DS News

67 advances, and better profitability, Sprague noted. "But you need to have that right synchronization across those metrics and that technology stack." e servicing system needs to handle data properly, Sogorka said, pointing out that the transfer of servicing rights has been problematic in the past. "We're making that better. We're spending a lot of time on the technology, to board the loan effectively to get the right information at the right time, automating that so there's not a lot of human error involved in that and get us away from spreadsheets and Excel." e industry has largely moved away from siloed origination and servicing businesses, Sogorka added. It should be easy to obtain any product that a financial service firm offers, which wasn't the case in a siloed environment. e right system and tools are essential, Jones agreed. "e penalties can be significant. Not only are you impacting the customer who you want to refi down on the road, you can have compliance risk and compliance cost." A GOLDEN AGE? "If you have the right technology and you can use data to take advantage of your interactions with your consumer, you're going to grow that relationship," Jones said. When you show the consumer that you are concerned about their assets, that you are educating them about the things that they need to do to protect their home, your value is going to continue to go up. Consumers are staying with a servicer for a longer period of time. It's a challenging business, Sogorka cautioned. e hours are long, and it only takes a couple of mistakes out of thousands to have a huge negative impact on the business. e uncertainty of cash flows or uncertainty of economic conditions doesn't cause MSR values to continue to go up; rather it's prepayment speeds and higher escrow earnings, Sprague said. "e uncertainty with the current inflation might be causing more uncertainty around the cash flows. It's not always a home run. Elevated delinquencies, or a little bit of elevated servicing costs, could cause MSRs not to be as valuable." "When you think about the consumer today, the short answer is: it should be the golden age," Jones said. Many consumers are living in homes they love, with low rates, and no desire to move, particularly if they are working from home. "e challenge you have is all the things that are impacting our customers today outside of the mortgage," Jones added—issues ranging from inflation to lingering COVID-19 challenges and other issues. "Some of the new customers that we have are going to want more tech than we have today," Jones added. "ey're going to have more interaction from the tools that we have to continue to create. So I would say there is a generation, where this will be the golden age for sure. But there are caveats because of so much of the market environment around them—as it continues to change, so will their needs." Another thing that needs to change is quicker, more transparent information to customers about servicing transfers, Jones says. Sprague added that there is currently much confusion among consumers about when a transfer actually occurs. "Outside of our industry, no one has a clue about this stuff," Sogorka said. "We're two-and- a-half years into a journey of fixing the servicing tech stack, and it takes time because there's a lot of platforms and a lot of systems and it's very siloed. e good news is that it's not complex. We don't need an Einstein to come in and try to map out how we're going to do this." e challenge, Sogorka added, is that for 50 years, all servicers had to do was send out a letter and collect money. Consumers had low expectations. But that changed quickly with new regulations and increasing consumer demand. However, much of the underlying technology that the industry relies on is 50-60 years old. As the industry updates that technology, the process will improve for consumers and servicers. Phil Britt started covering mortgages and other financial services matters for a suburban Chicago newspaper in the mid-1980s before joining Savings Institutions magazine in 1992. When the publication moved its offices to Washington, D.C., in 1993, he started his own editorial services room and continued to cover mortgages, other financial services subjects, and technology for a variety of websites and publications. "We have to make sure servicers are the trusted advisor in this space. We've got good- quality borrowers, good-quality data, and better-quality systems than in the past." —Jay Jones EVP Servicing, Mr. Cooper

• Cover