Mortgage Servicing Loan-level AuditNationwide Servicer Strengthens HUD Relationship, Avoids Costly Compliance Penalties
Introduction
A nationwide mortgage servicer with over a $40 billion dollar servicing portfolio throughout all 50 states, the District of Columbia, U.S. territories, and a large portfolio presence in Puerto Rico was audited by HUD during an annual compliance audit. HUD’s audit found multiple areas in the mortgage servicer’s portfolio that needed immediate remediation for the company to maintain its status with HUD.
Challenges
The mortgage servicer, whose portfolio at the time was largely made up of HUD guaranteed loans, needed to meet compliance standards in several areas of servicing that it was currently underperforming in. This was a critical point in the company’s servicing entity as losing the ability to service HUD loans would be detrimental to its business, shareholders, reputation and employees. There were multiple concerns on non-compliant characteristics within the foreclosure, loss mitigation, collection, and property preservation servicing areas. Other areas were identified as having possible issues and needed review.
Solution
The company retained Opus CMC to complete a comprehensive loan-level audit of its mortgage servicing portfolio with an emphasis on its HUD loans. They sought immediate and long-term remedies for its HUD audit results.
The Opus CMC Servicing Compliance team met with the mortgage servicer and based on the company’s current servicing issues and potential future concerns, Opus CMC recommended a loan-level monthly audit review on the entire servicing portfolio to address the HUD issues but also prevent similar issues on its VA, USDA, and conventional loan portfolios. The monthly audit reviews consisted of:
- Loan-level audits in over 50 different areas of mortgage servicing consisting of Foreclosure, Collections, Loss Mitigation, Bankruptcy, Property Inspection and Preservation, HECM Servicing, and many more.
- Identified several issues in the foreclosure process regarding first legal procedures that had been highlighted in the HUD audit. Offered fresh guidance based on regulatory requirements and recommended continuous testing in this area to bring any unknown potential issues to light.
- Recognition and remediation of potential HUD violations that carry penalties of up to $1 million.
- Discovered late fee issues within the collection scopes, specifically on loss mitigation. Offered immediate guidance on future prevention and the remediation for earlier findings. Opus CMC deployed additional testing to seek all impacted loans and remedy this. Opus CMC’s recommendations and process changes were instantly implemented.
- Provided a detailed total review report with findings, potential weak points, and areas of observations, along with preparing an in-depth summary of the entire portfolio that was reviewed.
Impact
An impartial and independent servicing review through a series of tests and audits resulted in dependable identification of process deficiencies and potential weaknesses.
- Enabled the mortgage servicer to be confident in its relationship with HUD and any potential audits.
- Positively improved the client’s servicing functionality and reduced concerns and pressures of non-compliance regulatory penalties.
- Created a longstanding business relationship with the mortgage servicer in which regular audits are performed to ensure ongoing compliance.
