Podcast: 6 criteria for choosing a backup loan servicer

Whitney
McDonald
12:38:15
Hello
and
welcome
to
the
buzz
of
bank
automation
news
podcast.
My
name
is
Whitney
McDonald
and
I’m
the
editor
of
bank
automation
News.
Today
is
April
2
2024.
Joining
me
is
blind
lot
in
Senior
Vice
President
of
Marketing
and
Business
Development
at
lending
as
a
service
provider
bourbon,
she
will
discuss
the
increased
demand
for
backup
Loan
Servicing
providers
post
the
SBB
collapse
and
share
what
people
are
looking
for
in
backup
service
providers.
Hi,
blinds.
Welcome
to
The
Buzz.

Blythe
Lawton
12:38:41
Thanks
for
having
us.
I
am
Blythe
Lawton,
I
am
the
SVP
of
marketing
and
business
development
for
vervets.
I’ve
been
with
a
company
seven
years
and
we
are
a
fintech.
Who
offers
primary
strategic
services,
things
like
credit
card
servicing,
loan
servicing
capital
markets,
services,
as
well
as
backup
servicing
and
credit
card
programs
under
our
vent
card
division.
So
we’ve
been
around
under
our
current
CEO
since
2008.
And
under
the
vent
brand
since
2019.
And
we’re
excited
to
continue
to
be
part
of
this
industry.
We’re
a
credible
player,
and
we’re
glad
to
be
here
and
talking
to
you
today.

Whitney
McDonald
12:39:25
Great,
well,
thank
you
again,
and
welcome
to
The
Buzz,
we’re
going
to
take
a
step
back
to
2023.
And
we
all
remember
what
happened
in
March
of
2023,
the
banking
crisis
SBV
collapsed,
which
triggered
this
importance
of
a
backup
service
provider.
So
I
would
like
if
you
could
talk
us
through
this,
this
new
demand
and
this
reminder
of
having
a
backup
service
provider
following
that
collapse
in
March.

Blythe
Lawton
12:39:56
Absolutely.
So
backup
servicing
provides
security.
And,
as
we
saw
last
year,
when
you
have
a
collapse,
you
have
a
large
portfolio
or
a
large
bank,
and
you
have
a
lot
of
portfolios
and
a
lot
of
loans
that
are
out
there
floating
and
not
being
managed
by
a
servicing
company.
So
you’re
not
you’re
not
collecting,
you’re
not
you’re
not
collecting
dollars,
accounts
are
getting
delinquent.
So
as
you
look
forward
post
the
SVP
collapse,
we
see
a
lot
more
interest.
verbund
has
been
around
for
a
lot
of
years,
and
we
have
a
strong
presence
and
capital
market
services.
And
as
this
collapse
happened,
we
see
more
people
becoming
aware
of
the
backup
servicing
need.
And
the
service.
Portfolios
tend
to
be
less
educated,
especially
if
they’re
new
or
their
startups,
whereas
the
capital
providers,
all
the
big
banks
are
very
strong
advocates
of
backup
servicing
because
it
protects
their
investment.
And
their
goal
is
to
have
the
insurance,
if
you
will,
on
the
money
they’re
lending
to
the
portfolio
so
that
if
a
trigger
event
or
a
you
know,
some
sort
of
action
were
to
happen,
that
they
can
protect
their
investment.

Whitney
McDonald
12:41:10
Let’s
talk
about
those
trigger
events.
What
might
be
an
event
that
would
have
a
startup
or
company
saying
Well,
I’m
glad
I
have
this
in
place?

Blythe
Lawton
12:41:21
Absolutely,
it’s
a
great
question.
It’s
not
always
dramatic,
like
a
bank
collapse,
it
could
be,
you
know,
a
change
in
leadership,
it
could
be
a
current
service
or
a
primary
servicer
who’s
managing
the
portfolio
but
not
really
being
able
to
keep
up
with
the
SLAs
and
the
the
levels
of
collections
that
are
needed
to
continue
the
funding
of
the
portfolio.
That’s
the
most
common
reason
for
a
trigger
event.
So
let’s
say
you
need
to
collect
X
percent,
but
you’re
only
collecting
y,
obviously,
that’s
going
to
be
a
concern
to
the
capital
provider
and
they
are
going
to
look
to
course
correct.
And
of
course
corrections
can
be
made,
they
may
decide
to
trigger
and
move
to
a
transition
on
the
successor
service
or
where
the
backup
partner
would
come
into
play.

Whitney
McDonald
12:42:12
Now
you’ve
shared
with
me
these
these
six
elements
of
backup
servicing,
maybe
you
could
share
with
with
our
listeners,
what
those
six
elements
are.
Sure,

Blythe
Lawton
12:42:20
things
that
are
very
important
to
have
our
asset
experience,
experience
in
a
world
of
backup
is
huge.
You
know,
a
lot
of
people
sell
backup
servicing,
but
they
don’t
necessarily
have
what
it
takes
to
fulfill
on
the
backup
servicing,
if
something
should
happen
to
the
portfolio.
So
experience
with
asset
classes
and
experience
with
adverse
conditions
is
very,
very
important.
So
that’s
one
and
also
the
people
in
play
to
manage
those
so
they
understand
the
nuances
of
what
are
happening
and
they
can
make
smooth
transitions.
Scalability
is
another
one
if
you
don’t
have
scalability
to
support
the
servicing.
So
if
you
have
a
backup
agreement,
and
your
selling
backup,
but
you
don’t
have
operation
centers,
you
don’t
have
a
place
to
put
the
servicing
if
a
trigger
event
would
occur.
So
having
scalable
ality
and
the
ability
to
scale
quickly
because
no
one
wants
to
have
their
portfolio
sitting
on
service
without
collecting.
So
having
those
open
seats
and
that
capacity,
in
order
to
take
on
the
transition,
the
successor
servicing
immediately
is
critical.
If
you
don’t
have
the
recruiting
flows,
the
seats,
the
it
the
setup,
you
can’t
it’s
like
buying
an
insurance
and
not
being
able
to
pay
a
claim.
Um,
response
time
is
also
huge.
Every
day
you’re
not
collecting
as
every
day
you’re
not
meeting
the
financial
needs
of
your
portfolio.
So
being
able
to
transition
if
there
is
an
event,
quickly
within
30
to
45
days
is
a
key
element
of
this
and
something
that
really
drives
credibility
for
those
players
who
have
had
experience
with
trigger
events
and
have
been
able
to
successfully
transition
within
reasonable
timeframes.
Another
one,
I
think
I’m
on
for
is
the
relationships.
So
having
relationships
with
the
investors
with
the
warehouse
providers
with
all
the
capital
markets,
participants
are
invaluable.
You
need
to
know
the
people,
you
need
to
know
have
the
asset
experience,
but
you
need
to
also
know
the
people
and
how
to
get
things
done.
Because
again,
when
you
have
an
event
with
a
backup
servicing
contract,
and
you’re
trying
to
transition
time
is
money.
And
so
those
relationships
help
clear
things.
And
they
also
make
sure
that
everything’s
being
done
credibly
and
correctly.
Advanced
Notice
you
also
the
relationships
also
help
a
lot
with
knowing
what’s
coming
down
the
line.
You
know,
many
times
you
have
questions
about
a
portfolio
or
corrections,
things
that
need
to
be
made.
And
there
might
be
some
conversation
that
happens
upfront.
But
with
those
relationships,
triggers
usually
aren’t
a
surprise.
And
that’s
that’s
a
very
important
element.
You
want
to
know
what’s
happening
before
you
have
to
make
a
formal
industry
notification.
And
then
compliance
compliance
is
the
last
thing.
Anything
in
loan
servicing
or
lease
servicing
has
so
much
to
do
with
compliance.
There’s
so
many
rules
and
regulations
and
having
a
solid
oversight
plan,
you
know,
a
plan
of
action,
if
you
will,
with
the
prospective
backup
if
there’s
a
trigger
event
and
having
the
oversight
and
the
people
to
make
sure
that
everything
is
handled
in
a
legal
and
regulatory
compliant
way
is
critical.
And
the
only
way
that
you’re
going
to
do
that
is
by
really
understanding
what
is
needed,
you’re
understanding
the
laws,
the
nuances
of
what
loans
the
portfolio
contains,
and
moving
things
through
regulatorily
and
within
the
correct
data
security
so
that
you’re
compliant,
and
you’re
able
to
take
your
servicing
from
one
shop
into
the
new
shop
seamlessly
and
seamless
as
a
word
I
would
strongly
emphasize
here.
And
then
there’s
also
risk
mitigation,
having
risk
groups
within
your
organization
to
oversee
and
really
make
sure
that
you
are
mitigating
risk
appropriately.
It
ties
in
a
bit
to
compliance,
but
that’s
also
a
very
important
component
of
transition.

Whitney
McDonald
12:46:39
Now,
with
all
of
those
elements
in
mind
that
you
just
broke
down
for
us,
which
thank
you
for
doing
that.
How
does
a
FinTech
really
select
their
backup
servicing
provider?

Blythe
Lawton
12:46:51
Well,
they
should
be
looking
for
experience,
credibility
capacity.
And
I’m
gonna
say
response
time
swift
timing,
you
know,
but
it
really
depends
on
the
experience
of
the
portfolio
holder.
So
a
lot
of
times
it’s
the
capital
providers
who
are
driving
the
decision
not
driving
the
decision,
but
prompting
the
decision
on
whether
or
not
there
should
be
backup
servicing
and
offering
broad
recommendations
of
organizations
that
are
credible
backup
services.
It’s
ultimately
the
choice
of
the
portfolio
owners
to
get
that
backup
servicing.
But
a
lot
of
times,
well,
not
a
lot
of
times,
depending
on
the
experience
level
of
the
portfolio
owner,
they’re
either
going
to
know
what
to
look
for,
or
they’re
going
to
need
more
guidance.
And
so
there’s
a
lot
of
information
about
there
on
backup
servicing,
if
you
know
where
to
look.
But
a
lot
of
times
newer
portfolio
owners
or
startups
don’t
always
know
where
to
look.
And
so
there’s
a
lot
of
good
advice
within
those
industry
relationships.

Whitney
McDonald
12:47:56
Now,
post
SBB
and
we’re
into
a
new
year
here.
Have
you
guys
seen
an
uptick
in
demand
for
bourbon,
what
are
your
clients
really
asking
for
or
even
prospective
clients?
What
are
those
questions
that
are
coming
up?

Blythe
Lawton
12:48:12
Oh,
Mervyn’s,
quite
a
stab
left
in
the
capital
markets
service
space.
So
we
have,
you
know,
a
lot
of
capital
markets
business
across
the
thing,
whether
it
be
you
know
verifications
custody
backup,
there’s
a
lot
of
services
that
we
offer
there.
So
we’re
a
very
established
incredible
player
within
this
mid
space.
So
I
would
say
we’re
seeing
a
small
uptick,
but
what
we’re
really
seeing
is
increased
scrutiny
in
ancillary
services,
things
like
our
annual
readiness
assessment,
where
people
are
maybe
doing
more
prep
on
certain
portfolios
to
make
sure
that
they’re
even
more
prepared.
With
a
contingency
plan.
We’re
seeing
people
we’re
seeing
clients
move
from
warm
to
hot
back
up,
and
then
maybe
back
down
to
warm
back
up
a
little
bit
more.
And
we’re
seeing
more
interest
in
the
topic
of
backup
servicing
overall,
if
you’re
in
the
space,
you
know,
about
backup
servicing,
and
you
know
how
important
it
is.
But
it’s
one
of
those
things
that
you
don’t
know
about
until
you
you
don’t
know
what
you
need
to
know,
kind
of
things
until
you
need
to
know.
So
that’s
what
we’re
really
seeing
a
lot
of.

Whitney
McDonald
12:49:25
Okay,
and
what
are,
what
are
some
of
those
considerations
that
that
you
don’t
know,
unless,
you
know,

Blythe
Lawton
12:49:33
um,
you
know,
just
really
understanding
that
backup
servicing
is
something
that
that’s
needed,
you
need
the
knowledge
and
experience
to
protect
your
assets.
So,
you
know,
you
want
the
backup
service
thing,
whether
you’re
in
a
time
of
strong
performance,
or
when
something
that’s
like
an
unexpected
challenge
happens
with
your
portfolio.
So,
you
know,
in
bourbons
case,
we’re
ready
to
step
in
with
solutions,
that
are
proven
solutions
to
preserve
the
investment,
regardless
of
what
happens,
you
know,
it’s
kind
of
I
liken
back
of
servicing
to
insurance
quite
a
bit.
And
some
of
my
peers
have
driven
every
once
in
a
while,
I’ll
give
a
chuckle
because
I
think
I
sound
a
little
like
a
broken
record.
But
it
really
is
like
insurance,
you
want
it
all
the
time,
because
you
don’t
know
when
something’s
gonna
happen,
you
can
have
an
indication
but
you
know,
you
don’t
just
buy
car
insurance
for
the
day
that
you
get
in
the
accident.
And
backup
servicing
is
very,
very
similar.
Yes,

Whitney
McDonald
12:50:29
and
I
mean,
we’ve
all
been
there,
maybe
not
specifically
on
the
on
the
backup
service
side,
but
yes,
insurance
or
fleet
insurance
or
wishing
that
you
add
something
that
you
don’t
have.
But
I
like
your
point
there
too,
about
having
it
and
when
times
are
good,
too,
just
to
just
to
have
that
readiness
in
case
an
event
does
does
come
up.
Now,
we
kind
of
talked
backwards,
we
talked
about
2023.
And
we
talked
about
March
of
last
year,
but
now
we’re
into
2024.
I’d
love
to
get
your
insight
on
what
you’re
watching
for
this
year,
when
it
comes
to
trends
and
keeping
up
with
with
what’s
going
on
in
the
industry.
So
what
are
you
watching
for,
as
you
as
you
get
into
deeper
into
2024?
I
should
say?
Absolutely.

Blythe
Lawton
12:51:19
So
verbund
Like
everyone
else
is
watching
the
macro
economic
landscape
to
see
what
changes
they’re,
you
know,
how
the
economy
is
faring,
if
it’s
going
to
improve
or
deteriorate.
So
we’re
watching
that.
And
we’re
since
we
are
a
business
who
works
a
lot
in
the
b2b
space,
with
the
loan
servicing
on
the
capital
market
services.
But
we
also
have
our
fervent
card
division,
where
we
work
direct
to
consumers.
And
those
are
kind
of
weighted
businesses
where
when
one
is
is
doing
really
well,
the
other
is
not.
So
we’re
watching
both
sides
of
that
on
to
see
where
we
go
and
where
we
can
add
value
for
either
our
clients
or
for
our
DTC
customers.
On
the
back
of
on
the
capital
markets,
services
front,
you
know,
we’re
really
looking
at
ways
to
provide
more
coverage
and
more
preparation
for
our
clients.
So
ancillary
services
that
we
have
always
offered,
but
maybe
we
weren’t
broadly
marketing,
because
not
as
many
people
were
taking
advantage
of
them.
But
with
the
events
of
2023.
And
everyone
having
a
more
conservative
view
going
into
2024
and
probably
beyond.
We’re
looking
at
how
we
can
add
services
farther
up
the
capital
markets
funnel
to
make
sure
that
people
are
protected,
like
I
said,
and
those
good
times
and
bad
times,
and
that
could
be
anything
from
inventory
backup,
to
the
annual
readiness
assessment,
to
all
the
things
with
onboarding
verifications,
collateral
management,
we
do
a
lot
of
different
things,
and
we’re
here
for
our
partners
and
so
we’re
trying
to
help
them
be
aware
of
all
the
steps
they
can
take
to
keep
their
investment
safe.

Whitney
McDonald
12:53:08
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