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63 "Pre-process automation ensures accuracy, compliance, and efficiency. This allows servicers to focus their people on more complex defaults, troubleshoot discrepancies, and focus on customer care. Underwriters, default servicers, and service providers become more efficient and can take on a more meaningful advisor role." —Jeff Johnson, COO, Computershare KEEPING INFORMATION SAFE A lot of information is shared during real estate transactions, and that information is valuable, leading to a rise in cybercrime among financial companies. Cybersecurity remains a top concern at a majority of lending institutions, according to the 2019 Regulatory & Risk Management Indicator released by Wolters Kluwer, with 78% of lenders reporting it as a top risk that will receive "escalated priority" in the next year. In a recent webinar hosted by Safeguard, Steve Roesing, President and CEO of ASMGi, stated that 69% of data breaches originated from outside sources, with 51% of breaches are caused by malicious or criminal attacks. Meanwhile, just 24% of breaches are caused by human error, and another 25% are caused by system glitches. Malware attacks made up 34.4% of attacks in 2019, the largest share of any other attack type. Meanwhile, account hijacking made up 18.2% of attacks. Among financial services institutions, there were 927 reported incidents, 207 of which included confirmed data disclosure. Web applications, privilege misuse, and other miscellaneous errors made up 72% of breaches. Most malicious breaches (88%) were reportedly done for financial reasons, while espionage made up another 10%. "at information can, in the wrong hands, become valuable and disruptive to the consumers or to the business owners," said Bruce Phillips, SVP & Chief Information Security Officer at WEST. According to Phillips, the value of an identity has shot up in recent years. "Whereas, 10 years ago, a fully vetted identity might have been worth around a single dollar, now, depending on credit worthiness, identities may be worth something in the hundreds of dollars range. You could effectively be sitting on $1 million worth of target for a criminal," Philips said. One rising concern facing the industry is wire fraud., According to data from the FBI, wire fraud is on the rise, with the Bureau reporting a 166% increase in reported wire fraud between 2017 and 2018. On the state level, governments are combating rising fraud risk through regulation, including the California Consumer Privacy Act. ese regulations are the first step to combatting the national wire fraud epidemic, but it will also require extra care and attention at the servicer level to ensure fraud doesn't continue to spread. is means encrypting non-public data and, eventually, moving to blockchain. Jane Mason said, "Extending the use of blockchain will help lock down not only the title aspects, but the servicing eligibility and qualification data collected from third-party services such as credit reporting." For now, servicers must be proactive in monitoring the data going in and coming out, according to Regina Lowrie, President and CEO of fintech services company Dytrix. Employees must also be trained on phishing practices that fraud criminals use, and know how to identify fraud before it strikes. "We're now validating the recipient bank account number and ADA number for the lenders before they ever issue a wire, for anything," Lowire said. "Even if it's for a payoff." "I believe that limiting the email traffic with a third-party that is on an unsecured network is the best practice," she added. BROAD IMPLICATIONS "Ultimately, the industry is expected to embrace new digital technologies where it supports clear efficiencies and a cost-benefit," said Fitch Ratings during their fourth annual U.S. RMBS servicer roundtable event. "However, servicers that are most effective in leveraging technology to directly embrace challenges such as the anticipated LIBOR transition, periodic catastrophes, and industry competition are more likely to be successful in 2020 and beyond." According to Fitch, U.S. RMBS servicers showed an improved awareness of difficulties and implications tied to the anticipated expiration of LIBOR at the end of 2021. ese servicers are also preparing for natural disasters as risk increased over the past decade. Servicers use FEMA-designated disaster area notifications to assess the initial impact to their borrowers. Strategies that servicers are employing include waiving late fees, temporary credit bureau reporting cessation, and short-term forbearance plans. e GSEs, as well as private investors, have policies that address most disaster scenarios, and such policies have

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