Keeping Your Loans at Home: Servicing Retention Provides Income Until the Refinance Market Resurges

Rising property values and low interest rates pushed mortgage loan origination volume to roughly $4 trillion in 2021, the highest level ever recorded. Since then, rising inflation and interest rates have curtailed loan applications — particularly refinances. The 30-year fixed mortgage rate topped 7% — the highest rate since 2002 — on November 10, 2022. “Higher mortgage rates have pushed refinance activity down more than 80 percent from last year,” said Joel Kan, the Mortgage Bankers Association’s AVP of Economic and Industry Forecasting.

The key may be servicing fees, income that helps credit union lenders offset revenue losses due to lower origination volume. Credit union mortgage lenders that sell off loans to the GSEs or other investors to free up liquidity may want to consider retaining servicing. By investing in the right mortgage servicing software, lenders can effectively service their loans in-house. The right software can help servicers comply with investor requirements and create value for their organization and its members.

Read the ACUMA Pipeline article.