Outsourcing Data to Drive Better Asset Management

Investors, portfolio managers and asset managers rely on accurate transaction and servicing data to make strategic decisions. One of their key pain points is when the file contains different or conflicting information, which can lead to downstream impacts on loan accounting, reporting and performance. As a result, some market participants are making the strategic shift to outsourcing asset and data management.   

“Having clean, accurate data is the foundation to make better pricing, portfolio and asset management decisions,” explained Mike Margolf, Managing Director, Secondary Market Technology. “This means maintaining disciplined processes and systems that quickly understand what your servicer or other service provider is reporting, what may be missing and what may be inaccurate. It also requires maintaining strong servicer relationships, and having expertise that supports remediation, either with file delivery or data accuracy.” 

Servicing data management firms aggregate information, ensure the files are complete, accurate and up to date. They normalize fragmented, inconsistent and erroneous data. And they collaborate with the client and/or their servicers to manage data delivery cadence effectively. This frees up internal capacity and empowers investors, portfolio managers and asset managers to seize strategic opportunities. 

Driving More Meaningful Decisions 

A third-party outsourcing firm provides turn-key support through systems and services, delivering instant access to accurate data and reporting. “This gives clients a clear and immediate picture of value and performance, so they can make more meaningful decisions about the assets in their portfolios,” Margolf said. “Outsourcing what many people may see as mundane but critical data tasks allows firms to focus on their core expertise and better deploy their personnel. That leads to better asset and portfolio performance.”  

Clients that choose to outsource can reduce the high cost of data administration and augment their teams with scalable technology and focused professionals. Outsourcing firms offer flexible capacity, improved margins and accelerated turn times through contractual performance metrics.

"All of these advantages translate into potential cost savings and ultimately, in the ability for downstream operators to act with more confidence in secondary-market transactions,” Margolf explained. “SitusAMC applies hundreds of logic conditions that can recognize potential holes in data. This goes well beyond missing data, and applies testing that may identify loan performance concerns, compliance risk or incongruency across reported loan terms or activity.”

A third-party firm can take those findings back to the servicer to investigate, helping the client understand systemic reporting errors -- and improve both reported data and underlying servicing processes. “It takes a disciplined operations team to manage the data-delivery process to understand what’s received, what may be missing or inaccurate and how to normalize it,” Margolf said. “That takes infrastructure. Not every client has that infrastructure, or is as efficient and scalable as SitusAMC may be, because we do this for so many clients across asset classes, and offer specific technology to perform these functions.” 

Choosing the Right Outsourcing Partner  

Investors, portfolio managers and asset managers looking to outsource data and asset management functions should consider a single provider that can marry technology and services to deliver a superior product. Opportunities exist to consolidate data from across all available sources, including seller, due diligence, servicer and collateral. Look for a firm with deep expertise and significant scale across asset classes and clients, which provides the resources to continually improve technology and systems.  

"We have centralized systems of record that retain day-over-day and month-over-month data, with clear lineage and line of sight into how that data has changed over time,” Margolf explained.  

Finally, consider a vendor that offers value-added services, such as servicing quality-control, mark-to-market valuation or collateral management services integration. Opportunities exist to bring together technology and services in one place that can use data efficiently to meet needs of secondary market transactions, financing obligations, loan accounting and/or other internal requirements. 

To learn more about SitusAMC’s data and asset management services and other diligence-related offerings, visit our website. In addition, SitusAMC recently published a white paper, “Trends, Opportunities and Best Practices in Mortgage Outsourcing.” It examines areas of opportunity in outsourcing across the residential mortgage lifecycle: loan origination, warehousing administration and asset management, and looks at best practices in each. Download our white paper here.