Three Reasons to Consider Mortgage Subservicing
Last Updated on December 1, 2021
Outsourcing this critical step in the loan origination process can provide significant strategic benefits to you and your borrowers.
Participating Financial Institutions (PFI) within our Mortgage Partnership Finance® (MPF) Program are afforded a variety of competitive secondary market benefits, not to mention a team of dedicated experts to support onboarding, training and education for your team. Thanks to the variety of product options at your disposal through the MPF Program, identifying the right fit for your institution can be simple. Many PFIs, however, don’t consider the additional avenues available to them through life-of-loan servicing capabilities – one of which, is the option to subservice your mortgage loans.
In the current economic environment, we are seeing an increase in the number of PFIs electing to sell their mortgage servicing rights to a third party. There are a number of benefits to choosing this type of relationship for your loan portfolio. Here are three for you to consider.
Subservicers are equipped with state-of-the-art technology to perform all administrative, compliance and financial servicing activities related to a mortgage loan for a monthly fixed per-loan fee. This dedicated attention to maintaining the infrastructure necessary to keep pace with the ever-increasing regulatory and compliance environment provides PFIs with the services they may not have in-house. Additionally, enhanced safety procedures and IT protocols provides peace of mind and reduces the risk of servicing errors which could lead to financial penalties.
From a customer perspective, this type of advanced technology results in a user-friendly, consistent, single point of contact that makes managing their loan seamless and easy.
Effective Cost Savings
Some of our PFIs may believe that the cost of subservicing is too high, and cuts into the profit margin gleaned from their loan portfolio. However, when factoring in the costs associated with the expertise needed to stay up to date on regulatory issues, the technology necessary to maintain a secure system and the strain on staff to keep up in these areas in a consistent and timely manner, subservicing can be an efficient use of resources. It can also free up time for employees, who may have multiple responsibilities, to grow your borrower relationships in other ways.
Today’s PFI customers want a seamless interface across all digital channels. A highly effective subservicer, acting on your behalf, ensures loan administration, business administration, default administration, client relations and adherence to all the most up-to-date rules and regulations are efficiently and effectively managed. Having the ability to partner with a third-party mortgage subservicer allows you to offer these digital solutions without having to build them into your current mainframes. This provides consistency when working with the customers, especially if they have more than one mortgage, while allowing you to maintain your brand and strengthen your relationships with borrowers.
For an additional fee, a subservice provider may allow PFIs the opportunity for a private label option that incorporates your brand within their designed interface, further enhancing the customer experience.
While the option of using a subservicer may not be right for every PFI, it could have a positive impact on your business and your borrower relationships.
To learn more about subservicing and to see if it makes sense for your institution, reach out to your Mortgage Relationship Manager for more information.