As the summer reaches its zenith, so does the selling season at county fairs all across the country.
The food, the rides, the midway and the stage entertainment keep people coming back with their families year after year. For some it’s exhibit halls and the gadgets that can be found within. They slice, they dice, they make dozens of julienne fries!
They save you time and energy, whiten your teeth and keep your sneakers looking as good as the day they arrived from overseas, all at a reasonable price. You’re encouraged to make an instant buying decision with an added value offer: “But wait—there’s more!”
Loan servicing systems may not make julienne fries (whatever they are) but they can bring profitability to mortgage bankers and depositories that make the switch from selling whole loans to retained servicing.
LSS software packages, specifically the ones created for these particular enterprise models, are far different from the “big iron” mainstays of the mega-servicers. They are fast becoming the mainstream lender’s answer to handling their own loans from cradle to grave.
Almost as importantly, they are great tools for making the transition easier and more economical for managers and department heads who must live within the limitations of their budgets.
For one thing, these systems are designed to be implemented without an elaborate information technology effort that can hit the bottom line like an angry blue ribbon bull. Cloud delivery can make adoption surprisingly easy, on par with the better mainstream LOS systems. Automated tasks, standardized workflows and integrated services ordering can reduce the need to go outside the LSS platform during the servicing process, which in turn keeps team members focused and productive.
Getting them up to speed—the eternal challenge of finding and training good people to perform customer facing work—is eased as well.
Think of it as the LSS version of “But wait—there’s more!” Instead of having to hire an entire staff of loan servicing specialists, lenders can largely grow their own by using the LSS software as a key training tool. Training files are easily created and sent through a predefined set of workflow steps, using scripting for calls and triggering correspondence and action items. Reporting protocols are readily produced to keep managers apprised of potential problems as they train new associates.
If the mortgage department is fortunate enough to have LOS and LSS solutions that share the same technological DNA, all the better. Because of the similarities to the LOS system look and feel, the loan department and the servicing department can quite easily cross-train and use one to supplement the other when market conditions change.
This is a very powerful consideration, given the huge expense of laying people off on one side of the house while finding, hiring and training people on the other. The skill sets are certainly not identical, but they are two sides of the same coin, as they both deal with the mortgage and with borrowers. Some megabanks locate these different facilities in various parts of the country, so it is more difficult for them to achieve the same economies that are available to mainstream lenders by cross training and retaining their good people.
The LSS also ties directly into the production and mailing process for statements, which, as your current subservicer will lament, is among the most costly aspects of the servicing business, along with the tracking required by regulators.
For smaller and midtier servicers, having this part of the process handled economically can make the difference between profits and losses in servicing. The LSS is an important resource for easing the pain in producing and mailing the still-requisite paper, particularly if it is specifically designed to share data with vendor technologies.
A great many lenders are exploring the potential benefits of servicing in general and others have taken the next step and started their due diligence process for LSS package selection. There are many facets to consider, but as most are finding out, there are more good reasons to become servicers than there are to not make the change.
The additional control gained by servicing one’s own loans is a strong reason, to be sure, particularly as loan quality continues to be very high. But the extra income earned by keeping the loans in house versus releasing the job to others is the most practical consideration. The loans made at today’s rates will tend to stay on the books for a very long time, and with the right LSS as the lender’s technology partner, they represent a lasting investment in the company’s future.
The LSS of today may not slice or dice your veggies, but it does deliver a whole lot more for today’s mortgage lender.
Kelli Himebaugh is corporate vice president, Mortgage Builder Software, Southfield, Mich.