Mortgage servicers face higher costs from transfers and regulation

The cost to service mortgages is rising for reasons that extend beyond a recent increase in borrower delinquencies. That’s according to Erik Eggers, chief revenue officer at Rocktop Technologies, who said that regulatory requirements and industry consolidation are fundamentally changing the economics of mortgage servicing. Speaking with HousingWire, Eggers said that servicing costs have traditionally risen during periods of elevated defaults. But today’s environment is different, with structural pressures increasing expenses regardless of loan performance. “The burden on servicers has simply gotten heavier over time,” Eggers said. “It’s not a challenge that you can outhire to solve. These structural changes and this increased workload, it is definitely not a performance issue. When you think historically of the rising cost of servicing, you typically think that it comes in connection with delinquency, and that is certainly the case. But these other costs that I’ve enumerated, they’re there regardless of delinquency.” Servicers face growing compliance obligations while managing an increasing number of servicing transfers driven by industry consolidation. Each transfer requires heavy...