Servicers in today’s environment are riding a treadmill when it comes to keeping up with new regulations and compliance requirements to meet the needs of not only the government-sponsored enterprises, but other state and federal regulations. 

So how do they do it?

A panel of servicing executives at the REperform Summit, a HousingWire mortgage servicing conference that concluded Friday in Dallas, credited technology solutions, tight quality control provisions and constant communication with their frontline staff for ensuring compliance with new servicing guidelines.

“What has changed is the system is a lot less forgiving,” said Gagan Sharma, president of BSI Financial, an Irving, Texas-based mortgage subservicer.

Sharma said human error is part of the normal course of business. But to lessen the risk in a heavily, regulated compliance-oriented environment, he recommends “having consistent and frequent communication to the frontline staff.”

Dave Vida, president of loan servicing at Denver-based mortgage services provider LenderLive, noted that expenses tripled in the compliance and quality control areas because of all the rules and regulations the company has to keep up with.

“We have full-time people who are responsible for tracking all of the changes on the GSE level, the federal level and the state level,” Vida said.

Vida’s team hones in on quality control by evaluating everything from the transaction to the valuation.

Alex Villacorta, director of research and analytics for Clear Capital, a data and valuation firm based in California, said while data systems can be fooled, technology is still one of the best ways to investigate transactions and ensure compliance with all regulatory requirements.

Clear Capital uses data to detect risk and evaluate assets.

Information provided to Clear Capital from brokers is put through a couple of servers, and the firm uses algorithms to detect any inconsistencies or layers of fraud. The firm also does an automated valuation on the backend using its own data pulled from comparable properties, surveys and other sources.

“We are comparing human behavior to what is happening in the data within our systems,” Villacorta said.

Finding ways to use technology to limit the risks lowers prices across the board for clients who are already squeezed when it comes to expenses, Villacorta said.

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