Magazine article American Banker

The Secrets of Servicing Profits; Mergers Rattling Loan Brokers

Magazine article American Banker

The Secrets of Servicing Profits; Mergers Rattling Loan Brokers

Article excerpt

What traits do top mortgage servicers share?

The best firms increase their portfolios aggressively - three times faster than average servicers - and rely heavily on Fannie Mae and Freddie Mac loans that undergo stringent underwriting.

That's the word from a "best practices" survey of the mortgage industry by Arthur Andersen, Chicago. The financial consulting firm, a unit of Andersen Worldwide, contacted the 100 largest mortgage servicers. Twenty- seven responded to the servicing portion of the survey.

Superior performers - those wringing the most profit from their operations - mine their portfolios to turn up cross-selling opportunities, the survey said.

The lead bank benefits by providing more services to customers, while the mortgage unit gains from commissions for passing along leads, said Clyde Kofman, one of the survey's authors.

"All the financial information mortgage lenders collect provides a lot of opportunity for additional marketing down the line," Mr. Kofman said.

Car loans, credit cards, and deposit products are among the offerings with which retail banks can follow up, he said.

One thing top mortgage servicers don't do is take a cookie-cutter approach. The best firms use automated systems to handle routine tasks but assign employees to work out complex issues, the survey said. The best- performing firms also work frequently with outside vendors to develop original systems, Andersen found. …

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