GMAC Continues to Build Subservicing Volume.

WATERLOO, IA -- With loan origination volumes tapering off and a plethora of new products gaining in popularity both among lenders and consumers, the subservicing industry is adapting to a new marketplace.

And GMAC Mortgage, one of the industry's biggest subservicers, believes that its relationship with Wall Street firms has proven to be an advantage as the securitization of new products evolves. GMAC sees an advantage in its ability to service multiple products, including consumer loans, from a single platform.

Ken Perkins, the company's senior vice president for business development, told Mortgage Servicing News from the company's offices here that trends in the origination side are forcing lenders to re-evaluate their businesses.

"I think clearly the origination side is expecting a lot of contraction of margins. As margins contract I think companies start paying more attention to cost."

That focus on cost is driving some lenders to outsource servicing functions, particularly those that just service loans on an interim basis pending sale and securitization of the portfolios. This year GMAC has picked up a number of interim servicing clients that wanted to reduce their operational costs, he said.

And sometimes, that works out well for the Wall Street firms that eventually securitize the portfolios as well. If the Wall Street firm uses GMAC as a subservicer - and GMAC has servicing relationships with a number of street firms - the investment banking firm may encourage an originator or conduit to use GMAC for servicing. That minimizes servicing transfers, Mr. Perkins noted, and helps to maintain stronger customer relationships.

"While nobody can put a value on that, there is value in not having that loan transfer an extra time or twice." His thoughts were borne out by a recent J.D. Power study, which found that servicing transfers negatively affect customer satisfaction among mortgage borrowers.