Mortgage compliance is ever evolving, and servicers need to stay diligent to support shifting regulatory requirements.
Take for instance the recent Department of Veterans Affairs targeted foreclosure moratorium. Under the May 29, 2024, moratorium, the department instructed servicers to “cease initiating, continuing, and/or completing foreclosures” on VA-backed loans unless one or more exceptions from a provided list were present.
Then, less than a month later, that list changed.
In a separate memorandum, the VA struck one of the exceptions from the list. It was a “blink and you might miss it” update, a minor modification that could have easily slipped by servicers. While this particular rescission worked in servicers’ favor (striking a requirement that the borrower be more than 210 days delinquent and unresponsive to outreach attempts), the reality is that every regulatory change, no matter how small, can have outsize implications for servicers if they aren’t addressed.
That’s why servicers need intelligent technology that is nimble enough to help them address compliance changes and reduce risk, and still has deep, robust functionality that helps them maintain their competitive edge.
Unlocking new efficiencies with deeper operational insights
For many servicing organizations, supporting changing regulatory requirements is a full-time job. Many teams take a manual approach to reviewing and auditing their portfolios, which is time intensive, costly, and risky.
Today, there are mortgage-specific business intelligence (BI) solutions that can help automate processes and alert the servicer when there is an exception to the rule. Additionally, these BI tools can provide deeper insights into portfolio performance to uncover retention opportunities and potential compliance risks so they can be remediated quickly.
The ICE Actionable Intelligence Platform (AIP) is a mortgage-specific business intelligence solution that assists with strategic or operational decision-making and helps servicers address regulatory changes. Integrated with the MSP® loan servicing system and ICE’s suite of servicing technologies, instead of manually checking and re-checking the conditions of every loan in a portfolio, AIP uses servicer-defined business rules to do that work for you. Rather than a human going into MSP to find and verify the info on a loan, servicers can set up AIP to do it automatically.
Consider this in the context of the VA’s foreclosure moratorium. Any servicer working manually to determine if a homeowner is exempt would have to check the conditions of the loan line-by-line to determine whether it complies with the moratorium. But AIP operates off a “pre-check list” that runs through dozens of configurable exceptions to determine a loan’s status and identify whether a foreclosure can proceed, without human intervention. Once the loan has been identified as ready, the servicer can take action.
And since servicers working in AIP can configure that pre-check list without waiting for software updates from their technology provider, they could modify the list’s parameters to accommodate the new mandates from the VA as soon as they were aware of the first change, and just as seamlessly adjust the parameters again once the rescission was issued.
Plus, AIP provides visibility into that list of conditions, meaning that if your team wanted to manually check a loan’s foreclosure eligibility in the system, the solution would highlight the exceptions they’d most likely want to pay attention to. This helps servicers stay flexible without sacrificing top-tier automation capabilities.
Staying nimble by cutting down lengthy development cycles
Developers will tell you that every business group within a servicing operation is often simultaneously vying for development resources. Each department will have priority projects that will require valuable ticket time, and if these projects are large or time-intensive, they can lead to development cycles that last for weeks or months.
When servicers get word that their software needs to change to meet new regulatory requirements, it can be a scramble for development teams to manually build, test and implement new frameworks. This opens the possibility of regulatory and compliance failure points within a servicing organization.
However, since AIP and its data suites are configurable, it becomes far simpler to accommodate changes. The ability for the servicer to quickly add new conditions to AIP’s “pre-check list” means they no longer need to tie up development resources and can instead adapt more quickly. This flexibility in adjusting to new regulatory guidelines nudges risk reduction more in the direction of “flipping switches” rather than “building from the ground up.”
Avoiding lengthy software development cycles is a win-win for servicers: not only does it make your operations more efficient by freeing up developers to focus more on other portions of the business, but it helps you and your teams identify potential pitfalls and better assess the risk to your company and your customers.
Getting the right support for regulatory changes
Servicers who fail to meet implementation deadlines from federal agencies can incur fines, face litigation, or seriously harm their reputation with their customers. Choosing a technology provider who is dedicated to keeping up with and implementing software updates that helps servicers support regulatory requirements is something all servicing operations should prioritize.
Reducing risk is a must, and reducing it intelligently starts with your mortgage servicing technology. ICE is continuing to make investments in its BI solutions to help clients better support their regulatory and compliance obligations, and to prepare for any changes in advance.