Mortgage Portfolio Runoff Prevention

Past client runoff, particularly those with higher credit and lower LTVs, causes massive losses in portfolio valuations or Early Payoff (EPO) fees. Most of the time, lenders have no idea that their past client is in the market until the borrower’s new lender is ordering a payoff request. At that point it is too late.  

Mortgage lenders are at the mercy of interest rate related news. Even if they provided great service helping their customer achieve the dream of homeownership, news about interest rates changing can cause their past clients to engage with offers they will inevitably receive from their bank or credit union via email, social media, and direct mail.  

To avoid those potential losses, mortgage lenders need a mortgage portfolio runoff prevention system in place to notify them when to engage with their past clients before they order a payoff request. Find out as soon as they are shopping for a purchase or refinance and take the client back before someone else has the chance to.

We have seen a 200% increase in application activity in our lender’s portfolios in the past 2 weeks, and over 3000 past clients re-entering the market everyday. Our database monitoring platform is helping these lenders head them off at the pass and gives them an opportunity to retain many of these past clients.

In the current financial climate, we are seeing ‘low interest rates’ pop up in the news daily. Whether this translates to lower mortgage rates in your institution it is definitely inspiring borrowers to look into their mortgage options. Borrowers are shopping right now, leaving lenders vulnerable to portfolio runoff.

For many lenders, purchase business is their bread and butter and they can’t lose focus or they risk losing relationships with their referral partners. The bigger issue with portfolio runoff isn’t just fear of missing out on the refinance volume, but without an effort to retain their customers, the highest Fico and lowest LTV borrowers will runoff because they can. Borrowers with credit or LTV issues will stay. High Fico borrowers are refinancing from an FHA loan to a conventional loan to lower their rate and drop their mortgage insurance. These are the very borrowers lenders need to retain to keep up the overall credit quality in their portfolios.

MonitorBase, is a past client runoff prevention solution for servicing lenders, correspondent lenders, and brokers. MonitorBase utilizes prescreened credit information, and other behavioral data attributes to determine when credit qualified past clients are back in the market to purchase or refinance a home.  

This gives mortgage lending institutions the tools the big banks have had in place all along to maintain the overall quality of their portfolio. Along with an early warning system, lenders should have a plan to engage with these customers fast. When loan originators get a bump in volume due to low interest rates, many don’t have the time to focus on their past client retention. 

The lender has more to lose than the originator. We suggest having a back up plan, instituted at the corporate team level, to engage with past clients and answer missed calls.