With federal and state regulation changes being made at the "speed of light" within the mortgage industry, compliance is the main concern for servicers throughout the country.
In order to remain compliant to all of the new rules being issued by all government entities, two industry executives said during a panel at SourceMedia’s 7th Annual Mortgage Servicing Conference in Dallas that it is important to have one person or a team available to help borrowers with their problems.
Michelle Leigh, vice president of the consumer banking regulatory compliance and quality control group at SunTrust Bank, said now more than ever before, servicers need to pay more attention and get to know all the different regulations out there, both on the state and federal levels.
"States are getting more aggressive composing their own regulations, as some are even stricter than the federal ones," Leigh stated.
For example, as part of the Fair Debt Collections Practices Act, a state-regulated servicer may only have a specific timeframe to contact a borrower that is different from a federal-regulated business entity.
To assist employees in complying to all of these various procedural differences, Leigh recommended that servicers should have access to an online regulatory compliance system for each state they service loans in, such as AllRegs or ComplianceEase.
"To understand what the regulations are, you need to have an expert in your servicing shop," Leigh added. "A compliance person needs to be able to write policies and procedures. The preference would be to have someone with a strong business sense because at times there is a 'risk-reward' scenario. Overall, the goal is to build a diversified compliance group."
Bob Emerling, vice president of reverse mortgage operations for Silvergate Bank, agreed with Leigh that hiring a compliance subject matter expert that people can have access to is critical for servicers.
Emerling said to bridge the gap between compliance and operations, servicers need to become better listeners. He added that most of the time, a borrower will tell the servicer how to solve an issue before they even act.
"A borrower hates being moved around during loss mitigation, which only leads to more confusion for all parties," Emerling noted. "You need to have an expert and negotiator whenever there is an issue that knows policies and procedures. Additionally, documenting in details what was discussed with a borrower is critical because data integrity is always a concern for servicers whenever an audit is conducted against them."
