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.

Final Thoughts

"A credit union whose technical environment has become outdated, is not meeting service levels, has escalating costs or has declining volumes is a candidate for outsourcing," he said.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."

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