FEB 26, 2013

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Servicing Lens

Post-Closing Mortgage Document Management Issues

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Post-closing document management has taken on new importance in the mortgage industry, particularly in light of record foreclosure volume, the robo-signing scandal and subsequent regulations and scrutiny.

Due in large part to processing delays involving documentation, the recent historic foreclosure volumes exposed great weaknesses in the loan document management procedures of many servicers.

With requisite new policies and procedures in place, mortgage lenders and servicers are just now tackling a tremendous backlog of foreclosures and contested buybacks, guaranteeing continued scrutiny of their loan documentation processes.

Until 2008, it may have been possible to overlook the importance of loan document management, particularly in post-close units that are not profit centers, but that’s no longer feasible.

The post-closing process now requires rigorous document management, auditing and reporting capabilities to ensure that documentation is complete and in compliance.

And, if a servicer’s post-close document environment lacks clear and consistent management, its team is spending time working with hundreds or thousands of jurisdictions and searching for files and related documents instead of time on mission-critical responsibilities.

For this reason, improving operational efficiencies in managing loan files can reduce operating expenses and risk, particularly with solutions that combine imaging, automation and jurisdictional requirements.

Other factors that make it harder for a servicer to be compliant include changing regulations and increasing scrutiny.

For example, if one doesn’t respond quickly to an audit request with clean, well-organized files, examiners are likely to apply even more scrutiny.

Disorganized files can lead to audit fines and costly buybacks, particularly when complete documentation is not readily available. Rapid response to audit requests and documented chain-of-custody will demonstrate strong internal policy adherence.

Mortgage servicers can reduce the cost of internal resources, facilities and capital investment with a smart outsourcing strategy.

Partnering with a service provider frees a servicer to focus on profit or operational goals, improves the ability to service customers and ensures rapid and comprehensive response to internal and external compliance auditors. A nationwide, trusted solution provider can offer technology, teams and insights into offloading the burden of organizing, managing and protecting those critical and ever-growing pool of mortgage documents.

Service Provider Benefits:

∙ Helps cut costs and improve efficiencies.

∙ Makes life with auditors much easier.

∙ Eliminates need to manage fees/requirements for thousands of jurisdictions.

∙ Proactively, properly signed mortgage assignment creates clear line of sight to the rightful beneficiary and less risky foreclosure practices.

 

Michelle Rowley is mortgage servicing advisor for CT Lien Solutions, a lien search, recording services and life of loan service provider under Wolters Kluwer Corporate Legal Services.

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