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14 | M R EP O RT FEATURE M any of us played Capture the Flag as kids. For those of you who are unfamiliar with the game, it's an outdoor game with two teams. Each team has a flag (or marker of some kind) and the objective is to capture the other team's flag, located at their base, before they capture your flag. Some of the players defend their base while others are on the attack to get the other team's flag. The offensive players on the attack can be tagged and sent back to their home base to start over again. It's a fun game to play. That is, until trillions of dollars are at stake and those flags are actually consum- ers in your servicing portfolio and you lose the game five times more often than you win. Defending one's portfolio has become the single most important priority for servicers. Michael Nierenberg, Chairman, CEO, and President of New Residential Investment, who services approxi- mately 4 million borrowers, used the word "recapture" six times during their Q2 2020 earnings call on July 22, 2020. It is top-of-mind for every servicer, especially after Rocket (Quicken Loans) released their S-1 in July, which stated a 75% overall retention rate through the first two quarters of 2020, up from 63% in 2019. That's more than 3.5 times better than the industry average. Before COVID-19 wreaked havoc and drove down mortgage rates, servicers were recapturing one out of five borrowers with re- finances being easier to recapture than purchases. However, those easier refinance recaptures have become more and more difficult for many servicers as origina- tion volume hits record levels and capacity continues to be an issue. Having too much volume and generating more revenue per funded loan than usual is a great problem to have for the origination side of the business, but it's when those overseeing the servicing side lose sleep, especially when current borrowers are call- ing in and can't get anyone on the phone to help them get a lower rate and are forced to seek help elsewhere. How to Reap the Rewards T o many, it feels like they are running a marathon right now. Unfortunately, if rates continue to remain low into 2021, the mara- thon would be followed up by an Ironman Triathlon and topped off with a Tour de France ride. It could be a long, exhausting, and intense recapture game at a faster- than-normal pace with some well- positioned to finish strong while others struggle to keep up. What are the well-positioned servicers doing to seize the op- portunity today? We can group them into a few buckets: investing in the right technology, gaining a better understanding of their cus- tomer, and employing personalized marketing. Those who built their businesses for scale with a focus on these areas are reaping the rewards. Effectively Use Technology W hat is table stakes today is an online digital mortgage application and a portal to request and receive required documents. According to Ellie Mae's 2019 Borrower Insights survey, 50% of borrowers opted for lenders that offered digital tools, and 66% of borrowers preferred online applications because they lead to quicker closing. Layered on top should be an omnichannel engagement platform that allows customers to seam- lessly communicate through the call center, text, chat, and email to progress smoothly in their transaction. This will decrease the number of phone calls which causes longer wait times and frustrated customers. Next is workload balancing for the staff. There are employees who can handle a heavier work- load than others. Some staff can efficiently handle 25% more loans than the company average, whereas other processors blow past locks once they hit a certain number. Likewise, some excel greatly at certain loan characteristics, such as VA loans, West Coast borrowers, high-balance loans, etc. These met- rics should be known and utilized to maximize closing efficiency by enabling technology to assign loans to the team members most likely to service the customer best by closing their loan on-time. This means improving overall pipeline pull thru for the company. Develop a Better Understanding of the Customer W ith more choice, more access to information, and less incentive to be loyal, home- buyers are firmly in control of their relationships with lenders. Better engagement sits with under- standing who the customers are, what motivates them, and, most importantly, reaching them at the right time with the right message. Buying journeys differ greatly based on a number of factors, the biggest—and most obvious—being that every journey takes a differ- ent path because every consumer is unique. So, lenders need to treat consumers differently. The difference is being able to under- (Re)Capture the Flag: Mortgage Edition Defending one's portfolio has become the single most important priority for servicers. By Mike Eshelman