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Servicers Shifting Focus to Digital Infrastructure

Mortgage infrastructure fintech provider Brace has observed a massive forthcoming boon in the servicing sector, according to the company’s latest Mortgage Servicing Pulse Report.

As the market experiences continued staffing cuts by mortgage originators due to reduced volume, fed by the post-pandemic effects of inflation, rising interest rates, and low housing inventory the mortgage market is experiencing its largest quarterly decline since 2003.

As the originator side is seeing a rash of layoffs, the servicing sector is expected to see a rise in the importance of mortgage servicing rights (MSRs), and options to keep homeowners in their homes. Policymakers, investors, and mortgage servicers all tend to agree that increased home retention is important for equity and sustainability in housing finance, and onboarding servicing teams will be the first step in encouraging a more performant market.

“Each quarter, Brace sits with the top servicers to discuss industry impacts, and we’re finding that many individuals in mortgage origination have the required qualifications and licensure to move into servicing divisions,” said Chris Eriksson, VP of Customer Development at Brace. “Digital infrastructure will take the pain out of a shift from origination to servicing. Adding new staff members quickly and compliantly to aid current team members who are already spread thin is the most critical component at this time.”

And as more originators exit the industry, many are considering a move to another position or a completely different industry altogether.

Customer observations as gauged by Brace included:

  • Onboarding: Tech solutions put in place during periods of crisis should be evaluated. In many cases, software may not be fully integrated with other systems yet, and require manual work that should be automated. Having a single digital tech solution for daily workflows enables the entire mortgage ecosystem to consistently perform better throughout all fluctuations in market cycles.
  • Work from home capabilities: Upwork reports that by 2025, approximately 36.2 million Americans will be working remotely, an 87% increase from pre-pandemic levels. Technology unifies people, and positive employee experiences are critical to accelerating transformation across businesses.
  • Digital enhancements: Those polled by Brace feel that servicing will inevitably go down the same road to digitization as origination divisions, but the transition has been slow. Customer engagement is essential for all players in the mortgage industry to survive in this current environment; they must be able to achieve economies of scale and rationalize their operations.

“Digital transformation is no longer a choice—it is necessary to keep pace in today's changing world,” said Jose Morin, VP of Servicing at Brace. “Loan servicing plays a vital role in the health of the mortgage industry. With the mortgage industry now catching up to broader trends in banking and shifting its focus to customer engagement and satisfaction, the elements that fulfill homeowners’ expectations first are going to be clear winners in this evolution.”

About Author: Eric C. Peck

Eric C. Peck has 20-plus years’ experience covering the mortgage industry, he most recently served as Editor-in-Chief for The Mortgage Press and National Mortgage Professional Magazine. Peck graduated from the New York Institute of Technology where he received his B.A. in Communication Arts/Media. After graduating, he began his professional career with Videography Magazine before landing in the mortgage space. Peck has edited three published books and has served as Copy Editor for Entrepreneur.com.

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