Mortgage Lender, Servicer Compliance Audits for Homeowners?

As the mortgage market increases the use of upfront automated audits to comply and prepare in advance for up-and-coming regulatory requirements, homeowners are being offered the opportunity to review whether lenders and servicers are up to the task. 

Federal Home Retention Services is offering a new set of automated tools that enable real estate professionals and property owners to investigate whether residential and commercial real estate transactions comply with certain multistate requirements.

The FHRS platform ensures that loans are clear of violations. It enables users to conduct specific mortgage loan compliance audits that help streamline mortgage loan modification inquiries and loss mitigation reviews.

Yet it does not serve only lenders and servicers that need to take action so they save time and avoid cost associated with failure to comply or litigation.

In addition, the Encino, Calif.-based mortgage compliance enforcement watchdog recently “opened its doors to consumers” allowing the public to obtain mortgage compliance services directly from FHRS.

If until now the firm “only conducted business-to-business dealings to correspondent lending institutions, federal banking associations, law firms, wholesale lenders, loss mitigation companies and direct lending institutions across the country,” FHRS stated in a company release, now consumers too can benefit from mortgage compliance reports and audits of securitized mortgage loans.

During a recent Home Ownership Mortgage Education event, known as HOME, organized in Los Angeles to educate homeowners about bank practices, FHRS reached out to over several hundred homeowners in California. Executives said the goal was to make homeowners aware of their mortgage loan modification options and how to get approved by a loan servicer.

Mortgage compliance failures may help homeowners to avoid foreclosure action in both nonjudicial and judicial foreclosure states giving them “a better position to negotiate” new loan terms or a loan settlement, said Phillip Michaels, CEO of FHRS and acting VP of compliance, “regardless of financial hardship and payment history.” Hence, he added, violations found in investigative compliance reports can provide crucial assistance to the borrower, as well as to legal advisors who want to specializes in loan modifications. 

These tools, FHRS reports, fulfill demand from various entities operating in the mortgage space. The provider of audits and analysis for residential and commercial real estate transactions expects the new products will help fill the gap in demand for compliance guidance to homeowners, commercial property owners and investors.

The software embodies many compliance analysis features used by FHRS over the years in electronic loan-level data examinations through its Mortgage Compliance Analysis Reports platform, Michaels said. Since 2008 the platform helped process 60,000 loans directed to regulators for compliance enforcement.

The new FHRS software also responds to a joint initiative from several national entities that aim to enable mortgage loan auditors to receive electronic loan data from licensees, “without the immediate need for costly on-site examinations."

Currently, FHRS said, according to the Limited Scope Electronic Examination Procedures published by Multistate Mortgage Committee—which consists of state regulator members of the Conference of State Bank Supervisors and the American Association of Residential Mortgage Regulators—the initiative provides “a simultaneous limited scope examination of 25 multistate mortgage entities using the same compliance analysis software applications.”

Corporations from the 27 states that are part of the initiative so far and have collaborated in the examination process are using different platforms, including the FHRS software.