MReport November 2017

TheMReport — News and strategies for the evolving mortgage marketplace.

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Page 26 of 67

LET NATIONAL TAX SEARCH THROW YOU A LIFE LINE 130 S Jefferson Street, Suite 300 Chicago, IL 60661 1.888.627.5494 National Tax Search consolidates Tax Reporting, Flood and HOA Management into one platform, and mitigates/minimizes your liabilities associated with these areas of real estate management: • 24/7 Secured Web-Based Service with optional API Functionality • Timely Reporting & Payment Processing • Assessment Details • Delinquent and Sold Tax Monitoring • Payment Processing • Tax & HOA Certification • Flood Zone Determination, including FEMA Map Overlays • Leader in Property Tax, HOA and Flood Determination TH E M R EP O RT | 25 FEATURE FASB provides some examples as to what the Reporting Disclosures will look like. These are not required formats, but only examples. Internal reports can be tailored to satisfy reporting needs such as allowance aggregation. FASB has also set a requirement (FAS Topic 326) for disaggregation of receivables by credit metric and by vintage year where receivables more than five years old are aggregated. This table is an example. Set or Obtain Data Tools Test, Parallel Runs Identify Qualitative Factors Creative Scenarios Build Data Warehouse Obtain, Repurpose Credit Models Stategic Concerns Develop Narrative Finalize Reporting building of a descriptive narrative of all the models selected and the processes to be used. Model Design and Development: Institutions will utilize the warehouses and the tools to develop historical analysis and internal mod- els, and integrate results with existing systems. The task will be to expand these systems to handle scenario inputs, develop financial and managerial reporting format, as FASB will re - quire lenders to define and explain the use of any credit-grading systems and other qualita- tive inputs to the ALLL process. Design Reasonable Scenarios: CECL urges banks to develop a narrative to explain the basis of the scenarios and why they are deemed to be reasonable. Regulators will review the scenario rationales with senior management, so institu - tions are preparing currently with external consultants and auditors. Firms will begin parallel test runs of the CECL ALLL process and the existing pro - cess, and test the process and the models and back-testing models. The challenge is to identify differences (size), volatility in results and capital impacts, and evaluate strategic considerations across product lines. Naturally, product pricing, origination standards, processing, collections, and operations will be of the essence. The CECL Committee is encouraged to write narratives, and work closely with auditors and external partners to finalize the narratives and reporting. DEAN HURLEY is a Managing Director of Mortgage Industry Advisory Company (MIAC) where he handles valuations of consumer and commercial product. Hurley also engages in consulting, risk retention analysis, stress testing, and asset-liability management work for clients, and works with the software development team. JEFFREY ZUCKERMAN joined MIAC in 2010, as VP of Software Sales in the Capital Markets Group. He has recruited and signed several of the world's largest financial institutions, investment banks, insurers, and asset managers as clients for MIAC's asset valuation, hedging, MSR risk management, and our proprietary software. 1. Plan 2. Research 3. Execute Government Task Force Create Data Model Segment Portfolios Research Credit Modeling Evaluate Existing Infrastructure Identify Consultants and External Partners Create Plan with Milestones, Procedures

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