On September 29, 2014, the CFPB ordered Flagstar Bank to pay $37.5 million in fines due to what it found to be violations of mortgage servicing rules. These fines include restitution of $27.5 million to approximately 6,500 borrowers who were serviced by Flagstar – 2,000 of whom lost their homes to foreclosure and a $10 million civil penalty to the CFPB Civil Penalty Fund.
The CFPB has issued a new rule to “simplify and improve disclosure forms for mortgage transactions” and recently introduced a new rule – Integrated Mortgage Disclosures under the Real Estate Settlement Procedures Act (Regulation X) and the Truth In Lending Act (Regulation Z) – otherwise known as TILA-RESPA. The changes laid out in this new act will be officially put into place on August 1, 2015.
There’s bad news on the horizon for many homeowners who currently have home equity loans. According to a recent article in the New York Times, when these home equity lines of credit (HELOC) reach their 10-year anniversaries, they are resetting. The reset causes the borrower to reach even deeper into his wallet and not only pay interest on the loan, but also pay on the principal. Borrowers might see their monthly payments triple because of this reset – which is especially daunting for individuals and families who are in subprime loans.
As enterprise communication strategies play a bigger role in customer experience and loyalty, there is an increased need to re-engineer the end-to-end processes for managing core servicing document output to resolve document related issues at their origin.
Legacy document systems and processes can no longer support the numerous application and underwriting workflows that come with mortgage loan modifications. Further, the industry is struggling with increasing compliance demands, high loan delinquency rates and shrinking loan profitability.
Enterprise communication strategies are playing a bigger role in customer experience and loyalty these days. This means increased pressure to re-engineer the end-to-end processes required to manage core servicing documents and on-demand letter output. Not addressing issues at the front end of the process guarantees increased problems at the backend – with your document outputs and customer interactions.
According to a 2012 CEB survey, many businesses believe their end-to-end process management does not meet their expectations of today’s workflow. The chart below confirms that most companies are falling short of utilizing a fully-integrated and mature CCM process; Document Outsourcing and Defining Documentation/ Compliance Protocol being the weakest links.
I talk with mortgage industry professionals every day. They are busy people trying to do a difficult job, too often under a microscope. In addition to struggling with servicing platforms that were originally designed in the 1970’s, they are all just one misstep away from another negative headline.
In a previous life I worked for a giant computer company. One of the activities I had to do was level set expectations with new clients who had invested large sums in new computer and software systems. This setting of expectations took the form of reminding new clients that new systems always necessitate a learning curve, the implementation itself would be disruptive to their established processes, and that real efficiencies would not be realized immediately.
For many years, the number one question asked by many of my customers has been: “from your experience, what percentage of customers are “opting in” to electronic delivery”? Everyone holds their breath in anticipation that their company may fall well below the national average. For the moment, let’s hold that magic number in suspense.