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A Note from Tom and Matt

Client Partners A Note from Tom and Matt

Where We’ve Been and Where We’re Going:
A Year-End Note from Tom Donatacci and Matt Detwiler

To our Client Partners:

As the final days of 2023 fly by, it’s only natural to take stock of where we’ve been the last 12 months and where we’re going in the next 12.

Often this kind of reflection leads to revelations about just how far you’ve progressed in the past year and leaves you optimistic for what’s ahead. And, from our vantage point, that certainly applies to Cenlar.

Reflecting in this manner has allowed us to consider all the substantive changes and investments we’ve made over the last year, enhancements that are transforming the way we do business now and into the future. With the strength and expertise of our talented leadership group and a focus on innovation, we’re confident that we’re in prime position to continue to lead the way in the future.

To get there requires our dogged dedication to making improvements that make you feel good about choosing Cenlar each and every day. We need to continually work to be more proactive and responsive, providing the very best care for you and your homeowners. On behalf of everyone at Cenlar, allow us to express our gratitude at your continued faith and confidence in us, as we work together with you to achieve that goal.

We’re proud to share with you what we’ve accomplished in 2023 and what — thanks to that hard work — 2024 has on the horizon.

2023 Accomplishments

Risk

Risk is everywhere, and building a robust risk culture has been a primary area of focus for Cenlar this year.

We’re doing this in several ways. We’re fostering an environment of self-identification and self-correction, and using executive messaging and grassroots efforts to reinforce how vital it is with employees. We’re working with employees to expand their training and knowledge, so they’re experts in not just how to do their job, but also why they’re doing it.

This is important work, particularly because Cenlar is currently in the process of implementing and enhancing practices to align to Heightened Standards.

Heightened Standards was issued to strengthen governance and risk management practices at the largest financial institutions, but can be applied to other companies based on asset size, scope, complexity of operations and risk profile. It typically applies to banks with $50B or more in assets.

The core tenets of Heightened Standards are focused on a strong, effective and sustainable risk governance framework. Once fully implemented, benefits will include robust risk management practices, a reduction in process errors and strong control of compliance and regulatory requirements. These benefits will extend not only to Cenlar, but also to you and your homeowners.

We aim to be operating at Heightened Standards by the end of the first quarter of 2024.

Default

In 2023, we’ve continued the work of reassessing every practice we have in our default operation. We’ve created new processes — and shored up the existing ones — to make certain homeowners have every opportunity to stay in their homes.

We continue to use a 4-phased approach to redesign our processes from the ground up. Our four phases are: 1) Determine Minimum Requirements, 2) Build an Effective and Sustainable Process, 3) Documenting and Training and 4) Success.

We have continued to invest in talent to deepen our bench strength in order to aid this rebuild.

We’ve realigned our Collections and SPOC teams with Loan Operations and Default so that we can quickly establish a clear line of communication with homeowners early in the process.

We’ve also centralized the QA/QC effort in default, creating a separate, objective review of our loan operations teams’ process that ensures accuracy and efficiency.

IT

As you probably know by now, we’ve invested heavily in technology over the last few years.

We’ve already discussed at length this year — in prior issues of the Centinel and in other communications — our Automation Factory. Launched in 2021, Automation Factory utilizes an “agile” pod model that has really progressed in 2023.

We’re automating, for example, many of our controls with the goal of reducing manual tasks, freeing up our employees to do more creative, analytical work. There’s the added benefit that automation also helps remove the risk that comes with manual processes. Importantly, automation helps prevent errors and create a faster, more efficient process for homeowners. Our goal is to have automated half of all our controls by the end of 2024.

We also launched an initiative earlier this year dealing with data. We have enhanced our team by hiring a very talented data scientist, Michael Biddle, who is heading up this effort. As Chief Data Scientist, Biddle has focused on leveraging the company’s large amounts of data and turning that into actionable information and insight for our own operations as well as clients and their homeowners. We call it Information Factory, and we’re excited to tell you more about it in our 2024 outlook below.

Homeowner and Client Experience

Of course, everything we do affects the experience you and your homeowners have with us, which is why we place a strong, constant emphasis on delivering the best possible client and customer service.

In the first quarter, we launched a redesigned and enhanced escrow analysis statement that educates homeowners about their loan in clear language, providing a better experience for them. Escrow-related questions historically have been one of the top reasons homeowners call their servicer, and this new statement — and the revamped “How to Read” brochure that accompanies it — has been designed to answer the most common escrow questions, broken into easily digestible sections.

Also in the beginning of 2023, we launched a revamped mobile app for homeowners of our non-private label clients. The app continues to receive top marks from users, with a rating of 4.9 out of 5 and more than 8,100 reviews on the App Store. It’s a key in our mission to do business wherever, whenever and however best suits homeowners.

Homeowners have responded to this approach. A study by the MBA released this summer revealed that 81% of Cenlar’s loans have registered for our CenNet homeowner website or our mobile app, beating the MBA average of 78.2%. In late 2022, we reached a milestone of more than 1 million homeowners having elected to “go paperless.” Currently, 42% of homeowners with loans serviced by Cenlar are paperless, compared to the industry average of 35.6%. Nearly all our homeowners — 93% — are using self-service digital payments. The industry’s standard of 85%.

We’ve also expanded our homeowner chat bots, which have been a huge success. Our bots handle nearly 150,000 interactions every month, and of those homeowners who interact with our bots, more than 85% get the help they need without ever needing to interact with a live representative.

We’re using speech analytics to feed what we build next into our homeowner bots. We’ve been adding more and more information to our bots, expanding the already large breadth of content connected to them. It’s important to note that we never use bots for decisioning and that homeowners interacting with the bot are always able to request transfer to a live agent. Our bots enhance our existing customer service offerings, not replace them.

This year, we’ve also made enhancements to provide consistency, quality and efficiency regarding homeowner compliant reporting. We’ve seen positive results with these changes, as complaints have gone down substantially year-over-year. Some of the changes we’ve made include:

  • We’ve updated the annual Level 1 complaint training for our contact center representatives, to ensure complaints are handled with care and consistency from the moment they come to us.
  • We’ve removed the requirement for homeowners to change their password on CenNet every 365 days. We typically receive a high volume of calls, especially at the beginning of the year, from homeowners needing assistance to reset their CenNet password. With this change, we’ve reduced the volume of calls from homeowners regarding password resets, which also has helped to reduce complaints.
  • We’ve refined ACH-related communications and web registration and implemented email communication where only letters once existed, adding clarity regarding homeowner actions and next steps. There has been a substantial decrease in ACH web rejections as a result.
  • We have begun sending proactive emails to homeowners regarding tax and insurance payments. When making insurance and tax payments on behalf of the homeowner, we send the homeowner an email that also includes their insurance carrier and taxing authority in the event they have questions. This process eliminates the need to call us to check to see if payments have posted and refers members to their agent or taxing authority if they have questions.

For clients, we debuted an exciting new feature this year: online access to homeowner call recordings. This provides you with the ability to play back calls authenticated in our IVR within minutes of the call’s completion, either by listening to the call within the system or by downloading it to your computer. We’ve received enthusiastic feedback from many of you about this system and its capabilities.

2024 Outlook

This completed work has provided us with an even stronger foundation, and our eyes now are focused squarely on the future.

While we are still working to complete enhancements in areas like risk and default, we are also pursuing transformational initiatives, like launching our Information Factory, an industry-leading effort made up of two key components: data reporting and predictive analytics.

As we mentioned previously, we hired a very talented data scientist this year who is heading up our data and analytics effort. Cenlar’s data science initiative combines math and statistics, specialized programming, advanced analytics and machine learning with extensive knowledge of mortgage performance and servicing operations to uncover insights that can guide decision making and strategic planning and improve operational performance.

Cenlar now has started using this approach to help guide collections calls and maximize the performance of the portfolio through deep learning methodologies. We’ll be able to share more with you, including initial results of this effort, in 2024.

Our data warehousing effort will allow us to build a business intelligence dashboard that will track key industry metrics and reduce the need for additional reporting for both Cenlar and our clients. The dashboard will provide meaningful information and highly visual graphics. We are aiming to launch this dashboard next year, and are excited to share more with you throughout 2024 as the launch draws nearer.

This is just the start. We’re confident that as we continue to transform our organization we’re also evolving mortgage servicing as a whole. While we’re still early on in this transformation, we believe the potential is significant. At the end of this transformative period, we will be a Cenlar that continues to be proud of our long history and also a Cenlar that redefines what it means to be an agile and expert organization, leveraging the latest technology and controls. We’re thankful for your partnership and support as we deliver this.

As 2024 progresses, we will continue to communicate with you about where we stand as an organization and where we’re heading. We promise to keep you in the loop with regular updates in our bi-weekly Bulletin newsletter and our quarterly Centinel newsletter, as well as our quarterly Updates with Cenlar Leadership calls.

It is our great pleasure to serve as your trusted partner each and every day. We know that our collective success depends on your input. True partnership requires listening to what you have to say and taking action so we can be both responsive and anticipatory.

We look forward to strengthening our relationship in 2024. On behalf of everyone at Cenlar, we wish you and your loved ones a very happy New Year.

All the best,

Tom Donatacci
Senior Vice President
Cenlar FSB

Matt Detwiler
Senior Vice President
Cenlar FSB