One major thorn in the side of the mortgage industry has been a lack of standardized procedures between mortgage servicers, which results in missing information and unhappy customers.
This is also the case with transfer of service (TOS) between mortgage servicers, according to a recent analysis published by the STRATMOR Group. Information is lost in translation: transferors wash their hands of the mortgage servicing rights (MSR) they send to the transferee, and the transferee complains of missing information that is vital to the account. As a result, borrowers miss payments, experience interruption of service, and ultimately, when the time comes to secure another loan, decide to take their business elsewhere.
However, there’s a remedy for this malady, according to STRATMOR: a unified methodology that identifies industry services, standards, and best practices for TOS.
As defined by the report, there are three key factors that will help to make TOS seamless: the first is to define current operational practices between transferor and transferee to identify any incongruences in their respective capabilities. The second is for communication to take place that will lay out exactly how the transfer will take place while at the same time taking into account step one. The final is defining a timeline for major tasks and milestones, as well as key risks and implementation assumptions.
But simply communicating is not enough—the two mortgage servicers need to test their plan with trial transfers. Once the tests have completed, the transferor and transferee have to reconvene and reanalyze the results, testing again if need be, until they’ve established a seamless transfer of the test data.
Only then can they begin the transfer of the MSRs. Still, it is outlined that each transfer should be monitored by the transfer command center.
For further reading, access the entire report here.