Mortgage Loan Servicing and Subservicing: An Industry Overview

Abstract

The purpose of this project is to give an overview and an insight into the mortgage loan subservicing industry. An emphasis is placed on the significance of the industry, its history, external and internal factors, and its future path. Information to facilitate the project was obtained through various sources. Information gathered over a summer internship position aided in the general understanding of the industry. Fellow colleagues also gave an insight as to how different pieces of the industry fit together. The majority of the information collected was from Mortgage Loan Servicing by The Institute of Financial Education. In addition, articles from the United States General Accounting Office and The Practical Real Estate Lawyer gave detail information about the future of the industry. The mortgage loan subservicing industry exists because it is extremely efficient and cost effective. The industry dates back to the 18th century and throughout the years has been continually evolving. Each time period presents new difficulties and changes. Government programs such as FHA loans and VA loans, along with the secondary market, have been significant in this evolution. The components of a subservicing company are also important in understanding the industry as a whole. Each department has a very specific roll in a mortgage loan subservicing company. This industry is continuing to evolve as the secondary market grows and new types of loans are introduced. The findings of this project are significant. Mortgage loan subservicing is a very specialized industry that performs an important service for a number of different types of clients. The industry has continued to change over time and has evolved with the changing economy. FHA loans, VA loans and the secondary market are responsible for the large expansion of the industry and the emergence of the modem-day subservicing company. The departments within the mortgage loan subservicer have also become very specialized and significant in the overall loan servicing. Service transfers and new types of loans continue to change the industry. Mortgage loan subservicers, however, have responded and adapted to the new servicing demands and will continue to do so in the future.