Source: Housing Wire —
Mortgage servicing is a scale business, meaning the economics of scale can be achieved with larger servicing portfolio by spreading the fixed costs among more loans being serviced. Such scaling; however, hasn’t achieved the expected results as indicated by both the increase of servicing cost on a per-loan basis and on loans serviced on a per-employee, basis according to the research for the past decades by the Mortgage Bankers Association.
This trend is more distinct for the non-performing loans whose servicing costs quadruple from below $500 before the housing crisis in 2008 to more than $2,000 in the past few years. Apparently, such an increase is largely due to the compliance requirements posed by the regulators. The servicing industry should reform by adopting new technologies and data-driven approach to automate the compliance process cost-effectively.
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