BLOG VIEW: The modern-day servicing landscape demands more of servicers than ever before. These demands place more importance on implementing a loan servicing system that can adequately support multiple business channels, boost operational efficiency, and quickly adapt to changing industry rules and regulations. The right software solution will result in the streamlining of operations and significantly improve customer experience.
When selecting a loan servicing system, financial institutions must evaluate how each solution supports the key components of servicing technology: comprehensive capabilities and flexibility.
Basic Software Solutions Need Not Apply
Since the market collapse of 2008, servicing requirements involving payments, notifications, customer service and default management have become more complex and demanding. Today's servicers are increasingly playing more integral roles in default management, government loan modifications and catering to the changing needs of investors. To be of true value to servicers, servicing software must provide a wide range of advanced functionality to meet these expanded responsibilities.
The most accommodating software solutions perform seamlessly – from the starting point of both manual and automatic loan boarding through to the full payoff of the loan. These capabilities include remittance and reporting to investors, loan modification, borrower notifications, consumer online banking, default management, daily cash balancing, and payment processing. Necessary system updates for regulatory compliance in each of these areas should be a given, not to mention the incorporation of flexible tools that allow servicers to easily adapt to changes in internal business practices or specific requirements from external agencies.
Ideally, a servicing system will also smoothly integrate with the loan origination software (LOS) for automated loan boarding and tax and insurance companies for escrow management, as well as other existing technology platforms used within the institution. This will eliminate the need to manually re-enter data across multiple portals and ensure the integrity of all loan information. A seamless integration also provides an efficient means of accessing necessary origination data when selling loans that are servicing retained.
Implementing a technology platform with extensive reporting capabilities, including electronic storage and retrieval of all reports and borrower-related documentation, will greatly benefit servicers. These capabilities provide an immediate method of delivering various statements, notices and other crucial information to the borrower, as well as reports and the necessary paper trail required to meet applicable investor and regulatory mandates.
Be Prepared For Changes
Although comprehensive capabilities are a major win for servicing platforms, the software has to provide more. It is not enough to simply conform to the current landscape of government programs and investor demands. Today's servicing environment requires solutions that consistently evolve to meet shifting industry trends before they become larger issues.
By selecting a solution with a flexible infrastructure that can quickly adapt to changes in business processes, investor requirements and regulatory updates, servicers are more likely to experience substantial improvements in their savings and business efficiency. Servicing platforms that provide the necessary tools to comply with existing regulatory requirements and quickly make adjustments to internal business operations allow servicers to put in place timely and more effective processes to conform to these changes.
Flexibility is also a necessity to meet the ever-changing requirements of the current regulatory environment. As the Consumer Financial Protection Bureau and other regulatory agencies continue to hand down new compliance guidelines, servicers with the ability to adjust their existing servicing technology on an as-needed basis will have an advantage. They will be able to conform to regulatory standards quickly and avoid possible fines for failure to comply.
The bottom line is this: Technology will continue to play a key role in the life of servicers for many years to come. Those that elect to implement a software platform that supports a comprehensive approach to loan management and flexible offerings to meet changing needs will remain successful as the mortgage industry continues to evolve.
Susan Graham is president and chief operating officer of mortgage technology firm Financial Industry Computer Systems Inc. (FICS).
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