USFN Loan Management & Servicing Seminar 2015

June 3-5

Cincinnati, OH

The USFN Loan Management & Servicing Seminar, held at The Westin Cincinnati, focused on discussing the evolving needs of the loan management and servicing industry.  Diamond Sponsor Safeguard was honored to participate as a panelist on the compliance and audits session.  The session summary is below.

Compliance and Audits

Moderator: Kip Bilderback, Millsap & Singer


  • Linda Erkkila, Safeguard Properties
  • Casey Rossato, Hunt Leibert Jacobson
  • Marty Stone, McCalla Raymer

Compliance management, audits and questionnaires are required for all sub-servicers in the servicing industry. During this session discussion focused on industry best practices from the standpoint of legal professionals and the servicing community on this important and evolving topic.

Historical Look Back
The history and evolution of the servicing industry's process for oversight of third-party servicers centered on the following key events:

  1. The financial crisis, the AG settlement, OCC requirements, and pre-2011 rules and regulations
  2. CFPB directives, regulations and bulletins 
  3. Client internal “best practices” and the typical third-party management cycle

Compliance, Audits, and Examinations
Audits are conducted by both in-house servicer staff and outside third-party auditing firms. There are pros and cons to each, but the key to any good audit is having good communication regarding agendas and expectations prior to the actual audit taking place. Audits tend to focus on specific areas, such as operations, IT/security, finance, human resources, front desk reception staff and vendor management. An effective way to approach an audit is to audit each function separately to ensure the appropriate staff members are participating on both sides.

Regulatory Impact
The OCC, FDIC, FHFA and other agencies drive much of the audit content. Regulatory and agency rules can change frequently, so it is important to have a process in place to ensure changes are being implemented in a timely manner and compliance is being monitored proactively.  Even in the face of declining default volumes, continued heightened regulatory and investor scrutiny will maintain the pressure on audits. 

The panel discussed various methods for managing alerts and announcements, implementing change protocol, and ensuring audit teams are auditing files to the requirements that are in place at the time the work is being performed.

Client Driver Audit Interests
Aside of regulatory requirements, servicer clients have individual audit agendas to test various areas, either for compliance purposes or as a general gauge of risk within any particular sub-servicer.  The panel discussed audit inquiries related to diversity of workforce measurement, the use of technology to monitor and track performance metrics, employee experience, tenure and training, quality control/assurance and document review, firm staffing levels, and ratios such as files to staff and attorneys and attorneys to staff.


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