Life-Cylcle Lending: Challenges Posed By Disparate Servicing Verticals

*Challenges Posed By Disparate Servicing Verticals*
**By Joe Dombrowski**

***Many institutions have grown accustomed to having one system for first lien mortgages, another system for second liens, yet another for lines of credit secured by real estate, and possibly even a fourth system to accommodate other installment loan products. A stratified operating environment may also have separate systems to help manage collections and investor accounting.

****Having multiple platforms can challenge executives charged with trying to rein in costs, sustain regulatory compliance, ensure data integrity and drive operational excellence. Since those systems likely use entirely different processes and procedures, the ability to have a collaborative lending strategy on an enterprise scale is severely limited. A multiple-platform approach also impacts the borrower experience because inefficient processing dashes expectations for real-time, right-now updates and customer service. Furthermore, since each system requires maintenance and support, there is significant – and costly – duplication of effort, driving up the cost of servicing and wasting manpower.

****Developing, enhancing and maintaining efficient processes can be severely challenging for organizations using multiple servicing platforms.

****>> Chief Operating Officer – Monitoring compliance metrics and generating the necessary audit reports from multiple software applications is labor intensive and cost prohibitive. The effort required to provide enterprise-level oversight can divert attention away from more beneficial duties, such as fine tuning day-to-day performance that promotes both efficiency and profitability.

****>> Chief Information Officer – Managing data integrity throughout the organization can be problematic. Each servicing system has its own architecture, making the infrastructure and networks extremely difficult to manage and maintain. Disparate systems may not link together, making the validation and certification of customer data exponentially more challenging.

****>> Chief Compliance or Risk Officer – There is heightened risk for the organization when regulatory changes must be duplicated across verticals, making compliance initiatives much more difficult to implement and manage. Identifying potential vulnerability and risk, and developing corrective resolution plans, can put unwarranted stress on staff resources. Maintaining transparency while successfully addressing compliance initiatives can further challenge the organization.