As an originator or investor, you have a lot of responsibility for managing and growing your portfolio. Loan servicing and loan compliance are essential to your bottom line, but they can keep you from focusing on maximizing your results. Loan servicing’s technical and administrative aspects can take staff away from your team’s high priority tasks and growth objectives. And maintaining lending compliance—with its ever-changing state and federal regulations—is critical to avoiding penalties and fines.
Fortunately, the right loan servicing partner can reduce your compliance risk and provide exceptional customer service, administrative support, and strategies that result in optimizing your growth objectives. Read on to learn more about the full range of benefits you get when working with a loan servicer.
How Loan Servicing Works: What You Should Expect
Paramount Capital Group, a provider of compliant, customized loan servicing and backup servicing solutions to fund managers for more than 25 years, outlines the key servicing solutions you should expect from your loan servicer.
End-to-End Master Servicing
Your loan servicer should offer customizable servicing and subservicing programs that start the day the loan is closed until the day the final payment is received.
First- and third-party servicing should include:
- New account onboarding
- Billing and payment processing
- A mobile app for convenient account and payment access
- Omnichannel borrower communications
- A dedicated account manager
- Portfolio and account management
- Reporting and analysis with performance dashboards
- Delinquent account management and payment collection services
Elements of a successful servicing process include:
- Boarding: Seamless boarding of new accounts regardless of your loan origination system
- Welcome: Welcome calls/emails within a week of boarding, advising the customer of account terms and payment options
- A “thank you” communication whenever a payment is received
- Multiple Payment and Collection Reminders that payments are due via email, SMS, and phone on a cadence customized to your assets.
Backup Servicing
A backup servicer should be in place if anything happens to your primary servicing company so that your loan portfolio isn’t vulnerable to data loss or disruptions.
But a backup servicer should do more than just store data. You should expect meaningful data, analytics, and reporting along with highly scalable solutions with broad functionality.
Look for:
- Multiple loan data sync options that integrate with any existing technology.
- Robust data, analytics, and reporting with customized, real-time analytics and reports.
- Data verification and reconciliation that seamlessly resolves the accuracy and consistency of loan data.
- Uncompromising data security with advanced security measures such as physical security protocols, encryption technologies, and robust access controls.
- Geographically diverse backup locations to mitigate the loss risk from localized incidents or disruptions.
With services that mirror (and even exceed) those provided by your primary loan servicer, you’ll have peace of mind with a backup servicer who steps in when needed most, with no lost data or time.
To learn more about Paramount’s Backup Loan Servicing, click here.
Technology
A loan servicer’s technology should be able to effectively communicate with borrowers and provide you with relevant, insightful information.
Their technology stack should offer seamless integration options with any loan origination platforms, electronic document creation, delivery, and execution, secure document vaulting, a scalable and flexible loan management system, and omnichannel communications for a superior customer experience.
These technology options should offer maximum flexibility, scalability, and ease of use, as well as provide a seamless customer experience. They should:
Use omnichannel communication to maximize customer engagement:
- Have email, SMS, and chat available for borrowers who prefer alternatives to phone calls
- Have a separate configurable dialing structure, custom-branded emails, statements, and customized borrower portals for first-party servicing
Offer convenient payment options:
- Provide a mobile app and online portal
- Provide for a full suite of payment options
Provide secure document & data storage:
- Offer a way to sign and store documents securely and easily electronically
- Provide optional authoritative copy secure storage
- Record and store all phone calls and communication
Get all the details about Paramount’s technology by clicking here.
Data Analytics and Reporting
You should have access to real-time account status for the information that affects your bottom line and growth.
- Expect customizable performance dashboards based on your KPIs and set up customized regular reporting for portfolio reviews, delinquency reports, investor accounting, and more.
- Give you access to the information you need when you need it
- Integrate with your technology
See the full extent of Paramount’s data and reporting capabilities here.
Compliance
Compliance risk exposes institutions to fines, civil money penalties, payment of damages, and voiding of contracts. Additionally, compliance risk can lead to a diminished reputation, reduced franchise value, limited business opportunities, lessened expansion potential, and lack of contract enforceability.
Regulator examinations blend risk-focused and process-oriented approaches. Therefore, policies and procedures must use similar approaches and methods to ensure that your institution is compliant with federal regulations. A loan servicer’s policies need to comply with all consumer laws and regulations and to manage the compliance program to ensure the lowest possible risk.
Your account servicer can help mitigate risks of compliance violations and penalties in the heavily regulated finance industry.
Among many other things, they should:
- Maintain compliance with all federal, state, and local regulations like SCRA, FDCPA, FCRA, FACT Act, TILA, PCS, and more.
- Have a full suite of policies and procedures to meet state and federal regulatory requirements, so you don’t have to build your own costly infrastructure.
- Proactively monitor regulatory updates for new or amended requirements.
- Possess all required licenses needed to perform servicing duties.
- Provide regular compliance training to its staff.
- Communicate timely and professionally with your borrowers via informative periodic statements, late notices, a robust borrower portal, & unparalleled customer service.
- Provide multiple payment options for your borrowers.
- Be experienced working with difficult borrowers &/or those experiencing financial hardship.
- Monitor and respond to complaints and information requests.
At Paramount Capital Group, compliance is a part of the day-to-day responsibilities of management, employees, service providers, and business partners. We have integrated a sound compliance management system (CMS) into our framework to effectively manage federal, state, and local regulatory requirements across the entire servicing lifecycle of an account.
Is a Loan Servicing Solution for You? Talk to Paramount Capital Group
There are many loan servicing companies out there that can remove the burdens from you and your team, but finding one that offers the flexible, customizable, and successful solutions you have with us at Paramount Capital Group could be challenging. Our proven end-to-end solutions give you a better way to manage receivables and affect your bottom line so you can get back to growing your portfolio.
To find out more about how we can help you with portfolio servicing, talk to a loan servicing specialist. Fill out this form, and we’ll be in touch for a fully transparent discussion about loan servicing. We look forward to connecting with you soon.