Mortgage portfolio runoff occurs when a mortgage lender's clients pay off their mortgage by either refinancing with another lender or bank, or purchase a new property and finance their next loan with another lender.
An Early Payoff (EPO) penalty is a fee that a servicing lender charges to an originating lender or broker when a mortgage is paid off with a certain time period, for example, within 6 months of closing. Most homeowners won't refinance their loan within the EPO time period unless there has been a significant drop in interest rates shortly after a homeowner closes on their mortgage, or the homeowner feels they didn't good financing from their original lender.
Most of the time, lenders have no idea that their past client is in the market until the borrower’s new lender is ordering a payoff request. At that point it is too late.
To avoid those potential losses, mortgage lenders need a mortgage portfolio runoff prevention system in place to notify them when to engage with their past clients before they order a payoff request. The bigger issue with portfolio runoff isn’t just fear of missing out on the refinance volume, but without an effort to retain their customers, the highest Fico and lowest LTV borrowers will runoff because they can. These are the very borrowers lenders need to retain to keep up the overall credit quality in their portfolios. Borrowers with credit or LTV issues will stay.
Founded in March of 2007, we have developed a solution that utilizes prescreened credit information, and other behavioral data attributes to determine when consumers are most likely to be in the market to purchase or refinance a home. The results are powerful!
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