How Mortgage Process Outsourcing Fix Loan Modification?

How does Mortgage Process Outsourcing Help with Loan Modification?

The current situation of the economy has brought a lot of problems when it comes to loan applications. The mortgage process outsourcing becomes the overall remedy for all these struggles.

Lots of consumers lost their jobs because of the pandemic. As a result, they are having a hard time paying their mortgage loan. 9.6% of Americans aged 55 and above have no confidence that they can pay their monthly rents anymore. 

That is why the US Government passed the $2.2 trillion CARES Act, which aims to guarantee support for federally-backed mortgages. This will help borrowers pause their mortgage payments for a short time until they’ve recovered from the COVID-19 pandemic.

However, support for forbearance is only applicable to loans approved by The Federal National Mortgage Association (Fannie Mae) and The Federal Home Loan Mortgage Corporation (Freddie Mac). Other non-bank lending companies must still comply with forbearance or provide other options.

The majority of lending companies in the USA are non-banks. They consist of 86% of all mortgage providers. That is why it is critical to create a solution for them, too or most of them will file a bankruptcy claim in no time.

With this in mind, let us look at how mortgage outsourcing helps small and medium lending companies.

Long Waiting for the Lending Companies Telephone Line

A federal policy states borrowers should inform their mortgage services immediately if they can’t pay their monthly mortgage. The borrower and loan provider have to come up with a solution on how to ease the situation. Unfortunately, it is not easy as more than 4 million people have applied for forbearance.

You need many people to attend to all of these phone calls. But, you no longer have enough funds to hire people since many borrowers request to pause their payments. This is where outsourcing comes in handy. They can provide quality call center agents to attend to the request at an affordable price.

You can quickly sort out all the requests and process them immediately. On top of that, these call center agents can work for your lending company 24/7. So you can expedite the forbearance process as soon as possible.

High Foreclosure Rate

Some who can’t contact their mortgage provider end up not paying the loan. They are unable to let the lending company know about their situation. Thus, there are a lot of foreclosed properties during the pandemic. 

In addition to that, loan forbearance shares rose from 0.25% to 2.66%. So, even if a borrower gets the forbearance, it is still possible that they can’t pay the mortgage in the future. As a result, the foreclosure rate increased from 0.36% to 1.16% during the pandemic. The rate trend is getting lower from 2010 until it rose again during COVID-19.

You can prevent a high foreclosure rate by having a team that can do an outbound call. These agents can call your borrower and make a follow-up about their payments. Once they reach the person, your agent can also process their forbearance request in case they can’t pay the mortgage.

All in all, call center companies can provide a team that can do both your inbound and outbound needs. At the same time, they can assist you in processing necessary documents for your borrowers. It makes everything efficient at an affordable price.

Record-Breaking Low Mortgage Rate

Although the mortgage rate’s trend is downward since 2018, it is at its lowest during the pandemic. The rate for a 30-year fixed mortgage is at 2.810%, the lowest recorded percentage ever. 

This is alarming, especially for small and medium lending companies. They don’t have enough borrowers to sustain their operations. Therefore, they need to make some adjustments to their in-house team. This is to lessen the cost they’re spending on their manpower. However, it produces many problems like understaffing and overloading tasks.

The good thing is that you can also outsource back office to an offshore company. The BPO company can assist you in your human resource task. They can organize your files and encode all the data you need for the application. Besides that, they can handle the tech support, too. You are proving that there is no limit to what service you can outsource.

Sudden Rise of Loan Application Rate

The only good thing from the low mortgage rate is the high number of loan applications. People take advantage of the fact that they can get a property loan with an interest of 2%-3% lower compared to a couple of years ago. As a result, there is a 400% increase in loan applicants.

As good as it sounds, a high application rate also produces several complications. For starters, you need to attain every request otherwise, it is a wasted opportunity. It takes tremendous effort to process every application you have. In addition to that, it is almost impossible to monitor your current borrowers while entertaining new applicants.

Outsourcing loan processors can ease the burden ofof attending to all mortgage requests. You can focus on appraisal and getting the closest estimation to a land property. Besides that, you can reduce the risk of errors as some BPO companies are fully automated when processing documents.

Long Process Time

Aside from overwhelming tasks due to high application rates, the loan processing time also increased from 18-40 days to almost three months. This is a lot of time, and applicants might look for another lending company that has a faster turnaround time. It is not suitable for your business as it might affect your credibility as a dependable mortgage provider.

As such, you can depend on outsourcing when it comes to expediting your process again. They have software that will help you process loan applications faster. This software has its own database where you can record borrowers’ previous transactions. You can check if the applicant has a good credit score to support their mortgage request.

On top of that, you can also use this database to examine whether the applicant has previous transactions with other lending companies. Mortgage process outsourcing providers that use software can easily tag borrowers if they have an outstanding balance.

3 Reasons Why You Should Get Mortgage Compliance Outsourcing

There are a lot of reasons why you should outsource mortgage compliance. But for this short discussion, we’ll give you three of the most important benefits.

Removes the Risk of Fraudulent Applications

As previously stated, BPO companies have a database where they can access all the applicants’ information. With this in mind, they can also determine the borrower’s credibility and if they can pay the mortgage in time.

This is helpful as it might be a wasted effort if you approve a loan and the borrowers cannot pay a mortgage in the future. Mortgage process outsourcing will reduce if not avoid at all, those fraudulent applications.

Data Security

Aside from the services, BPO companies also have top-of-the-line security for your data. Mortgage process outsourcing also has a lot of sensitive information for your company and clients. That is why having a safety protocol for your documents is essential. Setting up your security system might take a long time and a lot of money.

Outsourcing is the most practical way to protect your data without spending too much money. Although you will forward the data to an offshore company, they will sign an NDA to hold themselves accountable for your information. Besides that, some BPO companies have certification from ISO and other standardization bodies to cement their credibility.

Can Easily Follow Up on Bank Defaults

Most tasks mentioned above involve following up with application documents or reminding borrowers about their payments. However, outsourcing firms can also create a team to deal with getting requirements from the bank.

Banks’ call queue is also longer because of direct clients applying for loans. So it would be best to have people who will allot more time to call these financial institutions and ask them about their requirements. It would be best to provide those to your borrowers whenever they plan to apply for a mortgage. 

These agents can also deal with banks whenever there is a dispute on the mortgage plan. 

Mortgage Processing Support Services for SMEs

SMEs can outsource almost every aspect of their business to a third-party service provider. However, the most common services are call centers and the data entry process. Here are some of the other tasks they can forward to a BPO company:

• Property Valuation
• Broker Price Opinion Service
• Land Appraisal
• Business Owner’s Policy (BOP) Insurance Service
• Loan Origination

Many are still discovering the vast potential of outsourcing their mortgage services—some already experienced several advantages, especially during the pandemic. 

Mortgage Process Outsourcing Companies in the Philippines

The Philippines is home to many BPO companies specializing in loan processing. However, most of them are focused on large companies and Fortune 500. Usually, they have a minimum required number of people to work for your company. Very few are doing partnerships with SMEs. 

If you are an SME looking for a mortgage process outsourcing service, go to Magellan Solutions. We have 17+ years of BPO experience with more than 100 clients worldwide. 

Our Business Developers can help you set up your key performance indicators (KPI). KPIs will guide you and monitor the progress of your business with us.

We also offer guaranteed flexible pricing options based. Magellan Solutions understands that start-up businesses have limited funds for outsourcing services.

Our security is also world-class because of different standard certifications. Magellan Solutions also has an ISO/IEC 27001:2013 Certification. It ensures your company’s sensitive data is safe in our system. Our expert team provides security measures against phishing and data breaches.

Contact us today and get a free 60-minute business consultation. Please fill out the contact form below.