Servicers face a myriad of obstacles, both familiar and new. They face portfolio churning generated by rate-induced refinancing. At the same time, they face an unprecedented default management burden, much of it driven by underwriting innovation that has left many borrowers with loans they cannot afford to repay amid declining home values. And every day, someone is pitching a new technology designed to make navigating through this environment a little easier.
You can forgive servicing executives for feeling like they have to relearn the rules of the road, because essentially they do each time the industry evolves. Fortunately, lenders don't have to do this on their own. They can benefit from companies that provide outsourcing, capitalizing on the expertise of a third party just as drivers on the road today benefit from GPS systems and a host of other new technologies to make driving easier. Some of what you learned in driving school 20 years ago may be outdated. Fortunately, the technology and expertise provided by outsource firms can help you stay on track.
Lenders benefit from outsourcing in two ways. First, they can offload difficult or compliance-heavy tasks to an expert who has the resources and systems needed to stay abreast of rules and regulations that may differ from state to state, from county to county. Secondly, an outsource firm can serve as a valuable educational resource for mortgage servicers, many of whom handle tasks in-house up to a point, and then use outsourcing to handle overflow work. In a consultative role, the service provider can help a lender learn the best way to manage a task. Many outsource firms provide "cafeteria style" services today, making it easier for companies to select pieces of an operation to outsource while retaining some functions in house.
As servicing shops become more difficult to operate, lenders can work side by side with outsourcers to make getting from here to there a little less difficult.