mortgage servicer data service

Mortgage Loan File Management

Evidence-based Risk Managementwww.e-brm.com

© 2012 E-bRM, LLC - CONFIDENTIAL 2

The Task• Looking Back

Determine level of mortgages with processing and recording problems that may have resulted in inaccurate payment applications and balances

Identify actual mortgages and borrowers affected

• Looking Forward Institute risk management practices to control future processing and

recording problems and issues Install automated data capture, tracking and monitoring to maintain “real

time” documented files and continuously check for out of sequence events and patterns


Tip of the Iceberg

• But that is only the tip of the “cash flow” iceberg – Some other questions:

What about the split between principal and interest? What about funds that were escrowed? Were they applied

correctly to taxes and property insurance? Were payments applied first to principal and interest or to

penalties? Were all the rate changes applied and correctly initiated? Were there other fees and penalties and were they calculated

correctly? Was the servicing purchased? Are all the records on one system? Were there advances made? Did they influence timing of the other

payments?

• Retrieve all payments made by borrower – a straight forward task


Finding Needles in Haystacks• Mortgage servicing in general and default

servicing in particular have numerous dynamic rules-based events with very specific outcomes that must occur

• When servicing issues develop they will be complex in both information and timing

• Trying to find and correct problems in a mortgage servicing file that deviate from the required process and timing is like trying to find needles in not just a haystack but multiple haystacks


Finding Needles in HaystacksThe loan file and supporting sub-files have many different

documents, event benchmarks, and fee rules driven by the type of loan, the state in which it was originated, the programs it was originated under and the ultimate investor

Everything associated with the loan usually resides on a number of different systems of record in numerous locations, many controlled and maintained by different parties – previous owners, vendors supporting the various efforts, states and counties, and courts of various jurisdictions

The challenge is not just finding the needle but finding many needles in many haystacks and then matching them to one another


Literally Years to Search by Hand• Laborious task to create

paper time lines / pencil ledgers

• Even for trained analyst that knows what to look for

• Data retrieval and sequencing tasks can be automated

• Automation is repeatable, traceable and auditable


Loan Compliance Process Automation

• Objective: • Improved processing speeds and accuracy • Promote transparency

• Template driven requirements and process:• Find what is required / relevant

• Sequence of events over life of the loan (chronology)• Documents and data (internal and external artifacts)• Loan related cash flow events

• Understand access and retrieval protocol • Write unique program routines to accommodate

retrieval and organization

© 2012 E-bRM, LLC - CONFIDENTIAL

Loan Compliance Template• Line up events along key time lines

• Compare time lines requirements with actual timing and flag exceptions

• Identify documents and data• Missing documents by loan file• Incomplete documents by loan file

• Transaction cash flow events• Payment history• Escrow funds and advances• Penalties and charges

• Organize and deliver to analytic tool set and reporting• Client designed or specified

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Access Data from a Variety of Sources

Collect data from a variety of relevant datastores:

ClientSOR

MERS PACER DoD

CMDRConsumer Mortgage Data Repository

OtherVendorPortals NDC


Assemble Time LinesAll the associated events, documents and fees

need to be properly sequenced on the mortgage file time line to identify potential processing issues.

Active Duty Service & Default Events Chapter 7 Filing Sale

Escrow Payment

Notice of Default

Property Maintenance

Property Tax Payment

Notice of Trustee Sale

Promissory Note

Deed of Trust


Line Up the Associated Time LinesLine up time lines for servicer, borrower, military, courts …Because the loan file has been handled by a number of entities,

several important fees, notices, or actions may be out of sequence.

Report problem loans

Chapter 7 Filing Sale

Escrow Payment

Notice of Default

Property Maintenance

Property Tax Payment

Notice of Trustee Sale

Promissory Note

Deed of Trust

Title Search

Bankruptcy Filing

Active Duty Service & Default Events


Process Model• Identifying Data• Tagging Data• Tracking Data• Retrieving Data• Organizing Data• Delivering Data

Identifying, correcting, monitoring and preventing key risks in real time.


Key Servicer Use Cases

1. Bankruptcy Compliance

2. Ongoing SCRA Compliance

3. HAMP Application Process Compliance

4. Historical Payment Application Accuracy

These represents a partial list of potential uses. Others include penalties, charges, third party payments accuracy and proof testing, as well as many other client specific applications.


Use Case 1: Bankruptcy Compliance

Problem Scope: Objective: In the event a borrower filed bankruptcy

prior to or during any foreclosure action by the servicer, determine if servicer complied with bankruptcy requirements.

Problem Set: Legacy Portfolios (such as Look Back sample population).

Concerns to Identify: Stay violations (actions and communication); Assessed charges (Proof of Claim); Application of funds and stewardship of escrowed funds. Property sale or eviction.

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Solution Automation:• Use E-bRM Template to determine relevant data points:

Foundational documents (note, mortgage)

Performance documents (payments, escrow, fee statements, balances)

Communication documents (notices, orders)

Court documents (jurisdiction, proof of claim, bankruptcy plan, etc.)

• Identify Required / Relevant Data Sources PACER

Servicer Platform (note, mortgage, payment, escrow, foreclosure docs)

Other (DoD for SCRA, as required)

• Retrieve Data

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Solution Automation (continued):• Organize all data points on time lines:

Borrower: original purchase, payments, insurance, taxes …

Servicer: payment allocations, escrow, notice of default, RESPA …

Court: claim filing, stay orders, principal reduction, bankruptcy plan …

• Overlay individual time lines and identify data that does not match the E-bRM timing template Double dipping on escrow recovery

Foreclosure action started / resumed during bankruptcy

Principal / interest does not match bankruptcy plan

Payments not applied in accordance with proper court jurisdiction / plan

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Solution Automation (continued):

• Provide report of all mortgage case files identified with potential irregularities

Case Identification

Time Lines

Log of Potential Errors

Mortgage Document Repository Data Folder (all collected documents)

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Use Case 2: SCRA Compliance

Problem Scope: Objective: In the event a borrower was a active

military service person during a period of the loan, determine if servicer complied with SCRA requirements.

Problem Set: Legacy portfolios (such as Look Back sample population) and go forward processing rules.

Concerns to Identify: Improper foreclosure action, failure to adjust rates and fees.

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Use Case 2: SCRA ComplianceSolution Automation:• Use E-bRM Template to determine relevant data points:



Communication documents (notices, orders)

Military Service data / documents (dates, status, orders)

• Identify Required / Relevant Data Sources DoD (or DoD data extract) for active service records


Other (MERS, PACER as required)

• Retrieve Data

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Use Case 2: SCRA ComplianceSolution Automation (continued):• Organize all data points on time lines:

DoD: active duty start and end dates, service branch, identification ... Borrower: original purchase, payments, insurance, taxes … Servicer: payment allocations, escrow, notice of default, RESPA,

foreclosure …

• Overlay individual time lines and identify data that does not match the E-bRM timing template Interest rate not properly adjusted to the SCRA maximum Fees charged separately, not properly included in reduced interest rate Rate and fee reductions not properly applied retroactively to service

dates Family member of service personnel, not discovered and protections not

properly applied to loan

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Use Case 2: SCRA ComplianceSolution Automation (continued):


Case Identification

Time Lines



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Use Case 3: HAMP Process Compliance

Problem Scope: Objective: Determine if servicer complied with

HAMP notification, calculation and processing rules Problem Set: Legacy portfolios (such as Look Back

sample population) and go forward processing Concerns to Identify: re-default events, NPV

calculation not completed, notices that recommend defaulting, rate, term and principle modification issues, denial decision support

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Solution Automation:• Use E-bRM Template to determine relevant data points:

Communication documents (notices, letters, foreclosure notices)



• Identify Required / Relevant Data Sources Servicer Platform (note, mortgage, payment, escrow, foreclosure docs)

Servicer Document Image System (correspondence, notices)

• Retrieve Data

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Borrower: original purchase, payments, HAMP request …

Servicer: notices, NPV calculation, correspondence, foreclosure notices …

• Overlay individual time lines and identify data that does not match the E-bRM timing template Notices that recommend defaulting for HAMP participation

No record of NPV calculation

Reductions not in accordance with HAMP policy

Payments not recorded per HAMP modification

Parallel track foreclosure processing

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Case Identification

Time Lines



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Use Case 4: Payment Allocations Accuracy

Problem Scope: Objective: Determine if servicer is accurately

allocating payments received for a loan Problem Set: Legacy portfolios (such as Look Back

sample population) and go forward processing Concerns to Identify: payments applied to fees

before principal / interest, forced insurance, escrow allocation issues

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Solution Automation:• Use E-bRM Template to determine relevant data

points: Foundational documents (note, mortgage) Performance documents (payments, escrow, fee statements,

balances)• Identify Required / Relevant Data Sources


Servicer Document Image System (correspondence, notices) Other (PACER for bankruptcy if required)

• Retrieve Data

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Borrower: original purchase, payments, insurance, taxes…

Servicer: payment allocations, escrow, notice of default, RESPA …

• Overlay individual time lines and identify data that does not match the E-bRM timing template Late payments

Fee pyramiding

Notices of default / late payments

Forced insurance

Escrow allocation priority

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Case Identification

Time Lines



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Quality ResultsSignificant improvement in processing speedAccurate, repeatable, auditable Tools help identify and process exceptionsSatisfy look back mandateCompatible with multiple systems of record including:

MERS, PACER, DOD, NDC, DRI (and other SOR) Bankruptcy related errors – 19 unique templates

vetted with the U.S. Bankruptcy CourtMore cost effective operations / single point of contact

supportProfessional services / on-site implementation team


About UsE-bRM – professional services, risk

management and project management, licensed software solutions for mortgage industry

For more information or a live demo, contact:Richard Ellis, PMP PRMhttp://www.richardellis86.blogspot.comhttp://www.e-brm.com914-713-0712


Appendix – Terms & Abbreviations• SOR – System of Record

• MERS – Mortgage Electronic Registration System

• PACER – Public Access to Court Electronic Records

• DOD – Department of Defense (in this case the service duty records)

• NDC – National Data Center

• DRI – Default software database

• SCRA – Service Members Civil Relief Act

• HAMP – Home Affordable Modification Program

• LTV – Loan to Value

• NOD – Notice of Default

• BPO – Broker Price Option

• SaaS – Software as a Service

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