No note, no foreclosure: The records management issue in mortgage lending
It’s a delay tactic that might make George Bailey proud.
Rather than walk away, homeowners facing foreclosure are asking banks to show proof they owe what the bank claims. Some lenders are failing to do so, turning a follow-the-dotted-line process into both a drawn-out court battle and a tangled, twisted paperwork nightmare.
The revelation comes via a recent USAToday article titled “Homeowners use ‘show me the note’ to fight foreclosure.” Struggling borrowers argue lenders’ alleged devil-may-care attitude during the wild days of subprime lending created a document gap that’s muddying proper mortgage ownership.
Read the article and you’ll see courts are listening to homeowners who claim shoddy document management by their mortgage lender. For lenders, that means no note, no foreclosure. Or at the very least, time to rethink that denied loan modification.
But let’s nevermind the foreclosure issue for a moment. Nevermind because it’s Christmas and no one wants to see a family lose their home. Least of all, lenders. (It’s true. I have seen broken-hearted mortgage lenders do whatever they could to keep families in their homes).
Instead, let’s look at the records management issue.
At its core, this is all about customer service – big-time customer service. Smart financial services companies understand that trust is their primary commodity. All that other stuff – free checking, online banking, retirement planning, wealth management – that’s all secondary.
If a bank wants to capture the most share of wallet possible, nurturing customers throughout their financial lifecycle, from the moment they open their first checking account through retirement and generations beyond, it has to establish a trusting relationship with the customer.
How do you do that if – whoops, sorry – we can’t locate your loan application, you’ll have to do it again and, geez, I hope you weren’t on any kind of deadline. Or, more realistically, you can’t quickly and securely access information for a customer whose time is limited – and patience even more so. For kicks, make that customer a $10 million commercial client.
The right document and records management solution can effectively manage all documents associated with mortgage, installment or commercial loan. It can capably administer retention and destruction protocols, helping out with that old friend compliance. And information can be accessed any time, almost anywhere. Maybe even in court.
More importantly, the right enterprise content management solution can help customers like those referred to in the USAToday article by allowing lenders to see a worldview of the customer’s financial situation – and offering solutions like the Home Affordable Modification Program (HAMP).
Homeowners can apply for HAMP through their mortgage servicer. The lender collects documents (like paychecks, tax returns and so forth) and submits them through its paperless workflow process. This system can expedite the approval process by instantly routing electronic documents to the right decision maker at the right time, regardless of where they are geographically. No fax machines, interoffice mail, or overnight packages.
In the end, peace of mind for the homeowner, efficient record keeping and workflow for the lender – and trust between them both.
Is it me, or did an angel just gets its wings?