Field Services Industry Focuses on Compliance, New HUD Guidelines
With lenders under more pressure to make sure loan servicing practices meet applicable laws and regulations, vendors that serve the loan administration industry are also being scrutinized to make sure they don't cross any foul lines.
In fact, a greater focus on compliance may be one reason lenders are turning more and more to outsourcing functions such as field services, according to Marc Insul, president and chief operating officer at Fidelity National Field Services. Lenders that don't view property preservation and maintenance as a core business may be better off handing that task to an expert, he said.
"I think there has been some greater review by mortgage companies of field servicers, and making sure they're in compliance with guidelines and in compliance with what the rating agencies are looking for in terms of quality," he told MSN recently.
Mr. Insul, a former chair of the National Association of Mortgage Field Services, said that historically, field service firms have kept their own performance statistics and shared those with clients on an as-needed basis. Today, clients - and the rating agencies that monitor mortgage servicers - are putting more emphasis on standard performance measures.
Most of those scorecard measurements related to field service work originate with the rating agencies, he said. Those scorecards focus on things like turn-around time, loss ratios, and reductions in delinquency rates.
In recent years, a number of mortgage servicers, especially those focusing on the nonprime segment of the business, have come under fire for controversial loan administration and collection practices. While those incidents were not sparked by field service work, the damage endured by some mortgage servicers forced the entire industry to place a greater emphasis on regulatory compliance and customer service.
And because field service firms generally enter the picture in the event of a delinquency or default scenario, they have come under scrutiny in the new era of greater attention to default management.
Mr. Insul said mortgage companies are making a greater effort to understand borrowers, even when troubled borrowers may be making unwarranted claims or accusations. Lenders have learned to be "more attentive" to borrower complaints, he said.
Right now, Mr. Insul said the field services industry is anxiously awaiting new HUD guidelines for field service work that are expected to be released within the next few months. While the guidelines, which govern allowable fees that field service workers can charge for specific tasks and how those tasks should be performed, apply directly to FHA loans, the influence of the guidelines extends well beyond the FHA market, Mr. Insul said.
The guidelines often become templates for other investors and government-sponsored enterprises to use in setting their own field services guidelines. Fannie Mae and Freddie Mac, for instance, have been developing more comprehensive field service manuals.
"They are going to continue to look at building upon that and making their guidelines even more comprehensive," Mr. Insul said.
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