Opportunities and Challenges in In-House Servicing

Although the mortgage industry has been abuzz with recent reports of the rising costs of servicing, many servicers continue to prove that maintaining servicing in-house can be a lucrative business. With robust technology on their side, servicers stand to average around 1,000 loans per employee per month and sometimes substantially more depending on the makeup of their operation. If you take the average national mortgage loan, $201,000, and multiply it by the standard service fee of 25 basis points, that’s on average an additional $502,500 per employee per year generated by service fee income alone. Ancillary income, such as late fees, adds to the potential income.

Looking at it from this perspective, there’s no question that in-house servicing can provide an extra source of profit that significantly boosts the financial institution’s bottom line when costs are controlled with the right technology. Furthermore, retaining servicing also offers additional customer service benefits, as it allows the financial institution to maintain the customer relationship and have more control over the borrower experience. In-house servicing also provides an additional service offering to customers who already have investments or other types of loans with the institution.

Read the MBA Insights article.