Despite rising servicing costs mortgage servicers remain focused on performance, regulations and leveraging technology in 2018 according to a new report by Fitch Ratings issued recently.
The report, which is based on the U.S. RMBS Servicer Roundtable in New York says that servicers identified five key performance areas of focus during the Roundtable:
- Preparedness for future industry performance stress
- Existing service continuity risk in U.S. RMBS
- Cost of servicing
- Challenges in comparing servicer performance
- Impact of the 2017 hurricanes on performance
Approximately 69 percent of servicers at the Roundtable responded that they were seeing negative impact after hurricanes Harvey and Irma earlier this year. However, they agreed that the ripple effect was not as bad as originally feared even though most of the borrowers in the affected areas did not have flood insurance. The servicers indicated that most of the property inspections have been completed and estimated that 5 percent to 10 percent of loans suffered significant damage.
Servicers also agreed that their performance has been enhanced through the use of technology and leveraging it will be their key focus for 2018. According to the report, servicers have been leveraging technology to increase automation and provide efficiencies to the servicing platform. The availability of new and improved technology has made tracking and dissemination of regulatory changes easier, leading to greater standardization and reduced risk of regulatory non-compliance. While servicing technology remains expensive and burdensome to implement, it can increase business efficiency.
Servicers said that they continued to invest in technologies and processes to make servicing transfers less disruptive, which should help to ensure smoother RMBS transaction cash flows. Approximately 75 percent of the Roundtable attendees indicated that new technologies have proved beneficial in servicing transfers.
Control over servicing costs and the increase in the number of states scrutinizing servicers are other trends for 2018 identified by the servicers.