DSNews delivers stories, ideas, links, companies, people, events, and videos impacting the mortgage default servicing industry.
Issue link: http://digital.dsnews.com/i/1475522
56 reacting to and implementing a plan of action to handle unexpected changes. Fluctuating interest rates, inflation, unemployment, pandemics, and new compliance rules are just some of the things that drive a constantly changing landscape for servicers. Calling the compliance landscape for servicing complex is a huge understatement. Fannie Mae, Freddie Mac, and Ginnie Mae together provide thousands of pages of guidance on servicer responsibilities and update their guidance many times a year. Meanwhile, federal, state, and municipal regulations and statutes bring additional complexity to the mortgage servicing mosaic. Any meaningful servicing failure is typically accompanied by outsized financial and reputational harm. ese repercussions can impair your profitability, customer retention, and cross-selling capabilities as well. is means your playbook simply must be comprehensive and focused on ensuring your mortgage servicing platform is compliant and agile. ere are market risks as well. Mortgage rates and home prices are currently moving higher. Meanwhile, a once-hot refi market has rapidly cooled down, and profit margins are compressing. At the same time, today's borrower is accustomed to transparency and is searching for the best deals at the lowest prices. All these elements can significantly impair a company's brand—and especially customer loyalty—without fast and effective management. THE TRUE VALUE BEHIND SERVICING roughout the financial services industry, customer relationships and retention are appreciating in value. However, the most captive audience are borrowers with a mortgage. Unlike credit cards and auto loans, mortgages tie a customer to a particular financial institution for four to five years in some cases, if not longer. With a captive audience comes the capability to cross-sell other products and services, including credit cards, auto loans, HELOCs, future mortgages, and really anything your company offers. Deepening your relationship with customers works well on many levels … it creates better brand loyalty with customers, lowers marketing costs, and, of course, increases revenue. Mortgage servicers are uniquely suited to support cross-selling, too. ey have more customer touchpoints than virtually any other financial service or product and generally have very long relationships with customers. When attributing the value of cross- selling, servicers become a complex revenue generator and an extremely valuable operating platform. Additionally, the cost to originate a new mortgage with an existing customer pales in comparison to the cost of sourcing a new mortgage customer. is interesting fact allows us to look at the calculus of servicing profitability in a whole new light. We now need to consider the benefits of lowered marketing costs as a servicer attribution, which is where the Greenfield Playbook becomes so valuable. OPENING THE PLAYBOOK It requires a detailed strategy and a high level of expertise to create a lean servicing organization while protecting assets, increasing value, and reducing compliance risks. It is equally important to develop a friendly omnichannel experience for your mortgage customers that allows them to interact with you at their convenience and via their preferred methods. is is why the Greenfield Playbook works so well. A Greenfield Playbook is a guideline to build a mortgage servicer that is most cost-effective through digital technology. Its counterpart, the Brownfield Playbook, takes an opposite approach. Under the Brownfield Playbook, servicers outline problem spaces to develop and deploy new software systems with existing legacy software applications or systems. Building a mortgage servicing operation from the ground up using proprietary technology and software is an extremely complex endeavor. Truthfully, the typical servicing technology platform is an amalgamation of third-party systems and truly proprietary software. Most often, it is a company's capability to recognize what and where to invest in proprietary development versus investing in highly configurable off-the- shelf systems that makes all the difference. Before using the Greenfield Playbook, a company should have a clear strategic vision Feature By: Stephen Staid Mortgage servicers are uniquely suited to support cross-selling, too. They have more customer touchpoints than virtually any other financial service or product and generally have very long relationships with customers.