Subprime servicer uses psychologists to get borrowers to pay

The Wall Street Journal reports that Ocwen financial, the largest subprime loan servicing organization (servicing about one-fifth of all subprime loans in the U.S.) has hired a team of “social psychologists” to help its collectors figure out the best thing to say to each borrower to get them to make more payments on their loan.

These psychologists have prepared scripts for the collection agents (most of whom are in India and Uruguay).  They have also created software that analyzes what borrowers say, and makes suggestions for responses to be used by collection agents.

Some people think this helps get more money out of borrowers, but others are skeptical.  I agree with a comment from a mortgage industry insider who says that “…the most important factor in getting a borrower back on track is whether the borrower has the capacity to make the loan payments.”

In other words, the vast majority of borrowers make their mortgage and loan payments if they can.  When they stop it’s usually because there has been a loss of income, as with a lost job, or unexpected bills, often due to medical problems.

When people cannot make payments, some adjustment to the terms of the loan, like a modification of the interest rate, is the first thing that should be looked at.  If that does not reduce payments to a level that the borrower can afford, then other actions should be explored including bankruptcy.

One of the underused solutions for keeping people in their homes.  Bankruptcy is very effective if you have a lot of credit card debt that can be wiped out, leaving more money for mortgage payments.  Get more information in our previous post: Filing Bankruptcy Could be Your Best Option

If there is no way that you can afford the mortgage, even with a bankruptcy, then you should try to avoid the pain of foreclosure with a “short sale” or “deed in lieu of payment.”

Comments are closed.