HML. Homeloan Management Ltd

It is a fact of life that some people default on their mortgage payments. It is also a fact that some of these borrowers will eventually slip into the repossession stage. Money is tight and affordability has been squeezed, but repossession is by no means a certainty, and it is even less likely when special servicing is applied to a lender’s portfolio.

 

I won’t give up HML’s trade secrets in this blog, but I can share some of our successes and explain a bit about why Standard and Poor’s and Fitch have upgraded our special servicing.

 

So what is special servicing, how does it differ from regular credit management, and how do we know it works?

 

Special servicing, as the name suggests is an enhancement of general arrears management processes. We use a suite of behavioural scores to predict the likelihood of various arrears scenarios occurring and then we build bespoke contact and collection strategies around them. It is about working smart and understanding our clients’ customers rather than simply applying more manpower.

 

For example, we have the technology to accurately identify cases that are currently up to date but with a high likelihood of going into arrears in the next 60 days. Using this information we work out the appropriate frequency and intensity of outbound telephony activity and build a more tailored approach to collecting the account, based on customer characteristics and probabilities. We also expand this into parallel letter strategies, SMS strategies and into the various decision points along the arrears timeline.

 

We know it works because on average, special servicing clients have seen a reduction of 17.4 per cent in the percentage of cases 3+ months in arrears compared to an industry average from the Council of Mortgage Lenders (CML) of 13.6 per cent.

 

Although the stats show how effective special servicing can be it isn’t something every client wants or needs. A client may not have a significant volume of accounts in arrears to make special servicing worthwhile, and a number of our clients already have their own in house teams.

 

However should things change, the option is available and I’m confident that our service can make a difference to any lender’s portfolio.

 

And our recent upgrades show we’re not the only ones who think we’re up to the job.