November 2016 - End of the Road?

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 minimize collection and loss mitigation problems that may occur at a later date. Something of Substance I n addition to this in-depth approach, met- rics are a useful tool in helping drive more positive servicer performance. If a servicer has not developed a robust set of metrics and key performance indicators (KPIs), it becomes challenging for them to control, manage, and improve the business consis - tently and effectively. Default management and other key op- erational data should be collected monthly, and reviewed regularly to identify emerging trends so that appropriate proactive cor- rective measures can be initiated to help improve performance. It is critical that sur- veillance professionals periodically validate the metrics and information being provided. In some cases, surveillance professionals will need to partner with servicers to develop and expand key metrics. While actual field audit reviews provide a solid "point-in-time" assessment of per - formance, ongoing review, and analysis of metrics and KPIs offers a consistent view into how well a servicer is performing on an ongoing basis. Leading indicators designed to identify process improvement opportunities should comprise many of the metrics utilized. Critical trends—such as delinquency roll-rates, cash flow velocities, foreclosure timelines, loan modification volumes and timelines, corre - sponding recidivism rates, and REO disposi- tion timelines—should be highlighted so that corrective measures can be taken proactively in order to curtail delinquencies and reduce losses. In addition, identification of certain adverse trends should be studied in order to identify the root causes of performance breakdowns. For example, excessive customer service inquiries, customer disputes, and aged payment applications may mask a true under - lying problem (like untimely follow-up relat- ing to loan modification processing and other loss mitigation activities, borrower confusion over payment transmittals caused by servicing transfer issues, etc.). Setting the Standard S urveillance professionals should be well versed in a variety of servicing best practices. Such standards should be openly shared with servicers so that processing routines can be enhanced, with the end-goal being to optimize asset performance. These practices should identify the most effective processes and strategies across the industry and should be continually updated and revised, so they remain state-of-the-art. Best practices should cover a wide variety of key servicing functions, including (but not limited) to: • Loan boarding • Customer service • Billing and payment processing • Investor reporting • Collections and default management • Loss mitigation • Property inspections • Foreclosure timelines • Bankruptcy processing • Escrow administration • REO processing The preceding list touches on just a handful of areas that should be covered by best prac - tices in order to enable servicers to continu- ally improve their operations, and aid in the reduction of loss severities. Adherence to, and adoption of best practices increases the likeli- hood that servicers can identify and eliminate process redundancies, thereby resulting in more streamlined operations and cost savings. Effective servicer surveillance has been and will continue to be a critical ingredi - ent in the mix of elements necessary to achieve compliance with CFPB and other regulatory guidelines, while at the same time maximizing asset performance. In today's marketplace, more than ever, it is essential for servicers to adhere to the highest levels of servicing standards. Servicing surveillance is essential and should be integrally woven into the fabric of any successful firm, whether it is an investor, bank, monoline/private mortgage insurer, sponsor, servicer, GSE, rating agency, other regulatory body, or pertinent third-party. When implemented properly, surveillance can ensure residential mortgage servicing organizations run more efficiently and ef - fectively, thereby yielding greater compliance, improved performance, enhanced borrower satisfaction, increased mitigation of risks, and an overall reduction in loss severities. VINCENT SPOTO has more than 25 years' experience in the financial services sector. He is currently a partner and managing director at RRMS Advisors, where he provides advisory and consulting services relating to servicer surveillance, risk management, compliance monitoring, default management, and asset disposition. He can be reached by telephone at 212.843.9159 or through email at Two Brands, One Solution { { We cover the territory. Futura Title & Escrow Corp.'s brands offer a single point of contact for all of your title and escrow transactions. Regionally focused, our footprint consists of 69 convenient branch locations serving 58 counties throughout Idaho and Oregon, and parts of Montana, Washington and Wyoming. While we are one of the largest title and escrow groups in the Northwest, you'll find that our local emphasis is reflected in our market expertise. Committed to maintaining compliance with the American Land Title Association's (ALTA) Title Insurance and Settlement Company Best Practices, our brands are distinguished as the trusted settlement service providers in the region. When your transactions cover more than one county, Futura Title & Escrow Corp. is your regional title and escrow solution. Jenny Martin Senior VP & Corporate Business Development Director 208.955.9681 office 208.891.0481 cell

Articles in this issue

Archives of this issue

view archives of TheMReport - November 2016 - End of the Road?