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Issue link: http://digital.dsnews.com/i/1205640
94 Industry Voices Informative conversations with DS News' Editorial Advisory Board. 'RECESSION IS HEADING IN OUR DIRECTION' What is the the most important aspect for servers as the industry embarks on a new decade? Courtney Thompson discusses the trends, challenges, and new developments with DS News. As SVP of Default Mortgage at Flagstar Bank, ompson leads a best-in-class operations team, delivering industry leading transparency into, and the strongest control environment around, the default mortgage servicing process. ompson spoke with DS News regarding efficiency in mortgage servicing, the possible ramifications of state-run CFPBs, and how a possible recession impacts the industry operates. What are you focused on to begin the New Year? Efficiency is at the forefront of most servicers' minds. e market is telling us that the long awaited recession, regardless of severity, is heading in our direction. With default volumes currently at an all-time low, there must be more attention on having sound, trainable, scalable operations in place. Default is a people business at its core; scalability is critical. At Flagstar we've strategically in-sourced default mortgage servicing operations, and we are retooling and tightening our total default infrastructure in this wholly controlled environment to ensure that we are ready. For us, ready means industry leading transparency in all of our process, best in class service to our subservicing clients, and processes that will protect both the consumer and the bank in a higher volume environment What are the potential impacts of state- run CFPBs? Servicers, and all default industry vendors, should focus on what they can control in this space—the nitty gritty of the operations and the right people on the team to do the job. We do not have direct control over whether California or New York or Texas legislates above and beyond the CFPB or creates additional governmental watchdogs and auditors to pick apart processes. However, we can control our own processes and whether (and how) we follow the laws that do exist. Sound change monitoring and management processes, front-line testing and the right workflow technology go a long way. Knowing that you are compliant, or even knowing specifically what you have to work on is the best protection against a new regulating entity—plus, it's the right thing to do. Flagstar Default is committed to the always auditable ops process—holding our leaders accountable not only for having an efficient and compliant operation, but also for being able to answer the questions: How do you know that you are compliant?" What is the tool, the process, the audit package, the technology that can demonstrate this? is kind of oversight puts the onus on having a controlled environment and clear documentation of loan- related activities How is Flagstar Bank looking to leverage technology in the coming year? Flagstar Default is a meaningful player in the subservicing space and intends to keep growing. We look for forward-thinking technology partners that understand the industry and industry requirements, but are small enough to be agile and opportunistic. at's why in 2019 we launched a mortgage technology accelerator in partnership with the Detroit FinTech Bay—the first and only U.S. accelerator focused exclusively on incubating tech startups in the mortgage industry. In 2020, we're not going to bet the farm on a wholesale enterprise-wide technological overhaul. Instead, we'll see where we can leverage the best thinking of these startups to tighten and enhance discrete portions of our process for the biggest efficiencies and cost savings. How does outsourcing business function impact day-to-day operations? No matter who you are, you can never really outsource the risk of operating in this space. To Flagstar, complete control of our destiny and the decision-making associated with an underlying operation are the only choices—providing you have the right people. e weighty default regulatory environment has been around in one version or another for over a decade now. ere was a time when outsourcing seemed to be the only way to keep up with volume of new requirements and their impact on baseline operations. With default volume now at an all-time low, this is the ideal time to evaluate critical functions previously outsourced. For Flagstar Default, in-sourcing the right functions and partnering with the right tech companies to get the job done is the way to go. We have the infrastructure to manage the entire process and people who know how to work through the inevitable problems that emerge. In the interest of efficiency and optimization, we prefer to manage our risk