The Impact of Servicing Transfers
When servicing of loans change from one company to another,
servicers must be mindful of the Bureau’s requirements regarding transfers of servicing. In February 2013, the Bureau issued
Bulletin 2013-01 which generally defined mortgage servicing
transfers as situations where a mortgage owner sells the right
to service its loans or when the mortgage owner outsources the
servicing duties. With increased volume in loan servicing, and
transfers involving hundreds of thousands of documents and
customer histories, challenges abound.
One major issue has been brought to the forefront by the Bureau:
the out-of-date servicing technology in place at many servicers,
which has impacted their ability, among other things, to properly
and accurately transfer mortgage loan information. This concern
is not always evident until the new servicing entity works with cus-
tomers who are in default or later stages of loss mitigation. Lack of
system compatibility between the servicers involved in the transfer
transaction is an obvious conversion issue, and one that project
management teams identify as a priority. Depending upon the
complexity of the loans transferred, 250 or more data fields may
be involved. If the entity acquiring the servicing is limited in the
number of specific loan characteristic fields that can be converted
within their existing servicing platform, decisions need to be made
on the scope of information that will reside in their system. Manual
processes and storage systems are customarily required so that all
critical data is properly captured to ensure transparency in the on-
going servicing. With an increase in the number of independent
and new servicers in the market, the lack of system compatibility is
a significant risk that must be mitigated to prevent borrower harm.
Loans are transferred in various stages of loss mitigation, fore-
closure, or bankruptcy and must be properly identified as such.
This ensures continuity of service and mitigates the risk of harm
to the borrower than can result from dual tracking or inconsistent
levels of service in the default/loss mitigation process. The Rule
continues to emphasize the importance of ensuring servicing
transfers are transparent to borrowers.
Training is the key to
ensuring compliance
and providing the best
customer service in
mortgage loans.
