Loan Subservicing Benefits
Offer mortgages to your customers without investing in the servicing infrastructure |
While many Participating Financial Institutions (PFIs) choose to manage all of the mortgage needs of their customers primarily to maintain the customer connection, the Mortgage Partnership Finance® (MPF®) Program offers the opportunity for PFIs to utilize subservicing – a valuable benefit that can be a great alternative solution for loan servicing without sacrificing the customer relationship.
Utilizing the loan subservicing option allows PFIs to contract the loan servicing to a third party subservicer. The PFI can then concentrate on meeting the origination needs of their customers while retaining the value of the mortgage servicing rights and continuing to enjoy the advantages of partnering with their Federal Home Loan Bank (FHLBank).
PFIs that engage the services of a subservicer can continue to compete in their marketplace for loan originations, receive a competitive price execution for the loans sold, and, if selling under the MPF Program’s credit enhanced products, receive Credit Enhancement (CE) Fee income.
This loan subservicing opportunity is truly a win-win solution for the PFI and the customer. The PFI continues to preserve the client relationship while also retaining the servicing fee income, but contracts with a subservicer to perform some or all of the servicing functions related to the loans. It is for PFIs who are actively engaged in mortgage lending, but who may not have the resources or experience to service loans and can also be a cost-saving opportunity. A subservicer will also private label and be completely seamless to the customer who continues to enjoy the local, community relationship they value.
Here are some highlights to subservicing:- Reduces the amount of overhead required by removing the fixed costs associated with servicing, such as staff and technology
- Maintains the customer relationship and allows the PFI the opportunity to manage the customer throughout the life of the loan through private-label subservicing
- No minimum volume requirement; as a result, small and mid-size financial institutions can achieve cost savings immediately
- Subservicers are well-positioned to monitor and stay current with MPF servicing requirements along with local, state, and federal regulations
For More Information
For additional information about using the subservicing option, please contact your FHLBank or MPF marketing representative, visit www.fhlbmpf.com. |
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