Have you always thought that outsourcing mortgage loan processing is a bad choice? If yes, read this blog entry to find out the five common misinterpretations that mortgage companies have when it comes to outsourcing.
A mortgage loan has just been approved. Now the real work begins. The long and hard task of performing all the functions required to service the loan. If you are currently servicing mortgage functions in-house, you must know that there are huge benefits that comes with outsourcing responsibilities to a third party. Lower cost, robust technology and assistance with compliance are just few of the benefits. Why then are there only a few mortgage companies who are outsourcing? This is because of the common misinterpretations surrounding outsourcing mortgage loan processing.
Let us explore five of the biggest misinterpretations that surround the outsourcing of mortgage loan processing.
The credit union has the same per-loan cost to service in-house as with an outsourcing service provider
Very often, when mortgage loan processing is done in-house, companies fail to include several variable and fixed cost like licensing fees, office supplies, postage, training cost and staff salaries to name a few. All of these costs are customary when servicing a mortgage. Other costs include costs that stem from servicing mistakes like compensatory fees. When true comparisons are made, the findings clearly reveal the substantial savings that can be gained by choosing to outsource.
We fear losing total control over the servicing portfolio
You must know that the right outsourcing service provider will only encourage your participation and not discourage it. While you do not have to get involved with the day-to-day difficulties of loan processing, you can still remain very involved with your loan servicing portfolio. Before you outsource, you can clearly identify which services you want the outsourcing partner to perform on your behalf and where you do not want any involvement. Only choose a service provider who offers you online compliance tools and 24/7 accessibility to data. This way, you can always be kept informed and be in control of the situation. Also make sure that all loss mitigation or loan modification is presented to your credit union for review and approval. Only choose a service provider who will welcome your involvement and not deter it.
The outsourcing company will cross-sell to other mortgage services providers and complete with us
This can be true and is something you should cover with a potential outsourcing partner before you outsource. Find out their attitude towards cross-selling. Ask them if they will be willing to make a commitment to you. Request for customer references and check how the outsourcing provider upholds their commitment. Only work with an outsourcing vendor who understands this concern and abides by the policy of not competing by cross selling anything to other credit union members, unless you permit it.
The credit union is the only one that knows its members and therefore no one can serve them better than in-house professionals
The right outsourcing service provider understands your expectations and takes interest in understanding the special nuances of your member base. Compare the service you are currently providing with that of the outsourcing vendor. Is your credit union covering several payment channels and escrew administration? An enhanced number of options can make the experience a positive one for the borrower, and lender. Also think about the technological functionality that only an outsourcing service provider will be able to provide. Keeping up with regulatory compliance can also be difficult because of the heavy investment of financial and human resources. A reliable outsourcing service provider can help you serve your customers in a better fashion.
We do not need to outsource as our credit union has a solid hold on federal and state compliance
Even Ensuring compliance is a reason most mortgage companies outsource. The cost for even minor mistakes is real and the fines can be high. An outsourcing service provider can offer relief for servicers and lenders in this matter. When choosing an outsourcing partner, make sure that the state and federal laws lie at the core of each and every one of their processes. Are their performances measured weekly or monthly? Is their performance measured by the standards set by GSE and CFPB? These are some of the questions you need to ask.
Outsourcing mortgage services can ensure that you deliver superior value to your borrowers while benefiting from a solid increase to your bottom line. Partnering with the right service provider can help you enterprise maximize the value of mortgage servicing rights, while offering better quality services to your members. Find out more about outsourcing mortgage services today and give your company a head start.
Did you like reading this post? What are some of the misinterpretations that you have had about outsourcing mortgage loan processing? Let us know in the comments below. We, at Outsource2india love to hear from you!
Interested to know more?
- 6 Reasons Why Mortgage Lenders Should Outsource Mortgage Closing Services
- 5 Steps Involved in Mortgage Underwriting
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