Aritas Mortgage Solutions

The 5 Biggest Misunderstandings About Mortgage Process Outsourcing


Aritas Mortgage Solutions

May 17, 2023
Mortgage Process Outsourcing Myths


Mortgage Process Outsourcing Myths

Imagine you’re planning a vacation to a foreign destination. You’ll need to make travel arrangements; book flight tickets, accommodation and shuttle services. In addition, you may also have to plan some sightseeing activities. Now, there are two ways you could go about making these arrangements—do it yourself or hire a travel agent to make arrangements for you. If you do it yourself, you’ll need to prepare to invest time and effort in making the arrangements yourself. On the other hand, you may worry the travel agent will take away the autonomy of controlling costs and travelling preferences from you.

As a lender, you may face the dilemma of choosing whether or not to outsource your mortgage loan process. Your reservations could either be influenced by the negative stories you’ve heard about a handful of service providers or you are perhaps simply unaware of the many benefits of outsourced loan processing.

Whatever the case may be, we are determined to address it. This blog lays out and clarifies the five biggest myths that surround mortgage process outsourcing.

Myths About Mortgage Process Outsourcing

Here are the five common misconceptions you may have as a mortgage lender.

Myth 1: We offer the same in-house, per-loan service cost as an outsourcing provider

Truth: Outsourcing providers offer comprehensive loan handling services at affordable per-loan prices. They also control fixed costs such as staff salaries, benefits, costs of hiring, training and retention, office supplies and infrastructure. Their costs exclude compensatory expenses resulting from service errors. According to industry analysis, financial businesses with in-house mortgage process can incur an annual cost of $294 per loan. However, the average annual per-loan cost of leading outsourcing providers is $117.

Myth 2: We will lose portfolio control if we outsource loan processing

Truth: Any responsible outsourcing partner must ensure your participation throughout the process. They tackle complex and time-consuming functions simultaneously giving you sight of your portfolio. I. Set up a due diligence screening and communicate with your provider about the functions you would like to outsource. Likewise, inform them about the functions you would like to handle independently. When you look for an outsourcing company, make sure they offer compliance management tools and 24×7 access to applicant data so that you can fully monitor the lending process. Also determine how the provider positions your brand with applicants; ask if they offer private label subservicing options. As the portfolio owner, make sure you have final review and approval of all loan modification requests, contingency and loss mitigation.

Myth 3: We don’t want to risk cross-selling and competition from outsourcing partners

Truth: Be upfront with your mortgage servicing partner; understand their ethics and opinions on cross-selling and ask about the commitments they can make. Follow it up by asking for some customer references to validate the provider’s commitments. A responsible outsourcing partner will understand your curiosity and uphold a stringent policy against cross-selling any services without your consent or knowledge.

Myth 4: We understand our customers better than anyone else could

Truth: It’s important to have good business relations with clients to understand their expectations and deliver services accordingly. The right outsourcing partners will anticipate and proactively fulfill this need. They not only understand client expectations, but also customize their services and platforms to meet requirements. Compare the services of your outsourcing partner with other providers—see if they offer omnichannel payments options or escrow managers. A wide range of options will make the lending process smooth for you and the borrower. Many mortgage businesses can manage these services independently, however, many small-midsized businesses (SMBs) can’t afford to offer technical services to borrowers simply because of prohibitive costs. The dedication and expertise outsourcing providers offer on regulatory compliance removes the need and investment that goes into training an in-house team. A reliable mortgage process outsourcing partner will not only help improve your performance, but also uplift the lending experience for borrowers.

Myth 5: We have a strong understand of compliances and regulatory affairs

Truth: The Consumer Protection Financial Bureau (CPFB) closely regulates the mortgage servicing industry. Offering mortgage loans is also subject to evolving state and federal laws and regulations that can be stressful to manage. Add to it the steep fines for errors and mitigation costs.

Given how important compliance management is, ensure that the mortgage servicing company offers it as a primary service. Ask how regularly they evaluate their compliance standards against CPFB guidelines—daily, weekly or monthly. Do they monitor compliance regularly at each borrower touchpoint without compromising service quality?

The post pandemic housing market can be a challenging playfield for you. The goal of partnering with an outsourcing company should be to offer quality lending services and increase your business bottom line.

Hopefully, this blog has addressed your questions on the many myths about outsourcing mortgage loan services.

Aritas Mortgage Solutions is an outsourcing provider with extensive experience in comprehensive, customizable and technology-led loan processing services. Partner with us to deliver best client experience, earn high ROI and expand your portfolio.

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