The Road To Success In 2024

A loan servicer’s perspectives on the year ahead

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Vice President of Business Development

As mortgage rates remain high and property values experience year-over-year growth of 6.7%, according to Fannie Mae’s Economic & Strategic Research (ESR) Group, a look ahead to when the mortgage industry may trend in 2024 is clouded with continued uncertainty and heightened economic concern. The lack of affordable housing inventory is reaching a crisis level as more Americans remain in their homes to preserve the rock-bottom rates secured during the height of the pandemic, and a decrease in multi-family construction causes inflated rental rates to remain high for the foreseeable future.

With a growing national malaise seemingly invading every form of media, it may be hard to see the silver lining among the clouds. Yet, when we look at 2024 through the eyes of mortgage servicing, there is hope on the horizon, particularly as the industry continues to embrace technology to advance the servicing experience.

A Servicer’s Perspective

Mortgage servicing will continue to evolve with the market, as it has always done, to meet demand. However, where many servicers were reactive in the wake of the 2008 economic challenges, servicers of today are proactive in assessing the needs of the industry to provide stable, long-term solutions that support clients’ portfolio goals both now and into the future through a broad suite of products, services, and some of the best talent in the business. Regardless of market fluctuations, technology will continue to play an ever-increasing role in mortgage servicing and be a significant focus for how servicers can attract and retain clients. Investments made now to improve operational efficiencies pay dividends in customer satisfaction and performance. However, no matter the economic climate or the technologies implemented, at the end of the day, servicing is about relationships.

Servicers are here to provide the best experience and outcomes to our clients and their homeowners throughout their mortgage journey. Advancements in technology should never be at the expense of service.

Artificial intelligence (AI) and machine learning (ML) have the potential to be transformative for mortgage servicing, and the industry is no stranger to adopting the newest technologies to manage portfolio performance. Today, lenders are using AI and ML in a variety of ways, including:

• Loan Processing: AI automates data entry, document processing, and other loan processing tasks and reduces the risk of errors.

• Credit Risk Assessments: Lenders can use Al algorithms to analyze large volumes of credit data instantly and make informed mortgage loan decisions.

• Customer Experience: With AI and ML, lenders can utilize massive data sets to understand their customers and provide personalized experiences.

• Compliance: AI and ML allow lenders to ensure that routine processes are automated and completed in accordance with industry requirements.

In mortgage servicing, more servicers are using AI and ML to develop analytical tools to give lenders a real-time view of the risk and performance of their portfolio by converging data points into a single source of truth from which to glean insights. MSR owners can use these on-demand analytics to make fast, data-driven decisions about buying or selling loans and much more.

Using Tech To Improve The Customer Experience

One of the most effective implementations of technology in streamlining operations is through solutions that eliminate the need for “stare and compare” processes. For example, servicers have implemented optical character recognition (OCR) to read loan origination documents and source pertinent data to construct loan boarding files. This eliminates the need to manually board loans (someone manually reviewing each document), thus allowing for the elimination of traditional stare and compare data integrity reviews by moving to an exception-based processing of OCR-identified mismatches.

Servicers have also implemented technology to take over control of letter creation, changes, and composition from print vendors. This technology offers a higher level of compliance oversight and faster turnaround times to fulfill letter template updates. Final composed PDFs are then provided to print vendors for printing and mailing.

Servicers are also finding success in using technology and automation to help lenders maintain better control and transparency over their servicing experience. Some of the most impactful solutions that keep the customer experience top of mind are:

• Analytics: Provides lenders with insights into their loan portfolio, including identifying loans that may be in trouble of becoming delinquent or loans that may be eligible for a refinance opportunity. These tools allow lenders to quickly recall loans that need extra attention.

• Document Tracking: Enables lenders to track documents and address any issues that have been identified.

• Account: Based Marketing- Allows lenders to tailor their messaging, content, and offers to homeowners and strengthen customer engagement throughout the mortgage servicing journey.

Servicers also provide data-driven communications, which lenders can use throughout the onboarding process. With these communications, lenders can explain exactly what’s happening with customers’ loans, check on the status of clients’ accounts, and answer frequently asked questions. Most importantly, they can lay the foundation for positive engagement with a new customer even before a bulk loan transfer is completed.

“Artificial intelligence (AI) and machine learning (ML) have the potential to be transformative for mortgage servicing.”

> Eric Seabrook, LoanCare

Privacy and Security in a Data-Driven Environment

As more servicers lean into technology and automation to carry out tasks, securing sensitive borrower information cannot be understated. Borrowers’ trust relies on servicers being 100% transparent with the measures they employ to ensure data. Many servicers have adopted an “all-in-one” solution with data integrity in mind, where customers have full access to every facet of the loan servicing journey in one seamless platform.

Such platforms provide organizations with transparency across all their departments. For example, an organization can use servicing platforms to store and secure a wide range of interconnected data, thereby eliminating data silos. Moreover, the organization can view and analyze its operational, financial, reputational, and fraud risks in real time and mitigate those risks immediately.

Additionally, lenders can use these tools to track their customers’ loans and how regulatory changes impact them. This helps lenders find ways to reduce risk and ensure their customers can get the most value from their loans.

Conclusion

The future of mortgage servicing relies on blending cutting-edge technology and a personal touch. As the industry moves forward, leveraging automation, AI and data analytics will undeniably enhance efficiency, accuracy, and cost-effectiveness in processing and managing loans. However, the intrinsic value of human interaction, empathy, and personalized service must be considered, particularly in addressing complex issues and fostering trust with clients.

The companies that thrive in this evolving landscape will skillfully find the balance, ensuring that while technology streamlines and secures operations, the human touch remains at the core of customer engagement and satisfaction. Doing so will pave the way for a more resilient, responsive, and customer-centric mortgage servicing industry, ready to meet the challenges and opportunities of the future head-on.