Midsize and smaller banks and mortgage companies are increasingly finding they need consultants on loan servicing, investor accounting, and training.

Many have trouble keeping investment accounting experts on their staffs, especially when the work is done on behalf of secondary agencies like Fannie Mae or Freddie Mac. They also find it difficult to train new hires in such a specialized niche.

Celia Robinson, president of Mortgage Professionals Inc., Marietta, Ga., said lenders often turn to her firm for help. It sells loan administration services to mortgage bankers, banks, and thrifts.

"If a bank merges ... or is bought out, they still have to maintain their loans, but people may have left in the process," said Ms. Robinson. "We might go into a start-up and help them set up their loan servicing operation, or we might send someone in to help catch them up on reconciliation of their backlog."

Betsy Blanchard, vice president and servicing manager of Sunshine Mortgage, Atlanta, said she thought more lenders would be using services like Mortgage Professionals' because of their tasks' specialized nature.

"A loan servicer can lose a lot of money real quick if that desk isn't handled correctly," said Ms. Blanchard. "The cost is comparable to hiring a full-time employee to handle it at about $25,000 to $30,000 annually." Business has been good for Mortgage Professionals, particularly with its release of a Freddie Mac custodial accounting training module six months ago. The module was designed for the investor accounting departments of mortgage servicers as an on-line, interactive training tool.

Richard Beidl, senior analyst at Tower Group, Newton, Mass., said attitudes toward outsourcing had changed somewhat in financial services companies because of the financial incentives. An outsourcer with a subservicing agreement with Fannie Mae or Freddie Mac can give banks statements of net numbers rather than separately as revenue and cost numbers.

"This is very beneficial for banks' ratios," said Mr. Beidl. "There is a stratification here where a firm up to a certain size will want servicing rights but will want to outsource the work."

Mortgage holders with up to $5 billion in their servicing portfolios have a tendency to prefer to outsource their servicing. From $5 billion to $20 billion, it is no longer financially beneficial to outsource all of the portfolio. At above $20 billion, many banks begin to outsource what they cannot handle effectively in-house.

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