In 2011 the Department of the Treasury, in an attempt to alleviate some of the problems borrowers were having trying to take advantage of its Making Home Affordable (MHA) program (the parent of HAMP and other foreclosure mitigation program) instituted a new requirement called Homeowner Single Point of Contact or SPOC.  Wednesday it issued a report, Making Contact:  The Path to Improving Mortgage Industry Communication with Homeowners which provides an overview of how and why the SPOC guidelines came about and describes the implementation of the guidelines by the nine largest MHA services of non-GSE loans.

Report data was collected through a survey of the servicers, discussions with their personnel and through observations of performance.  The authors say it does not offer a conclusion on the best way to implement SPOC as "there may not be is not one 'right' answer."   It is intended as a snapshot of the approaches being taken across the industry.

Mortgage servicers were ill-equipped to deal with the wave of mortgage delinquencies that began to hit their servicing portfolios in 2007.  Their contracts are with and fiduciary duties are to the investors who own the loans and their job is to collect mortgage payments, manage escrow accounts, and remit mortgage proceeds to investors; thus their customer service was oriented toward the investor.   Homeowners cannot choose their servicers and have few rights in the relationship and until recently had few opportunities for redress when they were ill treated.  To quote the report, "It is not surprising then that many struggling homeowners, who tried unsuccessfully to communicate with their servicers, stopped opening mail, or responding to phone calls from those servicers." 

As delinquencies grew servicers were unprepared for their new role.   There was no standardized process for assisting homeowners and when mortgage modifications did occur, they often increased, not lowered, monthly payments.

In attempt to mitigate the growing foreclosure crisis, in March 2009 the Obama Administration launched what is now called the MHA and set a number of requirements for participating servicers to establish standards for modifications and improve their customer service relationship with  potential and actual program participants.  Still the complaints from borrowers and from those attempting to assist the borrowers such as housing counselors, Congressional office staff, and legal representatives, continued to mount, and some of them were tragic and grabbed media attention.  Borrowers told of hours spent on the phone, being shuffled from department to department, lost documents, foreclosures completed by one servicing division even as modifications were proceeding with another. "In this crisis, when millions of homeowners had trouble paying their mortgages, whether or not servicers were able to communicate effectively with homeowners has mattered a great deal."

In May 2011, in an attempt to improve communication within the servicing industry, Treasury issued a directive requiring the largest servicers participating in MHA to implement SPOC and to assign a single point of contact for each homeowner potentially eligible for MHA to work with the homeowner through the entire application and resolution process.   The directive became effective on September 1, 2011 and November 1, 2011, for new and existing loss mitigation cases, respectively.

A SPOC requirement was also included in the servicing standards agreed to in the National Mortgage Settlement, and a similar requirement (referred to as "continuity of contact") has been included in the servicing standards recently proposed by the Consumer Financial Protection Bureau (CFPB).  The Treasury report says that the fact that the National Mortgage Settlement and the CFPB, as well as other Federal and state regulators, are adopting similar SPOC requirements will help ensure that more personalized help for homeowners will continue after MHA expires.

The report offers the following general summary of the program as it exists today.

  • Homeowners now have dedicated personnel who will work with them from their first contact with the program. Servicers have reorganized their homeowner communication areas and expanded staff capacity. Across the nine servicers surveyed for this report there are more than 12,000 individuals whose primary, if not sole, responsibility is to communicate with homeowners seeking assistance. Nearly 6,000 other personnel are assigned to help SPOCs collect and process documents from homeowners.
  • Three primary implementation models have emerged. Seven servicers use a "Direct Model" whereby an individual SPOC serves as the relationship manager, one uses a "Pod Model" whereby there is a team of SPOCs available to assist the homeowner, and one uses an "Appointment-Based Model" whereby a customer service representative takes inbound calls and schedules an appointment with the SPOC.
  • Servicers communicate with homeowners in different ways. While all servicers make their SPOCs available to homeowners by phone, some also employ email or web-based interaction capabilities. To insure contact when a SPOC is unavailable some servicers use voicemail, while others route the call to another SPOC.SPOCs are expected both to handle incoming calls from homeowners and to initiate outbound calls to homeowners, as circumstances warrant;
  • SPOCs are responsible for discussing liquidation options (short sale or deed-in-lieu of foreclosure) with homeowners in the event a home retention option is not feasible, with the SPOC remaining as the primary or secondary point of contact for the homeowner for 30 to 60 days after the close of the short sale or the foreclosure process.
  • There is no standard caseload for SPOCs either as a target or in practice. Across servicers, actual caseloads range from 64 to 210 homeowners per SPOC. Servicers are developing different methods of calculating SPOC caseload to optimize their effectiveness since not all cases require the same level of effort.
  • The metrics by which SPOC performance is measured appear to vary widely, and include traditional call center metrics such as volume of calls and call abandonment rates, as well as newer metrics such as average days from the receipt of initial homeowner documents to completion of modification package or the number of loss mitigation resolutions per SPOC.
  • Challenges remain in improving how servicers communicate with homeowners. The likelihood of better outcomes for homeowners has improved but it is still too early to tell whether the industry will improve its customer service to the desired level. The SPOC model is in the process of maturing and there is likely to be a dynamic environment, with servicers continuing to experiment with different concepts and new promising practices.
  • There are programs to provide training for SPOCs, benchmarks for managing SPOC caseloads, and performance metrics to measure SPOC effectiveness.

There are many similarities and as many differences among the ways servicers are approaching and managing SPOC. The report details, servicer by servicer, the approach each takes in its service model, staffing levels, assignment of responsibilities, and training. 

The report concedes there are a number of questions with respect to best practices for SPOC that are yet to be answered.  These include the timing of SPOC assignment, SPOC caseloads, how SPOCs communicate with homeowners, and SPOC compensation and career path. Although it is outside the scope of this report, the advent and maturation of SPOC in the servicing industry may also play a role in, and be affected by, a broader conversation about changes in the overall servicing industry as well as the methods by which servicers are compensated.