At the start of the new year, Lori Pinto and I set a blistering pace, attending meetings and conferences around the country to talk with the folks who do the everyday work that makes our industry tick. It’s been an interesting look into the state of our industry and the mindset of people as they execute on their 2024 plans.
Now that we have completed the first quarter, we want to share a bit of this insight. For starters, we were encouraged by the overall positive vibe among many of the people we’ve spoken with, believing (or maybe hoping) 2024 will see some brighter spots later in the year. Through event speakers and individual conversations alike, there was talk about the likelihood of federal rate cuts, lower mortgage rates, and an increased focus on efficiencies across the industry due to slower production and M&A activity. Specifically, we heard:
- Portfolio retention and recapture is more important than ever, flow deals are popular again, and the non-banks remain the majority of the buyers in the MSR acquisition space.
- Delinquencies in mortgage portfolios are increasing. Homeowners are drawing down equity in their below 4 percent mortgages, and there are significant increases in real estate taxes and insurance premiums driving up the monthly mortgage payment – all foreboding signs of rising delinquencies.
- And regulatory changes continue to be top of mind and continuously occurring.
Speaking of that last item, we know that regulatory change management is a major pain point for everyone. It’s also a huge driver of increased cost in loan servicing.
Managing regulatory compliance is a people-heavy effort, especially as organizations build out their programs. Creating a mortgage servicing regulatory roadmap requires significant and ongoing investment. Think additional headcount, technology and consultants that can divert precious resources away from executing on your business strategy this year.
Here’s why: Regulatory management is a manual process, in large part because the required implementation timeline doesn’t allow for early automation. There are procedural and operational activities that need to be built, tested, and validated with every single regulatory issue.
As the leading mortgage subservicer, we know something about managing compliance. In fact, we have mature programs to handle it with the value add of cost-savings for our clients.
Heading into Q2, we’d love to learn about what processes, market forces or other influences are impacting your business strategy.
Here’s to a strong and productive year!