There was a time when offshore outsourcing was all the rage in the mortgage industry. Given the Internet’s impact on global commerce and the cost-effectiveness of overseas labor, it’s not hard to understand why.
These days, however, we’re seeing more mortgage companies choose to outsource mortgage services to domestic providers. I believe the trend can be boiled down to three basic reasons.
Better Access to Experts
To be sure, lenders and servicers can get help from an offshore vendor at virtually any time of day. But there is value in having experts located closer to you. Many lenders and servicers outsource critical tasks that require a vendor to deliver on time and within budget. Having a domestic vendor can eliminate the anxiety that many companies feel when they send these important tasks to an overseas provider.
If you are outsourcing complex tasks that involve conference calls, it’s easier to do so with a domestic outsourcer as well, as juggling time zones is less of an issue. You also have a better opportunity to meet face-to-face, which helps ensure your partner understands your needs and can fulfill them.
Deeper Compliance Expertise
Increasingly complex regulations and guidelines are a big reason why mortgage companies choose to work with domestic vendors. Generally speaking, the best mortgage compliance, quality control and underwriting experts are located stateside.
Also, the more complicated mortgage rules become, the more difficult they are to manage when you are working with overseas teams who may or may not understand the deeper business issues that are involved. Companies that need high-level expertise to create monthly quality control reports or to meet HMDA reporting requirements are more likely to choose domestic vendors, because they have confidence that they will get the expertise they need.
Better Data Controls
It’s no secret that regulators are putting more pressure on mortgage companies to reduce risk in their third party relationships. This pressure includes requiring lenders and servicers to better monitor the controls their third parties use. Of course, that’s a lot easier to accomplish when your vendor is located in the same country.
Domestic outsourcing has become more valuable to companies that are worried about how vendors manage consumer data. After all, mortgage companies deal with a tremendous amount of consumer information, and concerns about protecting that information have soared due to the number of high-level data breaches that have been in the news recently.
Obviously, outsourcing with a domestic vendor is no guarantee that everything will go perfectly. But it can provide assurance that your partner is abiding by the same controls and regulations that you are, and they are in a better position to demonstrate proof if needed.
Interestingly, while the Internet has been a driving force behind offshore outsourcing because it can reduce costs, it’s now having a similar impact domestically. A domestic outsourcer with virtual employees located within the U.S. can generate similar savings because they benefit from less overhead costs.
By the way, The StoneHill Group is a 100 percent domestic provider of mortgage quality control and outsourcing services, and we know the decision to choose a domestic or offshore vendor for outsourcing is a complex decision. What works for one company may not work for another. If you have questions about which direction works best for you and want an honest opinion, drop us a note at info@TheStoneHillGroup.com. We’re happy to help.