Author: Denise Wymore

The mortgage loan has been originated. Now comes the hard part – beginning the long and arduous task of carrying out all the functions required to service the loan. Although the majority of lenders and servicers elect to perform servicing functions in house, huge benefits are to be gained by outsourcing the responsibilities to a trusted subservicer. These benefits include lower costs, more robust servicing technology and assistance with regulatory compliance (this help alone is often worth the move). Why, then, is there hesitation? This article addresses the 5 biggest misunderstandings about outsourcing mortgage loan servicing and what lenders and servicers need to consider and assess before opting to keep the servicing in house.

Misunderstanding #1 – Our credit union has the same per-loan cost to service in house as an outsourcing company.

Clarification – The real question here is what the credit union’s per-loan cost includes. More often than not, in-house servicers fail to calculate a comprehensive, fully loaded per-loan cost to service and therefore are not making like comparisons. For example, they exclude many fixed and variable costs (such as staff salaries, benefits and training, licensing fees, office supplies, postage, etc.) that are standard and customary when servicing a mortgage. Default costs and costs that stem from servicing mistakes – compensatory fees, etc. – are also typically excluded from their calculation. Let’s consider an industry perspective. Annually, trade organizations publish survey results of the typical cost to service based on loan portfolio sizes. According to the latest survey, financial institutions can expect to incur an average cost of $312 a year per loan for in-house servicing. Now compare the $312 in-house average to the average $75 annual per-loan price point of a leading outsourcer. True comparisons of actual per-loan costs for in-house versus out-of-house servicing reveal that substantial savings are gained by moving to an outsourced servicing strategy.

Continue reading The 5 Biggest Misunderstandings About Outsourcing Mortgage Loan Servicing

While sitting on my mythical mountaintop with my mythical beard flowing, some mythical predictions for 2017 have come to me and I feel compelled to share them (Denise told me I had to).

The New MBL Rule

For credit unions that have experienced business lenders, the new MBL Rule will enable them to customize their loan offerings that will make them very competitive with the community banks and annoy the banks even more.  For credit unions that do not have experienced business lenders but still make business loans, there will be many deer in the headlight moments as the credit unions try to explain why they made a loan to a member who convinced the credit union that the pet rock business was coming back and no security and guarantee was needed for the loan.

The community bankers trade association’s law suit against NCUA will fail but not before the trade association receives increased dues to fund their Don Quixote mission and not before their attorneys upgrade their boats from the fees earned.

The New Membership Rule

This also is a loser for the community bankers.  The current rule is less expansive than the membership rule enacted during the time Dennis Dollar was Chair of NCUA and the bankers lost that court battle.  I need to get to know the attorneys for the community bankers.  They are going to have really nice boats.

Continue reading CUSO Guru’s 2017 Predictions

Last year our keynote speaker, Erik Wahl brought music, painting and words of inspiration to kick off the event. This year we are excited to bring sports legend Dan Marino to the main stage, courtesy of Mastercard.  Rather than hearing a speech, Dan has agreed to a more casual Q & A setting where you’ll get to hear how leadership, teamwork, intense preparation and perseverance creates champions and winners.

A first-round draft pick by the Miami Dolphins in 1983, Marino became an instant NFL sensation, setting the standard for quarterback excellence. He became the only rookie quarterback ever to start in the Pro Bowl (1983) and was named the NFL’s Most Valuable Player in his second season (1984). The nine-time Pro Bowler (1983-87, 1991-92, 1994-95) played in18 playoff games and led the Dolphins to the Super Bowl in 1985 against San Francisco.

Upon retirement, Dan held 25 NFL regular-season quarterback records and was tied for five others, quarterbacked Miami for 17 years, positioning the Dolphins as perennial championship contenders throughout his career. One of three players ever to do so, he twice won the Dolphins’ Community Service Award (1996 and 1998), and was named the NFL Man of the Year in 1998. Dan was inducted into the Pro Football Hall of Fame in August 2005 and in 2010 he was ranked number 25 on the NFL’s Top 100 Greatest Players list.

Continue reading Sunshine, Networking and Dan Marino!!

I have been working with credit unions a long time.  For years I have accepted without question the concept that credit unions may only admit members who qualify as being within the credit union’s field of membership; be it a common occupation or association or a common defined community.  But with the issuance of the proposed NCUA changes to the field of membership rules, I ask myself, in the land of the free and the home of the brave where freedom of choice is sacrosanct, why does this odd notion continue to exist?  Yes I know it is in the Federal Credit Union Act but it is an outdated concept.

When the Federal Credit Union Act was passed in 1934, all financial services were locally provided through local branches.  There was no Internet and home banking software.  A member had to walk up to a teller to do his or her business.  Common bonds served as a means to locally organize a group of people to make a financial institution viable.  Today, if a credit union has the necessary technology tools, the credit union can serve anyone in the country.   Many members are well served by their credit unions without ever stepping into a branch.

I am a strong supporter of NCUA’s recent efforts to define fields of membership as broadly as possible but there are some old concepts that NCUA has permitted to linger.   The notion that a community cannot be adequately served if a branch is not within 25 miles is a concept that needs to be retired.  What is the magic of 25 miles?  Is 25 miles the distance that a horse and buggy can travel in a day?  Having arbitrary limits on the number of persons that can constitute a community also makes no sense.

Continue reading Reflections on Fields of Membership by Guy Messick

Each month we are highlighting at least one NACUSO member with an interview style format that is meant to be fun and informative. This month our focus is on NACUSO’s newest member, the National Credit Union – Information Sharing and Analysis Organization (NCU-ISAO)

What’s your current position and can you give me a brief overview of what it is you do in your work?

I am the CEO and Executive Director of the National Credit Union – Information Sharing and Analysis Organization. (NCU-ISAO).  This is a not for profit specifically targeted at helping the Nations Credit Unions accelerate their cyber maturity and build resilient systems to support their members.

What would you say most motivates you to do what you do? What are you most excited or passionate about? 

The credit union model of people helping people is an incredible culture.  It is this culture upon which the ISAO is founded and operates. Credit Unions are an integral part of the communities in which they exist, and a critical financial resource to the members they serve.

I want to hear the story of how you came to work with credit unions. What attracted you to work for NCU-ISAO?

I learned about the CU culture while working at PSCU, a CUSO located in St. Petersburg Florida.  While I came to PSCU to work in financial services, I quickly recognized the magic of the Credit Unions and their interaction with the communities.

Continue reading NACUSO Spotlight on Gene Fredriksen