It Was All About Compliance at the 2015 MBA Servicing Conference
“Everyone has a frontline in their life. Figure out how to navigate this frontline successfully,” Eric Greitens, a former Navy SEAL and founder of The Mission Continues, stated as he kicked off the 2015 Mortgage Banking Association (MBA) Servicing Conference in Dallas, Texas. In the informative sessions that followed his introductory speech, attendees received lots of information on how to navigate that frontline in their own businesses.
Lynn Fisher and Marina Walsh of the MBA provided a mortgage market update showing a stronger economy and a position of improving mortgage performance. With unemployment improving and inflation remaining low, the housing market is expected to have some growth in 2015. Other important statistics heard during the conference included:
- Interest rates were low at the end of 2014 and beginning of 2015, which resulted in heavy refinance activity. Rates are expected to slowly climb in 2015 and 2016 and refinancing activity will be slowing.
- Mortgage credit availability is increasing but still tight compared to post-crisis levels.
- Housing starts are rising and in 2015 single family starts are expected to increase 12.6%, however that is 63% of the long run average. Multi-family starts are also projected up (8.6%) and closing in on their long run average rates. These estimates were made prior to the March 17 release of information that February 2015 housing starts fell 17% from January’s numbers. Weather was cited as part of the reason and despite this setback, analysts feel that March will rebound and there will be growth.
- Foreclosure rates at the end of 2014 were at the lowest level since third quarter in 2007 at 2.27% of loans. Foreclosure inventory rates in judicial states are triple to those in non-judicial states.
The session track I focused on for the remaining conference sessions addressed business strategy and operations. With cost of servicing increasing by 43% from 2013 to 2014 and with an additional 12% increase expected in 2015, servicers are looking for ways to improve operational efficiencies while managing compliance initiatives. Increased regulatory oversight has shifted compensation milestones for servicing executive management to be tracked on compliance-related audits, as well was vendor management scorecards rather than managing costs. While this is true, managing compliance does lead to managing costs. Servicers suggested that automating the back office, investing in workflow technology, developing a compliance management system and using a one call resolution process in customer service are strategies that maintain costs.
Self-servicing was also mentioned in several of the sessions. Self-servicing, as the panelists stated, is not “one size fits all.” Choosing a partner is extremely critical as you determine what software to use, how it will integrate with your platform and how to keep up with evolving technology and compliance. Panelists discussed double pins, passwords, fingerprint logins and encryption, as well as gaining consent and adding disclaimers as ways to ensure security and compliance with self-servicing. Keeping current with customer expectations on self-servicing and remaining competitive were listed as concerns servicers have when looking at a self-servicing option.
Investments in technology may be needed by servicers in order to enhance the customer experience. Technology is a key driver to ensure compliance to regulations can be audited and proven. In addition, consumers are expecting the same level of immediate and efficient communication from their mortgage lender or originator as they do from all other providers.
In all the conference sessions, compliance was a key part of the discussions. I learned that the CFPB received 162,200 mortgage-related consumer complaints between June 2012 and January 2015—fifty-five percent of these related to problems when consumers were unable to pay and 29% related to making payments. Panelists across multiple sessions noted that servicers need to ensure their teams are trained to be responsive to all borrower complaints. Transparency is the key when dealing with the consumer and the regulatory agencies. Final ruling on the guidelines surrounding requirements for consumers in bankruptcy status is anticipated in May of 2015 with a nine to twelve month implementation timeline.
The Venture team enjoyed meeting leaders in the mortgage industry and being involved in such leading edge discussions on trends. Next year’s conference planning is just beginning and I look forward to being a part of the 2016 MBA Servicing Conference 2016 in Orlando.