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CFPB Compliance Tools for Servicers Not One Size

FEB 15, 2013 7:35pm ET

Irvine, Calif.-based Retreat Capital Management is focusing on how to differentiate compliance software for small- and large-size mortgage servicers whose needs for automated third party service assistance are anything but one size fits all.

The nature of regulatory challenges varies by organization the same as the regulation itself, says Loren Morris, RCM senior vice president, general counsel and chief compliance officer. It is common knowledge that a small shop does not have the same needs as a large servicer and requires specialized solutions, yet solutions focus more on the service than on the user.

At the MBA servicing show in Dallas, Morris will be monitoring how the industry is adjusting to change.

Large servicers that face capacity issues also need to outsource assistance, he adds, while the rest of the industry needs to improve processes and planning so they are ready to comply with, among others, the final announcement of CFPB servicing standards made on Jan. 16, 2013 that will go into effect on Jan. 10, 2014. 

Judging from all indications, Morris says, large or small, servicers will need help in managing capacity issues along with their smaller size peers who have to rely on consultants and outsourcing. “Every servicer needs seasoned compliance experts to oversee their compliance programs and ensure that all staff members are properly trained and monitored.”

Smaller and midsize servicers that try to implement regulatory changes hastily, without prior evaluation of their operations, run the risk of establishing processes that are insufficient to protect them against noncompliance, he adds.

Finding the right outsourcer matters because there is no such thing “as a one-size-fits-all compliance program,” he says. “What works for one organization can be costly and ineffective for another. Large servicers have different pain points from their small to midsize counterparts, so it’s important to take an analytical viewpoint and examine how best to implement compliance measures. ”