BLOG VIEW: Mortgage servicing has become more complex since the housing bust of 2008. Servicers have seen an increase in regulations and responsibilities. Being able to automate routine processes and reduce errors is vital to being successful in modern-day mortgage servicing. This is especially true for housing agencies.
Housing agencies exist to increase homeownership – especially for those consumers who do not qualify for loans typically offered by banks and credit unions. Because of this, housing agencies often service multiple loan types, both residential and commercial, with strict reporting requirements and regulations dictated by the government agency that created the loan program. Servicing software that allows housing agencies to meet their monumental reporting requirements and the increasing needs of investors and borrowers quickly and efficiently is in high demand.
The Need For Advanced Technology
One mortgage company that has found its servicing department relying on the more advanced and dynamic features of its servicing system is Kentucky Housing Corp. Though its typical borrower is a first-time home buyer, this housing agency services a wide range of loan types and reports to various agencies, such as the Federal Housing Administration, Veterans Affairs, Fannie Mae, Ginnie Mae, Habitat, Disaster and Rural Housing.
Dayle Leach, managing director of loan servicing for Kentucky Housing Corp., seized the opportunity six years ago to automate as much of her organization’s servicing operation as she could when she saw servicing becoming more heavily regulated and time-consuming.
“Without an automated system, the types of loans we service would require long hours of tedious processes – time which my staff and I don’t have,” says Leach. “As a result, we began to find better ways to use our residential and commercial servicing systems, which incorporate necessary standard reports, as well as ones we can customize for our specific needs. Since then, we’ve seen a dramatic increase in time savings and have been able to streamline our servicing process.”
Like Kentucky Housing Corp., many servicers realize that in order to be competitive and able to meet the demands of today’s mortgage industry, they need a servicing solution that provides a wide range of advanced capabilities.
The most effective software solutions perform smoothly from the point of loan boarding all the way through final payoff. Necessary capabilities include daily cash balancing, remittance and reporting to investors, payment processing, default management, loan modification, and consumer online banking, while being easily adaptable to accommodate regulatory compliance changes within each of these areas.
In addition, a servicing solution should also easily integrate with the lender’s loan origination system. This will eliminate the need for manual re-entry of data and ensure the accuracy of all loan information. Integration of the two systems will also improve the overall process of accessing data throughout the institution.
Flexibility For Today’s – And Tomorrow’s – Lending Landscape
Though the essence of servicing hasn’t changed much since its inception, its future is entwined with technology. To be effective, servicers require software with robust reporting capabilities, flexibility and adaptability. The continued regulation of the servicing industry, along with consumer demand for easier online access on multiple devices to view loan information and make payments, is likely to increase in the future.
By working with various types of loans and agencies, many housing agencies have already learned that implementing flexible technology is a necessity.
“Reporting allows us to connect to the communities we serve, so we need a system that allows us to run various types of reports and track different loan types,” says Jo Stapley, vice president and chief operating officer of Utah-based Community Reinvestment Corp.“We work with multiple member banks, investors and community partners on one loan. Being able to quickly and accurately report on the status of a loan and property has built confidence among all parties involved, resulting in repeat customers and referrals, which has helped us to provide affordable housing to our communities.”
Thinking ahead is key. Servicers benefit most when they put in place a servicing solution that is proactive in addressing changing industry trends as they emerge. This requires a solution built with a flexible infrastructure. A servicing system with flexibility allows servicers to be more adept at swiftly incorporating changes in investor requirements, business processes and regulatory updates, which results in noticeable savings and overall efficiency for servicers.
Flexible technology also plays a leading role in meeting the growing requirements of today’s regulatory environment. This is especially true of the unique requirements specific to housing agencies. As the Consumer Financial Protection Bureau and other regulatory agencies continue to introduce new compliance requirements, servicers that can quickly reconfigure their servicing solutions to avoid penalties for non-compliance will come out ahead.
As housing agencies are well aware, using capable and adaptable technology is needed to be competitive in the servicing industry. All servicers, regardless of their business focus, require software that is both innovative and flexible in order to succeed in 2016 and beyond.
Susan Graham is president and chief operating officer of mortgage technology firmFinancial Industry Computer Systems Inc. (FICS).
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