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Common Misconceptions When Using a Sub-Servicer

Many mortgage bankers are hesitant to consider the benefits of using a sub-servicer due to several common misconceptions. Loss of control over borrower and lender communications, risk of having customer information falling into the hands of a competitor and the opinion that “no one will take care of my customers like I will” are all common misconceptions we’ll explore in this article.

Sub-servicing as an industry has been around for decades. It is the norm in the single family lending industry and has been growing in the commercial lending space in recent years. The reasons for it’s growth are many including gaining the efficiency of scale which improves profitability, improving customer service by having more resources and expertise, and allowing owners to focus on generating new business. Most owners don’t realize the amount of time they spend engaged in servicing issues until they off load those responsibilities to a professional sub-servicing shop.

Now for the misconceptions. Instead of losing control over communications, a professional sub-servicer will tailor make an agreement with each client where the client dictates the role of the sub-servicer in each interaction with borrower and lender. The sub-servicer only takes action in accordance with the client’s directives. For those rare or unanticipated events the client is always contacted for direction before any action is taken.

In the case of data security, the risk of having your customer data compromised is probably greater in most mortgage banking shops than it would be inside the secure environment of a sub-servicer. It is no secret that many mortgage banking shops are running outdated technology and using spreadsheets to supplement their servicing operation. A professional sub-servicer is going to have the most robust software and cybersecurity systems. Often times these systems just are not affordable for small and mid-sized shops. From disaster recovery plans that are tested regularly to cyber security insurance, your data security is always top of mind for the sub-servicer.

Finally, you’re right if you believe that no one will take care of your customers like you will! However, using a sub-servicer to provide the routine services of payment process, investor reporting and data security is one of the ways you can take better care of your clients. If you’d like to discuss how we can be an asset to your servicing operation, feel free to contact Bob Stout by email at or by phone at 615-545-6839.

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