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58 people expect, but consolidation will absolutely occur. ere will be a flight to quality after rapid expansion." He expects larger firms to continue to grow. Large lenders with diversified businesses could also look to add servicing operations. Sourcepoint will be among the companies looking at acquisition targets, according to Schachter. Companies that don't right size quickly enough are the most likely to be acquired, Rood said. Schachter expects a significant amount of loan and MSR transfers in the new year as the focus shifts away from refinancing due to higher interest rates. As companies buy and sell servicing and subservicing rights, it's going to be important to be able to accurately trace and secure those transfers and ensure accurate reporting, Mason said. "In the future, there's going to be even more scrutiny, particularly for subservicers," THE REGULATORY FRONT Regulators will keep a watchful eye on how servicers treat borrowers, Price said. "e regulatory environment is going to be a little more onerous. Regulators are going to be very keen on making sure that servicers are doing everything they can to keep borrowers in their homes, that they are afforded several options and that foreclosure is a last result." Rood agreed, noting that "with the new administration, this is a reinvigorated enforcement regime." He added that federal regulators have "made it clear that they are going to be scrutinizing and penalizing servicers for what [regulators] consider to be avoidable foreclosures that weren't avoided. ey're going to be flipping every rock in your operations to identify whether by intent or by accident you ultimately harmed or didn't serve a distressed customer." Furthermore, regulators will also likely scrutinize whether a servicer treated consumers any differently based on income, ethnicity, geography, or other demographic factors, Rood added. "HUD, DOJ, and CFPB (and others) will maximally enforce all fair lending laws under their jurisdiction," he continued. "And, if history is any guide, the enforcement will push the boundaries of the law and will probably exceed them." Servicers will also need to comply with the new Fair Debt Collection Act (FDCPA), which went into effect on November 3, 2021. e FDCPA includes a pair of new rules, both which were issued in 2020. One is designed to clarify the prohibitions on harassment and abuse, false or misleading and unfair practice when collecting consumer debt. e other is designed to clarify disclosures debt collectors must provide to consumers when collection communications start. According to the CFPB, "e second rule also prohibits debt collectors from suing or threatening to sue consumers on time-barred debt. Additionally, the second rule requires debt collectors to take specific steps to disclose the existence of a debt to consumers before reporting information about the debt to a consumer reporting agency." Gillen expects regulators to take some steps to address servicing backlogs as well as stronger efforts to ensure that servicers are abiding by rules already in place. "Regulators aren't going to tolerate servicers who don't have the proper controls in place," Schachter agreed. "ey want to make sure that borrowers can use whatever channel (internet, phone, chat, etc.) they prefer; they expect servicers to have the technology in place to support all channels. AN EVOLVING WORK ENVIRONMENT Like many other businesses, servicers were just starting to move employees back into the office in 2021, and still had a larger percentage of remote workers at the end of the year than they did pre-pandemic. Allen expects the hybrid environment to continue, though BSI Financial and other servicers are still determining the optimum remote/in- office ratio. "I don't know that 'normal' [work environment] is a term you can ever use again." Allen added that there are certain jobs with servicing firms and other financial services companies that necessitate a certain number of employees be in the office, but others will remain remote. About 30% of BSI Financial's workers are remote today, a figure Allen expects to fall to closer to 20%, but that will still be at least double what it was before the pandemic. Some employees will have a combination of in-office and remote schedules. "What we're realizing as an industry is that a distributed workforce is probably better than a centralized workforce," Sarkar said. "Once you distribute your workforce and your data points, you don't have a centralized point of failure. Pipeline visibility has become much better because as a servicing manager, you can use the technology to see where your hotspots are." "It's going to be challenging year, and I believe the industry will be up to the task," Sharga said. "It's important for default servicers not to rest on their laurels. ere is a director at the CFPB who has already identified mortgage servicing is one of his highest priorities to watch over in the coming year. It's imperative that servicers have their act together when it comes to borrower communication, loan remediation, and customer outreach." "We did some amazing things under incredible pressure in 2021," Mason said. "Now we just need to continue to adopt those practices and continue to look to increase our responsiveness to customers and our operational visibility and resilience." Phil Britt started covering mortgages and other financial services matters for a suburban Chicago newspaper in the mid-1980s before joining Savings Institutions magazine in 1992. When the publication moved its offices to Washington, D.C., in 1993, he started his own editorial services room and continued to cover mortgages, other financial services subjects, and technology for a variety of websites and publications. Cover Story By: Phil Britt "We saw the subservicing business grow not necessarily because there were a lot of contracts moving around, but because of the higher focus on retaining rights." —Allen Price, SVP of Sales, Marketing, and Client Management for BSI Financial

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