Oct 12, 2011

How does the Loan Servicing Industry Work?

The method, by which the sub-servicing firms or the mortgage banks collect the interest payments and principals timely from the borrowers, is called loan servicing. The levels of services will vary depending on the kind of loan as well as the terms and conditions that have been negotiated between the investor seeking services and the firm that will provide those services.


The expertise:

The field of loan servicing is a specialised profession. It requires proven processes, systems, and the experienced professionals who will understand your exact business needs. The following services are provided by most of the loan servicing companies:

* They manage portfolios.
* Modified collection services.
* Insurance fulfilment tracking.
* Backup, primary and master servicing.
* Debt protection and cancellation programs.

Some companies also provide services regarding various loan types. Some of them are:

* Auto/motorcycle/ boat/ RV loans.
* Equity/ home equity loans.
* Consumer loans that is unsecured.
* Different kinds of personal loans.
* Small business loans.
* They also provide structured settlements as well as other facilities.

The delivery option:

Whether you choose ASP or better known as Application Service Provider or BPO that is also known as Business Process Outsourcing model or a mixture of both, they are able to modify their high end systems to meet your requirements and needs. They will provide thorough, security level portfolio reporting and information so that you can supervise your portfolio as actively as you need.

Application Service Provider or ASP: Some of them provide computer operation management as well as system management which gives you access to their technology platform without making too much investment.

Business Process Outsourcing or BPO: The loan servicing companies also choose the BPO method. These companies provide devoted loan servicing experts who will complement your staff or take the responsibility for everything starting from collateral liquidation to underwriting. They also offer service for conversion, servicing, and origination.

Besides handling all these responsibilities, the loan servicing companies also provide services when it comes to complaints handling.

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