Cornerstone Latest lender to take over in-house mortgage servicing

In a coup for Black Knight, the deal is the latest in a growing trend as lenders see the service as a way to smooth out income and retain former customers when they refinance or buy their next home. .

Cornerstone Home Lending is the latest mortgage lender to take over its mortgage service – a trend that is gaining traction as lenders seek to smooth out income ups and downs and retain former customers when they refinance or buy their next home.

Toby Wells

Houston-based Cornerstone announcement Wednesday that the company has assembled “an elite team of maintenance professionals” led by Toby Wells, and will use software provided by Black Knight Inc. to collect payments on new loans. Prior to joining Cornerstone last year, Wells spent 18 years at Specialized Loan Servicing, including the last 5 years as CEO, leading a team of over 1,400 people.

Cornerstone Home Lending – not to be confused with Washington, D.C.-based Cornerstone First Financial, which was recently acquired by end-to-end real estate platform Fathom Holdings – said it would also transfer its existing mortgage portfolio to the internal company system. In the coming months.

“To fulfill our corporate responsibility to deliver an outstanding customer experience in the mortgage servicing function, Cornerstone must own and control the entire servicing process on a daily basis,” said Cornerstone President Adam Laird, in a statement. “Cornerstone clients will remain under the ultimate responsibility of Cornerstone team members during the loan origination and loan closing process, and now throughout the life of their loan.”

Servicing loans is not only about collecting monthly payments from borrowers, but also helping them avoid defaults in difficult times. Many lenders outsource services to companies that specialize in this area, but they are increasingly seen as a reliable source of income.

Because loan servicers have details of each borrower’s interest rate and loan balance, they are well placed to offer homeowners refinancing when the opportunity arises or help them finance the purchase of a home. a new house.

The nation’s largest mortgage lender, Rocket Cos., has grown its loan servicing business by 25% over the past year and now claims to be the nation’s fifth-largest lending service, collecting mortgage payments of 2 .6 million owners.

Signing Cornerstone as a client is a coup for Black Knight, the nation’s leading provider of mortgage servicing software. But Black Knight has recently faced fierce competition from fintech software developer Sagent.

In February, mortgage services giant Mr Cooper announced that it had sold the rights to its services platform to Sagent in exchange for a minority stake in the company. Sagent is upgrading the platform and will license it back to Mr. Cooper and others in the mortgage industry as the first cloud-native service platform.

Sagent also has a strategic partnership with digital lending and payments provider Figure to power Figure’s mortgage service and to work with Figure to use its Provenance Blockchain technology to create efficiencies in lending.

Just last week, Sagent announced a seven-year agreement with Pittsburgh-based Clearview Federal Credit Union to bring its mortgage servicing business in-house. In recent months, Sagent has announced deals with Servion Mortgage and Land Home Financial Services, as well as relaunching existing clients including Freedom Mortgage Corp. and Gateway First Bank.

Providing loan management software to lenders remains Black Knight’s biggest business, accounting for nearly 57% of the company’s $1.475 billion in revenue in 2021.

According to the latest report from Black Knight Annual Report to investors, its mortgage management software solutions were used to collect payments on 63% of the 53.2 million U.S. first mortgages outstanding in 2021, up from 61% in 2020. Black Knight estimates that its software was used to collect payments on 26% of the 12.2 million second mortgages outstanding last year. In total, Black Knight estimated it had 56% of the total mortgage management software market in 2021, up from 54% in 2020.

The $838.9 million in revenue generated by Black Knight’s mortgage management software solutions accounted for two-thirds of the $1.25 billion in revenue generated by the company’s software solutions segment in 2021. Black Knight’s loan origination software generated $411.1 million.

Black Knight’s other business segment, data and analytics, generated $225.2 million in revenue last year.

In 2019, Black Knight sued client PennyMac Loan Services alleging breach of contract and appropriation of trade secrets. PennyMac has filed an antitrust complaint against Black Knight alleging that Black Knight relies on anti-competitive practices to maintain its dominance in the mortgage services platform market. Both cases are now in arbitration, with hearings scheduled for January 2023.

Counting the loans it buys from correspondent lenders, Pennymac is the nation’s second-largest mortgage lender, with $234 billion in loan origination in 2021. Pennymac says it’s the sixth-largest loan servicer in the nation. country, collecting payments on $510 billion in outstanding mortgage debt from more than 2.1 million homeowners.

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