November 21, 2016 by Clark Brett, Director of Product Management
The mortgage loan servicing industry faces unique pressures to optimize document management and streamline workflows. Unlike most industries, loan servicers are formally evaluated by rating agencies (such as S&P and Fitch) on the efficiency and strength of their operations and internal controls. When a rating is published for a mortgage loan servicer (particularly when it involves an upgrade or downgrade), it’s a major business-impacting event.
The major rating agencies scrutinize numerous process and technology-related criteria. Fitch Ratings, for example, cites the adoption of industry best practices, and the extent of systems integration, among key evaluation criteria. Since a typical mortgage servicer handles millions of documents, rating agencies assess how efficiently the servicer manages incoming or archived data in its business operations. It’s unlikely that a servicer will win a top rating (such as RPS1 for “highest standard of servicing ability”) if its document management, or document-dependent workflows, rely upon weak platforms or processes.
Ideally, the mortgage servicer will have a document management environment that quickly and easily associates document content (regardless of its format, origin, or storage location); supports a versatile range of searches; enables “intelligent data” to be dynamically generated, and has tight linkages to workflows. These are the basic elements of a solid enterprise ECM and BPM solution.
However, additional challenges confront the mortgage loan servicer. Industry regulators, such as the Consumer Financial Protection Bureau (CFPB), have imposed rules that potentially impact workflow designs and outcomes. For example, CFPB recent regulations require enhanced transparency of “account resolution” and pre-foreclosure processes, nearly all of which will require enhanced document management and workflow processes. Rating agencies, in turn, may rightly assess how well a mortgage loan servicer configures its content management platforms and business processes to meet CFPB requirements, and other regulations such as the Fair Debt Collection Practices Act (FDCPA).
Other practices in the loan servicing industry, such as the outsourcing or offshoring of account support, may require special attention. Outsourced servicing operations often involve multiple international BPO support centers, with varying platform architectures. In such cases, ratings firms may intensify their assessment of weaknesses in the servicer’s document or workflow management environment.
Conclusions: The mortgage loan servicing industry is just one industry that faces unique, compelling market requirements to customize document management and workflow processes. Even the best ECM or BPM platforms may not address its operational or regulatory needs unless the implementation lifecycle is intelligently performed. At AI Foundry, this would begin with a “BPM Assessment” to identify process inefficiencies, and propose specific measures that will optimize the customer’s workflow processes. Download the overview to learn more about AI Foundry's BPM Assessment.
1Fitch Ratings, https://www.fitchratings.com/site/definitions/servicerratings