With two of the nation’s top mortgage servicers recently announcing they will sell their remaining mortgage servicing rights in 2017 to focus on more profitable business lines, we are seeing a continued shift toward consolidation in the mortgage servicing industry. The servicers who remain need to act to stay competitive in this era of higher regulation and costs.

According to the latest MBA Servicing Operations Study, the cost of servicing a performing loan is $181 per year, three times higher than in 2008. For non-performing loans, the cost is a staggering $2,386 per year, five times higher than in 2008. So, what should mortgage servicers do now to lower costs and stay competitive?

1. Take a hard look at your processes.
The end-to-end mortgage servicing process is highly complex and constantly changing to comply with new regulations. Have you gotten bogged down with endless quality assurance processes? Is your loss mitigation team not talking to your foreclosure department? Do an honest assessment of your servicing processes to find ways to trim the fat, close holes, and reduce siloes.

2. Optimize your servicing technology.
In its June, 2016 special edition supervision report, the Consumer Financial Protection Bureau (CFPB) warned that servicers are using “outdated and deficient servicing technology,” and that servicers should make improvements to their information technology systems to improve their compliance positions.

To keep costs down and avoid financial and reputational risk resulting from regulatory non-compliance, you need to double down on technology. Does your servicing technology automate workflow wherever possible? Does it include built-in functionality for regulatory compliance? Does it minimize the need to manage processes “outside the system”? If not, invest in these types of enhancements as soon as possible.

3. Squeeze the most out of your technology investment.
With any IT investment, the odds of completing your project on time and on budget are slim. In many cases, IT projects fail to realize business value due to poor requirements or lack of resources.

One way to increase your chances of success is to bring in the right team to help. Successful IT project consultants align your IT implementation with business value, define the right business requirements up front, and manage your project successfully using an “eyes on the prize” mentality. They can provide the temporary lift you need to get a big IT initiative across the finish line.

In this era of consolidation and regulation, being a profitable mortgage servicing operation is harder than ever. We’ll be watching closely in 2017 as mortgage servicers ponder that famous question: “should I stay or should I go now?”

Phoenix Oversight Group specializes in lifecycle solutions including software product management and solution delivery.