Susan Graham from FICS: Unlocking Success–Five Vital Features of Mortgage Servicing Software

Susan Graham is president and COO of FICS® (Financial Industry Computer Systems, Inc.), a mortgage software company specializing in cost-effective, in-house mortgage loan origination, residential mortgage servicing and commercial mortgage servicing software for credit unions, mortgage lenders, and banks. FICS® also provides document management, API, and Web-based capabilities in its full suite of products.

Susan Graham

Rising interest rates and high inflation are putting a strain on mortgage holders. The 2023 J.D. Power U.S. Mortgage Servicer Satisfaction Study found a significant decline in customer satisfaction compared to the previous year. J.D. Power attributes this decline to a combination of weaker financial health, an increased rate of mortgage transfers and a rise in issues resolving account problems.

In addition to borrowers, servicers must also work with regulators and investors to ensure the portfolio performs and complies. With the right tools, the three-headed challenge of meeting the demands of borrowers, investors and regulators can make it easier for servicers to work efficiently and profitably.

Fortunately, the right mortgage servicing software makes it easier to service loans efficiently while satisfying borrowers, investors and regulators. Real-time integration with the core system elevates your customer service and promotes optimal accuracy. Regular software updates (to accommodate investor reporting and other regulatory changes) facilitate compliance.

Five Must-Have Software Features for Success

To achieve success, lenders should choose mortgage servicing software that includes these five essential capabilities:

Automated Investor Reporting: Mortgage companies must follow investor reporting rules and accurately communicate the status of the loans they manage. The Government Sponsored Enterprises Fannie Mae and Freddie Mac have specific reporting needs. Keeping investors in the loop during the mortgage process can take time and create challenges, raising costs and compliance risks in a narrow profit area of the business. Changing compliance requirements makes things more complicated.

To efficiently handle loans sold on the secondary market, lenders require robust mortgage servicing software that automates investor reporting and quickly adapts to changing requirements. Some servicers choose to service mortgages using the limited tools in their core processing system to save money and process loans just like auto and personal loans. However, using the core system to service mortgages can cause issues given the more significant regulatory needs and unique nature of mortgage loans.

While core systems support many products, mortgage functionality is often limited, especially for effective investor reporting and compliance. Core system limitations may require servicing staff to do investor reporting and escrow tasks manually. Management may consider manual processing a viable option because mortgage volume is typically lower than consumer loans; however, this slows things down, removing the automation benefit the core system was meant to provide and increasing the risk of errors and non-compliance.

Robust Escrow Management: One of the most significant challenges to using a core system for servicing is the need for more escrow management. Modern servicing software automates escrow administration, ensuring accurate and timely payments and reporting. At a minimum, mortgage servicing software should include these functionalities:

•           Escrow analysis statements (initial, annual, and final versions)

•           Interest on escrow processing

•           Escrow tracking reports

•           Automated escrow premium updates and disbursements

•           Tax service interface

Borrower Web Applications: Web apps provide self-service options to customers who can view loan information and statements and make payments online anytime on their own. By providing loan information via the web, servicers will spend less time fielding basic borrower requests on the phone.

Mortgage servicing software should provide an easy automated solution to deliver information to borrowers. Being able to automatically generate emails to specific borrowers, notifying them that a statement/notice is waiting for their review via a web application helps keep borrowers informed and reduces call volume. Additionally, being able to generate personalized messages for a borrower to view in a web application upon login allows you to convey specific information to that borrower.

Servicers can also save money on printing and mailing when borrowers go paperless. According to J.D. Power’s 2022 U.S. Mortgage Servicer Satisfaction Study, only 52% of mortgage servicing customers get a paper statement. To increase paperless statement adoption, servicers need to build customer trust, in part by communicating transparently.

Application Programming Interfaces (API): APIs are software-to-software interfaces that facilitate seamless communication between applications, eliminating the need for direct user involvement. An API can be designed to retrieve data, update databases, initiate processes or enhance software functionality. According to Fannie Mae, mortgage lenders view APIs as a pivotal technology with immense potential to automate processes, improve accuracy, reduce costs, and streamline workloads.

By enabling workflow automation, APIs offer unparalleled convenience and time savings. Mortgage servicers can leverage APIs to automate reporting and programs, saving time and resources. This automation eliminates the need for after-hours and weekend work while minimizing errors caused by human fallibility.

Real-Time Access (RTA): Sound mortgage servicing software should let tellers, call center staff and borrowers access current mortgage information through the primary data system or home banking site. RTA means tellers and call agents can instantly see loan details, take payments, and print receipts with the newest data. Giving people on-demand mortgage information makes the staff more efficient and provides better service for borrowers.  

Picking mortgage servicing software with these five must-have capabilities creates more chances in the secondary market by letting lenders keep servicing in-house and quickly meet investor reporting requirements. Automating mortgage operations helps servicers improve efficiency and accuracy, saving time and money while handling more loans per employee and giving borrowers better service. Using web apps for routine questions lets servicers focus more on assisting borrowers who need specialized help, and your financial institution or mortgage software company can help you have breakthrough success by ensuring borrowers and investors are satisfied.