DS News - Digital Archives

» This trend will be a positive one for consumers. Customer service throughout the industry, and especially servicing, has been lacking for more than 20 years. Over time, it has become unusual for originators to actually service the loans they originate—instead mortgages have become commodities. The Consumer's Preference | The primary focus of legislation today is consumer protection. There is even a proposal in Congress that may require mortgagor consent before a loan is sold. This type of regulation would represent a huge win for consumers, who currently have no say over which company services their loan. From a consumer perspective, why would someone who chose to obtain a loan from a local originator wish to have it transferred to a non-local, unfamiliar servicer? Most originators have already developed trusted relationships with their borrowers, and that makes them the organization consumers feel they can depend on throughout the life of their loan. The benefits of local servicing are vast: the practice helps mortgage companies increase profitability and customer satisfaction while also contributing to dispelling the sub-standard reputations garnered by some servicers in recent years and restoring customer faith in the industry. Now's the Time to Retain MSRs | Retaining mortgage servicing rights (MSR) is a wise decision for mortgage companies, especially now. The value of MSRs is currently at an alltime low, so there is no better time for originators of any size to either establish or grow their servicing departments. It does not have to be all or nothing; based on the MSR market right now, originators should retain as much as they can afford and position themselves for growth in this area. This area of an organization's business will prove crucial to longstanding success. Whether we go through another recession and originations decline or not, servicing income will provide mortgage companies essential revenue. This revenue will be what enables a company to make it through hard times and come out on the other side. Localization Has Its Benefits | Smaller mortgage companies will increasingly realize the advantages of servicing their own loans, and access to affordable servicing technology will allow them to do so. In the past, customerfocused institutions typically lacked the resources or manpower to make both originating and servicing possible, but that is no longer the case. In addition to managing all tasks associated with servicing loans, today's technology providers are charged with designing systems that account for every regulatory change. The choice to offer superior customer service by retaining servicing rights and staying on track with compliance will become a no-brainer for many mortgage companies. The return to local servicing will also indicate the return to more longstanding relationships between mortgage companies and borrowers that creates ongoing cross-selling opportunities for the lender as well as valuable referrals. Not only does this bode well for an originator's business, but a higher level of customer satisfaction throughout the mortgage industry is also certainly a welcomed and desirable change. Jim McDonald founded McDonald Computer Corporation in 1976 to specialize exclusively in data processing services for mortgage bankers. The firm has kept pace with the dynamic nature of the mortgage industry, and today is the oldest privately owned mortgage servicing software company in the United States. S E R V I C I N G BOB REPASS MORTGAGE SERVICING CONSULTANT/SVP OF BUSINESS DEVELOPMENT The Five Star Institute While 2012 was in and of itself a year of change and adaptation, with servicers focusing their efforts heavily on fully integrating the single point of contact (SPOC) model into their day-to-day operations, the latter part of the year appeared to take on more of a "wait and see" approach. Well the wait is over. The political uncertainty has been removed and in 2013 the mortgage servicing industry will face an ever-increasing regulatory environment that will present many challenges, as well as opportunities. Going forward it will be imperative for all servicers to stay in front of the new policies and standards that they will encounter on an almost daily basis. The issue of compliance and how to handle it will become even more of a challenge as the requirements brought on by the DoddFrank Act and the Consumer Protection Act face implementation deadlines in 2013. Servicers must understand the importance of having a well-trained and prepared staff to meet these demands head on. If continuous learning and preparation ever stop, so will their productivity. As John Maxwell stated, "If you are preparing today, chances are, you will not be repairing tomorrow." I anticipate several things to occur as a result of the compliance factor. First, look for continued VISIT US ONLINE @ DSNEWS.COM consolidation among the large and medium-size servicers across the nation due to the growing inherent risk of servicing a loan along with the escalating cost of servicing that loan. Secondly, the outsourcing sector of the servicing industry will be an area of continued growth. Firms providing specialized services in areas such as asset management, customer outreach, audit compliance, and REO services should thrive in this environment. Servicers must find ways to increase efficiency through improved technology and outsourcing as they realize the answer is not just continuous growth of headcount. And finally, assuming Congress extends the Mortgage Forgiveness Debt Relief Act of 2007, we should expect to see continued emphasis on providing principal debt forgiveness to borrowers whether through short sales, loan modifications, or refinances. The recent statistics reflecting over $26 billion in debt forgiveness through the first nine months of 2012 is an encouraging sign that will prompt more pressure to continue this trend. Overall, expect 2013 to be the beginning, as well as the continuation, of many of the issues the mortgage servicing industry has been addressing and anticipating. Bob Repass has spent 30 years in the banking and financial services industry, focused primarily on loan servicing and sales and operation management. He's held senior management positions with the Bayview family of companies, Associates Financial Services, and currently, with the Five Star Institute. C O M P L I A N C E ART TYSZKA DIRECTOR OF DEFAULT SERVICING Wolters Kluwer Financial Services The Consumer Financial Protection Bureau (CFPB) is expected to issue its final rules governing the nation's mortgage servicers in January 2013. Does your servicing organization understand them? Is it ready to comply with them? Will it be able to prove compliance to the CFPB come exam time? You might be thinking to yourself: Slow down! We don't even know what the final regulations will look like yet. We have time before that first exam. But the CFPB already provided a clear indication of what the final regulations will most likely be when the agency issued its proposed requirements in August 2012. The agency issued its examination guidelines two months 51

• Cover