Mortgage lenders are in a difficult environment today. Depending on the type of home and location, prices are at or near historic highs, while interest rates continue at their highest level in decades, with more increases likely than any declines.

In such an environment, it is critical that lenders spend their time acquiring what new loans they can while being as efficient as possible in managing the loans they already have on the books.

That means focusing on the lender’s strengths – making good loans to qualified borrowers, while letting specialists handle the servicing of the loans.

By going to the specialists – in this instance, subservicers – mortgage lenders receive many benefits:

• Better economies of scale: Since outsourcing providers specialize in loan servicing, they can provide these services at a much lower cost due to economies of scale. Loan servicing outsourcing reduces the need for in-house bank staff.

 

• Access to the latest mortgage servicing technology: For mortgage lenders, top priorities for their technology investments rightly tend to concentrate around acquiring and processing loans as efficiently as possible, as well as technology that helps with proper pricing, underwriting and limiting risk. Servicing technology would be next on the priority list. For mortgage subservicers, however, the servicing technology receives top priority for investment. Additionally, the subservicer uses a portion of the fees it receives from you and form all of its other lending customers to buy or lease (if a SaaS platform) technology.

 

• Increased customer satisfaction: Since relying on an outsourcer enables your business to concentrate on its specialty – lending, while the subservicer focuses on its specialty – servicing, the loan customer benefits from the best of both. In a tight, competitive market, better customer satisfaction (prospects can easily access customer reviews online from Google and many other sources) can be the difference between gaining and losing a customer.

 

• Improved risk management: Outsourcing the servicing also helps lenders and investors manage the risks associated with servicing mortgage loans, though they still have to ensure they are working with a reliable, credible subservicer. If the subservicer fails to properly manage the escrow account, for example, a lender or investor could be held solely responsible for any resulting issues. By outsourcing, the lender or investor can transfer this risk to the subservicer.

 

• Regulatory compliance: Like the lending business itself, mortgage servicing is subject to several specific regulations, many of which change as different state and federal rules are imposed or change. Compliance with the various state and federal rules and regulations is very complex and time-consuming. By outsourcing, lenders and investors can ensure that their mortgage servicing is being handled in accordance with all relevant laws and regulations, with the specialized knowledge and expertise of the subservicer’s staff and technology, resources the lender doesn’t need to have on its own.

 

• Business expansion opportunities: Use of subservicers that are regional or national in nature, enables the lender flexibility in expansion into other states without the need to learn all the intricacies of servicing loans in a new area.

 

Why Selene Servicing

However, it is important to recognize that not all subservicers are the same. At Selene, we deliver a full set of subservicing product solutions to help grow your business. As investors and originators diversify their product suite to take advantage of current market opportunities, we are well positioned to service our clients in multiple asset classes.