09Jun

Top 10 Servicing QC Findings in a Turbulent Year

June 9, 2021 California MBA

From the unforeseen effects of the pandemic to an 11-year-mortgage volume high, the past year has been ground-shifting for mortgage servicers.

Servicers faced several challenges, with the impact of the CARES Act being among the most notable. After all, it resulted in forbearance plans that millions of homeowners took advantage of.

In fact, according to the MBA’s May 18, 2020 press release, loans in forbearance made up 8.16% of servicers’ portfolio volume, with 4.1 million homeowners in forbearance plans. Black Knight’s data shows that this number decreased significantly by the end of December, dropping to nearly 3 million homeowners, or about 5.3% of all active mortgages. The MBA’s National Delinquency Survey data shows the 2020 seasonally adjusted delinquency rate dropped from 8.22% in the second quarter to 6.73% in the fourth quarter.

But despite the rapidly changing mortgage servicing landscape this last year, servicers continued to struggle with the same quality control challenges that have plagued them in years past, a MetaSource analysis of servicing QC findings shows.

Among the 10 most common findings from among thousands of servicing QC audits the MetaSource team conducted over the past year were many that reflect an ongoing struggle with missing documents as well as oversights likely exacerbated by a year of unprecedented pressures. Here’s a look at the findings list along with insights into why they occurred – and how to avoid them in 2021.

24May

Top Three Remaining Compliance Issues of 2021

May 24, 2021 First American Docutech

We are a little over a third of the way through 2021 and massive shifts within the mortgage industry have occurred, whether due to the unexpected (COVID-19) or to the long-anticipated (URLA). While First American Docutech cannot address the unexpected for the remainder of this year (as much as we wish), we are keeping a watchful eye on changes expected to occur within the near future. The top three that we have identified are:

New restrictions on Federal National Mortgage Association’s (“FNMA”) and Federal Home Loan Mortgage Corporation’s (“FHLMC”), requiring them to only purchase Qualified Mortgages (“QM”);
FNMA’s and FHLMC’s discontinuance of Constant Maturity Treasury (“CMT”)-index adjustable-rate mortgages (“ARM”);
New State laws requiring the safeguarding of private personal information of consumers.

The following is a “high-level” overview of these changes, with more details to come over the next few months.

QMs Only
Three major parts of the QM requirements promulgated under 12 C.F.R. § 1026.43 were recently amended, one of which is in regards to the expiration of the so-called “GSE QM Patch” under Ibid. § 1026.43(e)(4)(ii)(A)(1). Under this Patch, a loan purchased or guaranteed by either FNMA or FHLMC, while operating under the conservatorship or receivership of the Federal Housing Finance Agency (“FHFA”), along with meeting a couple of conditions, would be considered a QM.

30Oct

TRID Turns 5: What We’ve Learned About Successfully Managing Mortgage Origination Compliance

October 30, 2020 MetaSource

MetaSource

Five years ago, big changes to federal requirements for the mortgage loan disclosure processes produced great anxiety in the lending world. Lenders feared they were facing an onslaught of complicated, new compliance demands that would inflate the cost and risks of every loan origination and leave them perpetually at risk of penalties.

The TILA- RESPA Integrated Disclosure (TRID) rules were instituted in late 2015 and administered by the Consumer Financial Protection Bureau. TRID consolidated four existing disclosures required under TILA and RESPA for closed-end credit transactions secured by real property into two forms:

The Loan Estimate (LE) replaced the Good Faith Estimate (GFE) and initial Truth-in-Lending Disclosure, which are provided to consumers at the start of the transaction and include both initial disclosures and timing restrictions (must be provided within 3 business days from the date the application is received)
The Closing Disclosure (CD) replaced the HUD-1 Settlement Statement and final Truth-in-Lending Disclosure, providing consumers the required 3 days to review all final terms and conditions and seeking to prevent borrowers from signing documents under duress

Lenders’ anxiety around these new rules was based on the lack of clear guidance from the CFPB, the myriad interpretations by varying investors, and potential penalties associated with non-compliance.