The industry must cut costs, but to do so will require an examination of the entire loan lifecycle
Mortgage loan servicers will find it difficult, if not impossible, to lower their costs if they fail to consider a life of loan timeframe in their cost analysis, according to executives at Nationwide Title Clearing, Inc (NTC), the leading post-closing services provider for the nation’s largest financial institutions, investors and servicers. Too often, the company said, servicers are evaluating budgets on a monthly, quarterly or annual basis, which obscures some of the costs the servicer will incur over the life of the loan. A better cost analysis is required.
“Now that the servicing business is once again offering good value to financial services firms, there is a strong drive in the industry to reduce costs and maximize profits,” said Michael O’Connell, Chief Operations Officer at NTC. “If servicers fail to consider their costs related to insufficient or redundant processes over the entire loan lifecycle, they run the risk of incurring unnecessary additional costs. This happens when they pay for the same services multiple times across different loan events and when they must manage multiple vendors to complete the same work. We can help them avoid those problems.”
O’Connell said that solutions exist to help services reduce costs over the life of the loans they service, but making such an investment before fully analyzing the costs the servicer is actually incurring doesn’t make sense. A life of loan cost analysis should be performed, which will inform management and make setting a new strategy easier and less risky. Once that is complete, choosing partners that can provide a bundle of services priced over the life of the loan will reduce costs, both for the services required and vendor management.
For example, following the successful opening of its new 32,000 square foot File Services facility, NTC launched a bundle of core services to support life of loan collateral obligations. This allows servicers to effectively lower the overall cost of servicing while strengthening quality and compliance. It also has resulted in the elimination of redundant tasks and the expense of multiple parties working or touching the same collateral files with similar objectives.
NTC has successfully established a Life of Loan service platform built upon expertise, knowledge and experience that reduces redundant tasks, controls data entry points and, most importantly, is paperless after the first touch of the actual collateral. NTC bundled services typically include:
- Document Intake
- File Creation
- Secure Collateral Storage
- Final/Trailing Document Processing
- Collateral File Audits & Remediation
- Exception Curative Processing
- Exception Tracking
- Side Letter Management
- Default Collateral Management
- Assignment of Mortgage/Allonge
- Lien Release Processing
“Mortgage servicers are experts at managing budgets and mitigating risk,” said NTC CEO, John Hillman. “But the pressure to perform in a difficult environment often tasks leaders with managing to the quarter or the month. These short timeframes do not reveal life-of-loan costs that add risk and lower company profits. I’m very pleased that our team is working with more servicers to help them get a broader view of their businesses so they can be more effective at reducing costs and lowering risk.”