For years, servicing has been treated like a pawn on the mortgage lending chessboard—important, but largely seen as a back-office function. In 2025, the board has shifted. Servicing is no longer stuck on the back rank but has moved from the sidelines to center stage, evolving into a queen-like force—versatile, strategic, and capable of driving meaningful advantage.
Lenders today are not simply reacting to interest rate volatility, regulatory pressure, and changing borrower behavior, they’re making calculated, forward-thinking moves to turn servicing into a lever for growth, loyalty, and operational strength. Many are starting to see servicing not just as a cost center, but as a position of strength—one that can shape the outcome of the entire game.
What’s driving this shift? Data and advisory insight are at the core. Today’s servicing challenges are complex and interconnected: compliance, borrower experience, and portfolio performance are no longer siloed. Instead, they require coordinated strategies powered by analytics and enhanced by the right partnerships.
This article explores how mortgage servicing is evolving, the rise of subservicing, the challenges lenders face, and the strategic moves that can turn servicing into a competitive strategic advantage. We’ll also share how STRATMOR Group is helping banks and lenders across the country make smarter moves that align servicing with their broader goals.
The early 2020s were defined by an unprecedented refinance wave, driven by record-low interest rates during the COVID-19 pandemic. But that cycle has shifted. In 2025, the industry is firmly in a purchase-driven market, with higher interest rates slowing origination volumes and compressing margins across the board.
For banks and mortgage lenders, this market shift places increased strategic importance on servicing portfolios. Rather than chasing refinance volume, lenders must prioritize retention and look for ways to improve servicing operations and customer relationships.
Regulators—including the Consumer Financial Protection Bureau (CFPB), Office of the Comptroller of the Currency (OCC), and state regulators—remain focused on borrower communication practices, default servicing procedures, and fair servicing outcomes. Issues around loss mitigation, borrower outreach, and data privacy are in scope.
To keep up, servicers need to invest in compliance infrastructure—both technological and human. They also need real-time insight into servicing operations and borrower activity to stay ahead of compliance demands.
More than ever, borrowers today want the kind of digital convenience they get in other parts of their lives. They expect Amazon-like digital experiences, seamless mobile access, real-time updates, and self-service tools that put them in control of their loan. Servicers have to keep up. That means borrowers need to be able to do the following digitally:
Unfortunately, many servicing platforms are rooted in legacy systems and weren’t built for this level of engagement. As a result, many lenders are exploring new technology options and subservicing partners that can help bridge the gap.
Subservicing involves outsourcing some or all aspects of the loan servicing process—such as monthly payments, escrow, customer service, default management, and compliance—to a third party. The lender still retains ownership of the loan, but the subservicer handles the day-to-day work.
Over the last few years, subservicing has grown rapidly, especially among Independent Mortgage Banks (IMBs), regional banks, and credit unions. According to Inside Mortgage Finance data, the unpaid principal balance (UPB) being serviced at subservicers has more than doubled in the last 10 years. The drivers are clear:
The subservicing market is evolving. Some key trends include:
The margin compression gripping originations is mirrored in servicing. As MSR (Mortgage Servicing Rights) valuations fluctuate, servicers face pressure to contain costs without compromising service quality. Tasks like call center staffing, escrow management, and compliance reporting are resource-intensive and often not optimized.
Servicers must stay ahead of an ever-expanding web of regulatory requirements. From RESPA to Regulation X, the bar for borrower treatment keeps rising—especially in hardship or default scenarios. Subservicers must also be equipped to respond quickly to policy changes and regulator inquiries.
Failure to meet these standards can result in fines, reputational damage, or even loan repurchase demands. For lenders, that makes quality control and oversight of subservicers a mission-critical task.
Too often, borrower data is scattered across multiple systems, including loan origination software (LOS), servicing platforms, CRM tools, and customer portals. This fragmentation leads to limited borrower insight and an inability to personalize communications, detect risk early, or improve loan retention.
Many servicing platforms are outdated, difficult to customize, and poorly integrated with modern tech stacks. Similarly, many servicing teams are under-resourced or lack the technical and analytical talent needed to adapt to today’s environment.
Despite these challenges, there are real opportunities for lenders to gain an edge through smart servicing strategies.
Servicing is a treasure trove of borrower data—payment patterns, escrow balances, life event indicators—that can power loan retention strategies. With the right analytics, lenders can identify early signals that a borrower may be shopping around or interested in refinancing.
Proactive use of servicing data—through preemptive outreach, targeted offers, or Mortgage Check-up programs—can have a major impact on both recapture rates and lifetime customer value. For example, STRATMOR’s MortgageCX Servicing Program found that borrowers who had contact with their servicer in the past 12 months reported significantly higher satisfaction. Their average Net Promoter Score (NPS) was 32, compared to just 22 for those who had no contact.
According to STRATMOR’s Customer Experience Director Mike Seminari, MortgageCX clients are using servicing data in two key ways. First, from a wide-angle perspective, lenders leverage peer benchmarking to understand how they stack up against competitors and to set strategic goals. Secondly, from a narrow-angle view, they use data to identify individual borrowers experiencing issues—such as statement discrepancies, escrow confusion, or rate questions—and proactively reach out to resolve those problems.
Siloed systems lead to missed opportunities. By integrating servicing data with LOS and CRM systems, lenders gain a unified view of the borrower, reduce churn, and better align marketing with real borrower needs.
For example, analyzing payment histories and home value trends can help lenders better time outreach for HELOCs or cash-out refis—even in a high-rate market.
Subservicers should be more than vendors—they should be strategic partners. That means setting clear performance metrics, conducting regular scorecard reviews, and having a robust oversight model in place.
Lenders should evaluate subservicers based not only on price, but also on factors such as:
Not every lender should outsource servicing. Some benefit from full control, brand consistency, and in-house data access. Others may find subservicing more cost-effective or better aligned with their growth strategy.
The key is to conduct a strategic servicing assessment, weighing cost, compliance, technology, and borrower experience across both models.
At STRATMOR, we work with lenders of all sizes to turn servicing from a cost burden into a strategic advantage.
A mid-size IMB came to STRATMOR struggling with rising costs, low borrower satisfaction, and declining recapture. After a comprehensive servicing strategy engagement, we helped the lender:
The results? A 28% improvement in borrower satisfaction and a 17% increase in loan recapture in just 18 months.
STRATMOR delivers value through:
Most importantly, STRATMOR helps lenders align their servicing strategies with broader goals—whether it’s maximizing MSR value, improving borrower lifetime value, or preparing for M&A.
Our proprietary MortgageCX platform delivers a continuous feedback loop into what borrowers actually experience—turning that insight into actionable service improvements.
Servicing is no longer a passive piece on the board—it’s a dynamic lever for growth, retention, and competitive edge.
Whether you’re managing servicing in-house, outsourcing to a subservicer, or evaluating your options, now is the time to step back and ask:
If you’re unsure, STRATMOR can help. With deep industry expertise and data-driven insights, we’ll work with you to build a smarter, stronger servicing model.
Contact STRATMOR Group today to schedule a servicing strategy consultation or data diagnostic. Michael Grad
STRATMOR works with bank-owned, independent and credit union mortgage lenders, and their industry vendors, on strategies to solve complex challenges, streamline operations, improve profitability and accelerate growth. To discuss your mortgage business needs, please Contact Us.
Feel free to reach out with any questions or needs we might be able to help with.
