The last four years have been historic for the mortgage industry, and after the frenzied activity of 2020 and 2021, the industry is facing considerable pressure currently. We’re now seeing a 7+ % mortgage rate for the first time in more than 20 years. Mortgage originators that geared up for the unending rounds of refinancing – culminating with the pandemic – have a lot of capacity and very little demand. With all of these challenges, now is the time to consider outsourcing your mortgage portfolio, and here’s why:
1. Regulatory Know-how
The scrutiny of this regulatory environment has resulted in more work for financial institutions that are either originating loans, servicing loans or doing both. These companies need to think about how to offer new products in order to retain their place in the market.
The quality of a servicer’s regulatory change management process and compliance is important as financial institutions begin to promote products like HELOCs, for example, to customers as interest rates continue to rise. So, while a company is focusing on how to market a HELOC to its customer base, using a partner that has the expertise to manage the regulatory and compliance requirements is undeniably the most critical factor to consider when selecting a subservicer.
Cenlar’s formal process entails working with our legal regulatory attorneys to understand the requirements and provide interpretation of the change to our compliance team. Our compliance team then works with operations and business control managers to understand the impact to business processes and procedures, training, communications, vendors and systems and then implement and assure controls are in place.
2. Providing the Best Homeowner Experience
While many people associate mortgage servicing as just the administrative function of a mortgage, it’s so much more than that for the homeowner. The homeowner has an expectation that the servicer will deliver an experience to meet their individual needs. For servicers, that means engaging with homeowners over time to establish relationships and learn their preference for communicating.
We believe the homeowner experience is not a single moment in time – it lasts over the lifetime of the loan. Whether that’s the regular cycle of loan onboarding, escrow analysis, monthly payments and year-end or extraordinary challenges facing homeowners, like the pandemic and natural disasters, we are responsive, anticipatory and always caring.
Mortgage servicers should be using data and analytics to determine how homeowners are engaged so they can leverage the best tools and communications strategies for delivering an optimal homeowner experience.
3. Self-Service Tools
Today, homeowners want to get the answers they need whenever and however they want. People today are far more accustomed to getting their answers in a digital format, whether that’s on the web or on an app on their phone, and Cenlar is leading the way in providing homeowners the digital offerings they now prefer. In fact, Cenlar is outpacing the industry standard on digital adoption across every measurable metric, according to a Mortgage Bankers of Association (MBA) 2023 Servicing Operations Study and Forum. Our bots handle nearly 150,000 interactions every month. Of those homeowners who interact with our bots, more than 85% get the help they need without ever needing to interact with a live representative.
4. Modernizing Mortgage Servicing
Mortgage servicing is shifting toward the cutting edge of innovation, delivering new solutions to improve effectiveness, decrease risk and drive a better experience for clients and their homeowners. For Cenlar, intelligent automation is a key part of how we are transforming our business. This year, for example, Cenlar is working on more than 30 automation projects, including streamlining mortgage insurance (MI) cancellation requests, which eliminates a common pain point for homeowners who are waiting to hear back on a determination to learn whether their request to remove MI has been accepted. Now, homeowners are able to go to the homeowner web site and request to have MI removed, triggering our automation. Our system then sends the homeowner the appropriate letter within a week. Cenlar is seeing 97% improved operational efficiency, reduction in operational risk and homeowners get responses four times faster.
5. Costs and Staffing
Servicing can be expensive and becomes more expensive every day. Why not partner with someone who can help you grow your market share by expanding your geographic footprint, introducing new products and investors by letting a mortgage subservicer take on the challenges of the administrative duties?
Finding the expertise that you need is hard today, too. With the new hybrid environment deployed by so many entities, people are moving easily from one job to another. Managing a staff that understands the market, your portfolio and being one step ahead from a technology perspective is daunting and costly for any financial institution.