HELOC Servicing Added to Cenlar's Menu of Options
The days of plain vanilla may be numbered in the subservicing business, according to senior executives at Cenlar FSB, the nation's second-largest subservicer.
Senior vice president and business development director Dave Miller says that subservicing is an increasingly customized business, with companies like Cenlar working closely with clients to tailor services to improve efficiency and provide high-quality service for home loan borrowers.
Cenlar, which has resisted the temptation to expand beyond servicing of residential mortgage loans, has been expanding its menu of services within the residential lending field recently.
Cenlar is conducting a "very controlled rollout" of its new home-equity line of credit servicing option, Mr. Miller said. And the company is working with clients on "service plus" options that involve outsourcing some underwriting and origination functions to Cenlar. Mr. Miller said many lenders are now taking time to review practices and relationships and think about alternatives that might make them more efficient.
"Since the refinancing craze has gone away, people have turned to other things and are focusing their attention on profitability and efficiency," he said. "Subservicing is absolutely one of the things that they should look at."
Essentially, lenders are asking themselves if they need expertise in all areas of lending, or should they focus on specific areas and outsource other functions. Because of this trend, subservicing has become more widely accepted in the marketplace, Mr. Miller said. And he believes many can benefit by choosing to focus their energy on income generating activity while outsourcing loan administration functions.
But client lenders want more than just efficiency gains, he said. Clients are also becoming more demanding about the level of service that is offered to the end customer. That can help a lender cross-sell additional products and services to the consumer and strengthen their relationship with the customer.
Many lenders are uncomfortable turning over the management of a customer relationship to another lender. Often, they want to be in a position to touch the customer even as they outsource loan servicing. As a result, they might outsource some pieces of the puzzle while maintaining control of others, Mr. Miller said.
"Whatever you put in place, you need to create a cohesive process so that the customer continues to get that high level of service regardless of which end it comes from," Mr. Miller said.
As a result, Cenlar officials spend a lot of time sitting down with new clients to get an understanding of their business.
"Our business is very customized, from the services or the activities that we offer to the end customer all the way through the way that we partner with our client."
Earlier this year, Cenlar enhanced its Internet customer service offering to provide greater customization to small clients that cannot afford the extent of customization that a larger lender might choose.
And Mr. Miller said Cenlar believes now is the perfect time to be entering the HELOC servicing business, citing industry trends that suggest HELOC lending volume is growing on strong consumer demand. Copyright 2005 Thomson Media Inc. All Rights Reserved. http://www.thomsonmedia.com http://www.mortgageservicingnews.com