Mortgage originators have made substantial investments in technology or digital services to improve the mortgage servicing experience, but still, the overall mortgage servicer satisfaction does not seem to have improved, according to surveys conducted. According to an MBA Newslink article, in 2016, the industry average for overall satisfaction was 755 (measured on a 1000 scale). In 2017 it was 754 and this year (2018), it is 758 – the overall mortgage servicer satisfaction has been relatively unchanged over the past three years. However, there have been substantial investments in technology in the meanwhile. This would lead us to believe just implementing technology may not be enough – the technology needs to be the right technology and tailored to the specific need. The primary element of all mortgage servicing processes is a core servicing platform, but there may be the need to bring in some additional technology, and importantly, to customize it to match the core systems as well as the specific business needs for it to work seamlessly.
Tax servicing is no different. And especially if tax servicing and reporting are outsourced to a third party, the first requirement should be to ensure that the vendor partner is able to provide a platform or solution that integrates completely with processes and information in the core servicing systems. Today, many service providers are offering solutions driven by technology, but sadly they may fail to customize the solution to fit into the lender client’s core business and their servicing system.
What are the customization needs in tax servicing?
The first step is understanding the customers’ servicing function. The right vendor will never be the one to recommend a solution without really understanding the lender’s specific business needs. A deep-dive into operations, processes and business goals is critical to assess the key business challenge and thereby the potential solution. And clearly, this should not be a ‘one-solution-fits-all’ approach. The vendor must be able to completely customize the solution/platform they have to offer for the lender’s servicing processes and systems, their on-demand reporting should be customizable as per the servicer’s specifications, and the vendor should be in sync with how the customer expects problems to be solved and what their timelines are, etc. An experienced vendor partner will work closely with your team to develop processes & solutions while ensuring a smooth transition, improving your organization’s efficiency without any added hassles. We have found that the following three key factors allows a vendor to best customize their tax servicing solution for you:
Factor 1: Portfolio size –
The larger the servicer and their portfolio, typically the more complex their current processes. Also, large portfolios tend to have a variety of loans, with multiple parcels in each. Large portfolios bring the large risk of exposure. Extensive industry expertise is required to bring in best practices, like regular triggers, tracking and upfront visibility of portfolio status and for probable delinquencies. Just as larger firms require customized solutions, smaller firms also benefit if the solution is customized to their needs, as their issues may be different, but equally important e.g. the need for insight on particular details for tax collection in local area or counties.
Factor 2: Complexity of loans –
Tax servicing of residential mortgages is very different from commercial ones. Residential loans tend to be uniform, although distributed across multiple taxing jurisdictions, while large commercial portfolios can be complex. The more complex the portfolio, the more customized the tracking and reporting that is needed to satisfy the client needs. In case of commercial portfolios, a high-value property may be made up of a number of unique parcels for tax purposes, and may even fall across a number of taxing jurisdictions. In some cases, loans may be collateralized by a number of properties which may be in different states.
Factor 3: Delinquent exposure –
Knowing the health of the portfolio is critical while deploying a solution for tax servicing. The more the potential delinquent exposure, the more stringent reporting and tracking that is needed. In such cases, just dropping the servicer a note once a year to let them know which parcels are late on their tax payments will not work. Vendors must be able to assist lenders with the list of all properties that were last reported as delinquent, or in their analysis are candidates for potential delinquencies. Providing regular delinquency information after every payment installment, with follow up on any previously reported delinquencies, will help the lender mitigate the potential risk of losing any property to foreclosure or a tax sale.
RETS is a Real Estate Tax Servicing Platform that is appropriately configured with advanced features to mitigate vital tax servicing challenges faced by lenders. RETS specializes in delivering assured cost savings with a flexible fee structure based on loan type, reduced risk with upfront visibility of delinquent exposure, exceptional client service with live chat and a seamless experience with an integrated customer ticketing system. It is backed by a team with 100+ years of tax servicing proficiency and excels in building collaborative solutions specific to client business needs that can be customized irrespective of portfolio size.