Servicers Seek Greater Automation to Overhaul Onboarding

Register now

Amid growing scrutiny of how the hand-off of mortgages is managed after loan closings and bulk sales, servicers are working to automate the entire process to create a consistent and accurate onboarding experience for borrowers.

Typically, servicers have only automated parts of their loan onboarding processes. But challenges related to the integrity of consumer data and loss mitigation activities during and after servicing transfers have resulted in a number of bulk MSR sales between large industry players being canceled.

The reality is that onboarding consists of two processes: the onboarding of data and the onboarding of documents and images. And the way that data and documents are generated during the origination process affects how that information is conveyed to servicers. It's usually not a perfect match, so servicers have to convert what they get from lenders to something they can use, said Brad Johnson, the chief operating officer of RoundPoint Mortgage Servicing Corp., a subservicer based in Charlotte, N.C.

"Each of those processes need to have a significant amount of pre-transfer mapping and testing and reconciliation just to make sure that you are getting everything you need; that it's coming over in a way that your team can digest it and use it and if not, you're identifying that quickly and providing that feedback to the transferor," he said.

RoundPoint is working with its lenders to improve their data delivery. "If you can't tell them what they're doing wrong, they'll never get better. But since we have the ability to tell them exactly what to do…we've helped them improve how they capture and transmit data and documents to us," Johnson said.

In a recent National Mortgage News survey, the three pain points most often identified by servicing executives as highly challenging include moving data from origination to servicing systems (21%); archiving and auditing for compliance and customer contact (20%); and onboarding new loans or acquired portfolios (17%). This suggests that problems that arise during MSR transfers are rooted in difficulties during the initial onboarding of a loan after origination.

Left unchecked, the challenges associated with servicing transfers will intensify, as 36% of respondents said they expect their firms' MSR transfer activity will "somewhat" or "significantly" increase during the next one to three years, while only 12% expect this activity to slow during the same time period.

The widely used system of record technology LoanSphere MSP has long had a complementary tool called Electronic Loan Interface to help servicers onboard loans to the servicing platform. But even with the ELI technology, servicers still have to do manual processes like creating spreadsheets to map the data uploaded to MSP, said Johnson.

Because of this, RoundPoint has developed a proprietary method for automating loan onboarding by customizing software that's not typically used in mortgage servicing to handle the data mapping process.

Black Knight Financial Services, the Jacksonville, Fla. technology firm behind MSP, recently launched a new tool to improve upon ELI and create a better data mapping process. Called LoanSphere Loan Boarding, the technology serves as "a translator" by taking "data from an origination system and turning it into transactions that will board the loan into our servicing application," explained George FitzGerald, executive vice president, solutions management.

The new tool was designed to help reduce the amount of missing data during transfers, particularly when loans are coming into MSP from other vendors' loan origination systems. At the same time, Black Knight is working on tightening the integration between its pair of LOS technologies and its servicing products, FitzGerald said.

For example, MSP performs checks to ensure all the data needed from the LOS is present prior to transfer. If it's not, it rejects the loan and notifies users of the missing information.

While it's ultimately a servicer's responsibility to ensure everything goes right during onboarding, it's often loan officers and originators that suffer from the negative social media reviews and consumer complaints to regulators that can result from a botched transfer — something consumers haven't been shy about.

For most borrowers, until they make that first payment, they still consider the loan in the origination stage. And even if the loan is handed off to a subservicer, in most cases it is still the originator's name on the statements that they receive and the check that they write.

Total Mortgage Services, a lender in Milford, Conn., relies on multiple subservicers, said its president, John Walsh. It realizes that its reputation is on the line if there is a bad experience during onboarding that can hurt its ability to keep the customer for a refinance or new purchase loan.

"We think it's very important that we carry through the great mortgage process experience and carry that all the way through to servicing. From the customer experience aspect, a lot of companies forget about that side of things," he said.

To stay ahead of potential issues, Total Mortgage Services works to maintain an open dialog with its subservicers. "It's worth the effort and the expense…because it's still our loan and it's still our customer. And if we do a great job, but then all of a sudden the servicing gets messed up…and they get frustrated, it's a reflection on us," Walsh said.

Customer retention is the goal for many originators, Johnson said, "and they know that a lot of that is dependent on the experience in the first 90 days [after closing], most of which is the onboarding process or the immediate results of it."

The origination experience is relatively short compared to the time the consumer spends dealing with the servicer over the life of the loan, added FitzGerald.

"While the borrower will certainly remember the pain they had at origination, if there was any, the desire to refinance through a company or use that company again is largely going to be driven based on the experience in servicing."

For reprint and licensing requests for this article, click here.