Are mortgage brokers better off with lenders that retain servicing?

Mortgage brokers at independent brokerages who partner with lenders that retain servicing rights have better success in sustaining business growth than those that do not.

That’s according to wholesale lender Home Point Financial which says it has run a 6-month experiment to find the extent to which loan officers are able to recapture business from customers without action from the lender.

During the experiment, Home Point did not take any marketing action including phone calls and direct mail, on more than 70,000 wholesale loans that it currently services.

It found that 1,479 loans were paid off due to home sale or refinancing and just 208 (14%) were recaptured by the originator and taken to any lender, not necessarily Home Point.

“Mortgage brokers are at a strategic disadvantage compared to consumer-direct lenders when it comes to staying in front of their customers and driving repeat business,” said Phil Shoemaker, Chief Business Officer of Home Point Financial. “Brokers just don’t have the resources to compete from the standpoint of data, marketing infrastructure and CRM capabilities, but where they can level the playing field, and even outperform retail lenders, is by partnering with a wholesale lender that retains servicing for the life of the loan, does right by the consumer, and empowers brokers to create customers for life.”

Many lenders sell off servicing rights
Home Point says it services more than 95% of the loans it originates while more than half of the top 20 wholesale lenders sell servicing rights, often within 2 years or origination.

“A truly effective partnership between a wholesale lender and a mortgage broker is about more than the first 30 days of loan closing, or even the first two years of a loan – that’s just one piece of the process,” added Shoemaker. “The real sustainable value comes from the ongoing data, marketing support and quality servicing experience that the wholesale

lender delivers to help mortgage brokers stay connected with their customers for the next transaction, even when that transaction doesn’t happen for several years.”