Home lending

Origination and servicing revenues flat. Costs up. Margins down.

What's predictable?  What's controllable?  Who's buying/selling?

Companies are evaluating strategies to gain a competitive advantage in a highly commoditized market. How are you managing the sustainability of your profit margins?  Where do you plan to grow/shrink your channels, technology investment, geographical footprint, and product set?  Are you buying servicing, selling servicing, subservicing, or outsourcing servicing?

Let's talk mortgage strategy, let's talk about solutions.

With volumes steady, rates set to rise, costs rising, and margins compressed, consumer finance organizations are revisiting business strategies and seeking ways to embrace the opportunities that these trends are creating.  Growth, market share, channel focus, profitability, servicing retention, product mix, and other strategic considerations are being analyzed as part of our clients' strategic roadmaps.

The following examples demonstrate how PwC assists our clients:

  • Strategic vision: Assisting with the development, validation, and analysis around forward looking strategic vision documents, growth objectives, and plans.
  • Product strategies: Developing and reviewing product strategies that launch efficiently and yield effective results, product launch implementation and management.
  • Channel strategies: Objective assessment of channel performance, execution, and strategy. 
  • Profitability analytics: End-to-end loan profitability analytics including production gain on sale and servicing,
  • Target operating model: Assessment, design, and governance of organizational operating models.

In a world of greater complexity, uncertainty, and accelerating change, monitoring and managing risk is a strategic imperative. How an organization monitors, manages, and mitigates risk can have direct impacts to the bottom line. We assist our clients with identifying, evaluating, monitoring, and responding to the full spectrum of risks in the lending environment including credit risk, market risk, compliance risk, operational risk, and reputational risk.

The following examples demonstrate how PwC assists our clients:

  • Risk assessments: Risk analyses on specific functional areas or processes such as treasury, credit, and operations.
  • Third-party risk management: Program diagnostics to identify gaps against leading practices, transformational roadmaps, TPRM office design and execution, technology enablement, and third-party assessments.
  • Cybersecurity: Lending-specific risk assessments, cybersecurity risk governance frameworks, and threat inventory and analysis
  • Governance frameworks: Design, establish, and review risk governance structures and organizations
  • Reporting evaluations and enhancements: Review board and management risk reporting for appropriate level of oversight
  • Controls: Designing and implementing internal controls frameworks, performing process reviews, and measuring effectiveness.
  • Policies and procedures: Assisting clients with establishing and enhancing policies and procedures across the functional spectrum.

PwC helps clients understand regulatory developments, comply with regulatory requirements, and establish best practices for managing regulatory risk.  Our objective is to work with our clients to minimize the costs and disruptions associated with regulatory compliance while maximizing the competitive and strategic opportunities that exist alongside regulatory change.

The following examples demonstrate how PwC assists our clients:

  • Regulatory examinations: Conduct pre-regulatory examination readiness assessments and post examination remediation
  • Regulatory compliance reviews: Analyze compliance program against leading practices for RESPA/TILA, HMDA, QM/ATR, QRM, Basel III, Reg AB, SOX, etc
  • Servicing compliance attestations: Reg AB, USAP, HUD testing and reports
  • Consumer complaints: Review and/or develop complaint management system
  • Cost reduction: Identify opportunities within compliance management program to lower regulatory compliance costs
  • Technology infrastructure: Perform gap analysis to identify potential technology enhancements, including CMS evaluations, to meet regulatory requirements.   
  • Reporting: Develop robust reporting suite to provide board and leadership with seamless oversight over regulatory compliance
  • Privacy: Identify and implement safeguards to protect sensitive and confidential consumer information to remain in regulatory compliance

Finance organizations are asked to respond to ever more complex regulatory, reporting and disclosure requirements in an era of cost containment. Finance leaders are under pressure to quickly operationalize complex standards and develop robust reporting that enables enhanced analysis and decision making.

The following examples demonstrate how PwC assists our clients:

  • Auditing and attest: Financial statement and compliance auditing (RegAB, USAP, etc) using auditing best practices and in consideration of the latest developments
  • Accounting advisory: Technical accounting advice on US GAAP and IFRS, technical and practical implementation analyses
  • Valuation/Modeling: MSR valuation, model validation, and model risk assessments
  • Finance effectiveness
  • Systems & technology assessments
  • Tax services: state and local taxes, transfer pricing, tax effectiveness, deferred tax assets, FATCA
  • Internal audit: Support through outsourcing or co-sourcing of testing, organizational review

Consumer finance organizations are facing unprecedented demands and challenges as they strive to meet heightened expectations from customers, investors and regulators while managing costs to generate profitable growth. A successful transformation journey requires a trusted partner who has deep industry knowledge, proven track records in servicing operations, and innovative approaches.

The following examples demonstrate how PwC assists our clients:

  • Process improvement and design: Identifying opportunities to improve origination and servicing processes based on leading practices
  • Operational and cost benchmarking: Cost studies and benchmarking performed on KPIs and costs for both originations and servicing
  • Servicing operational efficiency and quality improvement: Analysis of procedures and operations, identification of cost savings, servicing profitability analysis.
  • Call center management: Assessing call center operations to identify cost reduction opportunities and optimize staff utilization
  • Operational capacity assessment - Assessing resource capacity management and assisting with development of dynamic capacity planning initiatives and tools
  • Default management process improvement: Review of default management strategy and operational procedures, SPOC program
  • Outsourcing and offshoring analysis: Assessment of current operations and strategic alternatives for in-house operations in both fulfillment and servicing
  • Servicing transfers: Roadmap development, readiness assessment and project management, and transfers execution
  • Policies and procedures: Development and review of operational process documentation

Lending institutions are under pressure to understand and respond to the array of emerging regulations developed to create more focus on the customer. Understanding the customer's preferences and addressing their needs efficiently are essential to having a successful customer-centric strategy. PwC can assist in discovering customer insights and turning those insights into actionable intelligence; helping our clients comply with regulatory requirements but also exceeding their customer's expectations.

The following examples demonstrate how PwC assists our clients:

  • Understanding your customers: Customer journey mapping, Voice of the Customer strategy development, Customer experience strategic assessments, Persona development
  • Customer analytics: Lifetime value analysis, Lost customer root cause analysis, customer segmentation
  • Customer-Centric program evaluation: Program metrics, performance scorecards and management dashboard development
  • Complaints: Assessing complaint management maturity and strategic assessments

Today’s consumer lending environment is highly complex, driven by ever increasing customer demands, regulatory changes, and the digital revolution that is leading to a host of new entrants. Successful lenders need to navigate each of these challenges and recognize that a “one-size-fits-all” approach to customer experience is no longer suitable. Instead, they should develop a set of principles which can be used to build a successful customer strategy.  

PwC understands that a strong customer strategy is imperative to meet the constantly changing needs and preferences of today’s borrowers. With our deep banking and consumer lending knowledge, PwC can assist in designing and executing a customer experience strategy that is relevant for each target segment. We can also help conduct operational assessments and remediation, assist in process and technology integration, and identify opportunities to digitize certain originations and servicing tasks. We provide support and advice on critical decisions to shape a customer-centric strategy and help position you for success.

As advisors across the industry, we have developed benchmarking and perspectives on leading practices which we leverage when assisting our clients evaluate acquisitions, divestitures, and strategic alliances. Our services span the deal lifecycle from strategy development and target evaluation, through due diligence and execution, to post-acquisition integration.

The following examples demonstrate how PwC assists our clients:

  • Strategy: Extracting maximum value from merger, acquisition, and divestiture activities.  Objective advice on value propositions and synergies
  • Due Diligence: Financial and operational due diligence work on consumer finance companies and divisions
  • Benchmarking and cost analysis: Benchmarking the cost base and operating models of newly created entities versus industry competitors
  • Post-acquisition integration:  Leverage operational and technology expertise to effectively evaluate and integrate technologies and operations.
  • Pre-acquisition logistics and planning: Integration program setup and support, including roadmaps, gap analyses, and contingency planning