Servicers have experienced a noticeable increase in the amount of attention paid from government agencies and consumers, as well as other segments of the mortgage industry.
Additional demands have created a more complex servicing environment, reinforcing existing standards and bringing about new standards which servicers must adhere to in order to satisfy regulators, and keep the consumer informed in an understandable manner.
One of the most significant changes has come from the Consumer Financial Protection Bureau, which has focused largely on improving mortgage servicing and transparency, in an effort to provide the best possible experience for consumers.
In addition to the new CFPB servicing guidelines set to launch in January 2014, the evolution of the industry is also requiring servicers to re-evaluate their current processes and efficiencies, as the technology solutions necessary to successfully manage servicing have changed.
Servicers now have less than three months to prepare for the new regulations, and implement the technology and business processes that will ensure the continued success of their business and help evade regulatory penalties.
The CFPB recently released a supervisory report detailing the most notable mortgage servicing issues that need to be resolved, based on examination work completed between November 2012 and June 2013.
It highlights common concerns related to servicing. The agency hopes to eliminate these issues, such as sloppy servicing loan transfers, poor payment and escrow processing and loss mitigation mistakes, before they further impact the consumer. As part of the report, the CFPB goes on to note specific actions attributing to each issue, spanning from minor processing inefficiencies to larger operational inconsistencies.
The concerns expressed by the CFPB in the supervisory report reflect two key points that servicers need to address in order to succeed in today’s mortgage industry: reporting and communication. Both can easily be addressed by leveraging internal servicing technology, it is vital to utilize a comprehensive solution with the ability to effectively handle the servicing needs of today’s complex mortgage environment.
The question is, which solution is the best fit?
Historically, technology has played a key role in helping servicers successfully maintain operations internally and with borrowers. However, as quickly as times have changed, so have the demands of the industry.
The first servicing platforms originally introduced were designed to address the demands of a mortgage industry with much greater stability than that of today. These initial platforms were made to essentially automate payment processing, then grew to provide servicers with greater speed and efficiency to manage the most loans with the least amount of resources possible. The platforms eventually included more reporting functionality as investors began purchasing more loans and lenders kept fewer loans in their own portfolios.
Such functionality remains equally important to servicers today. However, the need for more advanced technology is at an all-time high because the current landscape of the industry remains in a state of flux, and the adoption of mobile and Internet technology continues to increase, servicers have to seek solutions that provide a much higher level of flexibility. It is the only way they can keep up with the greater, and ever-changing, demands of both consumers and regulatory agencies.
These solutions will effectively provide servicers with more advanced reporting techniques, as well as offer greater communication capabilities for both borrowers and investors, by leveraging the latest Internet capabilities to provide both parties greater access to data from any location.
It is safe to say that although there is no way to predict what’s next for the mortgage industry change will occur and additional modifications could likely still be introduced.
For example, the CFPB released amendments to the 2013 Mortgage Rules in mid-October, as a clarification to some of the reported conflicts with other regulations and agencies that servicers must adhere to.
Servicers investing in a more flexible and comprehensive technology platform today will be more apt to adjust to future changes and clarifications as they are released, as well as to update necessary processes with much greater ease than those who continue to utilize outdated technology.
Susan Graham is president and COO of Dallas-based Financial Industry Computer Systems Inc.