Wisniowski, Charles
In a recent interview with MBA NewsLink, Missy Zakett, vice president of sales with Western Union Payment Services, Englewood, Colo., discussed payment solutions and technology alternatives for the mortgage industry, as well as results of WUPS' recent Money Mindset Index survey of consumer payment behavior.

MBA NEWSLINK: How long has Western Union Payment Services been doing business in the mortgage space?

MISSY ZAKETT: It’s been more than 10 years. Western Union originally had a one-time payment solution, then we bought from another company which offered another product which offered another one-time payment solution which is where our Speedpay product came from.

Then we purchased another company about seven years ago called Paymap Inc. [San Francisco] which is where some of our mortgage specific products came from and that company had been in existence for about 15 years.

So as you look at providers of services to the mortgage industry, we’ve been around for quite some time. We have a very good understanding of the needs of the industry and we’ve seen some of the changes that it’s gone through.

NEWSLINK: Western Union’s Money Mindset Index survey noted that 40 percent of consumers surveyed said they were re-prioritizing which bills they pay first. Where did mortgage payments rise or fall in the payment priority list and were there common reasons given by respondents?

ZAKETT: Mortgage and rent payments remained as the top two payments. Thirty-three percent of respondents said rent was the most important bill to be paid first, compared to 31 percent six months prior, while 23 percent of respondents said the mortgage was their most important bill to be paid first, compared to 22 percent six months ago.

Respondents gave the following reasons for payment re-prioritization: the service is necessary for me—50 percent of respondents; I do not want to do without that service—41 percent of respondents; and I know there is a grace period for payment—26 percent of respondents.

NEWSLINK: Given the current credit crunch, are you seeing more of a “cash and carry” shift among consumers—perhaps not just in their shopping and spending habits but also in how they pay their bills, especially their mortgages?

ZAKETT: I don’t think it’s necessarily ‘cash and carry’ but all you have to do is open the newspaper to see that more people are having difficulty making their payments. Let me give a brief overview of the services we do provide and then I’ll answer the question because it really rolls into that.

Today through WUPS we offer the consumer a variety of choice. Basically any way you can think of paying, you can use a Western Union product to pay your mortgage or any bill for that matter. So you can take cash into one of our agent locations and use a product we call Quick Collect to pay for your mortgage that way.

You can also use one of our electronic products to either pay over the phone over the automated IVR [interactive voice response] solution or when you are talking to a collector or a customer service rep or if you go into the Internet and you want to pay through the Web. So really anyway you can think of.

We also have an alliance partner that we use that uses an interactive, outbound messaging. You know that service that the doctor’s office uses to confirm that you have an appointment tomorrow? It’s that technology but it will confirm who you are and then it will give you an opportunity to make an appointment now—‘Press 1 if you’d like to pay now.’

Instead of having to be rerouted back to a collector or a customer service rep, I can go ahead and make my payment right there on the phone.

So are we seeing more ‘cash and carry’? I don’t think it’s more ‘cash and carry’ but in today’s economy, there are so many people are having trouble making payments in general, s [you need to] figure out how you can offer solutions to that person that are right for them.

I was talking to a client recently about modifications and how difficult it is to actually sometimes get hold of the person. Because you have the embarrassment factor, you have the…'I don’t want to talk to a collector factor,' but even if you are calling them to try to help them, some people are just not comfortable with human contact.

So if there are ways you can find to allow people to make payments in a way they are [most] comfortable, then I think that helps you get paid easier, faster, more often.

NEWSLINK: With the rise in mortgage delinquencies and foreclosures, one of the most critical challenges facing mortgage companies today is simply getting paid. How do you see mortgage companies meeting that challenge in this economic environment? Are you seeing companies are looking for opportunities outside of the box?

ZAKETT: I’d say yes definitely. The good thing about being part of Western Union because it is such a well-recognized, trusted brand. Most mortgage companies use at least one of our products today to get paid.

So I’m not just out trying to sell people products. I’m really trying to understand the business and figure out solutions. One of the things we ask people at the end of any discussion, where are your pain points in getting paid and are there ways that I could try and help.

One of the things we’re working on right now, which really came from those mortgage companies really thinking outside the box and figuring out just how do they get paid, is along the lines of repayment plans and modifications.

So when you put someone on a repayment plan—I just read an article recently that said up to 60 percent of those re-default—how can you reduce those re-default rates and how can you make sure that people can and do continue to pay once you come up with a new plan?

One of the things we are doing is working with a couple of servicers using the products we have, tweaking them a little bit, to come up with a payday-to-payday solution that allows you to tailor your repayment plan for your mortgage to how that person gets paid.

Because some of the problem sometimes is budgeting, so how can I work with the borrower to make it as easy as possible for them to be able to repay their loan?

NEWSLINK: Survey respondents also noted that mail-in payments were the most common channel for their mortgage, with 35 percent paying their mortgage opting to pay by mail. Do you currently see an appetite among consumers for an alternative to traditional 'snail-mail' payments?

ZAKETT: Mortgage payments are probably the slowest adopters of electronic solutions. When we looked at this a few years ago, that percentage was above 50 percent on average, so you are starting to see it decline from mortgage consumers who want to use snail-mail. It’s still higher than other type of bills but it is declining.

NEWSLINK: Is that an area where you are looking to expand and fill that need for mortgage companies?

ZAKETT: Yes, we definitely are. That is pretty much a big part of what we do are those electronic payments. As I said, once you can figure out a way to convince the consumer that it’s the right thing to do, then they’ll typically stay on it just like they have with their other bills.

However, because your mortgage payment is typically the largest bill you are paying each month, adoption of electronic payment has been a little slower than it has in other bill types.

NEWSLINK: Regarding the year’s outlook: Given that Western Union’s perspective of the mortgage sector, what is Western Union’s economic assumptions for the mortgage industry and for the economy at large for the rest of 2009? How is WUPS planning business accordingly?

ZAKETT: We see further challenges as the mortgage industry continues to adapt to the changing economic landscape. Billers need to offer payment options for consumers to choose from to accommodate their cash flow needs, and consumers need to be educated as to the services and options available to them.

WUPS also expects to see an increase in on line expedited payment and banks, in particular, will need to ensure they offer same day payments as online payment adoption at biller sites is still growing more rapidly than bank adoption.