Are your loan profit margins declining every year? If the answer is “yes,” you are not alone. This is a common challenge in the servicing industry, as outlined by the Mortgage Bankers Association’s Vice-chairman J. David Motley in his opening remarks at this year’s MBA National Mortgage Servicing Conference:
“But we've never experienced the kind of prescriptive, regulatory requirements that have been imposed on us over the last two to three years. In 2012, our delinquency rate was just over four percent. We never got above six percent, even in 2009. Our cost per loan serviced went from $130, a new high at the time, to $195 this year. Not because of increased defaults. In fact, our default rate has dropped to 3% overall. The increase in cost was primarily due to increased expense associated with new regulation and the people, systems and process changes necessary to implement those regulations.”
Motley later in his speech said: “In the Consumer Financial Protection Bureau, we have a new regulator with unprecedented oversight authority. The Agency has instituted thousands of pages of regulations that affect the way we do business every day. Implementing the servicing rule's requirements necessitated system changes and staff training which had an incredible impact on our business operations, and bottom line…duplicative and overly burdensome state regulations are presenting new layers of complexity for servicers and consumers.”
As a result of the aforementioned regulatory changes, mortgage servicers have had to hire additional compliance staff and hone in on third party vendor performance. Of course, these actions are going to negatively affect the bottom line. While compliance is necessary for the protection of each homeowner’s rights, servicers are understandably seeking ways to turn a profit while meeting compliance.
With the overarching theme of compliance at the MBA Mortgage Servicing conference, the Lanvera team heard the same six resounding questions from servicers:
1. How can I maintain compliance on all statements, letters, notices, and other documents?
2. What are some best practices in avoiding lawsuits?
3. How can I net more profit per loan?
4. Are there any other ways I can increase eAdoption and decrease print and mail costs?
5. How do I reduce my call center volume?
6. What are some ways I can improve the borrower experience without cutting into my margins?
Now consider this: What if you had transactional document solutions that could save you up to $5-7 per loan annually, net an additional $3-$11 per loan annually, reduce call center volume, increase eAdoption, improve the borrower experience, and maintain compliance on all statements, letters, notices, and other documents? Sound too good to be true? It’s not! Click here to learn more.
While regulatory pressures continue to escalate, mortgage servicers have to remain compliant while keeping margins at a reasonable level.