Data as a service, or DaaS, for loans and MSR investors is fast becoming the difference between profitable trades and near misses.
Granularity of data is creating differentiation among investors. To win at investing in loans and mortgage servicing rights requires effectively managing a veritable ocean of loan-level data. Buried within every detailed tape of borrower, property, loan and performance characteristics lies the key to identifying hidden exposures and camouflaged investment opportunities. Understanding these exposures and opportunities is essential to proper bidding during the acquisition process and effective risk management once the portfolio is onboarded.
Investors know this. But knowing that loan data conceals important answers is not enough. Even knowing which specific fields and relationships are most important is not enough. Investors also must be able to get at that data. And because mortgage data is inherently messy, investors often run into trouble extracting the answers they need from it.
For investors, it boils down to two options. They can compel analysts to spend 75 percent of their time wrangling unwieldy data – plugging holes, fixing outliers, making sure everything is mapped right. Or they can just let somebody else worry about all that so they can focus on more analytical matters.
Don’t get left behind — DaaS for loan and MSR investors
It should go without saying that the “let somebody else worry about all that” approach only works if “somebody else” possesses the requisite expertise with mortgage data. Self-proclaimed data experts abound. But handing the process over to an outside data team lacking the right domain experience risks creating more problems than it solves.
Ideally, DaaS for loan and MSR investors consists of a data owner handing off these responsibilities to a third party that can deliver value in ways that go beyond simply maintaining, aggregating, storing and quality controlling loan data. All these functions are critically important. But a truly comprehensive DaaS provider is one whose data expertise is complemented by an ability to help loan and MSR investors understand whether portfolios are well conceived. A comprehensive DaaS provider helps investors ensure that they are not taking on hidden risks (for which they are not being adequately compensated in pricing or servicing fee structure).
True DaaS frees up loan and MSR investors to spend more time on higher-level tasks consistent with their expertise. The more “blocking and tackling” aspects of data management that every institution that owns these assets needs to deal with can be handled in a more scalable and organized way. Cloud-native DaaS platforms are what make this scalability possible.
Scalability — stop reinventing the wheel with each new servicer
One of the most challenging aspects of managing a portfolio of loans or MSRs is the need to manage different types of investor reporting data pipelines from different servicers. What if, instead of having to “reinvent the wheel” to figure out data intake every time a new servicer comes on board, “somebody else” could take care of that for you?
An effective DaaS provider is one not only that is well versed in building and maintain loan data pipes from servicers to investors but also has already established a library of existing servicer linkages. An ideal provider is one already set-up to onboard servicer data directly onto its own DaaS platform. Investors achieve enormous economies of scale by having to integrate with a single platform as opposed to a dozen or more individual servicer integrations. Ultimately, as more investors adopt DaaS, the number of centralized servicer integrations will increase, and greater economies will be realized across the industry.
Connectivity is only half the benefit. The DaaS provider not only intakes, translates, maps, and hosts the loan-level static and dynamic data coming over from servicers. The DaaS provider also takes care of QC, cleaning, and managing it. DaaS providers see more loan data than any one investor or servicer. Consequently, the AI tools an experienced DaaS provider uses to map and clean incoming loan data have had more opportunities to learn. Loan data that has been run through a DaaS provider’s algorithms will almost always be more analytically valuable than the same loan data processed by the investor alone.
Investors seeking to increase their footprint in the loan and MSR space obviously do not wish to see their data management costs rise in proportion to the size of their portfolios. Outsourcing to a DaaS provider that specializes in mortgages, like RiskSpan, helps investors build their book while keeping data costs contained.
Save time and money – Make better bids
For all these reasons, DaaS is unquestionably the future (and, increasingly, the present) of loan and MSR data management. Investors are finding that a decision to delay DaaS migration comes with very real costs, particularly as data science labor becomes increasingly (and often prohibitively) expensive.
The sooner an investor opts to outsource these functions to a DaaS provider, the sooner that investor will begin to reap the benefits of an optimally cost-effective portfolio structure. One RiskSpan DaaS client reported a 50 percent reduction in data management costs alone.
Investors continuing to make do with in-house data management solutions will quickly find themselves at a distinct bidding disadvantage. DaaS-aided bidders have the advantage of being able to bid more competitively based on their more profitable cost structure. Not only that, but they are able to confidently hone and refine their bids based on having a better, cleaner view of the portfolio itself.
Rethink your mortgage data. Contact RiskSpan to talk about how DaaS can simultaneously boost your profitability and make your life easier.
