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Subservicing

Subservicers specialize in loan administration, offering a menu of services, usually on a private-label basis, to their clients. The clients maintain ownership of the servicing portfolio, but when the phone rings, it's the subservicer's job to answer it and solve the customer's problem.That means the subservier has to be able to manage multiple tasks on behalf of their clients, and always remember to answer the phone using the client's name.

Subservicing can in most cases be tailored to meet whatever particular needs a financial institution has.

The consumer in most cases is largely or wholly unaware that someone other than his or her own bank is handling loan administration and customer service. It's a neat way to let the owner of the servicing rights focus on their core competencies while outsourcing tasks that don't fit into their business strategy.

And indications are that the subservicing market is growing. Industry sources expect this trend to continue, especially among smaller servicers that may want to take advantage of technology and econ-omies of scale that they cannot achieve in-house. For many lenders, it turns out that the most profitable way to manage their mortgage servicing rights is to enlist the help of a specialist to manage the business.

Managing multiple loan accounts for different clients is a tough juggling act, but it's a business at which most subservicers excel. Subservicing, at its best, gives lenders access to leading technology and economies of scale that they might not be able to achieve on their own.

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