3-7 MBA’s Servicing Conference Highlights Trends in Mortgage Servicing and Forecasts What’s Next

One of the things I enjoy the most about the conferences Venture Solutions attends is learning what is on the forefront of technology. David Pogue, an American technology writer and host of NOVA ScienceNow, launched the MBA’s National Mortgage Servicing Conference & Expo 2016 with his keynote on the digital generation, disruptive technology and how it influences our society. Another key point he made was that many new businesses popped up from the recession. Out of necessity comes innovation. That innovation is also happening with the mortgage servicing industry as the millennial generation, new technologies and increased regulation change the business.

This year’s conference had several great sessions and additional speakers. Key takeaways for me include the following:

  • Economic Outlook. MBA’s Lynn Fisher, VP of Research and Economics, shared that the U.S. economy has great momentum and solid consumption, however, there is some concern about a global shock that may affect our economy. Positive economic signs are also seen in employment statistics and a tighter labor market—an increase in wages is expected. With this better economy, it is expected that the Federal Reserve will raise rates twice this year—most likely at the end of second quarter and then again after the elections. In the next ten years there will be tremendous housing demand, similar to what was seen in the 1970s, in almost every age group and especially in the Hispanic demographic.
  • Mortgage Servicing Outlook. Marina Walsh, MBA’s VP of Industry Analysis provided updated information on servicing. With regards to profitability, there were some minor improvements in net operating income, but there is more pressure on the servicing side to meet profitability as production margins diminish. Direct servicing cost per loan is at $164/loan and the majority is personnel cost. Even though the default rate continues to drop, expenses have only dropped somewhat. Walsh also presented new research on customer service. On average, 11 non-default related notifications and communications are sent to each borrower per year. Inquiries per call center per full-time representative were up significantly averaging 35 from 69 in 2010—increasing cost from $7 to $3 per call. Regarding online payments, 56% of borrowers had an online account and 30% were making their monthly mortgage payments via Internet or speed pay. This will become more significant as more millennials become homeowners.
  • Complaints Management. Servicing complaints are responsible for 80% of the complaint volume with 176K recorded in the CFPB database. Companies have 180 days to provide a response to the complaint. Servicers can notify the CFPB when they can’t verify the facts or do not have a commercial relationship with the complainant. Despite the number of complaints, JD Powers reports that 72% of borrowers are satisfied with their servicer. However, since 59% of mortgage complainants give permission to the CFPB to publish their narrative, the threat of Internet reputation is real. As such, documenting root cause for incidents and remediation is imperative. One company provided their customer-centric approach, which included internal training about the customer, monthly surveys with JD Powers, deep dive meetings to address complaints, collaborative work teams and incentives tied to customer complaints.
  • Privacy and Data Security. A security risk not only can cause operational issues with down systems and stolen data, but it also impacts your relationship with current and potential customers. In addition, the Federal Trade Commission has the right to fine companies for privacy and data security issues, and repeated issues or negligence can result in harsh actions by government bodies. A key to security in a company is training staff. In addition to this, some of the top critical security controls include patching applications and operating systems, using the latest version of an application, whitelisting applications and keeping administrative privileges under strict control. Part of this session showcased the Federal Financial Institutions Examination Office’s (FFIEC) Cybersecurity Tool, which helps institutions identify their risk and determine cybersecurity maturity.
  • Responding to Exam Findings. Ensure you have appropriate follow up monitoring for all items identified in an exam. It is important to focus on the items noted on the status memo you will receive during the exam. This session also identified that the most effective remediation process is to scope the full issue, plan how you will remediate, then execute, monitor and validate the plan. Make sure the remediation plan is detained and includes traceable milestones plus identify outside dependencies, such as vendors, in the plan. Update your policies and procedures and include a training plan that mirrors the remediation. Some items that were noted as exam trends from prior servicing audits included successors in interest, private mortgage insurance (PMI) termination, Fair Debt Collection Practices Act (FDCPA) violations and Unfair Deceptive or Abusive Acts or Practices (UDAAP) findings.

The MBA’s Servicing Conference provided the opportunity for leaders in mortgage servicing to discuss what the future holds for this ever-changing industry. Venture was excited to be part of this great event and we look forward to attending the 2016 MBA Annual Convention in October.

About the author

Marketing Manager

Angela has 20 years of experience in the areas of marketing and product management and product development within the financial services, education, publishing and retail industries. As marketing manager, Angela develops Venture’s marketing plan and executes marketing campaigns for the mortgage, auto and insurance markets. Angela manages Venture’s product marketing and represents the company at various industry conferences and trade shows. Prior to joining Venture Solutions in 2013, Angela was serving as marketing director at Free Spirit Publishing in which she led the marketing strategy, communications and product marketing initiatives. In addition to her experience, Angela holds a Master’s Degree in Marketing Management from the University of St. Thomas.