In the highly commoditized world of loan servicing, profit margins are tight, and servicers must operate in the leanest and most efficient manner possible. That’s why digital leaders are leveraging the same data and analytics they use to originate mortgages to service the customer over the life of the loan.
The right data can provide mortgage servicers greater insight into their portfolios, helping them to mitigate risk, improve portfolio retention and build deeper relationships with their customers. All of this allows lenders to maximize servicing returns.
Real-time, Reliable Consumer Credit Data
Access to an applicant’s credit history is critical in determining the pre-payment risk of a loan, and in today’s digital environment, time really is money. Up-to-the-minute credit reports can provide valuable insight into a borrower’s financial situation. But what about after the loan is originated?
A mortgage can be a 30-year commitment, and a lot can happen over those 30 years. The loss of a job or a spouse, or any number of unforeseen events, can put a borrower at risk of defaulting on their loan. Running your portfolio through regular credit screening can help head off many problems before they arise.
For example, alerts can be triggered if a customer’s credit score drops suddenly, which could be a signal of financial difficulties. Servicers can reach out to that customer with help to guard against default through loan modification, collection, monitoring or working with the consumer to design a mitigation strategy.
On the flip side, improvements in credit score could provide an opportunity for the servicer to proactively reach out to that customer with an offer for a better loan with a lower interest rate. Rising credit scores could also indicate potential prospects for other product offerings, such as a checking account or a credit card, triggering leads for your sales team.
Income and Employment Verification
Even if a borrower’s credit score is holding steady, any changes in income or employment could affect the pre-payment speed of a borrower. Constantly scanning your portfolio using real-time income and employment data can provide valuable insight.
Supplement Additional Data for Greater Insight
The real power of data-driven analytics is unleashed when traditional datasets are combined with alternative sources. For example, more than
Alternative datasets can help you see beyond the traditional credit score. Merging existing customer data with other information sources, such as credit card balances or banking history, can identify credit risks before they become a problem or help you discover new opportunities. Advanced analytics can help you expand customer relationships and grow your business.
Mitigating Portfolio Runoff
Scanning the Multiple Listing Service (MLS) database against your portfolio can alert your sales team when a property goes on the market. They can proactively work with the homeowner to help them secure a mortgage for a replacement property.
The same data could help your customers monitor the health of the investment they’ve made. For example, if they are contemplating a move, this information can help them consider the best time to list the property.
Leveraging this insight can help transform your business from being simply a payment processor to becoming a value-added resource to your customers.
Automated Valuation Models (AVMs) Offer Additional Insight
Effective portfolio management requires more than keeping track of your borrowers’ ability to repay their loans. It’s also critical to monitor the value of the properties you hold. AVMs provide real-time, accurate automated property valuations for use throughout the entire mortgage and home equity loan lifecycle.
Proactively monitoring existing loan portfolios and customer acquisition lists can help mitigate risk and identify lending opportunities. At the same time, tracking house value trends across a MSA, the region or across the country can help identify new markets for your business.
AVMs can also help keep you compliant. Constantly monitoring property valuations can help meet federal Allowance for Loan and Lease Losses (ALLL) regulatory guidelines. At the same time, transforming your paper-based processes into a data-centric, digital ecosystem can help streamline workflows and increase efficiencies across every department.
The bottom line? Faster decision-making. The right data, combined with the right analytics, deliver the insight and the confidence lenders need to anticipate and capitalize on fast-moving market opportunities.
