"As originations increase, many lenders see selling loans to Government Sponsored Enterprises or other investors as a critical strategy to free up capital and manage portfolio risk. But did you know there is an advantage to retaining servicing rights on sold loans that creates a steady revenue stream through servicing fees while strengthening borrower relationships that can lead to future business? The catch? It takes the right software to make it work."
"The hidden costs of using the Core System At first glance, the core banking system's basic servicing functions seem like the easy choice for lenders evaluating their servicing software options. It's already there, already paid for, and handling other products just fine. Why add more software? The reality is more complicated. Mortgage servicing involves regulatory requirements and operational complexities that differ fundamentally from those of other loan types and products."
Mortgage origination volume is projected to rise to $2.2 trillion in 2026, improving market outlook after years of elevated interest rates. As originations increase, lenders commonly sell loans to GSEs or other investors to free capital and manage portfolio risk while considering retaining servicing rights for steady revenue and stronger borrower relationships. Retaining servicing rights can create servicing fee income and future business opportunities, but success depends on appropriate software. Core banking systems often lack the dedicated mortgage functionality needed for escrow management, investor reporting, and other mortgage-specific regulatory and operational requirements, leading to manual workarounds and higher labor costs.
Read at www.housingwire.com
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