Selected Services allows investors to choose from a customized menu of services, complementing their existing mortgage servicing activities.
Recruiting, retaining and managing staff to conduct non-core activities can consume management resources to the point that key activities do not get the time they deserve. Outsourcing frees management to focus on those activities that are truly important to the success of the organization.
As the investor, you can tailor a set of services that fits with your unique business model.
Some activities lend themselves to scale or are only possible with sizable investments in technology and infrastructure. These activities are perfect candidates for outsourcing.
Which Services to Select?
In assessing which activities to conduct in-house and which to outsource, it may be useful to review mortgage investment from two dimensions: the activity’s strategic importance to the investor and its return to scale.
The less strategic and the more the activity lends itself to efficiencies resulting from scale, the more it is a candidate for outsourcing. The table on the next page illustrates some broad classes of activities from these two perspectives.
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|Portfolio Management |
|Mortgage Approval |
|Mortgage Underwriting & Presentation |
|Borrower / Broker Relationship Management |
|Collateral Administration |
|Data Management |
|Loan Setup |
|Assumptions, Renewals, Payouts |
|Reserve / Escrow Management |
|Property Tax & Insurance Administration |
|Billing, Collections & Remittances || || |
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For example, mortgage underwriting and the preparation of the associated presentation to an investment committee may be something that an investor feels is too important and, in the case of mortgages, too specialized to outsource. Additionally, there are probably not material returns to scale. As such, this work is probably not a good candidate for outsourcing.
On the other hand, billing and collection activities or insurance administration may not be deemed strategic to an investor’s mortgage investment program. Such activities lend themselves to scale, as do most servicing activities. These are the kinds of activities that may be great candidates to outsource to CMLS.