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MortgagePoint ยป Your Trusted Source for Mortgage Banking and Servicing News 30 April 2025 F E A T U R E S T O R Y ments during Q3 led to impairments in mortgage servicing rights (MSRs) and, thus, reduced servicing profitability. Technology to the Rescue W hile the loss of much-needed servicing revenue would undoubt- edly be a bitter pill for lenders to swallow, the cost to service non-performing loans as they work their way through the loss mitigation/foreclosure process would only add insult to injury. As Walsh and MBA's Deputy Chief Economist Joel Kan shared during the MBA Servicing Conference in Dallas, distressed servicing costs reached $2,005 per loan in the first half of 2024. After being artificially deflated during the prior two years due to the rate environ- ment and relief options offered during the pandemic, today's servicing costs for non-performing loans (NPLs) now exceed 2019's costs at $1,960 per loan. Current economic constraints compel servicers to seek operational efficiencies. The top three contributors to NPL servicing costs are systems, customer service, and loss mitigation. Given the stringent regulatory require- ments surrounding distressed servicing, investments in servicing technology and borrower-facing staff are necessary to ensure compliance and, therefore, may be harder to trim or scale back from a cost perspective. However, by integrating eSign and remote online notarization (RON) into loss mitigation procedures, servicers can swiftly deliver electroni- cally streamlined packages for signature while reducing their loss mitigation and, by extension, NPL servicing costs. Maximizing efficiency becomes par- amount in an environment where time translates to money, particularly amid rising interest rates and carrying costs. Presently, an error-free loss mitigation transaction averages a turnaround time of 21 days. However, in practice, such transactions seldom occur without errors. With paper-based processes, rectifying errors entails reprinting and reshipping documents, followed by waiting on the borrower to locate a notary, sign and return the corrected paperwork. In contrast, leveraging eSign and RON for loan modification transactions allows the borrower to review the docu- ments ahead of the signing. Because the documents can be corrected quickly, the signing can still occur as scheduled, sav- ing the servicer shipping costs and extra carry costs while retaining timelines. Another benefit to borrowers is they can complete the modification documents from anywhere at any time, providing maximum flexibility, quicker closing times, a better overall experience, and tremendous value. The significance of operational enhancements in reducing turnaround times cannot be overstated, especially given the stringent timelines servicers must adhere to in the loss mitigation process. In a scenario where every day and every dollar holds weight, compress- ing turnaround times from application to resolution yields immense benefits for both servicers and borrowers. While lenders have long integrated eSign capabilities across origination stages, extending eSign and RON technologies to loss mitigation process- es represents uncharted territory for many servicers. Fortunately, borrowers have readily embraced eSign technol- ogy, while Fannie Mae, Freddie Mac, and Ginnie Mae all permit servicers to employ eSign technology for loss mitigation transactions. As the CFPB and FHA underscore the imperative to support vulnerable borrowers, govern- ment-sponsored enterprises (GSEs) have facilitated mortgage servicers in providing swift and convenient access to loss mitigation solutions. The arguments for embracing digi- tal transformation echo those of similar transitions in various sectors: borrowers are accustomed to online transactions, eliminating the need for physical presence, error detection and correction are streamlined, and compliance is bol- stered. However, in the face of escalating delinquencies and anticipated surges in loss mitigation transactions, the primary rationale for eSign and RON adoption mirrors that of the assembly line: en- hancing process efficiency. In a scenario where every day and every dollar holds weight, compressing turnaround times from application to resolution yields immense benefits for both servicers and borrowers."