PHOENIX, Ariz.-Alan Riegler, partner at CCG Catalyst here, weighed the "pros and cons" of in-house and outsourced mortgage servicing:
Key Technical and Business Advantages
Outsourced: predictable and "probably" lower costs per loan due to a shared environment regulatory requirements, hardware, software and staff are outsourcer responsibility.
In-house: direct control of environment; ability to create tailored environment ability to pick and combine "best of breed" products from multiple vendors.
Key Technical and Business Disadvantages
In-house: regulatory requirements, hardware, software and staff are CU's responsibility - "which are not a core competency."
Outsourced: limited to capabilities and offerings of vendors; risk of vendor not performing to service level agreements; "ground rules" could change if vendor is bought.
"A credit union whose technical environment has become outdated, is not meeting service levels, has escalating costs or has declining volumes is a candidate for outsourcing," he said. "Generally, an outsourced environment is more effective for a smaller credit union."