More Consolidation Is Coming— Are You Ready for an Acquisition?

-By Christian T. van Dijk
President, Integra Mortgage Solutions

This year has seen significant consolidation in the mortgage industry; just since April, there have been more than a dozen deals, perhaps most notably Freedom Mortgage Corporation's acquisition of Round Point Mortgage Services, which will make Freedom the seventh largest servicer in the U.S.

Technology Can Support Successful Consolidation

Given increased regulatory pressure and decreased profit margins, this consolidation through acquisition is likely to continue. The right technology can help pave the way to more efficient and profitable acquisitions.

Operations and processes in mortgage servicing are notoriously complex. Investing in a formal system of record to run these business processes can have benefits on both sides of an acquisition:

  • Scalability: Imagine suddenly doubling the number of loans you service. How will the team handle this new volume? Can the process adapt to changes in the business? The right technology should make a non-issue of these concerns.
  • Lower risk profile: Built-in controls reduce the risk of expensive audit findings a common and unnecessary recurring cost in our industry. Fewer audit findings over time can bolster a company's bottom line and valuation.
  • Increased operational efficiency: The best software tools help companies do more, with less redundancy and fewer worker hours. The leaner the organization, the easier it is to combine or consolidate with another.

General transparency: The right software provides full transparency, so that anyone (with proper credentials) can access complete documentation of the process. This kind of visibility eases the due diligence process.

Don't Go It Alone

It is very tempting to think that the problem we are trying to resolve is very unique to our department or organization, particularly with technology. Chances are it is not; however, the context in which we try to apply it or ask questions about it may be different. This is where the power of the network within our industry comes to shine -- don't be shy, make connections, and ask around!

The thought of abandoning your current system can be a daunting one, even if that system may be running on a spreadsheet. That's why it's critical to get input from peers and experts who intimately understand not only technology, but also the mortgage industry. While your IT team might have valuable experience, they often have conflicting priorities and won't likely understand the intricate nuances of the business process well enough to provide meaningful insights. Expand the discussion.

Talk to colleagues who have worked with different systems, and look for a vendor who focuses on building long-term partnerships to support your evolving business. Relationships are key and the most meaningful ones begin with a conversation.