2016 FINANCIAL AND MORTGAGE SERVICING PREDICTIONS

Photo Credit: http://www.thedailychronic.net/2015/51574/a-look-back-at-2015-and-ahead-to-2016/

As 2015 comes to an end and we gear up for a new year, we’ve pulled together some financial and mortgage servicing trends to anticipate in 2016:

1. Increased Importance of Risk and Compliance Roles
With CFPB regulatory changes perpetually rolling down the pipeline, financial institutions and mortgage servicers are working double time to meet compliance standards. As a result, they are spending millions of dollars on compliance resources alone.
 
A recent article in eFinancial Careers states that “with CCAR deadlines in March, [financial institutions] are going full throttle with hiring permanent employees, as well as seasonal consultants” in risk and compliance roles. Because of this increase in hiring in financial institutions, a greater emphasis on regulation standards, as well as cost analysis, will need to be in place. The “all hands on deck” mentality in risk and compliance will continue to be a challenge for institutions as they focus on core competencies.

2. Loan Interest Rate Hikes
Mortgage servicers anticipate a little reprieve in 2016 with rising interest rates to help balance portfolios. That being said, the challenge will still lie in managing existing non-performing loans.

To read more on National Mortgage News, click here.

3. Alternative credit-scoring models available to Fannie Mae and Freddie Mac
FICO will no longer be the sole resource for credit scoring in the mortgage space thanks to a recent bill introduced by U/S/ Rep. Ed Royce and U.S. Rep. Terri Sewell.
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“Together, Fannie Mae and Freddie Mac occupy 90 percent of the secondary mortgage market. The use of one credit scoring model has nearly created a monopoly in this field. Reps. Royce and Sewell suggest that additional credit scoring models would "foster competition and innovation in the credit scoring industry." -DS News.

4. Increased Federal Reserve’s Fed Funds Rate
According to the August NCUA Report, The Federal Reserve’s Fed Funds rate is forecasted to reach 2.5% by the end of 2016. The economic improvement means consumers will be more likely to invest in bigger ticket purchases such as car loans and mortgages, which make up approximately 85% of a credit union’s aggregate loan portfolio. For more information on how the increased Federal Reserve’s fed funds rate can help credit unions, visit CUNA.org. 
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With the presidential election around the corner, there are likely to be many additional changes and trends to the financial and mortgage servicing landscape in 2016. What are your predictions for 2016 and how do you think they will affect your organization?