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MortgagePoint ยป Your Trusted Source for Mortgage Banking and Servicing News 42 November 2023 F E A T U R E S T O R Y this category are loans that have a higher propensity for default, such as FHA loans. Another factor for lenders to keep in mind when deciding whether to service in-house or outsource is the scalability of their operations in response to market fluctuations. Changes in the origination market can greatly impact loan counts, and the ability to scale up or down needs to be a driving factor. How nimble are your in-house operations if you have a sudden influx of loans? How will your customer service experience be affected by changes in loan count? These are questions lenders need to keep in the back of their minds. Therefore, while loan count is a critical factor, it's not the sole determinant in the decision to keep servicing in-house or to outsource. 2. Technology Investments T echnology is crucial when deciding whether a mortgage loan servicer should continue in-house servicing or use a subservicer. Sophisticated technology is required to manage the complex pro- cesses of mortgage servicing efficiently and accurately, including loan adminis- tration, payment processing, regulatory compliance, customer service, and risk management. However, developing and maintaining such technology in-house can be costly and requires significant technical expertise. Outsourcing to a subservicer with state-of-the-art technology platforms can be a more cost-effective and efficient solution for mortgage servicers without these resources. On the other hand, larger servicers with the necessary resources may prefer to retain control over their technology, allowing them to customize and innovate according to their specific business needs and customer preferences. Therefore, the decision largely depends on the servicer's technical capabilities, finan- cial resources, and strategic priorities. Cost comparisons between investing in internal technology or using an estab- lished subservicer can be challenging, as technology is evolving at lightning speed, and other factors need to be considered, such as the regulatory compliance com- ponents required and how the technol- ogy can affect the customer experience. Smaller lenders may not have the capital or infrastructure to manage their techno- logical needs in-house and would benefit from the flat cost that comes with using a subservicer. The added bonus is that the subservicer has one line of business: to create the best possible platform for their clients and thus tend to invest significant capital to ensure their technology opti- mizes the experience. 3. Management Resources S taffing and management resources are crucial determinants in the decision for a mortgage loan servicer to continue in-house servicing or to use a subservicer. Mortgage servicing involves intricate operations that demand skilled staff in areas like loan administration, customer "If a servicer lacks sufficient personnel or their management team doesn't have the expertise to handle these functions effectively, the quality of service could suffer, potentially leading to reputational risk, regulatory penalties, and dissatisfied customers. "