#HousingDC22 Recap: Strategic Partnerships and Innovation in Servicing

Dan Sogorka (CEO, Sagent) and Jay Bray (CEO, Mr. Cooper) recently kicked off #HousingDC22 with a fireside chat with Housing Finance Strategies CEO Faith Schwartz to discuss the partnership established between Sagent and Mr. Cooper early in 2022. We’ve summarized the session so you can quickly get the highlights, plus you can watch the entire recording embedded below.

This conversation highlighted a singular focus for both of these servicing giants: the consumer. That alignment is the cornerstone for our strategic partnership focused on leveraging technology to help servicers efficiently provide the engagement that homeowners want, exactly when they need it. But how did Sagent and Mr. Cooper arrive at this crossroads? 

As Dan Sogorka said,

Sagent saw that the servicing industry as a whole was missing this giant opportunity. Here you have this consumer that everybody’s fighting over in the beginning to get 15 minutes to dance with, then here you have them sitting for 5, 10 years on your software platform and you’re really not engaging them at all. 

Dan continued,

“We saw this as a giant opportunity to: 
#1: Put the consumer at the center.
#2: Refresh the technology overall around the cloud, benefiting the consumers, the servicing users, and, frankly, the servicing business model.”

Jay said that Mr. Cooper has been investing in technology for a long time to solve problems in servicing, not only to make it easier for the homeowner to engage when and how they need to but to make the servicing process more efficient. So Mr. Cooper is excited to partner with Sagent because of the potential outcomes:

It’s a win-win at the end of the day because I think it’s going to be the best solution in the marketplace for the servicer and the best customer experience.

Regarding this strategic partnership to support the servicing industry, Dan shared several facts that show the integration of these two leaders: 200 technologists from Mr. Cooper have joined Sagent, with a new location in Dallas to open for those employees soon. With their deep originator and servicer perspectives, combined with Sagent’s domain expertise based on delivering servicing software for over 30 years,

We thought those two things together would pretty much be an unbeatable combination. Coupled with [Mr. Cooper’s] relentless drive to do better… the focus on customer service and their drive for new products and new inventions, it’s really aggressive, and it matches up with what we’ve tried to do with Sagent.

Jay also noted that, as a result of the strength and talent involved in the partnership, Mr. Cooper has been able to pivot to building out better origination solutions to close loans faster, enabling borrowers to self-serve when they want to. 

What’s next for the partnership?

As for what comes next, Dan said that Sagent is focused on what will be most impactful for customers and the company that creates value “for shareholders but also creates value for customers and consumers. We’ll have better, faster software that can be put in front of more people.”

Sagent is servicing well over 10 million consumers today, growing consistently; we have over 800 employees worldwide, end-to-end performing and non-performing servicing; and we’re doubling down on all of that with the Mr. Cooper team — their passion along with our passion. The next couple of years will be very exciting.

Jay concurred, explaining that Mr. Cooper will continue to grow beyond their current $800B portfolio across 4 million customers, aiming at $1T and 5 million customers by investing intelligently. “Thinking about investments: There are a lot of ways to deploy capital… we’ll continue to buy a lot of MSRs, but it’s also important to be intentional about investing in our platform and our team members.” 

The servicing landscape today, tomorrow

When Faith asked Dan about the servicing landscape right now and in the years ahead, he called out the “ebb and flow” movement he sees, where some of the biggest companies are shrinking, other companies are growing by buying up MSRs while the rest are steering away from that, with smart companies doing so based on their core competencies. But in any case, he sees a solid future made possible by new technology.

I think servicing is a viable business, and I think we need to keep making the tools better… The old model with software was ‘here are some tools, good luck.’ But we’re here as a teammate with you. Compliance is integral to this business, and it’s embedded in the technology.

Jay shared his perspective: “The state of servicing has changed. You go back 2 years or a year ago, originators could keep their servicing, margins were very large, and provided them with a lot of flexibility. Today, at 6% coupons, they’re not able to keep the servicing. I think you’ll see a lot of MSRs enter the marketplace (and we’ll certainly participate in buying our fair share of those). But I don’t think we’re going to see anything like we saw in the last crisis from a default standpoint.”

In closing, Dan said that he thinks the work that Sagent and Mr. Cooper are doing will be increasingly relevant in this tough market cycle.

“I think we have a huge role to play. In today’s environment, how do you get the right people engaged with the right borrower at the right time? It takes a lot of technology to do that… which is exacerbated if the consumer is going through some type of trouble… the empathy and the ability to get that person engaged quickly and efficiently is going to be huge. It’s a giant opportunity for Sagent to enable that going forward.”

You can see the full session embedded below.