NTC Study Reveals up to 490,000 Homeowners May be Affected by Inaccurate Servicing Records

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NTC comments on best practices to stay in compliance with the August 2014 CFPB bulletin on mortgage servicing transfers.

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...in today’s compliance-oriented landscape, such a high number of errors could bring increased scrutiny and penalties from CFPB regulators, not to mention putting a cloud on title and cause trouble for homeowners.

The Consumer Financial Protection Bureau (CFPB), on August 19, issued a compliance bulletin and policy guidance titled: Mortgage Servicing Transfers. The guidance replaces the earlier document with the same title, and directly addresses the highlighted concerns that the transferor and transferee in all transactions involving MSR or whole loan sales are jointly and separately responsible for the integrity of the data and documents of all loans involved in the transfer. The document puts particular attention on loans involved in residential mortgage servicing transfers with pending loss mitigation activities.

Although the compliance bulletin is a non-binding guideline, it does accurately reflect the requirements and audit priorities the CFPB will exercise under its authority to act within the powers entrusted to it under Regulation X and RESPA rules. The document also discusses expectations for verification of data and documents transferred, by both parties involved in the transfer, to ensure they are correct. As with most CFPB regulations it gives general guidelines with the expectation that servicers will develop specific policies and procedures that comply with the spirit, if not the letter, of the regulations.

As a leading research and document-processing provider for the mortgage and financial industry, NTC (Nationwide Title Clearing, Inc.) maintains that the industry needs a quality control methodology with which to validate the data in its servicing systems against collateral file or servicing file images. Lest the fine details be overlooked, according to NTC COO Michael O’Connell, one aspect that has a direct effect on servicers’ ability to comply with the bulletin, and referred to directly in Appendix A section 12CFR, 1024.38 (b)(4) (i), is that the validation of the database records against collateral files is the responsibility of both sides in the deal. He further noted that if this point is overlooked faulty data can be passed on to the next servicer. This oversight allows for the possibility of inaccurate information within data fields being transferred to another system. And per NTC, this occurs much too frequently and leaves servicers at risk of noncompliance:

In an in-house study, NTC found that out of 2,285,665 servicing database records that were verified against the collateral file, 24,490 loans (1.07%) had significant discrepancies. When viewed against roughly 49 million outstanding residential mortgages as many as 490,000 homeowners could be affected by faulty servicer database records.

“These database inaccuracies might have represented ‘acceptable risk’ in times past – but in today’s compliance-oriented landscape, such a high number of errors could bring increased scrutiny and penalties from CFPB regulators, not to mention putting a cloud on title and cause trouble for homeowners,” said O’Connell.

This issue is one that NTC has long taken steps to remedy with its forensic audit and remediation services wherein the company receives a copy of both the data fields and an imaged copy of the original file, which are then compared to each other – and if there is a discrepancy, it must be resolved before moving forward. As part of its services, NTC ensures database and file accuracy through pre-transfer audits and post-closing quality control checks. The company works to iron out issues before a transfer so that the information passed to the next servicer is accurate.

In addition to the company’s dedication to ensuring the accurate data in a servicer’s system, NTC executives have also removed the guesswork associated with compliance following recent regulatory stipulations with the use of comprehensive property reports.

For more information about NTC, including its research and document processing services, visit http://www.nwtc.com.

About NTC:

Based in Palm Harbor, Florida and founded in 1991, NTC (Nationwide Title Clearing, Inc.) is a privately-owned leading research and document-processing service provider to the residential mortgage industry. NTC services mortgage lenders, servicers and investors, including eight of the top 10 residential mortgage servicers in the country. NTC is known for delivering the highest level of accuracy in research services and quality document processing that set the industry standard while protecting homeowners, assisting the mortgage banking industry and preserving the nation’s land records. The company’s land records and document experts are able to track and fulfill county document requirements in all recording jurisdictions nationwide, which is close to 3,600 different jurisdictions. NTC specializes in providing land records research, property reports, lien release services, assignment services, final document tracking, document retrieval and other custom business solutions. NTC’s expansion is tied to their contribution to their industry and their local community, ranking number 13 on the Tampa Bay Business Journal’s 2014 Fast 50 Awards list of fastest growing companies in Tampa Bay, and number 2,097 on the 2014 Inc. 500/5000 list of fastest-growing companies in America. NTC also won the Inc. Hire Power award for the second consecutive year in 2013 for putting Americans back to work. For more information, visit the company’s website at http://www.nwtc.com.

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