Like many lenders during the Great Recession, U.S. Bank found itself with a large number of mortgage loan borrowers who couldn’t keep up with their payments, and it had little help to offer. This was bad for the bank and borrowers alike because mortgage loans that went into default often ended up in foreclosure, which drove up the bank’s costs while putting the borrower at risk of losing their home.
Scott Rodeman, a senior vice president for consumer loan servicing who joined the Minneapolis-based bank in 2014, knew there were resources available to distressed borrowers from his experience at a previous bank employer, and he reached out to SpringFour, a 13-year-old company headquartered in Chicago. SpringFour acts as a conduit to agencies and organizations that work directly with borrowers having trouble making their loan payments because of other financial issues, like the loss of a job or mounting medical bills from a serious illness.
“Coming out of the mortgage crisis, mortgage servicers were somewhat limited in how they could help their homeowners…stay in their homes,” says Rodeman, who is responsible or U.S. Bank’s mortgage, auto and consumer loan collections, repossession, recovery and loss mitigation operations. The bank could offer solutions to homeowners who still had some cash flow, but it had little advice for those who couldn’t even make a partial payment. “Really, our loan counselors had very few options to help them improve their financial cash flow to pay for home-related expenses, housing and things like that,” Rodeman says.
That’s where SpringFour comes in. The company provides a cloud-based technology solution called the S4 Desktop that allows lenders like U.S. Bank to refer distressed borrowers to nonprofit organizations and government agencies that can help them get their financial affairs in order. “When people get behind and can’t pay their bills, it’s really because of something that’s happening in their financial lives,” says SpringFour CEO and co-founder Rochelle Nawrocki Gorey. “There’s a lot of shame attached to financial challenges, so they don’t reach out and get help. We believe that when people are living paycheck to paycheck, they need and deserve to be connected to local resources that can help.”
U.S. Bank and SpringFour were co-finalists in Bank Director’s 2018 Best of FinXTech Innovative Solution of the Year award.
The S4 Desktop solution can be accessed by U.S. Bank service representatives by logging into the service via the web. From there, they can direct the borrower to agencies and organizations that can help that individual work through their financial crisis. A link to SpringFour can also be found on the U.S. Bank website. The SpringFour database contains over 10,000 resources in all 50 states, and Gorey says her firm is constantly vetting and curating the data to keep it up to date. “We have a professional data team that is assessing the nonprofits for track record, reputation, funding and capacity to assist,” she says. “We’ve built a strong track record of trust with our financial institution clients. They know when they make a referral through SpringFour, it’s going to be accurate.”
Because the S4 solution is cloud-based, there were no implementation issues to speak of, according to Rodeman. “There was no technical work or development work really,” he says. “It was all customer-facing edits to our existing processes. Then, of course, training our employees to offer the service and manage that just like any other call center function.”
U.S. Bank has been working with SpringFour for about two years, and Rodeman says the program has shown tangible results. “Consumers that receive these referrals are twice as likely to engage in some kind of loan workout strategy with us rather than just allow the house to go into foreclosure,” he says. “That’s a significant number.” Mortgage borrowers that receive referrals are also 10 percent more likely to remain current with their mortgage. An equally important if less tangible benefit is that the program has enabled the bank to build a deeper relationship with its customers. “Coming out of the crisis, consumers were afraid of their mortgage servicers,” says Rodeman. “For us to see that kind of engagement rate increase shows that we’re building rapport and trust with our customers.”
If U.S. Bank had access to the SpringFour program during the mortgage crisis, Rodeman believes it would have helped reduce the number of foreclosures. The economy is much healthier today, of course. But even now there are borrowers who need help making their loan payments, “Based on our numbers in an improving economy, I don’t see why it wouldn’t have [helped] back then.”