Third Party Administrtors - at the ready for 2018?

11 October 2017

The third party mortgage administration market continues to thrive, mainly on the back of the amount of new entrants coming to the mortgage market. In many instances new entrants wish to concentrate on originations activities in-house, but they do not want a large operational overhead in what would be deemed “lower risk” activities and therefore have outsourced their account servicing.

The amount of Invitation to Tender documents received by organisations such Phoebus Software indicates many established institutions are also considering transformation programmes of varying complexities.  Although at the moment, originations and digitisation are a major focus, we do see financial services institutions considering the cost benefits that could be driven by migrating to a new servicing solution, either by way of an internal re-platform or moving to outsourcing. 

Third party administrators (TPAs) will now be planning for 2018 and there will probably be some fairly fundamental focuses next year.

First, we have the impact of what is now being deemed an inevitable rate rise environment. Clearly, there is a generation of borrowers that has not experienced base rate at higher than 0.5%. In the event of a rise notified to borrowers by system generated documentation, this could cause an influx of enquiries and customer services teams will need to be ready to cope with these within client service level agreements.

Then, of course, there is the possibility of increased arrears and collections activities. Many books have been performing very well, but no-one is sure on the propensity for increased arrears levels and what base rate level will really start to cause issues for lenders.  There will therefore be increased requirements on TPAs from an arrears management perspective. The servicing systems used by most TPAs have workflow automation that will deal with the automation of documentation and customer contact required in this critical area, but TPA’s will undoubtedly be running test scenarios to ensure everything runs accordingly to their once rates increase.

The other area that I expect to see a resurgence in is the securitisation market. Clearly we have seen some recent activity, but with the withdrawal of the Term Funding Scheme, securitisation will return as a more mainstream funding vehicle once again in 2018. TPAs that offer securitisation capabilities will see an increase in enquiries from their clients and so ensuring the right system capabilities and experience of personnel are in place is vital.

In summary, undoubtedly TPA’s with the right technology will cope with whatever the mortgage eco-system requires of them.  2018 will throw renewed challenges into the ring, but those who are prepared will reap the most benefit. 

 

Media contact

Debbie Staveley
Director and Owner,
bClear Communications

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+44 (0)1275 542 511

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