Mortgage subservicing insights: David Schneider on lender strategies, AI and Cenlar’s role

HousingWire

Unlock the secrets to successful mortgage subservicing! Discover why lenders are retaining servicing rights and how AI is revolutionizing the industry.  David Schneider, President and CEO of Senlar, shares expert insights on the crucial role subservicers play in today's mortgage ecosystem. Learn why scale matters, how technology investments pay off, and what lenders should consider when choosing a subservicer.  Explore strategies for balancing capital structure, customer retention, and the latest advancements in mortgage technology. Gain a competitive edge with this essential guide to subservicing.  #MortgageServicing #Subservicing #MortgageTech #LenderStrategy

Transcript

00:00Live from Las Vegas, I'm Diego Sanchez, President of Housing Wire, and I'm pleased to be joined

00:15by David Schneider, President and CEO of Senlar.

00:18David, thanks so much for joining me.

00:19Thank you for having me.

00:20It's an honor to be here.

00:21I appreciate the time.

00:21So before we dive in, could you just let us know what is Senlar and what role does it

00:27play in the mortgage ecosystem?

00:28Yeah, great question.

00:29So Senlar is a sub-servicer.

00:32We service loans for MSR owners who find that we provide greater value than they can do

00:39on their own.

00:39So in other words, a lot of people own MSR and they say, you know, I'm not so good at doing

00:44this.

00:44I don't have the infrastructure.

00:45I don't have the scale.

00:47I don't have the people and the technology.

00:48And we provide that for our clients.

00:50So we like to think we stand in the back for our clients as their back office and really

00:54enable them to own MSR and serve their customers.

00:56So why should a lender work with a sub-servicer?

01:01You talked about some of the reasons, but walk us through all the rationales.

01:05Well, I'm biased, first of all.

01:06But right.

01:08So look, I think using a sub-servicer is a great play for most owners of MSR because it's

01:14a scale business.

01:15You know, we service two million loans and we think we're not sure we'll have the right

01:19scale at that level.

01:20So it's a scale business and what that scale means is that we invest in technology.

01:25We invest in people.

01:26We're spending a lot of time on building out our AI lab, different partnerships we're building

01:31with people.

01:32And that is hard to do when you only have 20,000, 50,000, even 100,000 loans.

01:37So we bring that scale to our clients and allow them to take advantage of all that scale

01:42means to us, pass it on to our clients.

01:45So backing up for a moment, why should a lender even consider retaining servicing in this

01:54environment?

01:54Yeah.

01:55Well, I think everyone's going to make their own decisions.

01:57There's a lot of lenders out there and I've been in the mortgage business for 30 years

02:00and I've owned MSR and I've not owned MSR.

02:03And it's really dependent on what your capital structure is in terms of how you want to run

02:08your business.

02:09And MSR is a capital intensive asset.

02:11And there's a lot of originators out there who say, you know what?

02:14I'm going to be really good at originating and I'm going to sell all my MSR on a flow

02:17basis.

02:18We see that with a lot of folks.

02:20A lot of others say, you know what?

02:21I want to have a more balanced model.

02:23I want to have a model where I control the customer.

02:26I can re-solicit the customer for refinance.

02:28We've heard a lot of talk about that in the industry, especially recently.

02:31And I want to have cash flows coming in when rates are higher and the origination business

02:37isn't so good.

02:37So really it's dependent on that particular company, their capital structure, and their goals

02:43for the company.

02:44Yeah.

02:44I mean, you are seeing several of the big servicers build a lot of technology so that

02:50they can originate from their book.

02:52Right.

02:52Which means they're recapturing a mortgage that some other originator created.

02:59Yeah.

02:59Right.

03:00So that has to be another factor at play when a lender thinks about subservicing.

03:05It absolutely is.

03:06When you think about servicing, you think about a few things.

03:09One is the cash flow related to the servicing and what does that do for your income statement

03:14and how do you manage your balance sheet.

03:16And then you also think about the retention of that customer.

03:19And retention, quite honestly, this has been something that we've been talking about as

03:22an industry for 30 years, 25 years.

03:24And sometimes we get it good.

03:26Sometimes we don't do it so well.

03:28But that is really important because once you have that customer, that customer has a

03:32great experience with us as someone like Sendlar doing the subservicing, that customer is more

03:36likely to go back to our clients.

03:38And we do most of our servicing on a private label basis, which means it's in the name of

03:43our client.

03:44Got it.

03:44So you don't even see Sendlar.

03:45You see the client.

03:47And then the customer has a good experience and they want to get the new loan.

03:50It's going to be easier with their existing lender.

03:53And they go back there.

03:54Some lenders have different strategies, too.

03:56Some lenders like it to go through a call center.

03:58Some lenders like it to go back through their broker channel.

04:00Some lenders like it to go back through their retail loan officer channel.

04:03So it's really dependent on what's important to that specific originator.

04:08All right.

04:08Let's say the lender has made the decision to retain servicing.

04:14Now they have to work with a subservicer or they want to work with a subservicer.

04:19What should they be thinking about and how should they be comparing and contrasting the different

04:25subservices out there like Sendlar?

04:27Yeah.

04:27So when I think about that, I think about three things.

04:30I think about the size and the scale of who you're partnering with.

04:34And not because that size is important just because it's size alone, but it's important

04:38because of the investment you can make.

04:40It's important in the investment in technology, especially now with the investment we're making

04:45in AI, the investment we're making in machine learning, the investment we're making in our

04:48core platforms.

04:49Those investments cost a lot of money.

04:53And the more units you have, you can spread that cost.

04:56And that allows us to drive our costs down and our price down to our clients.

05:00So that's important.

05:01Second is what kind of company are you?

05:04And we're a federally regulated bank regulated by the OCC.

05:09So we have a very high bar for risk, infrastructure and compliance.

05:13And as you know, in servicing, risk and compliance is everything because you've got to do things

05:18right.

05:19And there's like thousands of rules.

05:21There's thousands of rules and you've got to follow all those rules every single day.

05:25So that's important.

05:26And then third is who are the people?

05:28And you know, at Sendlar, we like to think of ourselves as we're mortgage bankers first

05:32and subservicing partners second.

05:34And all of us, you know, I've been in the industry 35 years and run big mortgage companies,

05:40small mortgage companies.

05:41And that's kind of true for everybody on the team.

05:43And what that means to us is that we understand our clients.

05:47We understand the position they're in, what they're trying to achieve, and we can help

05:51them achieve their goals.

05:53So you've spent time at Originator's.

05:57You're now at Sendlar.

05:58What excites you about servicing in particular as opposed to being, you know, a leader at a

06:06mortgage bank?

06:07Yeah, I love mortgage banking to start with.

06:11Like, you know, it's what I do.

06:12It's what I've done for my career.

06:13And whether it's working with loan officers or working with brokers or now doing servicing,

06:18all of it's really fun and unique.

06:20And it's a different challenge.

06:21This is a unique challenge because of the size and scale of the platform.

06:25I mean, we service 2 million loans.

06:27We have 2 million customers.

06:28We have customers calling every single day.

06:29And that's really been fun to think about how to bring technology, how to, you know,

06:36use the right resources to improve the customer experience.

06:39You know, a great example is how do we get more customers on a digital platform?

06:43And how do we help them make more of their servicing relationship?

06:48One great product we're working with, one of our clients is UWM, and they have a relationship

06:53with Built, which we're having built out with them.

06:56And Built does a lot of payment rewards programs for rental properties.

07:01And now they're introducing it to mortgage banking.

07:02So you can get rewards for making your mortgage payment.

07:06So it's those kind of innovative things that we do with our clients that we think are pretty

07:09interesting.

07:10Yeah.

07:10And subservicing is having a little bit of a moment.

07:12You mentioned UWM.

07:14Rocket bought Mr. Cooper.

07:15And I think that caused a lot of lenders to say, OK, maybe we need to consider a subservicer.

07:21Yeah.

07:21I think a lot of that is focusing on subservicing, focusing on clients.

07:25And also, one of the things that we do is we help clients with retention.

07:31We don't compete with clients.

07:33We don't originate a single loan, but we help you do it with analytics.

07:38We have a new program with a company called Ardley, which helps with retention analytics.

07:43And what that also does for us is for some of our clients who are smaller who can't really

07:47afford to buy that platform themselves, we can help them with that because we can spread

07:53it out against our whole client platform and really make tool, advanced tools available

07:57for them.

07:58So I mentioned before that several of the big servicers are deploying a lot of technology,

08:05including artificial intelligence, to improve their ability to originate from their book.

08:10Yeah.

08:10How is Sendlar keeping up with those big servicers and helping your clients recapture more of their

08:17own book?

08:19Yeah.

08:19I think with recapture, there's a few elements of it.

08:22It's being there at that exact time that someone wants to do their next loan.

08:28Because nobody wakes up any day and says, hey, it's a great time to do a loan.

08:34Normal people don't, you and I might think that, but normal people don't say that, right?

08:38They say like, well, I'm talking to my financial planner, I'm talking to my banker,

08:42we're talking, my neighbor just got a refi, maybe I should look at it.

08:46And what you want to do is to be there at that time for that customer when they think

08:51about it.

08:52And also make it known to them that they now have an opportunity to do a refinance transaction.

08:57You'd be surprised at how many people don't really know.

09:00They don't follow the markets like you and I follow the markets.

09:03And they might not know that they could save $500 a month, $300 a month if they do a refinance

09:08transaction.

09:09So it's making that information available to the clients.

09:11So what we try and do is help our clients with advanced analytics, better understanding

09:17of customers so that when they're ready to do that loan, they can take advantage of that

09:21opportunity.

09:23All right.

09:23So fingers crossed, we're moving into a lower rate environment in 2026.

09:29Who knows?

09:31Rates are going to do what they do.

09:33But in this environment, what do you see as the opportunities in 2026 in terms of origination

09:41transaction and then what you do subservicing?

09:43Yeah.

09:43I think one of the things I've learned over the time is I have no idea where rates are

09:47going.

09:47Like, so, you know, if anyone wants to, if I give a rate that you can be pretty sure shorting

09:52it is the best idea.

09:53But I think for mortgage bankers, what's important is you need to be ready for everything.

09:59I've always said that great mortgage bankers have three books on their table.

10:02They have rates stay the same, rates go up, rates go down.

10:06And you've got to be ready for all three of those things.

10:08And you've got to have your plan ahead of time because the best mortgage bankers are ahead

10:12of the curve.

10:13They know when it's happening.

10:15They react quickly.

10:16They respond to the market.

10:18And for us, how we can help them is to make sure that when the time comes and it is a refi

10:23market, we help them with that process.

10:25When the time comes, it's not a refi market.

10:27We help them with streamlining their costs and managing their cash position.

10:32David, I could talk servicing and subservicing all day.

10:35It's a really fascinating topic, especially right now.

10:38Thank you so much for joining me today.

10:40Appreciate it.

10:40Enjoyed it.

10:43Enjoyed it.

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