How servicers are putting available originators to work

In the last few months, a series of lenders have issued layoffs or offered buyouts, everywhere from Better.com to Wells Fargo to PennyMac to Rocket Mortgage. During the early days of the Great Recession, another period that saw major headcount reductions in the field, smarter firms brought displaced personnel into their servicing unit. But that was a long time ago in an industry that sometimes has a short memory.

Today, servicers could be missing an opportunity if they ignore the displaced experienced talent from the origination business. After all, loan modification activity is expected to continue to rise with increased economic uncertainty.

The skill sets are transferable, said Jose Morin, vice president of servicing at Brace, a mortgage fintech that automates loss mitigation processes using artificial intelligence.

But since the Great Recession, a bunch of new, primarily technology-focused lenders have replaced those that closed up and they may not be aware of the potential there, he added.

“They’re not necessarily connecting the dots because they’ve only been in their position for maybe a couple of years and they haven’t seen that cycle that we saw back in 2009, 2010 and 2011,” Morin said.

In lacking that experience, “they’re not looking at the mortgage industry as a full picture of originations and servicing,” Morin said.

Also, many people in the mortgage business believe the transaction ends when the origination closes. However, “with the smarter companies that are going to continue to survive and continue to grow, they are seeing the servicing as an extension of the transaction and possibly executing on that relationship,” Morin said.

BSI Financial Services is one such servicer. The company is a purchaser of mortgage servicing rights packages and to defend its portfolio, it has a customer retention unit primarily for refinancings. It also subservices for others but contractually cannot solicit those customers for a new loan.

Right now, BSI is sufficiently staffed up to handle an influx of distressed borrowers; it started out as a specialty servicer and works with non-performing and re-performing mortgages, noted Allen Price, senior vice president, head of sales. New hirings are made to cover attrition.

Those loans are handled on the non agency side of its servicing business; it has a separate unit for agency MSRs. Managing an asset that needs some kind of loss mitigation execution is a very specialized skill set, in contrast to originations.

“But what is common among an originations employee versus a back office, ops or default employee is the ability to engage the client,” Price said.

Origination staffers tend to be very customer focused. “We find that that is absolutely critical in managing distressed and defaulted assets, because at the end of the day, you’ve got to work with borrowers,” said Price.

These people have experience in explaining complex products such as adjustable-rate mortgages to consumers as they are being originated, according to Morin. If the borrower becomes distressed in the future, the average person at the servicing center might not understand an ARM product’s complex features, as they still represent a small share of the marketplace, Morin said.

“Again, it’s a miss to not bring over the folks that you just trained or that have experience with [ARMs] on the origination side to come over and now service them, right after they talked them into the product,” Morin said. Unlike fixed-rate mortgages, ARMs come in many varieties; they can vary by index, initial term and rate adjustment limits among other factors.

“You’ve got to communicate with borrowers,” Price added. “And I can teach you the technical skills, I can teach you how to handle a delinquent Fannie Mae loan, but what I can’t teach you is how to be nice to people.”

On the other hand, it’s difficult to teach someone how to treat a person with respect, especially as those borrowers are going through a very difficult financial situation. “And so we do think there’s a lot of value in hiring people who worked on the retail side, because they do have that empathy, because you need that big time when you get on the back end of the business,” Price said.

While the workflows might be different — Brace’s new default management platform helps servicers manage that area — the similarities include the call center personnel working with scripts to handle inquiries. And given state and federal regulators focus on protecting distressed borrowers, compliance during calls is important.

In addition, at nonbanks, loan officers have a role during the modification process because someone with a license must sign off on the process.

A number of Covius’ clients are shifting employees, said Niki Culver, senior vice president of operations at the mortgage technology company, which has units covering the loan transaction spectrum. She is responsible for the Covius Settlement Services business.

“They’re doing a really good job of balancing the load, because we all want to retain top talent,” said Culver. “A lot of positions have complementary skill sets, which allows the shifting to move from the origination to the servicing to be a little bit more simple.”

While the purposes might be different, call center employees working on originations can use those same skills to contact customers who might need a modification.

A lot of companies, Covius included, have been doing a lot of cross-training for employees in sales and within their operational teams, in order “to be able to allow for that shift to make sure that we’re covered wherever that we need to be,” Culver said.

“One of the things that Covius specifically has been very diligent on is diversifying all of our platforms so that we have a balance between origination, servicing and capital markets, so we are able to be more nimble and move those resources and be able to retain that top talent versus having to let people go and then rehire in another market when it shifts again.”

The current focus at Covius is on employee retention — especially to keep its top talent on staff — rather than making new hires.

BSI, too, encourages internal transfers; it often hears from employees that are looking for a change.

“It’s cheaper for me, if I can move you from one area to another,” Price said. Loan officers and underwriters are not doing as much volume so if they are willing to change to the servicing end of the business or another part of the company, that’s a win.

“You’ve already been on-boarded,” Price said. “You understand the cultural philosophy and so it ends up being a lot cheaper for me to just take someone that’s already here, move them over, train them a bit, and then turn them loose.”

Cenlar is in a different situation than other companies mentioned here, because it is only a subservicer. Also, being chartered as a federal savings bank makes it subject to a different regulatory scheme. For example, it doesn’t need licensed loan officers to sign off on modifications (by federal law, depositories are exempt from this requirement).

If anything, David Miller, executive vice president of business development at Cenlar, is envious of those that have both originations and servicing. Those firms “have the ability to bring in some really talented folks that understand the business, understand the language and have familiarity with the technology,” Miller said. “And I think with probably very little cross training, they can become really good servicers and high producers on the servicing side.”

Banks with branch networks, which Cenlar also doesn’t have, were able at the start of the pandemic to shift people out of [other departments] into their servicing organization, he noted.

Cenlar, at that time, was “hiring in a big way and our call center teams particularly and we were hiring folks that were outside of the industry, outside of the business, so the training is a bit longer and a bit harder,” Miller said. “As we look at opportunities now to hire, we think there are great opportunities to bring those folks into our servicing organization.”

These people know the mortgage business and the lingo, including recognizing that Fannie Mae is not a candy company, he joked.

“Think about underwriters, and there’s a direct correlation with those kinds of needs, particularly in our default operation as we’re doing modifications, loss mitigation, and other activities around the fold,” Miller said. “They are very good hires for us, and are pretty much ready to step into a role and be productive, effective and efficient on day one.”

Private mortgage insurers, such as Enact, also touch on both sides of the transaction, as the product is sold to protect lenders when a homebuyer lacks the ability to put down 20%. As borrowers become distressed, their emphasis turns to working with the consumer and the lender during the loss mitigation process.

“During the global financial crisis (when Enact was still known as Genworth), or even during COVID when we saw activity moving from one side into other aspects of the business, we were able to move resources internally, which gives people a better skill set, to actually build up a more well-rounded skill set,” said Rohit Gupta, Enact’s president and CEO. “And at the same time, it helps us kind of source capacity from within the business versus going to market and spending especially in this market, three, four or five months hiring somebody.”

Rohit Gupta

Vanja Savic

That makes a difference in being able to meet clients needs at Enact.

“If they need any specific skill set in terms of systems, or in terms of lender processes, then we have plenty of experience inside the company,” Gupta said. “We can easily provide training internally to ramp them up.”

Many on the origination side probably spent their entire mortgage career in that segment. “I do think there are great opportunities that they might not have otherwise thought about to move into servicing.” Cenlar’s Miller said. “I hope that they’d be looking for an opportunity in the servicing shops, because I think it really is a good match.”