Insights on the 2023 Default Mortgage Servicing & Tech Landscape
With more than 20 years of fintech experience leading servicer relationship and performance management efforts for leading Fortune 500 financial service organizations, Yvette Gilmore, Senior Vice President, Servicing Product Strategy for ServiceLink is an accomplished and award-winning housing and finance veteran. Gilmore brings a unique outlook to what lies ahead for default mortgage servicing.
Q: What is your outlook on the servicing industry in 2023, specifically the first six months?
A: We know at a certain point, defaults will result in either modifications and loans being brought current, or they're going to finally have to matriculate through to a default. These things are complicated by regulatory scrutiny.
Mortgage loan servicers want to be sure, given the amount of equity that a defaulted client might have, that they have explored every option available to keep a homeowner in their home, which is why you don't see loans going all the way through, on a broad scale, to foreclosure. At a certain point that's going to break. I think the general consensus is today, that it's going to be some time in second quarter.
Q: With ever-changing guidelines and regulations over the past few years, how did you and your team adapt and include these in your strategy and products?
A: One of the simplest and most important things we do is to ask the question. We really work with our partners to make sure that we understand what is important to them so that we can assist with making sure they have what they need in order to ask any questions. The key thing with any regulatory agency is being able to have a very clear line of sight as to why you made a decision relative to an asset, particularly if it's going to have a negative outcome on a homeowner.
Admittedly, with the higher interest rates, modifications right now are difficult. When you're talking to any sort of agency, you want to be sure that you can very clearly see the decision tree. As a service provider we have to be able to supply that for our clients to keep them out of harm's way.
Q: Do you anticipate any new regulations or guidelines in 2023 to protect borrowers or to boost homeownership?
A: As an industry, we want to leave no stone unturned. The goal is not to have a mass of foreclosures. However, there also has to be a goal of not having extremely high pipelines so that we clog up other ancillary services when a decision is made to take the next step. It's a balance and it's certainly complicated by vast amounts of equity. Though that equity, of course, is eroding a bit given the high interest rate environment.
Q: With the rise in defaults you see on the horizon, how can services help their borrowers and handle the increase in volume?
A: I think it is a balance between using your provider's technologies to assist with workflows so that you're able to have smooth transitions regardless of what the decisioning is. The need for strong technologies is more crucial than ever. Those of us in the technology sector will also say it's not enough to have the technology, you have to have business rules and procedures that allow you to utilize the technology in a manner that's most effective so that you get the higher efficiencies that it offers.
I can't overstate enough - if you're purchasing a technology, if you're working with a provider, you really have to have a provider that is a partner that very much understands your business. At ServiceLink, we understand that. We seek to understand our clients' needs and make recommendations based on that specificity.
Q: What other macroeconomic trends are you tracking in 2023?
A: Equity erosion is of great concern. It’s crucial to make sure that you're keeping the equity that you've gained during this time as much as possible. It’s a struggle in this interest rate environment and it’s another one of the things we are watching and staying in front of.
Q: What is ServiceLink’s product and technology strategy for 2023?
A: We are constantly reviewing our service guidelines and the number of people we need to make sure that we can process effectively throughout the enterprise. ServiceLink provides a solution for every aspect throughout the default ecosystem. In order to be competitive, we make sure that we have the right service levels and resources to anticipate client needs. It's a constant balance between being able to deliver and being able to develop what our clients need.