The Competitive Edge: In-House Mortgage Servicing for Credit Unions

When interest rates rise, credit union members are less likely to refinance their mortgages at higher rates, which can increase the value of mortgage servicing rights (MSRs). Credit unions can retain the servicing of loans sold on the secondary market to enhance revenue. The 2024 Mortgage Bankers Association’s Servicing Solutions Conference & Expo reported that 19% more companies that retained servicing revenues were profitable than those that were not.

Keeping servicing in-house offers numerous benefits, including enhanced borrower experience, operational control, and data security. This approach strengthens credit unions' financial health and fosters more robust relationships with members.

The Benefits of In-House Servicing

Servicing loans in-house can provide a significant competitive edge for credit unions. A primary benefit is that in-house servicing generates additional revenue streams through servicing fees and ancillary products. MBA reported that the average servicer handled 937 loans in 2023. With a standard service fee of 25 basis points, using the average home loan size of $405,000 in April 2024, this means that each full-time employee can generate nearly $950,000 per year in revenue. This steady income can help credit unions weather economic fluctuations and enhance their financial stability.

Click here to read the full article on Credit Union Business News