Study Shows Subservicing Industry Gaining Popularity.

Washington -- The MBA annual cost study suggests that subservicing has become an increasingly popular option for loan administration, especially among smaller lenders.

The annual MBA cost study found that 0.55% of loans were subserviced by others among study participants last year. But that range varies dramatically according to the size of the firms.

Among the smallest category of companies in the study, those with portfolios of less than $50 million in loans, lenders outsourced loan administration for almost 15% of their loans. Lenders with portfolios of $50 million to $299 million had subservicers handling 9% of their loans, and firms with $300 million to $1.5 billion sent 6% of their loans to subservicers.

By contrast, lenders with $10 billion or more in servicing outsourced loan administration on just 0.54% of the dollar volume of their portfolios.

In fact, the average firm with a servicing portfolio consisting of less than $50 million of mortgages spent more 16 times as much on subservicing as the typical firm with a portfolio of more than $10 billion.

Last year, the MBA cost study found that the percentage of loans subserviced by others doubled between 2002 and 2003. In 2003, lenders reported that 0.67% of loans on which they owned servicing rights were subserviced by others. That ...