Jennifer Henry: In an Uncertain Market, Servicers Are Leveraging Data, Technology to Drive Efficiency

Jennifer Henry is Vice President of Strategy and Marketing with Equifax Mortgage & Housing Services. She is responsible for pricing, product management, product marketing, campaign management and mergers and acquisitions. Henry brings more than 20 years of experience to her position at Equifax, including operations, technology, marketing, sales, product management, mortgage loan quality and loan origination services. Prior to her position at Equifax, she held leadership roles with First American Mortgage Solutions and Fannie Mae.

While the COVID-19 pandemic has created uncertainty in today’s financial market, the mortgage industry — so far — has remained strong and is still providing a positive outlook long-term. 

The average U.S. rate for a 30-year fixed mortgage fell to 3.29% in March, the lowest ever recorded by Freddie Mac.  While this considerable drop is a result of market uncertainty, the 30-year fixed rate drop is causing a rush in mortgage applications, a high demand for refinances, which reached an almost 11-year high, according to the Mortgage Bankers Association, and even an influx of home equity lending. 

In addition to the rate cuts, home equity lending is soaring as home values increase. This is leading homeowners to remain in their current home longer and take advantage of the equity accrued, which is also a way to give homeowners access to liquid capital during uncertain times. 

While the falling home loan rates mean a booming business for the mortgage industry and a sign the housing market may help the U.S. economy avoid a true recession, it could also pose a challenge for those trying to process the influx of applications and requests. The digital mortgage servicing journey must focus on streamlining the process through technology and data-enabled solutions.

Servicers are faced with a host of operational challenges, such as identifying risk within their portfolio; marketing and retention of performing assets; and efficiently executing operational policies and procedures in accordance with regulatory and compliance guidelines. In addition, many of these servicers must now process requests and make decisions remotely. This drives home the fact that lenders and services alike need a way to navigate the process of converting from a cumbersome paper-based process to a seamless digital one.

Any of these issues can threaten a servicer’s ability to sustain a profitable business model. With the industry landscape continuing to change and move quickly, servicers must implement technology solutions that enable them to efficiently and effectively manage shifts in the marketplace and meet the demands of the consumer.

The entire industry is being impacted by the efficiencies that come from deploying new technologies to automate, simplify and speed up each step of the servicing process, helping to bring us closer to a complete end-to-end digital experience. The most successful servicers are those that are able to best meet customer expectations of speed and convenience and deliver on that in a way that ensures they are not putting themselves at undue risk.

Servicers that can effectively leverage third-party data in a secure environment are able to more quickly and securely make decisions in a compliant manner. Having all this information available electronically, in one location, significantly reduces the amount of paper documentation required.   

Third-party data can provide digestible and actionable insights that give servicers a better awareness of their portfolio.  This insight can help to identify opportunities, such as consumers that could benefit from refinancing, and can also help mitigate risk. 

Third-party data also increases operational efficiencies with non-performing loans. Having insight into these areas helps mitigate the risk of loss from defaults and foreclosures while helping reduce the need for unnecessary manual reviews.

While these insights help reduce costs for servicers, they also help boost efficiencies and free up internal resources to focus on more complex, revenue generating activities. Having the right data and analytics that provide the insight and confidence servicers need to help anticipate and capitalize on fast-moving market opportunities, and adopting digital processes that can increase operational efficiencies, are crucial to succeed in today’s market. Smarter insights enable smarter action. 

The industry is working through a series of market challenges, but it is also embracing technological advancements that are redefining the mortgage servicing process. Deploying new technologies in an efficient way helps ensure that servicers have the ability to manage any significant volume changes in a more operationally streamlined, intelligent way.

(Views expressed in this article do not necessarily reflect policy of the Mortgage Bankers Association, nor do they connote an MBA endorsement of a specific company, product or service. MBA NewsLink welcomes your submissions. Inquiries can be sent to Mike Sorohan, editor, at msorohan@mba.org; or Michael Tucker, editorial manager, at mtucker@mba.org.)