Servicing costs continue to increase as servicers deal with increases in compliance costs, including the recent 900-page servicing rule which goes into effect later this year.
During the session Innovation and Technology: Finding Efficiencies in Servicing Operations at the Mortgage Bankers Association’s National Mortgage Servicing Conference in Dallas, panelists discussed how to find efficiencies in servicing.
“The biggest setback at the moment, which I hope we can overturn, is the TCPA rule,” said Marion McDougal, Caliber Home Loans executive vice president and chief loan administration officer. She added that the ruled means millions of dollars in servicing costs.
But while compliance may be expensive, there is something that would cost servicers even more.
“These rules require a network of folks involved – legal, risk management, senior servicing management as well as individual line departments,” said Marina Walsh, MBA vice president of industry analysis.
“It is especially difficult when rules are open to interpretation,” Walsh told HousingWire. “The cost of compliance is big, but the cost of non-compliance is even bigger.”
So while compliance costs are expensive, they are also necessary. Because of that, the panelists discussed other areas where servicers could cut costs. Instead, panelists focus on using technology.
“Part of technology innovation includes process reengineering so that business processes are done right the first time,” Walsh said. “This helps eliminate not only direct cost through less back and forth and inefficient communications between servicing silos, such as customer service and collection groups, but it would also cut down on investor indemnifications and compensatory fees.”
And other panelists agreed, even saying that doing things right the first time could eliminate the highest cost-driver in the company.
“The largest cost-driver we have is mistakes,” said Andrew Laing, Fay Servicing chief operating officer.
Panelists also explained that studying the systems and identifying the cause of inefficiencies is also key to moving forward and creating a more efficient process.
“Root cause analysis – if you don’t do it, you absolutely should do it,” McDougal said during the session.
But technology can also help identify some of those mistakes, or help avoid them in the future. Jeremiah O’Brien, Fannie Mae vice president and co-head of operations pointed out that “whatever a human does you can get a robot to do it.”
Walsh also commented on using technology to identify and solve problems with inefficiency.
“Servicers can use technology to reduce the need for manual intervention through artificial intelligence,” she told HousingWire. “If servicing steps are mapped out through accessible technology-driven analytics, problems are more readily identified.”
As a whole, the industry is moving towards a greater use of technology, even giving more options to the consumer in order to reduce consumer dependencies on servicers.
“Many servicers are using technology to move toward self-service options for the borrower,” Walsh said. “As one servicer said, ‘Anything, anywhere, anytime, any device.’”
