What should lenders look for in mortgage servicing software?

As more borrowers exit forbearance, it's time to reevaluate your servicing software.

With rising interest rates and compressed margins, many lenders are looking to their servicing business to grow revenue. However, working with borrowers exiting forbearance programs adds another layer to an already complex process which could raise servicing costs. Lenders who want to thread the needle between the different interests of borrowers, investors and regulators need smart, efficient mortgage software solutions to meet their servicing goals.

New investor guidelines

Borrowers exiting forbearance plans have a number of options, all of which require servicers to have a seamless, flexible process to communicate and place borrowers  into appropriate work-out plans. At the same time, those options trigger specific additional requirements from investors, including reporting principal and interest collection activity, drafting funds due to the investor, resolving any reporting or drafting discrepancies, and reconciling custodial accounts.

To make things even more complicated, the two biggest investors — Fannie Mae and Freddie Mac — continue to adjust their guidelines amid the unpredictable nature of the global pandemic. And the stakes are high. Regulators have ended some of the flexibilities they put in place during the pandemic and have put servicers on notice that they will be scrutinizing how they handle their dual responsibilities toward borrowers and investors.

In this environment, lenders need mortgage servicing software that automates servicing operations from payment processing to investor reporting according to multiple variables.

To increase servicing efficiency, choose mortgage servicing software that:

Automates servicing operations.

Automation is essential for efficient servicing. According to Craig Martin, mortgage practice lead with J.D. Power and Associates, “interacting with customers more efficiently—and more effectively—can reduce costs and increase profit for servicers regardless of the business model, while having the added bonus of improving satisfaction.”

Servicers can interact with borrowers more efficiently by automating payment processing, escrow administration, and other servicing tasks with leading-edge mortgage servicing software and APIs that allow scheduling of recurring tasks. This allows servicers to quickly deliver accurate information and gives them more time to respond promptly to unique borrower needs.

In addition, leading-edge mortgage servicing software that integrates with systems such as the loan origination system (LOS) and a financial institution’s core system allows lenders to sell loans to the Government Sponsored Enterprises (GSEs) while retaining servicing. In-house servicing generates service fee income, provides cross-selling opportunities, and allows lenders to provide better, more personalized customer service.

For almost four decades, FICS has been delivering state-of-the-art mortgage servicing software that meets the needs of servicers, investors, and borrowers. FICS’ mortgage servicing software—Mortgage Servicer and Commercial Servicer—automates servicing operations, improving efficiency and the borrower experience. Mortgage Servicer, our residential servicing software, simplifies the payment process, allows better flexibility in escrow management, and makes it easy to track and generate reports and accounting for investors in the secondary market. 

Commercial Servicer provides complete automation and seamless dataflow for servicing complex structured loans such as commercial real estate, multi-family, equipment, and construction loans. The flexible commercial servicing software offers comprehensive accounting and investor reporting, escrow management, and more to simplify the complexities of commercial servicing. 

Includes Web applications.

According to John Cabell, Financial Services Practice Lead at J.D. Power, “The mortgage marketplace is changing rapidly as traditional players and new digital-native entrants ramp up their digital and mobile offerings.” In today’s digital age, borrowers—especially Millennials—expect the mortgage process to be quick, easy, and transparent. Accordingly, mobile or online services are important to borrowers when accessing loan information or making mortgage payments.

According to the J.D. Power 2021 U.S. Primary Mortgage Servicer Satisfaction Study, only 38 percent of customers said they found the desired information on their servicer’s website within the first two pages. Overall satisfaction decreased by 55 points when customers had to visit more than two pages. Customers who indicated they would switch lenders if given the opportunity gave these top reasons (in addition to better rates): “better/improved customer service” and “easy access to help myself to information about my loan.”

Web applications provide convenient, paperless access to mortgage information. Using web application APIs to integrate mortgage services within a financial institution’s home banking or mobile application expands the services made available to borrowers, offers convenient access to their mortgage loan while they are also engaged with other loan or depository type products, and helps foster a long-term relationship.

Making mortgage information, statements, and payment capabilities available on the servicer’s website increases efficiency for borrowers and servicers. A good marketing campaign can significantly shift borrowers from directly contacting staff for simple requests to conveniently accessing this information online 24/7.  Additionally, encouraging borrowers to opt out of receiving paper statements decreases servicers’ costs related to postage, printing supplies and equipment, and employee time. We’ve all seen rising costs because of the pandemic, so taking this easy step can reduce expenses even more.  Plus, using mortgage servicing software and web applications to implement paperless servicing helps attract   environmentally-conscious borrowers.

Web-app-based account alerts are an underutilized way to provide exceptional customer service and promote borrower satisfaction. Account alerts can also be used to encourage borrowers to adopt and be more active on web applications. According to one survey, receiving account alerts via text message, secure messages on the servicer’s website or email was associated with high customer satisfaction.

FICS’ web applications, eStatus Connect and LoanStat, give borrowers 24/7 online access to their loan information and allow them to make online payments. These web applications also allow servicers to send tailored email messages to borrowers, such as encouraging them to opt out of receiving paper statements.

Utilizes APIs.

Application Programming Interfaces (APIs) streamline and automate the mortgage processes for lenders and borrowers from origination through funding, then extend that efficiency into servicing for

• Loan Boarding
• Payment Processing
• Investor Reporting
• Escrow Administration

APIs save time and reduce errors, providing more accurate information and giving servicers more time to respond to borrowers’ unique needs.

Used with a scheduling tool, the Mortgage Servicer API and Commercial Servicer API allow servicers to schedule and automate system programs, reports (such as end-of-day and end-of-month) and interfaces, eliminating after-hours work.

Mortgage servicing software that automates servicing operations and includes web applications and APIs increases efficiency, saving time and money and improving the borrower experience. Contact info@FICS.com to request a demo of FICS' mortgage servicing software.