Fiserv is responding to the need for a data and regulatory compliance continuum between the loan origination and mortgage servicing space by creating a new “third domain” platform.
Fiserv introduced LoanComplete at the MBA’s National Mortgage Servicing Conference in Dallas after 12 months of being in pilot phase.
It represents the integration of Fiserv Lending Solutions’ main platforms into a streamlined system that automates loan data access and information quality management starting at origination and all the way through loan servicing and securitization.
Traditionally “there was a lot of activity” and information exchanges necessary to process a mortgage loan from the origination system to the servicing system, says Jay Coomes, a Fiserv Lending Solutions executive. “Everything form the closing, to the auditing and comparing the data” required specific management tools that somehow were left behind as most service providers focused improving either origination or servicing platforms. “This loan completion systems domain that actually ensures the loan is complete and the quality steps have been taken, and all documents are aligned occur in this third area that previously did not have a name.”
It is imperative for the industry must focus more on this “third domain” area of mortgage loan processing, Coomes says, “because we have recognized that a lot of the problems that have occurred over the last decade happened in this particular space as opposed to originations or servicing.”
LoanComplete enables users to customize the platform to respond to their specific needs and most importantly, by implementing technology that is compatible with their origination and servicing systems.
Over the years the industry has come up with solutions for some of the issues generated in this space, he adds. “Once in a while we have run into a vendor that delivered part of the solution, but no one seemed to be able to capture the end-to-end, loan completion process.”
It is a known fact that the dividing line between originators and servicers started to blur as the housing market started to escalate in 2007. Today both originators and servicers implement loan quality controls and processing strategies that do not follow traditional models and have to make sure they comply with requirements from Dodd-Frank and the CFPB, in addition to state regulations.
According to Coomes, Fiserv has been working “for quite some time” to define what entails capturing the data and the documents at the front end, create and track the loan file, add quality controls including audits, data accuracy, “and then make sure the data goes where it need to go, whether that is an investor, lender, servicer, insurer, auditors, legal representative, or other party.” And Fiserv captured that loan completion process, he says, which at least until now, “has not been specifically defined as a specific domain the way origination or servicing is.”
Until now the problem has been automation, he says. That process so far has been very manually work intensive. “Today as we talk to lenders,” he explains, they may have linked together certain areas of the origination and servicing process manually and in some cases through automation, but have not automated both and the bridging process end to end the way it is possible efficiently in a single application platform. The end result is that when the loan is securitized buyback risk is minimal, he adds.
Right now servicers are dealing with transfers of large portfolios of loans, says Fiserv Lending Solutions senior account executive Lee Gillespie. In addition to the volume they have to stretch their resources because “as they board their loans there’s a real lag in getting the data and fully understand what they got and what they have to deal with from the servicing standpoint, and in compliance with the CFPB bullet points on servicing transfers.”
Fiserv has been tacking problems with servicing portfolio transfers for the past 12 months for many clients, he says, LoanComplete helps take the data from the prior servicer, all the document transfer files that come from the prior servicer and introduce them into the platform. The software is designed to review and report whether critical loan and compliance data are present in each document file, whether the prior servicer’s data is clean and can be used as loan boarding data in the servicing platform. “If not, data is prioritized based on the critical nature of the issue at hand,” he says. It ensures that the new servicer becomes aware of what is missing: a legal document, the securitization information, or other data mismatches and document gaps.
For example, the system also identifies loan modification documents, which may not have been highlighted by the previous servicer’s report. The latter has been called out as a big problem in portfolio transfers by the CFPB, and is an area of focus by the regulators right now, says Gillespie.
LoanComplete notices a loan mod document—which is not supposed to be there—and flags the loan as “an exception” and identifies the critical nature of the exception, he says, “so the servicer knows they need to address it with the prior servicer and get a report detailing what to request from that servicer versus waiting for weeks, or getting to know after the transaction is complete.”