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.
continue reading »