​3 reasons to hire a servicer

On the September 21 episode of my Lykken on Lending broadcast, we had the opportunity to discuss the servicing aspect of the industry with David Allison of Dovenmuehle Mortgage. At one point in the conversation, we discussed the fact that some organizations do their servicing in-house. Why should lenders outsource their servicing? Here are a few reasons that David gives:

• First, the increased emphasis on compliance has made it difficult for lenders to catch everything. Outsourcing servicing can help lenders specialize on origination and allow other professions to shoulder some of the responsibility.
• Secondly, the cost savings can usually justify outsourcing your servicing. By specializing on the servicing aspect of the business, services have built efficiencies that allow them to operate on a more cost-effective level.
• Finally, the high level of quality by organizations that specialize in servicing can make it an easy decision to outsource servicing. Again, this all comes down to specialization. Subservicers focus exclusively on servicing and are able to devote all of their skills and attention to that end.

As with anything else, deciding whether or not to hire a subservicer or do servicing in-house depends on the structure of your organization. But it's clear that there are valuable reasons to outsource. Whatever your choice, make it wisely. It can make a huge difference either way.