Premier Member Editorial: It’s Time to Rethink Mortgage Servicing. Here’s Why.

Michael Grad is a Senior Partner at STRATMOR Group, Denver. He leads the firm’s strategic advisory team, covering a wide range of consulting engagements to implement business growth strategies, process improvements and the use of advanced analytics and technology aimed at building competitive advantage.

I’ll start with a simple truth: too many lenders are still treating mortgage servicing like a side business rather than a strategic asset. That needs to change.

I’ve spent the better part of my career advising mortgage companies, banks, and credit unions on how to improve performance—and right now, servicing is one of the most overlooked opportunities in our industry. For years, it’s lived in the shadow of origination. But in 2025, with volumes down, margins compressed, and borrower expectations higher than ever, the spotlight is shifting.

Servicing isn’t just something you have to do. It’s something you can do better—and by doing so, gain a real edge.

The Refi Era Is Over—Now What?

During the pandemic-era refi boom, most lenders were too busy managing capacity to think long-term. But today, we’re in a different market—one defined by purchase loans, rate volatility, and tighter margins. New loan opportunities are harder to come by. That means keeping the customers you already have is no longer a nice-to-have; it’s essential.

Servicing is where that happens. It’s where borrowers come back—or walk away. Yet far too many lenders still see it as a cost center rather than a value center. That mindset limits what servicing can deliver—not just to borrowers, but to your business.

Compliance and Convenience Are Non-Negotiable

Let’s talk about the two forces driving change in servicing: regulators and borrowers.

Regulatory pressure is intense. Agencies like the CFPB and OCC are laser-focused on borrower treatment, especially in default and loss mitigation scenarios. They’re not just looking at policies—they’re looking at execution. That means lenders need real-time visibility into servicing operations, audit-ready reporting, and platforms that can adapt quickly.

At the same time, borrowers expect more. They’re comparing their mortgage experience not to other lenders, but to Amazon and Apple. They want mobile access to payments, escrow tools, payoffs, credit scores, and equity information—all in a few clicks. If your system can’t deliver that, it reflects poorly on your brand—regardless of whether you service in-house or through a subservicer.

Legacy platforms and fragmented workflows are a liability. If your borrowers are calling in to get basic information, you’re already behind.

Subservicing Is Growing—But It’s Not a Silver Bullet

Over the past 10 years, subservicing has grown rapidly—and for good reason. It offers scale, cost control, and regulatory expertise. At STRATMOR, we see more lenders—especially IMBs and credit unions—exploring subservicing as a way to stay nimble and compliant without the infrastructure burden.

But here’s where I get concerned: too many lenders treat subservicing as a “set it and forget it” solution. That’s a mistake. You’re still on the hook for borrower treatment, no matter who’s handling the calls. And not all subservicers are created equal.

If you’re going to outsource servicing, you need a real partnership—not just a contract. That means:

• Setting SLAs tied to borrower outcomes, not just task completion
• Demanding transparency into call center metrics, satisfaction scores, and compliance performance
• Reviewing scorecards regularly—and being willing to make a change if your partner isn’t delivering

The lenders getting this right are treating their subservicers like strategic partners, not low-cost vendors.

The Hidden Gold Mine: Servicing Data

Here’s where it gets exciting: servicing is a treasure trove of borrower insight—and most lenders are barely scratching the surface.

Think about the data you have at your fingertips: payment timing, escrow fluctuations, property value changes, even customer service interactions. All of that can be used to detect risk, identify opportunities, and proactively engage borrowers before they start shopping elsewhere.

At STRATMOR, we’ve found that just having a single touchpoint with a borrower—an email, a call, a statement clarification—can significantly improve customer satisfaction and retention. In our MortgageCX Servicing Program, borrowers who reported a servicing interaction within the past 12 months had Net Promoter Scores 10 points higher than those with no interaction. That’s not just a nice statistic—it’s a competitive advantage.

And yet, most lenders don’t have the tech infrastructure—or the mindset—to capitalize on it.

Integration Is the Key to Recapture

The real power comes when servicing data doesn’t live in a silo.

Too often, origination, CRM, and servicing systems are completely disconnected. That’s a missed opportunity. When you link those systems, you can time outreach for HELOCs, cash-out refis, or even purchase loans based on actual borrower behavior—not guesswork.

We’ve helped lenders implement data strategies that do just that. The results? Better retention, better recapture, and a better borrower experience—all while spending less on acquisition.

Unfortunately, recapture rates across the industry are embarrassingly low. If you’re letting your customers go elsewhere after you’ve already earned their trust, you’re leaving money on the table.

A Real-World Example: Strategic Overhaul, Real Results

One mid-sized IMB came to us last year facing familiar challenges: high servicing costs, declining borrower satisfaction, and weak retention. Their tech stack was fragmented, and their subservicer was underperforming.

We worked with them to:

• Select a new subservicing partner better aligned with their goals
• Establish clear scorecards and accountability metrics
• Launch a borrower engagement program powered by servicing analytics

Within 18 months, they saw a 28% increase in borrower satisfaction and a 17% boost in loan recapture.

That didn’t happen because they worked harder. It happened because they worked smarter, with a servicing strategy that aligned with their business objectives.

My Challenge to Lenders

If you take one thing from this article, let it be this: servicing is no longer just a compliance function—it’s a business driver. And in today’s market, you can’t afford to ignore that.

Ask yourself:

• Is our servicing operation delivering the experience our borrowers expect?
• Are we using our servicing data to drive engagement and loyalty?
• Do we have the right partners and platforms in place—or are we settling for “good enough”?
• Is our servicing strategy helping—or hindering—our growth goals?

If you’re not confident in your answers, it’s time to reassess.

Let’s stop treating servicing like a back-office function and start treating it like the opportunity it really is.

(Views expressed in this article do not necessarily reflect policies of the Mortgage Bankers Association, nor do they connote an MBA endorsement of a specific company, product or service. MBA NewsLink welcomes submissions from member firms. Inquiries can be sent to Editor Michael Tucker or Editorial Manager Anneliese Mahoney.)