Subservicer Oversight Review Procedures
As required by both the CFPB and the GSEs, lenders are responsible not only for all of the work they outsource to their loan subservicer, but also for complying with the regulations that dictate lender/servicer operations. Lenders should be proactively overseeing their loan subservicer relationships and auditing operations regularly, but few have sufficient internal resources to do so. Richey May has developed a comprehensive subservicer oversight review program for those lenders and financial institutions that utilize a subservicer, in an effort to assist them in their oversight responsibilities and bring clarity and actionable information to the process.
With Richey May’s subservicer oversight services, lenders get a comprehensive report that provides tangible insights into all regulatory aspects of their relationship with their subservicer. Our service includes an intense review of the subservicer’s policies and operations, evaluation of the way it is handling a specific lender’s loans, and testing loans for compliance.
Richey May conducts the review on behalf of multiple clients at the same time, allowing us to share expenses and thereby create cost savings that are passed down to our clients. Our subservicer oversight services are managed by the former Servicing Controller for a top 10 US bank, bringing expert industry insight directly to our clients.
“I thought the audit was something that was good to have two years ago when we signed up. However, after just finishing with our second major scheduled audit in the past five months, this report proved to be more than just backup. It was instrumental in helping with a smooth review of subservicer oversight. I can’t thank Richey May enough for looking out for their clients.”
Overview of a Subservicer Oversight Review Engagement
- Review of pertinent servicing policies and procedures
- Two days on-site interviewing key servicing department personnel, as well as compliance, training, internal audit, legal, vendor management, and IT department managers
- Standard loan-level testing package on 25 loans specific to each client’s portfolio, primarily focuses on default and escrow attributes, with the option to select additional areas for testing from an expanded menu
- Upon completion of the evaluation, lenders are provided with a written, comprehensive report that details the subservicer’s performance on that particular lender’s loans
“We changed from OCC to FDIC last year, so this was our first full scope compliance exam by the FDIC and they decided to limit our scope in the servicing area because of your review. They mentioned it over and over and said it was great that you did this and covered all areas they would be concerned about, therefore we had no additional testing or review. This just happened before the holidays so we definitely want to ensure we do it again for the next audit cycle completion.”
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