The Fics Advantage: Leveraging Automation For Smarter Mortgage Servicing In 2025

After years of high interest rates, and price spikes, mortgage lenders are optimistic heading into 2025. Fannie Mae predicts a 28% increase in mortgage originations to $2.1 trillion. The Mortgage Bankers Association (MBA) also predicts that total origination volume will increase by 28.5% to $2.3 trillion.

Alongside that, Fitch expects mortgage servicing rights (MSR) amortization costs and write-downs to increase with higher pre-payments. This could negate any profit potential from increased loan volume. To combat this, lenders should retain their servicing rights to collect the maximum amount of revenue throughout the loan’s life. Retaining servicing also builds stronger customer relationships, which keeps customers satisfied and poised to return for more business. 

To ensure that servicing retention generates a worthwhile impact, lenders should turn to digital experiences and automated servicing software to make servicing easier, keep loyal consumers satisfied, and drive more profit.

Retaining servicing rights builds revenue and loyalty

Selling off servicing rights can damage long-term relationships with borrowers. According to J.D. Power, overall customer satisfaction drops tenfold among the customers who transferred to a new servicer. In 2023, they reported that overall satisfaction scores are 119 points lower when customers don’t choose their servicer. 

Fortunately, there is a way around this for the well-informed. Effective loan servicing positions servicers as reliable advisors for the homeowner. Furthermore, servicers can leverage these relationships to approach consumers with value-added services — including asset protection, insurance products, home improvement loans, and maintenance options. Retaining servicing allows lenders to enhance revenue streams and deliver a superior customer experience that builds long-term loyalty.

Additionally, lenders can also strengthen borrower relationships, providing a valuable opportunity to cross-sell additional financial products. This strategy gives lenders room to market offerings such as credit cards, auto loans, and depository accounts to clients with that they’re already connected with. On the flip side, transferring servicing removes direct access to these borrowers and closes the window into their mortgage activity.

Of course, customers aren’t the only ones that benefit from in-house servicing. Revenue can also skyrocket, as well-trained staff with the right servicing software can service 700 or more loans individually. Considering the average loan size of $403,000 in November 2024, alongside the standard service fee of 25 basis points for the year, each servicing employee can generate more than $700,000 in annual service fee income alone. Late fees and commissions on optional insurance may also increase revenue.

These benefits add up to a decisive competitive advantage for these institutions.

Servicing software improves efficiency and customer satisfaction

Modern mortgage servicing software gives lenders an edge that’s so efficient, it almost seems unfair. Servicers can automate critical tasks, such as investor reporting and compliance, to streamline workflows and position in-house servicers to win with speed. Digital technologies help lenders reduce errors, cut costs, and shorten processing times. JD Power also found that satisfaction with digital channels was one of the primary drivers behind higher customer satisfaction scores for mortgage servicers in 2024.

Application Programming Interfaces (APIs) play a key role in this transformation. APIs enable seamless communication between servicing applications and other systems. They can automate workflows by integrating software programs, reducing manual intervention and minimizing man-made mistakes. This automation decreases staffing hours and operational costs, providing borrowers with faster access to digital loan information. Improvements in problem resolution and satisfaction with digital channels are primary drivers of enhanced customer satisfaction. If this doesn’t highlight why digital servicing solutions are important, perhaps nothing will.

Here’s a prime example: FICS’ Mortgage Servicer software maximizes servicers’ capabilities by automating key residential servicing operations — including payment processing, investor reporting, escrow administration, custodial accounting, imaging, and report writing. Borrowers also benefit from convenient online access to statements and real-time account information. By adopting advanced mortgage servicing software, lenders can meet investor and regulatory demands while strengthening borrower relationships through faster, more accurate service.

Servicing software simplifies compliance and investor reporting

A critical function of mortgage servicing software is the automation of investor reporting. This is a vital task for servicers who must routinely report payment and default activities to government-sponsored enterprises (GSEs). These reports must meet daily and monthly funding requirements, reconcile custodial accounts, and resolve discrepancies while adhering to specific reporting criteria.

Platforms like Mortgage Servicer can handle all standard industry reporting methods. They automatically generate essential reports, including reconciliation, remittance, delinquency, prepaid, and balance reports. They also manage Principal and Interest (P&I) and Taxes and Insurance (T&I) advances and recoveries. This locks down compliance and efficiency in a highly regulated environment.

Equally important is direct access to comprehensive loan data. While standard reports are provided, servicers often require tailored reports for more effective loan management. Mortgage Servicer gives lenders access to extract any data from the system or database tables. With this access, lenders have complete flexibility to customize reports or create files for integrations with other software. Data can also be exported in various formats.

This level of data accessibility and portability is important for making efficiency a reality. Whether sharing data across systems or migrating to a new vendor, the ability to manage data freely ensures operational flexibility and peace of mind. With robust mortgage servicing software, lenders can adapt to evolving needs, work with multiple software vendors, and maintain complete control of their data.

As the mortgage industry looks toward a period of stabilization and growth, lenders have a rare chance to strengthen their operations and customer relationships by retaining servicing. By embracing automation, improving compliance workflows, and delivering seamless digital experiences, lenders can maximize efficiency, enhance borrower satisfaction, and create new revenue streams.

As competition intensifies, those who invest in robust servicing tools and customer-centric strategies will be well-positioned to build long-term loyalty and thrive.