The Challenge

A community bank faced a GSE investor loan servicing audit, designed to ensure compliance with strict guidelines. The audit revealed eight findings, highlighting areas where processes and controls fell short of GSE requirements. This posed a risk to the bank's investor relationship and required a comprehensive remediation plan.

SCA Steps Up

Recognizing the need for expert guidance, the bank engaged SCA. Senior Loan Servicing and Secondary Market Consultant Heather Papows took the lead, collaborating with the bank and the GSE auditor.

A Collaborative Approach

Heather worked tirelessly to:

• Resolve Action Items: Meticulously addressing each finding, conducting research to identify and clear cash variances, implementing proper controls, retesting for compliance, and ensuring proper system integrations.

• Develop Useful, Timely Action Plans: Developing and implementing a comprehensive plan outlining a clear path to resolve all issues.

• Transfer Knowledge: Heather went beyond simply clearing findings – prioritizing training of all those involved in the process, including loan servicing and accounting team members, to ensure everyone acquired the necessary long-term knowledge and a built-up skill set for self-identification of potential issues.

Beyond Remediation

SCA's impact transcended into a larger-scale developmental program, enhancing the Client’s confidence around investor loan servicing through:

• Procedural Improvement: Heather curated job aids and a 25+ page Investor Loan Servicing Procedure Manual, covering critical areas like cash management, reporting, and delinquency management. This comprehensive resource formally documented the entire process and ensured all personnel were well-equipped to handle investor loan functions effectively.

• System Enhancement: Through core platform testing, Heather pinpointed programming flaws impacting GSE accounting compliance. This escalated and eventually was submitted as a core system enhancement request to a major core platform, prompting system improvements to align with GSE requirements.

• Institutional Alignment: Training extended beyond loan servicing staff. Heather ensured the bank's accounting team, responsible for final reconciliation, also received comprehensive training. This fostered institution-wide understanding and improved overall oversight.

Success Story

The collaborative effort led by Heather culminated in a year-long journey to complete remediation. All findings were resolved, action items were addressed, and the bank achieved full GSE compliance. More importantly, SCA equipped the bank with the knowledge and resources to not only maintain compliance but also prevent future audit issues. This empowered the bank to self-identify potential problems and proactively handle loan servicing functions according to GSE best practices.

This case study demonstrates SCA's commitment to providing more than just a single resolution. Our approach fosters long-term success by building internal expertise and empowering institutions to achieve sustainable adherence to policies, procedures, and guidelines.