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Servicers Revamp Data Management as Regulatory Deadline Approaches

If you haven't reviewed the upcoming regulation changes from the Consumer Financial Protection Bureau (CFPB), better put on a big pot of coffee. Effective January 10, the rules are changing, and this includes amendments to the Real Estate Settlement Procedures Act (Regulation X) and the Truth in Lending Act (Regulation Z).

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The rules affecting several ""areas of mortgage servicing"":http://files.consumerfinance.gov/f/201312_cfpb_servicing-applicability-comparison-chart-reg-x-and-z.pdf have been revised. So, which areas have changed? (It might be simpler to ask which areas haven't changed.) Here's a partial list of what has been revised:

+Regulation X+
* Error resolution and information requests
* Force-placed insurance
* Early intervention on delinquencies
* Continuity of contact with borrowers
* Loss mitigation procedures
* Mortgage servicing transfers
* Escrow accounts
* General policies, procedures, and requirements

+Regulation Z+
* Periodic statements
* Interest-rate adjustment notices
* Prompt payment crediting and payoff payments

The CFPB has included an exemption for companies that service 5,000 or fewer mortgage loans, but for the many mortgage servicers subject to the bureau's regulations, they are using these rule changes as an opportune time to

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overhaul their entire systems of data entry, rework internal procedures for loan approvals and reviews, and re-assess staffing allocations.

According to Greg Lehman, product manager for enterprise content management at ""Fiserv, Inc."":http://www.fiserv.com, when it comes to maintaining compliance with the new regulations, financial institutions should be especially mindful of information management and data integrity.

He highly recommends switching from manual data entry to standardized, automated systems for the purpose of ensuring accuracy. Sophisticated information management systems can help with the complexity and challenges of completing the loan process through multiple phases and systems.

""[E]nsuring the accuracy and consistency of stored data is often one of the biggest challenges for loan servicing,"" according to Lehman.

In a recent post to Fiserv's ""_The Point_"":http://www.fiserv.com/the-point.htm blog site for the financial services industry, Lehman wrote, ""When loan files and histories were examined in the aftermath of the mortgage crisis, discrepancies were often found that made it nearly impossible to understand systems and decision-making processes. In light of new regulations created in response, it's especially important to ensure the accuracy of the loan file and maintain a comprehensive loan record that includes all signed legal documents.""

Lehman stresses that automated systems take manual entry and its inherent risks out of the equation.

A comprehensive information management system can capture and retain content, compare and route data, streamline approvals, as well as track documents to minimize loan processing time, Lehman explains. It can also boost efficiency with a leaner staff, and if there's ever an audit, the process is greatly streamlined with more accurate records and archived documents, he notes.

Loan servicers that make it a priority to stay current with technology, Lehman says, will be better equipped to adapt to this fundamental shift in how mortgage lending and servicing is done, and can expect to increase customer satisfaction and enhance profitability, all while minimizing risk.

About Author: Howard Goldthwaite

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