More Than Money: The Cost of Mortgage Servicing
Mortgage servicing is a big job that comes with a fair share of risks. Lenders who do their own mortgage servicing must be diligent about the details. They must stay up to date on ever-changing regulations. They’re responsible for dodging massive fines when it comes to compliance. And there’s not much to be gained for all that hard work.
So, the big question is this: is it better to handle mortgage servicing in-house, or to outsource?What does mortgage servicing really cost you in either scenario?
In-House vs. Outsourcing Mortgage Servicing
For mortgage servicing, you the in-house vs. outsourcing options may depend on the size of your financial institution. Often it comes down to whether or not you can afford it. In-house servicing comes with more than risk. It’s a high cost and low reward venture. If your operations are smaller, it might be cheaper to pay a mortgage servicer’s salary than to outsource. But that position comes with high expectations. One mistake by an inexperienced servicer could cost millions of dollars in fines.In contrast, you could have a third-party expert on your side. One who knows the ins and outs of rules and regulations. On average, outsourcing costs about 10 dollars per loan per month. But many third-party servicers charge hefty fines to get you started.Choosing to outsource to a mortgage servicer— whether your operation is a small or large one— means a team will cover the behind-the-scenes work. But it’s not a one-size-fits-all solution.And you still have to take care of the other (most important) half of the job: making the homeowner happy.
The Break Down
Even with the best of the best on staff, the average servicer deals with 300–400 loans. What’s the right move when the amount of loans you service grows? Should you hire more people? As a financial institution expands, there comes a point when outsourcing is the smarter option. Consider this:If a mortgage servicer handles 50,000 mortgages and
- Each servicer handles 400 accounts
- They would need a department of 125 servicers at 400 mortgages each.
- The salaries for 125 employees at the average salary is much higher than the 10 dollars per loan per month it costs to outsource.
If you’re a small institution, we know what you’re thinking. Third party servicers only cater to large institutions. Their interest is turning big profit, and they charge hefty fines to establish a relationship.We think it should work a little differently.
More Than Savings
At Valon, our only job is mortgage servicing. We don’t have to worry about the other responsibilities of running a financial institution. Our business is mortgage servicing rules, regulations, and compliance.Our system is automatically updated with new regulations so we don’t miss a thing. It comes in handy with the constant updates and changes for servicing during COVID-19.We devote 100% of our efforts to helping your institution meet the demands of mortgage servicing. And we’re good at it. We take care of the nitty-gritty. You have more resources to direct to other operations.The Valon platform is scalable and modular, and we don’t charge any upfront fees. If you’re a small credit union, we want to be on your team. We offer special attention to small lenders because we know that catering to the community you serve is important. Let us take the risk off of your hands.We believe that mortgage servicing should always be “member first”. That’s why we offer customer service to both lenders and homeowners.And working with Valon costs the same as other external providers. Without the fees. Without being profit driven. And with special attention to small institutions and homeowners.