October 2016 - Changing of the Guard

TheMReport — News and strategies for the evolving mortgage marketplace.

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TH E M R EP O RT | 53 O R I G I NAT I O N S E R V I C I N G A NA LY T I C S S E C O N DA R Y M A R K E T SERVICING THE LATEST refund. If the borrowers have a non-escrow account, on the other hand, they will be responsible for all the tax and hazard insurance payments and can potentially en - counter penalties from the taxing agency for late payments. CoreLogic determined after extracting complaints data from the CFPB's official website from January 2013 through December 2015 for four relevant complaint categories (loan servicing, pay - ments, escrow account; applica- tion, originator, mortgage broker; settlement process and costs; and credit decision/underwriting) that mortgage servicers can achieve a significant reduction in borrower complaints by improving the accuracy of their yearly mortgage bill estimation and more effi - ciently processing refunds to the borrowers. But even with this in- formation, the question remains: Are these CFPB complaints an accurate representation of these servicers and lenders? The Five Star Institute and Black Knight Financial Services came together in March of 2015 in a white paper examining how the mortgage-related complaints received by the CFPB are on the decline after an initial ramp-up period, and delinquent loans and foreclosures have also decreased. The report seeks to address of the question of whether these two stats are falling at the same rate and if there is a correlation between the two. For the comparison of com - plaint trends and loan trends, the comparison revealed that complaints in the category of "loan modification, collection, and foreclosure" declined by more than 50 percent on an absolute basis and by 35 percent on a rela- tive basis versus non-current loan inventory. This translates to a rate of about 13 complaints per 10,000 non-current loans as of Q 4 2014. Meanwhile, the rate of complaints received in the "loan servicing, payments, and escrow account" was reported to be only one for every 10,000 current loans in Q 4, which calculated to just 0.77 basis points. "When the data presents that there are 13 complaints per 10,000 non-current mortgage loans, we need to ask the question if the criticism mortgage servicers are receiving is warranted, and if these numbers instead align more closely with the normal course and expectations of doing busi - ness," said Ed Delgado, President and CEO of The Five Star Institute. Editor's note: The Five Star Institute is the parent company of MReport and Adapting to Regulatory Changes in Servicing "It's people, it's processes, it's technology," said a speaker at the Five Star Conference, describing how to address regulatory challenges. T he combination of a changing business climate and regulations and federal oversight does not mean servicers can't en - hance their business portfolio, and the Servicing Lab in at the 2016 Five Star Conference and Expo in mid-September provided servicers with tools to create effective ser - vicing strategies and at the same time comply with the changing regulatory landscape. Topics at the lab included an update on Fannie Mae servicing from Malloy Evans, VP, Single- Family Servicing and MHA, Fannie Mae; issues in loss mitigation; a consumer credit trends market update from Joanne Gaskin, Senior Director, Scores and Analytics, FICO; compliance concerns; and a presentation on doing business in D.C. from Tim Rood, Chairman, The Collingwood Group. The lab director was Michael Waldron, CCO, Bayview Loan Servicing, and the host was Edmond Buckley, President, Aspen Grove Solutions. "It's people, it's processes, it's technology," Waldron said of how to handle regulatory changes. "It's a resource model, and this is a resource-intensive business, whether it's monetary, or whether it's head count. We address it by devoting appropriate resources to a good foundation and a sound structure. We address it by being willing to attract and retain talent that's able to do the analysis, that knows the operations, that can work in conjunction with the business from a compliance and support perspective to add value to the platform." On the topic of avoiding regulatory scrutiny, Rood said, "Story matters, and servicers have to understand their audience in Washington. Success is possible, but it takes almost a metaphysical change in their view of patience. They've got to work together. The industry itself needs to come together and decide on some compelling storyline that they can all agree to that has their mutual self-interests clearly identified. Get a clear, compelling story, stick with it, make some allies in the industry, and stop thinking that you are or that you can stay off the radar." Speakers other than those mentioned above included John Berczuk, Wells Fargo Corporate Trust; Eric Chader, The Collingwood Group; Ryan McGuinness, Freddie Mac; Gregory Lee, Loancare; Donna Clayton, LenderLive; Rachel Rodman, Arnold & Porter; Stephen Faulkner, Opexnow; and Laurie Maggiano, CFPB. Editor's note: The Five Star Institute is the parent company of MReport and "When the data presents that there are 13 complaints per 10,000 non-current mortgage loans, we need to ask the question if the criticism mortgage servicers are receiving is warranted." —Ed Delgado, President and CEO of The Five Star Institute. Continued from page 49

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