USFN | Coding for Success — Hold/Delay Reason Consolidation

Coding for Success — Hold/Delay Reason Consolidation

by Harry Beisswenger, COO
NetDirector, L.L.C. — USFN Associate Member

What’s in a name? Plenty when it comes to foreclosure/bankruptcy delay and hold code reasons. The ramifications of delay/hold reason proliferation have become increasingly wide-reaching. The USFN Technology Committee recently developed a proposal to consolidate and standardize delay/hold reason codes industry-wide.

Over the past year, the committee was tasked by its members (attorneys) to review the current state of the market and how the proliferation of delay/hold reason codes could be consolidated and standardized to improve efficiencies. The committee team members met with attorneys, servicers, and default management providers (Fidelity and First American) to develop a comprehensive, consolidated list along with an implementation plan.

Based on the positive response from the parties, the committee firmly believes that by consolidating and standardizing the current expansive list of reason codes, we can significantly reduce labor costs and improve business process efficiencies industry-wide. Some examples of delay reasons “gone wild” include: 14 different reasons for eviction, state-specific reasons, and the infamous “went fishing” reason. Some key benefits that can be realized by moving to a consolidated and standardized model include:

▪   Improving data integrity/purity
▪   Shrinking cycle times
▪   Lowering employee training costs
▪   Reducing overall labor costs
▪   Reducing liability and charge offs
▪   Simplifying reporting options
▪   Improving data interface results

Just between First American’s VendorScape and Fidelity’s FIS Desktop alone, a union list of 577 different reasons to delay or hold a foreclosure/ bankruptcy file were identified. We have taken that list and reduced it to less than 30 higher-level delay reasons such as Missing Loan Document, Court Delay, Damaged Property, Litigation, Title Defect, etc. Since some servicers may require additional information, an optional sub-type field for certain reasons and a free-form comment field for more nuanced detail are being considered.

Hold/delay code consolidation and standardization will streamline the foreclosure and bankruptcy work flow processes, allowing servicers and attorneys to more easily identify the proper classification for a hold/delay reason. We are excited by the prospect of implementing such a wide-reaching standards initiative. To successfully move forward with this code consolidation, participation from all parties is necessary. This type of data standardization may take some short-term effort on behalf of the participants, but it will benefit the entire industry in the long term.