Is It Crazy to Switch Mortgage Servicing Systems?

By John McCrea, SVP of MortgageFlex and Michael Harris, Partner at BlackFin Group

No one likes to talk about implementing a new technology system, especially when it is mission-critical software that will be used on millions of loans in a portfolio. But when the alternative is to continue using software that was designed many decades ago and doesn’t offer anything close to what modern systems can, it’s time to make a decision for change.

Mortgage servicing is a perfect case in point. Servicing used to be a very simple business, sending out invoices, collecting payments, and updating a ledger. But over the years, this business has become increasingly complex.

Today, heavy regulatory oversight and razor-thin margins make servicing a much more challenging business. But in a market where servicing revenue is the only real profitable business a lender has, everyone wants to get into it.

The question is, what tools should be implemented?

In a new business, this is relatively straightforward, especially given the affordable nature of modern servicing software. But what about switching over, a growing concern with millions of loans on an old platform – is switching over to a new Servicing System crazy?

The Mortgage Servicing Expert Consultants at BlackFin Group don’t think so.

Our executives recently sat down with them to discuss the issue further.

Taking a closer look at the real risk of change

We’ve written elsewhere on the MortgageFlex blog about why more lenders are calling us to discuss our new mortgage servicing platform. There are a lot of reasons mortgage servicers are ready for something better. But what about the risk?

We asked Michael Harris, head of the mortgage servicing consultancy from BlackFin Group, why he thought the decision shouldn’t be as scary as many people seem to think.

“Many executives underestimate the risks involved in moving to a new servicing platform,” Harris said. “You have to do it correctly, but there are ways to reduce the risk and overcome the stigma of making a change that will better serve your business.”

Harris laid out three primary reasons that switching is not as risky as it was in the past.

1. The long implementation times required in the past are no longer an issue. Today, a servicer can make the switch in less than 90 days. Compare that to the 1-2 years it took in the past and the risk fades away.  

2. A servicer doesn’t need to have 75,000+ loans in a portfolio to justify the switch. BlackFin has worked with servicers handling half that many profitably on new software. And credit unions are doing even less quite easily. And you don’t need servicing executives with 40 years of experience on staff when you work with a partner who already employs them.

3. The risks of data in motion between an older platform and a newer one are overblown. Many people have done it successfully at this point. It’s only a matter of moving about 85 fields per record. It still requires expert handling, but it’s not a significant risk.

When it comes to expert implementation, MortgageFlex is proud to partner with BlackFin Group to help new clients make the switch from outdated software to our platform, safely, securely, and in full compliance. Learn more by visiting www.BlackFin-Group.com or by emailing BlackFin at info@blacfin-group.com

You can also find out more about how easy it can be to move into the future of mortgage servicing and realize more bottom-line profit by reaching out to us today. Visit MortgageFlex or reach out to John McCrea at 1-860-460-7418 for a live demo