MOST SERVICERS HAVE RECOVERED COMPLETELY or are well on their way to recovering from the 2007 financial crisis. Since 2007, for example, Bank of America (a major servicer) has seen its stock price go up by more than 320 percent--but this is still not close to its pre-crisis level.
Despite the fact that some servicers needed to sell portions of their portfolios, either due to non-performance or they no longer fit with the company's strategic goals, others were able to maintain profitability during the market readjustment.
With added scrutiny by government agencies such as the Consumer Financial Protection Bureau (CFPB), Federal Deposit Insurance Corporation (FDIC) and several others, it has become more evident that servicers must change their processes to avoid future failure and colossal fines from these government monitoring agencies.
In addition to increased regulatory requirements, millennials (who are more technologically savvy) are demanding systems that are quick to respond and provide the information they want in an almost immediate fashion. Those servicers who are still around need to realize that doing business the old-fashioned way will not be sustainable for long, and effective use of technology to change their processes is the only way not to suffer lost profit or worse.
It is safe to say mortgage servicing is constantly evolving, and companies are searching for the best avenues to serve both new and existing borrowers and also be cost-effective. Millennials, who make up the majority of new entrants in home purchases and subsequently servicing, have forced servicers to evolve from the old interaction processes that were often limited to letters sent in the mail.
According to the National Association of Realtors[R] (NAR), Chicago, 50 percent of millennials search for homes on their smartphones and 26 percent actually purchase a home the same way. This drives home the fact that these buyers--who use technology on a regular basis--want more access to loan information online or on their mobile devices. They want to check balances, make payments and, in some cases, completely manage their loan using technology.
In order not to lose this very important, growing segment of borrowers and to keep high customer service ratings, servicers should be mindful of and adopt new methods of using technology.
This is why more servicers are building mobile-friendly websites that offer users account information as well as the ability to pay. They...