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» VISIT US ONLINE @ DSNEWS.COM 59 when it comes to integrating with other—or newer—systems. When you consider the inherent need for servicers to interact with their partner firms and vendors, things can get complicated quickly. Cole Patton, Managing Partner at McCarthy & Holthus Law Firm, told us that last year, 70% of his firm's client updates were manual, with the other 30% being automated. "at's the kind of the infrastructure and one of the hurdles we're dealing with on some of those legacy systems," Patton said. DIMONT President and CEO Denis Brosnan told DS News that legacy systems, despite their faults, have remained in place for a reason. "e reason legacy systems exist or continue to exist, though, is because they work," Brosnan said. "e fundamental focus of a servicer is to collect payments from the borrower and to remit to investors and then to produce the interest statement at the end of the year, and those core systems are very good at that. ey're producing tremendous amounts of transactions with a high degree of reliability." Brosnan added that, despite the continued viability of many legacy systems, "what they're not good at is all of the intricacies of workflow in all the different activities that happen." Moving forward, many industry experts agree that a continued shift to digitalization of mortgage and servicing processes is the wave of the future. While upgrading technology can be extremely expensive, Stephen Hladik, Partner at Hladik, Onorato & Federman, LLP, suggests that the investment is worth it for many reasons, including a commitment to increased data security. "It's a time-consuming, costly process," Hladik said. "However, it is an absolute, vital necessity for law firms and servicers these days to deal with the most cutting edge of data security." Despite the high costs involved, there are still often inexpensive ways to help ensure data security. Patrick highlighted the step of ensuring that data flowing between different organizations is encrypted. CONSIDERING COMPLIANCE For Sharma, ensuring proper technology updates from vendors is key to streamlining compliance processes and reducing friction between servicers and vendors. "ere are certain industrywide compliance regulations, and all those industry vendors have got to provide advisory solutions," Sharma said. "If a particular regulator comes out with a new guideline, every servicer has to deal with that guideline. So it would be best if our technology vendor would just develop that, launch that as an update, and all of us automatically get it as part of core business. at is one challenge that we think that industry vendors could do a better job of: having a radar for compliance changes and baking those solutions into their system upgrade roadmaps." John Vella, Chief Revenue Officer at Altisource, echoed Sharma's statement, suggesting that, as regulation changes, technology needs to keep up. "When a new regulation comes in, you have to change the technology," Vella said. "You have to update the policies, you have to train your people, you have to make sure your vendors are complying. So, the whole process around changing rules and regulations and how well you manage that is probably the biggest issues within a servicer's operation." Cole Patton told DS News one concern he sees is the need for more consistency. "All of the servicing industry is subject to the same regulatory and compliance requirements, whether that be state or federally mandated," Patton said. "We see each of those servicers taking a slightly different nuanced spin on how they direct or employ methods to accomplish those compliance or regulatory objectives." Dave Worrall also pointed to concerns involving the changing regulatory environment and how it relates to privacy and consumer information protection. Worrall cited the example of the California Consumer Privacy Act (CCPA). "Any servicer who's not paying attention, or who didn't pay attention to the CCPA—and "e reason legacy systems exist or continue to exist, though, is because they work." —Denis Brosnan, President and CEO, DIMONT

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