So, servicers say they don’t use spreadsheets anymore. Really?
When receiving the report of loans to be onboarded that wasn’t anticipated, are your systems capable of managing exceptions, communications, and all the other events and activities that are regulated? When the CFPB tweaks billing cycles, statement generation, or required borrower contact, are you confident your systems can support all these requirements? When HUD updates loss-mitigation guidelines for disaster recovery, are your systems able to properly consider both new and unchanged requirements when determining eligibility and options?
The mortgage industry prides itself on embracing technology. Yet, when in doubt, most mortgage servicers — even those with clearly defined strategies to innovate — still resort to the old standby: spreadsheets.
Unfortunately, spreadsheets do not represent a responsive or flexible business approach, let alone a cost effective one. Mortgage servicing remains a cost center with tight margins and constrained human resources. This can be even more troublesome in the current MSR market, where there are additional demands to create operational efficiency, minimize overhead and manage risk, as well as pressures to improve the customer experience and retention.
In the post-financial crisis era, servicers cannot escape these challenges. Nor can servicers avoid the need to bridge gaps created by unceasing changes in regulations, investor guidelines, and program offerings. Even if a servicer is fortunate enough to have a healthy technology budget, these constraints create breakdowns in processes, uniformity and efficiency.
Servicing teams and their management may think the use of spreadsheets is a cheaper alternative to purchasing and implementing different applications to try to automate processes. This is not accurate from several perspectives.
For one, spreadsheets are never integrated with the data needed to ensure accurate and complete management of the corresponding calculations or activities that must be tracked. Spreadsheets are simply incapable of accounting for the vast amount of data that impacts business scenarios in real time. An organization requires decision making that is capable of surpassing loan level detail and can aggregate data in a meaningful rollup, ensuring the critical visibility and flexibility needed. This simply isn’t possible with spreadsheets.
There is an answer, however, and it resides in automated workflows with dynamic pathing. These are nothing like workflows of the past, but workflows that are capable of positioning an organization for today and tomorrow.
Such workflows require more sophistication, flexibility and transparency than most existing systems can support. But they will free staff from day to day concerns that result in overlooked critical requirements. And they will take away the urge to resort to a spreadsheet as a means to getting the job done.
How does this all happen? First and foremost, servicers need to put control over workflow in the hands of operations, so they’re not waiting for IT development resources to free up. Second, the workflow framework has to embody complex rule structures that can support today’s plethora of conflicting and parallel guidelines in addition to representing individual servicer needs. Last, but not least, it needs to effectively bridge existing systems and point solutions, as well as lend itself to access by internal users and consumers.
They key to all of this is leveraging automated workflow technologies, which make it possible for servicers to overcome the increasing number of market and regulatory demands while simultaneously innovating a better customer experience. Adopting them means saying goodbye to your old spreadsheet addiction for good. But the sooner you make this decision, the healthier you’ll be.
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