The servicing industry landscape has been reshaped tremendously by market forces and regulation. Current regulations related to BASEL III have created a need for due diligence and advisory for servicing companies. Banks have a desire to improve capital efficiency and explore MSR sales in order to implement this strategy. As the purchase market strengthens, demand for valuation modelling and servicing transfers grows along with it. Servicing quality control measures are being sought by lenders as they strive to keep pace with the industry’s regulations and upticks in market demand.

Opus CMC is the industry’s most trusted service provider for due diligence. Our client centric approach to loan servicing due diligence yields high quality results driven by the unique standards of each client. The highly seasoned team of professionals at Opus CMC is committed to delivering accurate and actionable results. Our consistent delivery of these exacting standards are core drivers of our client’s success.

Operational Review +

Opus CMC’s Operational Reviews assist clients in navigating consumer financial laws related to their servicing business.  Additionally, Opus CMC tests for compliance with underlying regulatory, agency and secondary market investor requirements.

Previously, regulator focus had been on the larger financial institutions.  More recently, there has been a shift towards “non-bank” servicers and smaller community banks.  Servicing compliance has experienced a tremendous amount of change in the past several years and continues to evolve.   Regulators are more closely monitoring servicing transfers, evaluating stricter compliance rules, and stepping-up claims of discriminatory practices and disparate treatment of consumers.  The 2010, passing of the Dodd-Frank Act resulted in the creation of the CFPB, whose sole mission is protecting consumers.  Further oversight from the OCC, Federal Reserve Board, the FDIC, state Attorney Generals, and the DOJ have increased legal actions exponentially.  Resulting consent orders and financial penalties require adherence to these laws and best practices established by the regulatory entities.  Ensuring compliance with laws, regulations and internal polices is more complex and costly than ever before.

Opus CMC’s scope of review includes all loan servicing functions including:  Loan boarding, data integrity audit, servicing transfers, RESPA and TILA compliance, document tracking and customer service.  Additional attention is paid to higher risk functions such as default management, collections, loss mitigation, foreclosure, bankruptcy, resolutions, and asset management.

 

Loan Boarding/Servicing Transfers

During the loan boarding process, there is ample opportunity for error due to the logistics of transferring large amounts of data and documentation associated with the sale or acquisition of mortgage loans.  Mortgage servicers lose paperwork, lose track of a homeowner’s loss mitigation plans, and may hinder a consumer’s chances of saving their home from unnecessary foreclosure. Regulators have publically expressed a heightened concern about these practices given the large number and size of recent servicing transfers.

 

Default Management

Federal regulators rely on laws, such as the Fair Debt Collection Practices Act (FDCPA), to ensure servicers are in compliance with collection activities as outlined in the FDCPA.  These practices govern both third-party collection agencies, as well as, servicer collection activities.  Violations of the FDCPA, allow a consumer to sue a servicer for physical distress, emotional distress, lost wages, wage garnishment recovers, statutory damages, and recovery of attorney costs and fees.

 

Bankruptcy and Foreclosure

As with default management, federal laws help regulators enforce the proper treatment of consumer’s in bankruptcy and/or foreclosure proceedings.  Laws, such as the Soldier and Sailors Relief Act, in some cases, overlooked by a servicer and have extreme consequences.  Bankruptcy proceedings create an automatic stay of foreclosure proceedings and are very prevalent in today’s market to help curb the foreclosure of a consumer’s home.  Foreclosure laws vary from state to state and are very complex and subject to change.

 

Servicing Compliance

Previous regulator focus has been on the larger financial institutions; however, there has been a shift towards “non-bank” servicers and smaller community banks.  Servicing compliance has experienced a tremendous amount of change in the past several years and continues to evolve.   Regulators are more closely monitoring servicing transfers, evaluating stricter compliance rules, and stepping-up claims of discriminatory practices and disparate treatment of consumers.  The 2010 passing of the Dodd-Frank Act resulted in the creation of the CFPB, whose sole mission is protecting consumers.  Further oversight from the OCC, Federal Reserve Board, the FDIC, state Attorney Generals, and the DOJ have increased legal actions exponentially.  Resulting consent orders and financial penalties require adherence to these laws and best practices established by the regulatory entities.  Ensuring compliance with laws, regulations and internal polices is more complex and costly than ever before.  

Traditional Servicing+

Operational and loan level compliance reviews based on various regulations like TILA, RESPA, and agency/ investor guidelines to identify process and asset level deficiencies across the following areas of servicing:

• Servicing transfers, loan ownership transfers, and escrow disclosures

• Payment processing and account maintenance

• Consumer inquiries, complaints, and error resolution procedures

• Maintenance of escrow accounts and insurance products

• Credit reporting

• Information sharing and privacy

 

 

Default Servicing+

Operational and loan level compliance reviews based on various regulations like FDCPA, TILA, RESPA, and agency/ investor guidelines to identify process and asset level deficiencies across the following areas of special servicing:

• Collections and accounts in bankruptcy

• Loss mitigation, early intervention, and continuity of contact

• Foreclosures