This article originally appeared in National Mortgage News.
The demand for fintech innovation in mortgage servicing is strong, but servicing operations and regulatory complexity have made delivering this innovation slower. In servicing, the catchphrase “disruption” isn’t the hero of the story — precise, scale execution is.
The originations business is hard hit by 8 straight Fed hikes since March 2022. We’re down from $4+ trillion in originations two years ago to $1.9 trillion this year. But servicing keeps growing, with MBA estimating outstanding loans at $13.72T by December.
And top-of-mind for servicers right now are capital, cost control, compliance, customer acquisition/retention, and, of course, fintech.
The challenge for fintech leaders, then, is to incrementally replace existing processes and infrastructure while embracing the nuance required to execute with no mistakes and at this nearly $14 trillion scale.
The fintech that powers this execution must work as well for servicers as it does for their borrowers.
This is what we do at Sagent, and below I break down how.
The Best Tech Solutions Won’t Fix Flawed Processes
With fintech innovation in mortgage servicing, the challenge is not only with the tech, but also with outdated processes that need to be iterated upon in tandem as the tech evolves to augment those very process improvements.
A purposeful approach to reimagining mortgage servicing needs experienced servicing experts to first identify how to improve operational, customer service, and compliance models before implementing tech solutions.
At Sagent, our thesis is that we can remedy this with smarter, faster, cloud-native servicing fintech and a two-part execution plan. Phase one of that plan was to broaden our management team (more on that in a moment), renew and grow Sagent customer relationships, execute our landmark client/partner deal with top U.S. servicer Mr. Cooper, and integrate the Mr. Cooper fintech team we acquired into Sagent.
We’ve made quick progress merging Sagent’s software innovation speed with Mr. Cooper’s mortgage servicing depth to deliver solutions for our entire industry integrating two industry-best tech stacks and teams into Sagent.
In phase two, we’re focused on leading rapid progress on our next-gen software platforms for America’s intricate and highly regulated $13T mortgage servicing sector.
But we also understand that while shiny new tech can create point solutions within the mortgage servicing process, far too often, even fresh, new tech fails to address the root process problems and can, in fact, perpetuate the fragmentation of data, rules, and workflow.
Current mortgage servicing tech stacks are largely outdated, not due to a lack of creativity or a desire to evolve, but because servicers have to meet real-time borrower, regulator, and investor needs every day. Legacy systems and bloated infrastructure make it difficult to update tech while maintaining compliance and exceeding expectations for all stakeholders in the ecosystem.
As processes formed around tech limitations, they became flawed and all-consuming. Where’s the path out of this morass? By combining fintech and servicing operations expertise, servicing fintech leaders can identify areas where the process can be improved and rebuild the technology to better serve all stakeholders.
Truly innovative servicing technology must be built by individuals who understand how the regulatory environment has evolved to inform nearly all servicing operations decisions. This requires subject-matter expertise and on-the-ground experience because understanding the origins of process flaws is necessary to inform how the technology can be rebuilt.
Redrawing the Servicing Fintech Roadmap, Starting with Proven Experts
To effectively address the challenges of the mortgage servicing sector, the entire ecosystem requires a combination of fintech and servicing operations expertise.
Throughout an acute market cycle adjustment that began in 2022, Sagent combined deep tech expertise with unparalleled industry knowledge to simplify the vastly complex servicing space. Heading into 2023, Sagent already had a formidable team of servicing software experts at the helm, and we’ve audaciously doubled down on that in Q1.
Today’s most effective servicing fintech leaders were yesterday’s most effective servicing operators.
And that’s why we’ve further deepened our bench of industry heavyweights with several recent additions to our leadership team — including Fannie Mae vet and mortgage fintech pacesetter Marianne Sullivan as Chief Operating Officer, mortgage luminary Priya Seenath as SVP, Chief of Staff, Technology and Engineering, and mortgage servicing ops visionary Perry Hilzendeger as EVP of Servicing.
These additions underscore our stance that nuanced, technical software powering America’s highly regulated $13 trillion mortgage servicing sector must be built and led by servicing operators who get the details. This team’s experience and expertise validated that the goal of incorporating technology in the mortgage servicing sector should be to make the process easier, not to create flashy new solutions.
Building the Future of Servicing
The industry can best be reimagined by combining fintech and servicing operations expertise to incrementally innovate by bringing real-time solutions to real-time policymaking. The best way to achieve this is through experienced servicing fintech operators with the expertise and empathy necessary to build truly great technology.
Viewed this way, it’s not about “disrupting” the mortgage servicing sector for the sake of sounding innovative, but rather about actual, nuanced innovation that understands what changes must be made and when to execute with no mistakes across a highly regulated and complex infrastructure.
We’ve built a top-tier fintech team consisting of the most successful servicing operators and best-in-class product engineers/fintech leaders. Now, we’re consulting with and advising the industry’s top servicing organizations as we reimagine — rather than disrupt — the $13T+ mortgage servicing ecosystem.
This is how Sagent is changing the dynamics of America’s housing ecosystem, and it’s a modernization game-changer for homeowners, servicers, and investors.
This article originally appeared in National Mortgage News.