The “Five C’s” that challenge mortgage servicers: #5 - Cost

Published on: 27 January 2026

Rob Lux, CEO of Ranieri Solutions, details the fifth and final challenge mortgage servicers face and how they can be addressed with Cloud for Mortgage.

Cost: a continuing challenge for mortgage servicers

Over our previous four articles on this topic, we explored the persistent challenges mortgage servicers face today:

• Delivering a proactive, digital-first customer service experience

• Keeping pace with Federal, State and local regulatory compliance changes

• Protecting consumer data against rapidly evolving cybersecurity threats

• Customizing services to the diverse needs of clients and investors.

  
  

Now, in this final installment, we address the final and overarching challenge: Lowering the cost of servicing mortgages and why legacy technology contributes to higher costs.

Servicing costs haven’t dropped in decades – and legacy technology is the reason

Data from the Mortgage Bankers Association shows that for more than a decade, the average cost to service a performing mortgage loan has remained at around $170 per loan per year, stubbornly unchanged. Meanwhile, costs for non-performing loans have accelerated even faster, rising to roughly $2000 per loan per year, since 2020.

Servicers have tried multiple approaches to manage these expenses:

• Smaller services sell loans or hire subservicers

• Large servicers shift work offshore to lower-cost labor markets.

But all servicers – large or small, onshore or offshore – share one thing in common:

They are still operating on 40-50-year-old technology.

No matter where the work is done, legacy systems consistently deliver the same outcome: slow processes, heavy manual work and rising labor costs.

You can’t manage a modern servicing operation on pre-internet technology

Servicers have relied on mainframe-based systems for decades. But continuing to use technology built for a paper driven world and hoping for lower costs simple doesn’t work.

• Subservicers can’t deliver meaningful cost reductions if they’re operating with the same outdated tools.

• Offshore teams can’t improve productivity if heavy manual work, screen-hopping and reconciliation remain necessary for every workflow.

• Slow and expensive compliance and investor updates expose the operations and risk teams to heavy penalties and fines.

The result? Servicers remain stuck at roughly 800 loans per employee, well below the long pursued 1000 loan benchmark and battling with 20% employee turnover along the way.

The human cost of outdated technology

The next generation of servicing talent grew up with intuitive apps, real-time interfaces and smartphones – not green screens, obscure function keys and cheat sheets taped to the monitor.

When a new employee must memorize that “DLQ1/CBRH” is the path to credit bureau reporting, you’re already losing:

• Productivity

• Talent retention

• Accuracy

• Morale.

While these core systems haven’t fundamentally changed in half a century, their costs continue to increase annually.

Why? Because a duopoly legacy technology vendors controls the servicing system market and servicers are forced to accept perpetual cost increases from platforms that actively limit their efficiency.

Why new systems haven’t solved this problem – until now

Many servicers have attempted in-house builds or adopted third-party tools over the years. They often handle performing loans as well, which is the easy part of servicing:

• Send statements

• Accept payments

• Remit to investors.

But true complexity, and cost, begins when a borrower stops paying.

Default servicing requires:

• Collections

• Loss mitigation

• Foreclosure and bankruptcy workflows

• Investor specific rules

• Intricate, fast changing regulatory requirements

To manage this, servicers rely on layers of bolt-on systems, spreadsheets and manual reconciliations, driving complexity and cost up – not down.

The hidden cost few talk about: Customer attrition

Poor servicing experience drives consumers to refinance with competitors, shrinking retention rates and costing $10,000 or more per new customer acquisition.

Modern servicing platforms directly influence:

• Customer satisfaction

• Retention

• Cross-sell opportunity

• Lifetime value.

If servicers want relationship banking, they must first deliver relationship grade servicing. And that requires modern technology.

Introducing Cloud for Mortgage: Purpose-built for today’s servicing reality

The industry has waited decades for a platform designed to address the true drivers of servicing cost. Now, it’s here:

Cloud for Mortgage by Raineri Solutions and SAP Fioneer

Cloud for Mortgage is the first platform built by servicers, for servicers on top of SAP’s globally proven, highly scalable technology.

Cloud for Mortgage delivers what legacy systems can’t.

1. A unified, cloud-native platform: No more bolt-ons. No more scattered data. No more complex reconciliations.

2. Real-time access to data: Eliminates latency, reduces errors, speeds decision-making and enhances AI performance.

3. End-to-end servicing – including default: Default servicing is built into the platform, not layered on afterward.

4. Intuitive, modern UI: New employees can ramp quickly, without green-screen training or memorized commands.

5. Faster regulatory and investor updates: Enhancements deploy quickly and consistently across the platform.

6. Fully integrated AI agent: The Fioneer AI Agent is part of the platform and will quickly answer questions and execute repetitive tasks.

7. Document management: All documents and related mortgage information are available as a virtual loan file. This includes mortgage documents, call recordings, property pictures and videos.

8. Lower technology and operational costs: Automation, integration and modern workflows break the industry’s dependence on labor intensive processes.

The result: True, sustainable cost reduction

Cloud for Mortgage doesn’t simply replace legacy systems.

It transforms the economics of servicing by enabling servicers to:

• Handle more loans with fewer people

• Improve accuracy

• Reduce turnover

• Accelerate compliance

• Deliver self service capabilities consumers want

• Grow without proportionally adding staff.

Modern servicing isn’t about reducing people – it’s about using the people you already employ to do more by providing them with modern technology.

Cost control requires modernization

Servicers have tried everything: subservicers, offshoring, bolt-on applications and homegrown tools. None of it has fundamentally changed their cost structure because the core platform has remained unchanged.

Cloud for Mortgage changes that.

It is the first truly modern, integrated servicing platform capable of driving real cost efficiency and enabling sustainable growth.

The industry has waited decades for this moment. Now, it’s here. Learn more about our Cloud for Mortgage platform.