Mortgage servicing is an essential aspect of the mortgage industry. It entails loan payment collection and management, customer service, and loss mitigation in the mortgage. Mortgage servicing efficiency is critical for lenders and borrowers since it affects both the cost and quality of service delivered.
However, mortgage servicing efficiency has been a significant issue in the industry, particularly in 2023. With increasing costs and regulations, mortgage servicers need help to maintain efficiency. Loss mitigation, compliance, and loan-boarding support services are some of the critical factors that add to the complexity of the process.
In this blog, we will explore the key considerations and strategies that can help boost mortgage servicing efficiency.
Why is Mortgage Servicing Efficiency an Industry Pain Point? Key Considerations in 2023
Mortgage servicing efficiency is an industry pain point due to several factors that impact the cost of servicing loans and the quality of service provided to borrowers. Some of these factors are:
Increasing costs and reducing the number of loans serviced per employee
According to a survey by the Mortgage Bankers Association (MBA), the cost to service a loan has increased from $196 per loan in 2008 to $2,128 per loan in 2020. This increase in cost is due to factors such as rising labor costs, technology costs, and regulatory compliance costs. Additionally, the number of loans serviced per employee has decreased, which further adds to the cost of servicing loans.
Challenges related to the aging workforce, new regulations, and geopolitical factors
The mortgage servicing industry is facing a significant challenge related to an aging workforce. According to the MBA, the average age of mortgage servicing employees is 46, and approximately 30% of the workforce is over 55. This aging workforce, combined with new regulations and geopolitical factors, has increased the pressure on servicers to stay compliant.
Servicers may not be measuring the right metrics to determine efficiency
The MBA survey also found that servicers may need to measure the right metrics to determine efficiency. The survey found that servicers are primarily measuring call center metrics rather than the productivity of their employees. This can lead to inefficient operations and higher costs.
Inefficiencies and bloat might result from over hiring during bullish periods
When market conditions change, over hiring during bullish periods can lead to inefficiencies and bloat: When the mortgage market is strong, mortgage servicers tend to overhire to meet the increased demand. When market conditions change, however, these extra staff might become a liability leading to inefficiencies and higher costs.
Strategies for Boosting Servicing Efficiency
There are several strategies that mortgage servicers can implement to boost their servicing efficiency. Some of these strategies are:
Servicers should implement smart staffing practices, such as cross-training employees to perform multiple functions, flexible work schedules, and outsourcing non-core functions to third-party vendors.
Start by breaking down silos
Servicers should break down silos within their organization and promote collaboration across different departments. This can help improve communication and reduce redundancy in operations.
Pay special attention to delinquency servicing
Servicers should pay special attention to delinquency servicing, as this can significantly impact servicing costs. Servicers can reduce delinquency rates and improve overall servicing efficiency by implementing proactive loss mitigation strategies.
Give employees the tools for productivity
Servicers should provide them with the necessary tools for productivity, such as technology platforms that streamline workflows and automate repetitive tasks. This can reduce the time required to service loans and improve overall efficiency.
How PrivoCorp can help
PrivoCorp is an end-to-end mortgage solutions provider that can help servicers improve their servicing efficiency. PrivoCorp offers various services, including compliance support, loan boarding support, and loss mitigation solutions.
We are committed to being your success partner, providing everything you need to take your business to the next level. Our experts have 10+ years of experience in the mortgage industry, and we deliver solutions in mortgage servicing that maximize efficiency while reducing your in-house costs.
By partnering with PrivoCorp, mortgage servicers can leverage its expertise and technology platforms to streamline their operations and reduce costs. You can focus on your core business by outsourcing your servicing function’s most expensive and effort-intensive parts.