As the CFPB has taken a step back from examination and enforcement, other federal agencies and states have stepped in. Instead of one agency’s rules and regulations to deal with, mortgage servicers now have to cater to a multitude of regulators looking at a variety of new areas. It all equals expanded risk.
What can servicers do in this new environment? A panel at the MBA’s National Servicing Conference on Wednesday addressed the new challenges, and offered their best advice. Mitchel Kider, Managing Partner of Weiner Brodsky Kider, led the discussion that included Monique Riccobellie, commercial and consumer loan servicing director at the Huntington National Bank, Michelle Rogers, partner at Buckley, and William Fricke, vice president and senior credit officer at Moody’s Investors Service.
Trending compliance issues include how servicers are accommodating LEP borrowers and ADA borrowers, fair servicing and data security. Within fair servicing, loss mitigation is a huge concern, and one that states are looking intently at. And they have the tools to do it, Rogers said.
“Some of this states have very skilled statisticians who do their own fair lending analysis. Where the federal government was previously out in front of these issues, the perception of states that there has been a pullback means they are staking out this ground,” Rogers said.
Riccobellie, whose company recently went through an examination, outlined five keys to exam preparation based on the experience:
1. The timing of your preparation.
Give yourself a cushion to find problems and remediate them before the exam period. “If you’ve been notified that examiners are coming, it’s too late. That’s like doing estate planning after you’re already dead.”
2. Determine how your organization is going to manage the exam.
“It sounds obvious and basic, until the CEO is calling 17 different people for different things. You need a day-to-day point person. Think carefully about who this is going to be: whether a subject matter expert, someone from legal or compliance.”
3. Think through response timelines.
“We receive requests late in afternoon and our goal was that no one went home before we went through the first flip of responses, then when we came back the next morning we had responses ready. That meant we instituted a PTO freeze, and our first shift planned on staying late unless they were notified that there were no questions.”
4. Think through the review process.
“Some think a hierarchy review, where you start from the top and everyone reviews in turn is best, some believe collaborative approach better. Get as many different viewpoints as you can in the room. Some of exam topics are expanding out, so historically I probably wouldn’t invite IT into the conversation, but that’s changing.”
5. Go overboard on documenting and cross referencing prior responses.
“You cannot document enough. You can’t cross-reference to prior responses enough.”