Special Report: Servicing Software Update

Last year, lenders managed to originate an estimated $2.5 trillion in home loans - some experts put the figure closer to $2.7 trillion - with only a modest increase in staffing. Just to put that in perspective, before 1998, annual lending volume had only exceeded $1 trillion once - during the 1993 refinancing boom, when the industry just surpassed the trillion-dollar mark.

The 2002 boom in lending kept originators busy, but they handled the volume in large measure because they had technology to help them do more and do it faster and cheaper than in the past. But loan officers were not the only ones busy last year.

Servicers saw record portfolio churning. That meant loan boarding and loan payoff activities were running at a pace far exceeding the normal average. And at the same time, rising delinquencies and defaults, byproducts of an anemic economy, kept credit counselors working overtime as well. In short, 2002 was a messy year for servicers. But they also managed to keep up with the workload, in large measure, because new applications are helping them manage call centers and centralize database information.

Servicers no longer rely on just a "legacy system" to manage loan administration. In most cases, they have acquired or developed "wrapware" - software that is integrated with the main system to provide functionality that a mainframe system may not support on its own. The evolution of client-server computing architecture allows integration of systems and databases that wasn't possible in the past.

It's a good thing servicers have more technology solutions at their disposal than ever before. A tight economy means that corporate parent companies are looking for ways to reduce costs, and that puts loan servicers under pressure to do more with less.

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