentive plans, if applicable

Evaluation and Recommendations

A staffing model is established, maintained, and used to drive recruitment and training programs.

• Considers open positions, absenteeism, holidays, training, productivity by position, demand fluctuations, and planned programs.
• Frequently updated to be current and accurate.

The scope, type and structure of the Collections incentive program are aligned with investor goals.

• Collectors are measured on individual and departmental performance including quality of work.
• Incentive program drivers align with both the servicer and Fannie Mae goals, if applicable.
• The scope of participation is significant enough to affect behavior.

 Assessment: Call Monitoring

 

Collections: Call Handling: Call Monitoring

Evidence Call monitoring scorecard    Internal quality standards or goals    Evidence of analysis of call monitoring to achieve and maintain the call center quality standards established by the servicer

Call Monitoring:

• Volume and frequency of monitored calls are adequate.
• Identified deficiencies are used by management and provided to collections agents to improve performance.
• All calls are recorded and archived for at least one year.

CSF: 7.1.4.3 Borrower Assessment and Counseling: Assess the borrower’s willingness and ability to successfully cure the delinquency. Establish performance measures and track decisioning effectiveness. Once borrower contact is made, collection agents need to accurately assess the borrower’s financial situation and intent to retain the property. The use of rules-based decisioning tools and checklists ensures all necessary information is collected and the best option for resolution is provided to the borrower.

Assessment: Counseling and Decisioning Tools

The collection agent determines the borrower’s intent to stay in the home and his or her willingness and ability to successfully cure the delinquency. Inherent in this decision is the assessment and review of the borrower’s ability and commitment to make future payments when due. Collectors must be equipped with the right set of tools and training to quickly gather, update, and assess borrower data. The collector must also thoroughly educate the borrower on all available solutions and gain the borrower’s commitment for resolution. To increase the effectiveness of counseling, servicers can partner with third partner credit counseling agencies. In addition, servicers must maintain accurate records of borrower contact.

 

Collections: Borrower Assessment and Counseling: Counseling and Decisioning Tools

Evidence Sample counseling scripts    System demonstrations     Financial analysis tools used to assess a borrower Servicer interview

Assessment: Execution of Collection Strategies

Payment plans with borrowers should be tracked for collection effectiveness and continuous improvement. Counseling effectiveness can be gauged by roll rates, success rates of promises to pay and outcomes for repayment plans, and referrals to loss mitigation.

 

Collections: Delinquency Resolution: Execution of Collection Strategies

Evidence Repayment plan tracking reports   Loss mitigation referral tracking reports     Roll rate tracking reports

Evaluation and Recommendations

Training and tools that align with Fannie Mae goals are in place for collectors.

• Collectors receive counseling and negotiation training and related tools to perform their jobs effectively. Leading servicers train collectors on the entire loan delinquency cycle and develop abilities to recognize outcomes beyond repayment options, such as payment deferral, modification, Mortgage Release, short sale, and foreclosure. In addition, well-trained employees collect required financial documents early in the process for validation. Web portals provide an efficient means to collect and store documents.
• Collection personnel are empowered and trained to identify loss mitigation opportunities and can perform basic loss mitigation (e.g., modification pre-qualifications, repayment plans) without transferring the borrower.
• Servicer staff understands the relationship between collection and loss mitigation and collection agents possess competencies in both areas. This is accomplished by cross-training employees. Staff has a holistic understanding of the entire delinquency lifecycle and can therefore make higher quality loan assessments, providing the homeowner with effective workout requirements and plans, and explaining resolution options and decisions.
• Collectors are trained to recognize certain words, such as “vacant,” “listed for sale,” and “don’t want to remain in house,” that indicate triggers for alternative actions.
• Call scripts and / or decision trees are used to guide collecting agents in their conversations with the delinquent borrower.

Appropriate identification and hand-off processes are in place to trigger referrals to loss mitigation and other departments in a timely manner.

• Leading servicers frequently use warm transfers from collections to loss mitigation for more effective follow through with the right party at the time of contact.

Effective use of credit counseling agencies.

• Servicer tracks and responds to counseling agency referrals in a timely manner.
• Contracted counseling agencies work as partners with the servicer to provide expanded geographic coverage, particularly for face-to-face interactions.

Servicer’s track record of providing effective solutions as measured by the success or failure of repayment plans and loss mitigation referrals is examined.

Servicers should monitor roll rates to measure their ability to manage delinquency performance and prevent future defaults.