Despite the changes going on in the industry, specialty mortgage servicers still have plenty of room and opportunity to grow.
Key experts in the industry affirmed this point in a session titled “The Future Role of Special Servicers,” at the Mortgage Bankers Association’s National Mortgage Servicing Conference & Expo 2014.
“The book is still being written on the new rules, but some of the early chapters are available,” Steven Horne, CEO and president of Wingspan Portfolio Advisors, said.
“The economics of serving are still really out of whack, but it does pay to service loans, which is where we see a lot of opportunity,” Horne added.
However, the experts did outline key challenges and issues servicers are overcoming in order to grow.
1. It is very important for servicers to follow through, David McDonnell, managing director of Statebridge Company, explained. “It is about following through and seeing that what you are saying you are doing is actually happening to keep those costs down.” Now, it is an individualized process with individual loans, Horne said.
2. In terms of being transparent, McDonnell noted that they think the expectation for investors and clients is that they want that transparency as well. “You have to be quick in what you are wanting. We have become more open in allowing our investors to access someone into our shop,” he continued.
3. It is important to seek outside counsel for guidance and compliance, Horne pointed out. As situations emerge, it shows better good faith effort that mortgage servicers are consulting outside counsel to ensure compliance, he said. In other words, play on offense so you don't have to play on defense.
4. When it comes to costs, be transparent. “When you are speaking with an investor, you have to be upfront about what it costs you to do that business. You have to get over that and discuss what makes you different,”McDonnell added. From there, businesses are able to follow success-based pricing and as they perform better, they can raise prices.
5. The new servicing frontier leaves more room for growth, according to the experts. “We really have been looking to diversify our core skill sets into customer service, underwriting, originations and more,” Horne said. Meanwhile, McDonnell said Statebridge is looking into receiving its GSE ticket, getting rated by rating agencies and partnering with an originator. In addition, McDonnell said they look at non-QM as a big opportunity for growth. “As originators originate that type of product, you need a specialty servicer to handle it,” he continued.