Special Report: Defaults & Loss Mitigation
The mortgage servicing industry is facing some challenges. Never mind the impairment and amortization charges that have been piling up on balance sheets as homeowners refinance their loans at a record pace. With portfolio churning at a record pace, lenders find that their capacity to board loans on a servicing system and manage lien releases is being stretched. Customer service and call centers are also being challenged by the turnover. On the bright side, with a weak economy, staff turnover rates are down from a few years ago.
If you are in the mortgage industry today, it is imperative that you find ways to increase efficiency by maintaining or, ideally, increasing the number of loans you service per full-time employee. Recently, data from the Mortgage Bankers Association of America suggests that industrywide, loans serviced per FTE declined last year - not surprising given the challenges of managing portfolio churning in a refinancing boom. And direct expenses per loan rose to $79 in 2001 from $71 the year before. But to remain competitive, lenders need to employ tools and strategies that over the long run will increase productivity.
There's no shortage of tools on the market designed to help mortgage servicers achieve that goal. From software to hardware, telecommunications to the Internet, lenders are finding ways to streamline back-office operations and make customer service more user-friendly.
Lenders may be reporting record profits today - fueled by loan origination activity.
But once the refinancing boom slows down, mortgage companies will be looking to their servicing portfolios to pick up the burden and keep profits coming in the door.
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