Lenders of all sizes are looking into becoming servicers, bringing us full circle back to the days when virtually every lender serviced their own loans.
There are many benefits to this strategy, including greater internal control of compliance and regulatory factors that can affect originators down the road, as well as income opportunities from well-made loans that are serviced properly.
But there are a number of things to be examined when considering becoming a servicer, particularly for companies whose business success is dependent on high customer service levels. Chief among these is choosing the right technology platform to make it happen.
Lenders know all about LOS software but far fewer are familiar with LSS software, the loan servicing system technology that makes cost-effective servicing possible. Here are some factors to consider when looking at LSS alternatives:
Training—New servicers have to train new teams. Whether the servicing staff is newly hired or transferred from elsewhere within the organization, getting them up to speed quickly and effectively is critical to success. The LSS package should include granular workflow that can serve as a powerful training aid to enable the transition into the very different world of servicing loans. At the same time, the interface and working screen environment should be intuitive and unintimidating.
Automation and Workflow—Just like the origination team, the servicing team lives and breathes their software, so the experience should be user-centric. The days of having to do everything the way the engineers imagined it should be are long gone; modern system design is all about creating efficiencies and automating as many tasks as possible. The all-important automation of routine and repetitive functions should be built into the workflow, enabling each associate to accomplish far more than would have been possible just a few years before. The workflows should also be rules-based and readily customizable. The platform should be ready to use right “out of the box” with presets that reflect industry best practices, but easily adapted to fit the lender’s way of doing business.
Here are some specific automated functions to look for:
• Printing and mailing services for statements.
• Opt-in text messaging alerts (a preference for many these days).
• Capacity for e-statements to replace or supplement paper ones.
• Capability for consumers to upload documents to the servicer.
• Ability to handle automatic payments and direct debits.
Interface and Integrations—The interface should be clean, intuitively understood, and not require constant references to manuals or help screens. Likewise, the interface should include integrations with key service providers that allow orders to be placed, tracked, received and utilized without leaving the LSS environment. As with originations, the “devil is in the details,” and manual data re-entry is one of the devilish detail areas where errors are often made. By having desired service providers fully integrated into the platform, with essential order information auto-populated, much time and energy can be saved.
Support and Service—As consumers we are getting a bit spoiled with our electronic devices. They are a lot easier to use and cause fewer calls to technical support than they used to, but it is not necessarily the same in the servicing software world. Servicing lenders, whether new or experienced, want technology that is as trouble-free as possible and backed up by solid, accessible support. No provider will tell you their tech support is lacking, so the best thing to do is speak with current users to get the straight story. The ones with the least to hide will be the most eager to share testimonials and contact information for users willing to discuss their actual experiences.
Ease of Implementation—This seems like a given, but the reality is that some systems take more effort to implement than others. Finalizing the implementation and making the technology useful varies depending on business model, existing technology in place, and the goals of the client. During the due diligence phase of the servicing technology quest, specifics on the implementation timeline will be revealed and every aspect should be examined. As with the service and support consideration, implementation experiences are a good topic to discuss with actual users of each candidate platform.
Building a servicing department is not an easy job, but having the right tools can make it a great deal easier.
High performance servicing technology is available at remarkably modest cost and can provide great functional sophistication while requiring little in the way of IT expertise to implement. There are also systems available that share much of their look, feel and architecture with sister loan origination systems, bringing an “end-to-end-to-end” experience for lenders.
Support for mobile devices, extensive personalization and other considerations are apt topics for discussion with providers, too, but few are more important than the comments of current users.
Kelli Himebaugh is corporate vice president, Mortgage Builder Software, Southfield, Mich.