Servicers know all about the regulatory complexity — whether the rules are coming from the state or federal level or the Consumer Financial Protection Bureau (CFPB) – that often leaves them in a constant state of audit and exam. With so much at risk, servicers must find ways to be preventative and proactive to ensure compliance and longevity.
“When you think about the current mortgage servicing landscape, it’s complex,” said Kristin Broadley, Chief Innovation Officer at QC Ally. “You’re under constant scrutiny and constantly having to monitor and govern processes and practices to make sure that you are doing right by your clients.”
Servicers and asset owners that aren’t in compliance with regulations are subject to enforcement action from the CFPB. Recent months have seen companies receive fines related to improper forbearance practices, serving as a cautionary tale for others who may currently be in — or pending — CFPB servicing reviews. And those reviews are no joke, Broadley said.
“They’re fantastic at finding things,” she said. “They’ll put a wealth of experienced auditors on very few files, and they will go through it with a fine-tooth comb.”
Quality control/Quality assurance sampling
So how can servicers be sure their programs are satisfactory?
According to Broadley, it starts with a robust QC QA program that is preventative and proactive rather than reactive.
“Test those high-risk processes, those things that are of interest to the CFPB, the state regulators, federal regulators, asset owners, investors and insurers,” she said. “Making sure that you’re consistently testing and monitoring [your processes]. Having that proactive, preventative program gives you a clear line of sight into the risk of your servicing book so that you can make changes as needed.”
When doing QC, it’s important to do your samples based upon your performing population. You should also look at your default population and loss mitigation. With QA, you can get really granular and test timeframes and timing, as well as specific processes that your servicing system may not be the best at reporting on.
“Figure out what your key risk indicators are on any process and product and then consistently test it,” Broadley said. “If you see in the news that they’ve identified issues with another servicer, test your own. Leverage your QA process to identify risks, but also identify when you’re doing well.”
Governing and monitoring a process doesn’t necessarily mean that you’re going to find out that something’s gone wrong — it can also serve as reassurance that things are continuing to go correctly and your processes and people are operating as intended within the risk tolerance you’ve determined.
How QC Ally simplifies QA
QC Ally works with each servicing client based on their unique risk tolerances and portfolio. If a servicer wants to manage its QA process internally, the company can help make that happen. And if an issue is identified, QC Ally can help with lookbacks and reviews to identify any populations of loans that may have to be remediated.
“QC Ally is a partner to servicers and those lenders that are retaining servicing with subservicers, because we can step in with a level of expertise, do the testing needed and provide that level of certainty, transparency and visibility when it comes to whether things are working as intended,” Broadley said.
QC Ally has a 99% accuracy rate and is a variable cost — no training or expertise is required on the part of the servicer.
“You can leverage us to quickly test those processes for you and provide results that are actionable,” Broadley said. “One being inaction — you pat yourself on the back, things are working as intended. Second being, you have an action plan and you make adjustments so that you can remediate any issues that are out there.”
For more information on working with QC Ally, visit qcally.com.