Mortgage Servicing Regulatory ReviewTop U.S. Mortgage Servicer Goes from Compliance Woes to Operational Excellence
Introduction
A top U.S. mortgage servicer with a multi-billion-dollar servicing portfolio throughout all 50 states and the District of Columbia received regulatory action and significant fines for failing to provide mortgage borrowers with the protections against foreclosure through loss mitigation required by law.
Challenges
The mortgage servicer faced unprecedented and immense scrutiny from investors, government entities, and regulators to adhere to the stipulations and requirements of the regulatory action and to continue its mortgage servicing daily processes without any future infractions. Issues with their foreclosure and loss mitigation processes had a ripple effect on the entire portfolio. Property preservation and non-retention loss mitigation servicing areas needed an overhaul also.
Solution
The mortgage servicer retained Opus CMC to complete an onsite comprehensive loan-level audit of its mortgage servicing policies and procedures focused on its foreclosure and loss mitigation practices. The servicer sought remedies for current weak points in additional areas of its servicing compliance procedures.
Our Servicing Compliance group met with the servicer’s leadership, and we performed an onsite audit consisting of:
- Loan-level audits in over 50 different areas of mortgage servicing, including foreclosure, collections, loss mitigation, bankruptcy, property Inspection and preservation, HECM servicing.
- Detection of a flaw in the property preservation procedure that had been a concern of the servicer. Offered new guidance based on an updated regulation and worked with the servicer to update procedures with the property vendor management team.
- A quality review of the servicer’s updated loss mitigation and foreclosure procedures and instantly implemented recommendations.
- A detailed report with all findings and observations, an in-depth summary of strong and weak areas within the servicing group.
Impact
An independent servicing review through a battery of tests and audits resulted in dependable identification of process deficiencies and potential weaknesses. The outcomes:
- Enabled the servicer to feel confident in their recent implementations driven by the standing regulatory action.
- Specific recommendations to existing servicing procedures – not originally in question – instantly increasing profitability due to reduced unnecessary expenses.
- Ongoing business relationship and continued servicing reviews, delivering invaluable servicing insight and guidance.
