Consumer Mortgage Complaints remains focus of CFPB

CFPB’s recently released Monthly Complaint Report Volume 2 shows Mortgage related complaints in 3rd position just under Debt Collection and Credit Reporting companies with a total of 187,916 complaints reported based on a 3 month rolling average. Although mortgage complaints showed the greatest month over month decrease of 4%, definitely due to increased scrutiny from CFPB, consumer complaints remain at the top of mortgage banker’s concerns probably second only to borrower data security.

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Mortgage banking customer service departments are the image of the company projected to the end customer and to the world. With the advent of social media and internet driven news sources such as Twitter, a single customer’s gripe can become a national news within a few hours causing enormous reputation risk to the firm. Although striving for a zero customer complaint scenario is an ambitious goal, it is definitely not feasible when dealing with thousands of customers and myriad of scenarios for customer discontent. The key then is to resolve a customer issue in a professional and expeditious manner and make this “second chance” to satisfy the customer not only a means to resolve the complaint but to use it as an opportunity to enhance the customer relationship.

In their book Marketing Services noted Services Marketing experts Berry and Parasuraman write:

Mistakes are a critical part of every service. Hard as they try, even the best service companies can’t prevent the occasional late flight, burned steak or missed delivery. The fact is, in services often performed in the customer’s presence, errors are inevitable. What the inevitability of service shortfalls does imply is that excellent service recovery is just as critical as the pursuit of error-free service in the building a quality based foundation for marketing services.

Customers who encounter a non-routine service situation scrutinize the service company’s handling of the situation. They are an attentive audience for the messages the company’s recovery efforts convey about its service values and priorities. Thus service-recovery situations offer some of the best opportunities of communicating commitment to customers and strengthening their loyalty.

Some of the key areas to focus on to achieve “service recovery” in mortgage banking are:

Centralized Complaints Tracking: With most complaint resolution requiring coordination between multiple departments and individuals, a centralized and workflow driven complaints tracking process is key to proper coordination and resolution. Unfortunately most mortgage banking core systems such as LOS and servicing systems do a poor job of complaints tracking. Customer Service departments thus need to integrate a strong complaints management system with their existing workflows to ensure high quality of service and constant tracking and adherence to complaints resolution Service Level Agreements. A checklist based case management approach typical in software helpdesks and utility service companies is essential for ensuring tracking and closure of all cases within designated SLA’s.

Single Point of Contact: We have all faced the horrors of automated service prompts, unfortunately automated Interactive Voice Response (IVR) systems are still based on rigorous branching and forking type rule based responses best suited for a issues that have a linear resolution logic. Designating a human being to be the key contact point and customer service concierge for the borrower is essential especially in cases that do not result in single contact resolutions. The Home Affordable Modification program required Mortgage Servicers to provide a SPOC with sufficient skillsets to coordinate the loan modification process with borrowers. This model should be followed by the entire customer service department.

Prioritization and Escalation Hierarchies: In the absence of pre-determined prioritization and escalation hierarchies customer service departments tend to gravitate to serving “whoever is screaming the loudest” at any moment. We have heard news reports of cases being improperly triaged based on whether someone produced a letter from their political representative or somehow got hold of the CEO’s office phone number. To prevent scenarios similar scenarios a clear escalation plan has to be created and borrower expectation set on the way their case will be handled and escalated if required. Escalations should be automatically performed by the customer service department if preset SLA parameters are violated rather than as a reactionary move to an unhappy customer.

Integration of Customer Contact Channels: Borrowers today have a choice of how to interact with the mortgage bank, while some may prefer the traditional phone call or fax many prefer not to speak to a human but to get the same level of service through email or through a website. While most mortgage banking customer service departments do a decent job of making sure no customer communication is lost or ignored, the quality of service through different contact channels  is vastly different and sometimes disjointed from the case management system causing requests for duplicate information, repetition of notices and related issues. The borrower interaction website should be utilized as the most important repository and coordination point to make it the central point of all borrower interaction. Reminding borrowers to refer to the website for timely updates and managing their case can vastly improve their customer experience.

Customer service and borrower facing communications, once an often overlooked area in mortgage banking and considered a necessary evil, has become a key survival factor for mortgage banks today. Rather than seeing this as an area of more work pressure, mortgage bankers should embrace customer service as a key differentiation to survive and thrive in today’s market. As the CFPB continues to crack down on poor customer service, mortgage banks have to transform from a collection company mentality to a financial advisor mentality. We have touched on a few areas that need to be implemented but the old adage “treat your customer as you would treat your own grandmother” should remain the mantra of complaint resolution efforts!

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