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We understand that as a mortgage lender, you’re keen to scale your business and manage complex loan portfolios. According to Fannie Mae, skilled labor shortage is one of the biggest challenges in this pursuit. Regulatory norms only complicate things further. Lenders must be meticulous and have very specialized skills to process mortgage loans. The volumes of loan applications and time required to process them make it a key function for cost saving, improving efficiency and reducing TATs. Processing speed also plays a big role in closing a mortgage loan. However, as federal regulations evolve and costs of portfolio management grow, lenders tend to find processing mortgage loans in-house quite difficult.
The good news is that there are economical but effective alternatives. Have you ever considered third-party loan servicing? Outsourcing partners make significant contributions to the US mortgage market by helping lenders improve costs, optimize operations, increase efficiency and address skill shortages. They do your heavy lifting so you can focus on loan originations, front-end operations and customer experience.
If you’re considering outsourcing your processes, here are a few things you need to consider as you identify the right third-party loan servicing partner.
Why Should You Even Consider a Third-Party Loan Servicing Partner?
Third-party loan processing can help you scale in the following ways:
- Cost savings: They reduce operational costs by leveraging lower labor costs and eliminating the need for an in-house team
- Scalability & flexibility: They efficiently manage varying loan volumes without investing in additional resources or downsizing during lean periods
- Enhanced efficiency & faster TATs: They streamline workflows and use specialized knowledge for faster loan processing and improved customer response times
- Expanded service hours: You can benefit from extended service hours which means improved customer experience due to increased responsiveness across different time zones
- Leverage analytical capabilities: You can also gain valuable insights and make informed decisions for process improvement and risk management from your outsourcing partner’s analytical capabilities
Things to Consider in a Third-Party Loan Servicing Provider
Some third-party loan servicing providers offer comprehensive services while others offer a combination of specific services. The kind of service(s) you opt for should depend entirely on your requirements and budget. Here are a few things that all third-party loan servicing providers should prioritize to deliver the best results.
#1. Customizing Credit Decisions
Irrespective of what third-party loan processing companies say, you must rely on your own credit decision rules and data collection systems. You can seek their guidance on ways to mitigate any contingencies or risks.
As service providers, every third-party loan servicing company should respect your experience and understanding of borrowers and the mortgage industry. That is why, before you must always ask if they will let you use configurable credit decisions to manage loan processing.
#2. Predicting and Mitigating Risks
It does not help to know when a borrower defaults on repayment. A third-party loan servicing provider should be able to study patterns, predict risks and mitigate them. Make sure they use the latest tools for predictive risk analysis.
#3. Staying Up to Date with Evolving Compliance
Third-party loan processing companies should stay up to date with evolving compliance standards and industry trends. For instance, lenders should be aware of future compliance standards associated with secure data storage when they gather credit data about borrowers. Third-party loan servicing companies must have software and processes to deal with evolving regulatory compliances.
#4. Communicating Effectively with Customers
As a lender, you may feel that working with a third-party loan processor could alienate your borrowers. That’s why customer support teams should focus on two core objectives: to effectively communicate loan defaults and to courteously resolve customer issues. Borrowers should not be left in the dark and all information must be communicated to them proactively. It is important to look for a third-party loan processing partner who helps you communicate effectively with your customers.
#5. Ensuring Prompt Collection of Repayments and Defaults
Third-party loan processing partners should use automated schedules to effectively inform borrowers about repayment deadlines and payment defaults until they repay lenders. Time is of the essence in the mortgage loan processing industry. The longer it takes to communicate delays and collect repayments, the more money you will lose as a lender.
Your outsourcing provider must communicate clearly with the borrower and follow-up regarding payments to ensure timeliness and avoid any loan defaults.
Conclusion
The task of choosing the right outsourcing partner is much simpler if you always keep these factors in mind during your decision-making process. Providers should be flexible about customizing their services to meet your requirements. They must help you offer the best mortgage loan service to your borrowers.
Aritas Mortgage Solutions offer services such as pre-closing and post-closing audits, loan documentation and indexing along with other mortgage processing solutions that are designed to maximize efficiency and minimize hassle. You can choose a solution based on your budget, challenges or requirements. We’re here to help, let’s talk.
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