April 2016 - Tech Revolution

TheMReport — News and strategies for the evolving mortgage marketplace.

Issue link:

Contents of this Issue


Page 26 of 67

TH E M R EP O RT | 25 FEATURE organization was able to strengthen internal controls through implementation of a BST program. Without spending a lot of money, this servicer was able to: • Increase its organization's operational efficiency; • Lower overall IT investment costs; • Lower the burden on its business due to IT issues; • Reduce organizational exposure to IT risk and security vulnerabilities; • Strengthen internal controls; • Ensure CFBP compliance; and • Seamlessly handle loan origination volume through implementation of new TRID guidelines. Back to Basics M IC serves as a collaborative partner with the business, provides subject matter expertise for legal regulatory com- pliance issues, and is the focal point for issue escalation. In addition, MIC would inform the business of new regulations or changes to existing regulations that warrant additional testing or changes to processes and current test routines. MIC should also independently validate BST test results and may perform sub-testing of certain activities, as deemed necessary. Based on this validation, MIC may from time-to-time make process change recom - mendations to the various lines of busi- ness. In addition to processes performed internally, functions performed by exter- nal third-party vendors (such as property valuation services, title service companies, property management firms, etc.) should be subject to BST as well. This is critical since processes performed by third-party vendors generally represent greater risk than processes performed in-house. It goes without saying that BST results should be documented and formally reported to senior management on a consistent basis. From an IT perspective, solid BST programs can be supported by a combination of Microsoft Access and Excel macro programs to maintain and support a robust and fairly sophisticated initiative. By deploying these simple and relatively inexpensive technology tools, mortgage finance firms can move forward "to do the right thing" without breaking the bank. Simply speaking, strong BST programs need to consider the following six IT mechanisms when capturing and reporting testing results: • Summary of errors by regulatory/legal issue; • Error trending by process and by regulation or law; • Repeat errors that have occurred over three consecutive reporting cycles (i.e., quarterly); • Status reports by functional area; • Error tracking and corrective action status; and • Additional enhanced MIS reports, as deemed appropriate. While in the past mortgage finance professionals may have hesitated to enhance their internal control infrastructures for fear of incurring large IT and programming costs, professionals today are slowly realizing that by stepping back, using a little common sense, and going back to basics, it is indeed possible to create a stronger internal control environment without breaking the bank! VINCENT SPOTO is the founding partner of RRMS Advisors, an advisory and consulting firm specializing in servicer/vendor surveillance, risk management, compliance monitoring, and default management. His firm also provides expert witness and discovery work for the mortgage finance industry. Vincent has more than 25 years' experience in the financial services sector. Prior to founding RRMS Advisors, he worked for notable firms such as JP Morgan Chase, Citigroup, and Credit Suisse. For more information about his firm, please visit THE INDUSTRY LEADER IN eCLOSE TECHNOLOGY. With our iSignroom TM and eSignPad TM technology, it has never been easier to electronically close your transaction anywhere, anytime! One of 5 national eClose providers selected to be part of the CFPB's eClose Pilot Program BE FULLY COMPLIANT WITH AUGUST, 2015 CHANGES TODAY! When you want the ultimate closing experience, think eClose, and think PeirsonPatterson, LLP JASON L. WRIGHT PEIRSONPATTERSON, LLP JASON.WRIGHT@PEIRSONLAW.COM 972.392.7770 ISIGNROOM.COM Clearly, surviving in today's marketplace is dependent on having a strong commitment— both organizationally and financially—to a robust internal control environment designed to protect consumers.

Articles in this issue

Archives of this issue

view archives of TheMReport - April 2016 - Tech Revolution