In today’s marketplace mortgage servicers need lawyers as much as lawyers need technology.
Among others, frequent updates issued by regulators are forging new mortgage industry partnerships and collaboration that either start or are introduced during a Mortgage Bankers Association convention.
It is part of a tradition that reflects the issues of today’s marketplace, says Bill Garland, executive vice president, strategic relationships and business development officer of DRS, an Irvine, Calif.-based provider of loan servicing compliance and risk management solutions.
Effective on June 1, 2013 servicers will be held accountable for outside counsel oversight and management. According to WKFS, the new directive that replaces the existing Designated Counsel Program states that “servicers will now have sole responsibility to screen and select law firms with expertise in end-to-end default-related legal services.”
It means subservicers will be under more scrutiny to provide vendor due diligence and management, compliance accuracy and higher efficiency in communicating policy procedures.
Automated content must be consistent and in compliance with very specific requirements about timelines, outsourcing and workflow of documentation, including, for example, synchronizing a default workflow with a compliance expert “capable of connecting default management” activities that trigger borrower notification correspondence related to compliance requirements.
Risks, WKFS warns, include delivering noncompliant documentation to borrowers that may result in audits or fines from regulators, potential compensatory fees to investors and “operational disruption” due to notification delays.
Garland told this publication DRS and WKFS are still working on additional details to this collaboration. The 40-year mortgage industry veteran was attending this year’s MBA servicing conference in Dallas to follow up with WKFS through face-to-face meetings during an event that gives new insights into the present and future of the market.
The collaboration will result in a more robust “default compliance content engine” that benefits from DRS’ technology and WKFS’ legal background and an existing platform that offers, policy and compliance technology, audit and management reporting, and cross-department transparency.