Mortgage servicing seen as next outsourcing niche

(Manila Bulletin)

The mortgage servicing industry may be small, but the pioneer in the management of mortgages in the Philippines sees the sector as the next BPO (business process outsourcing) opportunity.

According to BFS, the country’s first company to specialize in mortgage servicing and asset management, there will be a growing need for mortgage processing as the demand for housing is projected to grow. This goes hand in hand with an expanding consumer market stemming from an improving economy.

“The purchase of a residential home is the most important investment,” explained BFS President Federico Y. Cadiz. “With a growing economy, the opportunity to make this investment is made more available. In a recent report, the Bangko Sentral ng Pilipinas (BSP) said the total consumer loans grew 20.9 percent year-on-year at the end of September 2014, with residential real estate loans increasing by 24.8 percent in the same period to P79.8 billion.”

“Under a growth regime, lenders will manage and process an increasing number of loans and mortgage accounts. As the volume of borrowers and loans grows, the costs to efficiently process these mortgages correspondingly increase,” said Cadiz. “At some point, it makes sense to have a specialist do it.”

He cited the experience in developed countries where financial institutions compartmentalize into specialized activities, such as mortgage servicing, to lend scale to the process.

According to Cadiz, outsourcing mortgage servicing makes sense because the service provider can leverage on its expertise, its processes and technology, and economies of scale. “Mortgage servicing BPOs will be able to do the job in a more cost-effective manner,” he said, adding that these BPOs can offer the service here and abroad.