There’s one thing that is totally symbolic about how the mortgage business has gotten twisted around.
And that’s the fact that homebuyer counseling now is centered on the servicing end of the business, rather than the originations side.
The logical time for homebuying counseling and credit repair is BEFORE the owner closes on the home, not after!
But this type of counseling is now counted as a loss mitigation technique put in place after the borrower gets in trouble. So servicers get to chase those horses around after they’ve gotten out of the barn!
The best application of homebuyer counseling comes in helping borrowers clear up their credit in order to qualify for a home loan. Many people if not most do not know the ins and outs of credit scoring and what affects their score. (They probably have a handle on the big picture: paying your bills on time is good for your credit score, being overdue is not.)
There are also some populations that for reasons of culture or remoteness aren’t really a part of the credit and banking system. These folks also benefit for a primer on how credit works and how to behave in the best way.
For the “after” counselees, learning credit techniques can be helpful in getting folks to repair bad credit and get more current on their overdue mortgages. So all that is good.
Linking the servicing and originations side of the business through servicing might be an interesting thing to do, to prevent future overdues. In fact the servicer SPOC (single point of contact, not a pointy-eared Vulcan or a baby doctor) could also be extended to the originations side (obviously the firm would have to be active in both originations and servicing, and not all mortgage firms do both).
Being proactive on loss mit on the originations side should turn out to have a nice payoff on the servicing side, with fewer overdues and defaults.
The mortgage business has always been a little too siloed for its own good. A primo example of it was the gulf between their mortgage businesses and their home equity businesses, typically housed in the consumer finance area. Yet these two types of lending are more similar than they are different.
The successful mortgage banker of the future will be one that has an elaborate web of continuity between its originations and servicing efforts.
