Mortgage loan servicing was one of the critical processes that broke down during the 2008 housing crisis, but it has now become one of the most integral components for the market’s recovery, according to an October 2014 CoreLogic (NYSE: CLGX) white paper.
That breakdown transformed mortgage servicing from a back-office operation into a focal point of legislative, regulatory and consumer action, says the white paper titled “Mortgage Servicing: Foundation for a Sound Housing Market,” written by CoreLogic’s Stuart Quinn, policy research and strategy analyst, and Faith Schwartz, senior vice president for government solutions.
As a result, laws and regulations now have the potential to drive up operational costs for the mortgage servicing industry, and as banks today shed their servicing assets to comply with various capital requirements and deter further headline risk, the important role loan servicing plays in the post-crisis housing finance system becomes more apparent.
“As the industry restoration goes forward, it’s important to keep in mind that the ability to aggregate and service mortgage loans, or subservice others’ mortgage loans, is a key component of efficient and effective primary and secondary mortgage markets,” write Quinn and Schwartz.
Though the conversation around servicing has not yet fully subsided, the next few years will likely grow the foundation established during the crisis, says CoreLogic.
“This particular segment of the market has been through a massive reformation and the industry remains in the early stages of fully implementing voluminous regulations that will be monitored and reviews for effectiveness in the years to come,” write Quinn and Schwartz.
View the CoreLogic white paper.
Written by Jason Oliva