Garbage In, Garbage Out: The Ever-Growing Need For Attention To Detail
Mortgage loan servicing operations is a fast-paced environment that carries a multitude of responsibilities. New loan setup, investor servicing, escrow management, reporting, reconciliations, need we go on? The hub of information for this entire operation is your core database system. When you think of all the things that source to the core for datapoints – credit reporting, management reports, billing statements, annual notices, escrow vendor integrations-- it should really resonate that the integrity of your data is dependent on the thoroughness of the input. The onboarding of new loans is your greatest opportunity to capture as much information as possible, and the most critical time for accuracy. Unless a (potential) error arises, this initial setup stage is likely your one and only opportunity to look at the details of the loan in its entirety. You do not want to be caught up in the mess that arises when you pass along incomplete or inaccurate information – these types of errors can sometimes go unnoticed for some time, where the problem compiles and the integrity of the data unravels further each month. The remediation process required after the fact is timely and often costly, not to mention the reputational risk associated with it as well.
The best way to mitigate these risks is through the development and application of detailed procedures that include job aids (which act as a point of reference for less frequently encountered situations, as well as a great training and cross-training tool for future use), automated workflows with milestone trigger points, and a strong audit process for proper oversight. The key here is the application of these processes- providing proper and ongoing training for staff, addressing technical hiccups to maintain automation wherever possible, and the encouragement of staff and management to periodically re-assess in search of newer or better ways, or to fill gaps in the current process.
The challenge many institutions face is balancing the best use of time with the reliance on automation- we all want to click a button and believe all of our data points are transferred with no issue- but the reality is we are often faced with workarounds and technical difficulties -which clouds the process due to manual intervention.
We also find that with the vast responsibilities each servicing staff member holds, often the attention to detail (or even, the knowledge on a detailed level) is lacking, as there just doesn’t seem to be enough time for it all. A skilled manager will recognize the importance of spending the time to learn what each person knows and pays attention to (and more importantly, what they don’t know or don’t pay attention to) in their daily tasks, and will focus on fostering growth in the necessary areas.
The bottom line for all of this is confidence. Confidence in your staff that they are trained and knowledgeable. Confidence in your process that is encompasses all it should. And confidence in your core that it reflects all of the data points fully and accurately. When you have confidence in all of these areas, you allow for proper decision making from the top down, where Senior Management can analyze and manage asset quality and determine future product offerings, where you can weigh future staffing requirements, and overall helps you meet the demanding needs of regulatory requirements of the CFPB, CECL and FDICA, to name a few.
For more information on how SCA can assist in building confidence in your loan servicing operations, please contact Bill Dolan, Director, at WDolan@scapartnering.com or by phone at (617) 694-2617.
