With a challenging year ahead, when does mortgage subservicing make sense?

Suggestions for how to weigh the pros and cons as you set or refine your home loan processing strategy.

While there’s no need to begin 2023 in a panic, the business of servicing mortgages is likely to grow infinitely more challenging in the coming year. Falling home prices and inflation have many housing market experts predicting a rise in defaults and foreclosures this year, and there are signs this trend has already begun.

No wonder a growing number of credit unions are considering a subservicing strategy to better manage their servicing costs. In fact, more credit unions are already leveraging subservicers, as NAFCU reported last year that subservicing has grown from less than 1% of mortgages in the 1990s to a $3.8 trillion industry in 2021.

Many credit unions I talk to are discussing whether subservicing makes sense for them. However, the decision isn’t always clear. How do they weigh the pros and cons? And what does a sound subservicing strategy even look like?

What Lies Ahead

The first step in determining whether to continue servicing mortgages in-house or utilize a subservicer is performing an internal review of your current servicing operations and how well your present strategy will meet future market challenges. A very important factor to consider is the outlook for the housing market and the overall economy.


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