An uncharacteristic cold front, complete with wind and drizzle, greeted National Mortgage News’ seventh annual Mortgage Servicing Conference attendees on April 23 at the Westin Galleria Dallas hotel.
Perhaps two exhibitor giveaways — Datawatch’s fleece blankets and The Northstar Companies’ golf towels — helped provide warmth as morning conference participants huddled in their chairs. Audible sips of coffee gave way to hands readying pens for a day of note taking while mortgage industry leaders doled out advice for handling compliance implementation.
During 2013: A Mortgage Industry in Transition, four panelists listed keeping up with regulations at different government levels, procedural integration and documentation proof and consistency as the biggest challenges loan servicers face as they transition to a compliant mortgage industry landscape. The panelists agreed that companies must foster a corporate culture where all employees and vendors are compliance trained and vested.
At Aligning Customer Service and Communications Best Practices with CFPB Guidelines: A Win-Win for Mortgage Servicers, J.D. Power and Associates Director Craig Martin said compliance implementation with customer service centers was crucial.
“Probably one of the costs to servicers is going to be your contact center costs, and we see a very clear correlation between problem incidents and the number of contacts a customer is going to make to you,” Martin said.
He further discussed how implementing customer service compliance guidelines could provide better customer experiences. In turn, these experiences could result in positive financial and brand imaging impact for mortgage servicers. He advised servicers to think like customers when implementing compliance guidelines in their servicing centers. For instance, websites, a top customer complaint against servicers, should be accessible and easy to navigate from a customer perspective. Also, a streamlined communication plan for problem resolution should include metrics for tracking and assessing customer issues.
In the last morning hour, Silvergate Bank Vice President of Reverse Mortgage Operations Bob Emerling and SunTrust Bank Group Vice President of Consumer Banking Regulatory Compliance and Quality Control Michelle Leigh offered operations advice for staying compliant with various regulatory agencies during their presentation, Compliance for Non-compliance Professionals: How to Bridge the Gap between Compliance and Operations in Reality.
Emerling said understanding federal consumer protection focus provides a good framework for checking operations against compliance. For instance, having accurate information and calculations for items such as billing statements, adjustable rate mortgage notices and processed payments helps alleviate federal concerns about data integrity. Making sure current systems are scalable helps keep servicers compliant despite any customer volume changes. Providing policies and procedures training to all staff and being consistent with borrower contact shows regulatory agencies the mortgage servicing company has a consumer-first focus.
Leigh said understanding the differences between federal and state laws, government service enterprise policies and industry guidelines and the servicer’s own policies and procedures were crucial for mortgage professionals. She suggested having an appointed regulatory compliance person or team for federal, GSE and state rules. As well, all employees should know their company’s policies and procedures.
“Usually there are questions when regulators are there that are going to be asked,” Leigh said. “They usually want to have information such as training. ‘Who got trained?’ ‘What was the training about?’ ‘Do you have any material?’ ‘Can you give us a list of signatures that they actually received it?’ They will ask you.”
Just before noon, note takers flipped to new pages. Some nearby attendees stretched in their chairs, checked mobile device messages or whispered lunch plans to neighboring coworkers.
As noon struck, Conference Chair and National Mortgage News Editorial Director Mark Fogarty introduced Christopher Haspel, senior adviser of servicing and securitization for the Consumer Financial Protection Bureau. In an update to prepared remarks, Haspel reminded servicers about their consumer obligations and the “corrective measures,” if necessary, that the CFPB would institute.
Of the servicing activities monitored by the CFPB, transfer activity and concurrent borrower protection steps, new servicer document handling processes and consumer complaint service training were specifically highlighted. As well, session attendees learned the CFPB had handled more than 63,700 mortgage complaints, and 61 percent of those complaints were related to problems consumers faced when unable to make payments, especially when related to collections, foreclosures and loan modifications.
After lunch, the outside chill and even colder wind pierced through the makeshift fleece blanket shawl one conference participant wrapped around her shoulders. Fifty shades of grayscale highlighted the afternoon sky while several attendants forecast smiles and chatter while gathered in the conference foyer or around booths in the exhibition room.
As the first concurrent sessions neared, several people filled the Dallas I conference room for the CFPB Mortgage Servicing Rules discussion that headed up the regulatory compliance track. Of the nine major topics covered by servicing rules, seven of them included actual damages as penalties for non-compliance.
K & L Gates Partner Nanci Weissgold said she wanted servicers to understand how much work was ahead of them with a January 2014 CFPB rule implementation deadline. Servicing rule implementation challenges included identifying disconnect in areas ranging from technology support and documentation practices to understanding how guidelines affected different servicing activities. Weissgold also discussed key Truth In Lending Act rules related to periodic billing, adjustable rate mortgage notices and payment crediting and payoff.
Co-presenter Antonio Chimienti, Esq., senior vice president of compliance for Bayview Loan Servicing LLC, focused on Real Estate Settlement Procedures Act rules in forced-place insurance and loss mitigation. As well, he highlighted rules governing early intervention and continuity of contact. Though the regulation briefing was mostly a review, concerns about costs and operations highlighted what conference participants asked the speakers and dominated nearby chatter among participants.
The next session switched focus to Top Ten Things the Businesses Need to Know About Preparing for a CFPB Exam. The four-person panel based their discussion around what they felt were key development areas for servicers wanting to ace the compliance test.
“We review your business operations at every level,” Ann Thompson, CFPB office of supervision policy senior analyst and Top Ten panelist, said. “That includes the executive and board level all the way down to individual file reviews, and during our examinations, we often will use file access to help carry out these reviews. We’re also committed to consistency across the market regardless of location or charter to help level the playing field. We do coordinate with our prudential and our state regulators to try and minimize regulatory burden whenever possible.”
Several list items coincided with earlier general session presentations, but panelists provided perspectives more tailored to industry operations. They also stressed being proactive rather than reactive when implementing compliance policies and preparing for the exam.
Top Ten panel member and Ballard Spahr Partner Michael Waldron presented a framework for a compliance management system, which was an item on the panel’s list. Under the compliance system umbrella, four major categories made up the program–oversight, compliance program, consumer complaint response and compliance audit. Several details were provided under each sub-category. The umbrella also incorporate several other items from the panel’s top ten list.
“Having the framework allows you to overlay your business to essentially identify the pressure points for building out a scalable compliance management system,” Waldron said. “If you haven’t already, you should take an overview or foundational framework like this and set over the top of it, your business practices, your products, your headcount, your technology, your systems, and from that, take away where you need to address the gaps.”
If a hot topic existed for conference participants, it was third-party vendor management. Indeed, Servicer Surveillance and Vendor Risk Management: Structuring Successful Models with Your Service Providers was the last and most crowded compliance track session of the day. Panel moderator and Ernst & Young Executive Director Paul Nagai polled the attendants and found servicer representatives comprised the audience majority although sub-servicers were well-represented too.
With new regulatory guidelines or emphasis changes to current regulatory pieces, Nagai confirmed this element is one of the two changing the servicing landscape in relation to third-party vendors. The second element involves servicer accountability for third-party vendors used.
“It has become much more of an extension of the primary servicer’s operations and particularly as it relates to the customer interface components.” Nagai said. “And in many cases, we see that certainly your customers don’t necessarily differentiate between the servicers and their providers. So they look at the larger institution as the umbrella.”
Panelists placed emphasis on servicers conducting sub-servicer due diligence and risk management analysis. Servicers should look for third-party vendors who are onboard for cooperating with the servicer’s onsite testing, quality assurance and compliance policies.
