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64 be preparing now. ere is no time to waste, and no excuse for inaction. No one should be surprised by what is coming. Our first priority is ensuring struggling families get the assistance they need. Servicers who put struggling families first have nothing to fear from our oversight, but we will hold accountable those who cause harm to homeowners and families." e CFPB has made its views clear: servicers should have their loss mitigation efforts prepared in advance in order to help homeowners. e FHFA released a list of loss mitigation options for its borrowers, saying those with loans backed by Fannie Mae or Freddie Mac can emerge from forbearance via: » A lump-sum payment of what was missed; » A repayment plan that increases monthly payments until the missed payments are paid back; » A permanent loan modification to help lower monthly payments; or » A deferral to pay back the missed payments by adding them on to the end of the loan. Servicers who are not prepared to work with their borrowers and walk them through these options could face serious consequences from the CFPB; these are the types of issues the CFPB could begin scrutinizing as it looks closer at discrimination practices. KEEP CLEAR, CONSISTENT COMMUNICATION As the expectations heat up amid higher demand for loss mitigation and increased scrutiny from regulators, lenders and servicers can ensure they are staying one step ahead by staying in consistent communication with borrowers and making sure that communication is clear and concise. Oftentimes, homeowners do not know the options available to them, or even that they should contact their servicer if they are struggling with their mortgage payments. Clear communication through the right channels can help increase homeowner education and provide them with the tools and information they need to make the financial decision that is best for them. Partnering with a good document provider can help improve that communication gap. Partnering with the right provider can help enhance critical communications and boost servicing efficiency. At Mortgage Connect, we customize consumer communications to create a single point of contact to simplify the process. e right technology partner should provide borrower solicitation, critical communications, and document execution all in one place so the borrower knows where to look when they need information on their mortgage and loss mitigation options. HOW TO STRENGTHEN DUE DILIGENCE EFFORTS Over the past year, a surge in demand for originations forced many lenders to go on a hiring spree, even offering significant signing bonuses for underwriters to join their team. Amid staffing shortages and new staff, defect rates began to rise. Freddie Mac explained that defect rates climbed in 2020 among smaller lenders due to multiple factors, including violations of COVID-19 temporary flexibilities, loan manufacturing defects such as missing documentation and miscalculation of income and missing income documents. But now, the CFPB will increase its attention on these defects and demand higher levels of quality control among lenders as defaults are expected to rise. When the CFPB announced it will double down on its scrutiny of discrimination, it also said it will require financial companies to show their processes for assessing risks and discriminatory outcomes, including documentation of customer demographics and the impact of products and fees on different demographic groups. It said it will look at how companies test and monitor for unfair discrimination. For mortgage lenders and servicers, the time is now to double down on their due diligence, quality control (QC), and quality assurance (QA). e CFPB will closely watch for defaults, and choosing the right fintech partner can help lenders and servicers achieve the top QC for their borrowers. e right tech partner could not only help lenders navigate their QC checks, but could also be implemented from the origination stage in order to eliminate defects due to human error. Because of this increased need for QC efforts, even fintech companies are beginning to expand their portfolio of offerings. For example, Mortgage Connect recently announced its acquisition of ADFITECH, a provider of outsourced mortgage services such as QC, due diligence, fulfillment, and document management services. Lenders and servicers should choose a tech company that will enhance their QC efforts as the CFPB moves into full enforcement mode and borrowers increase their demand for loss mitigation services. Lenders can put their borrowers and their company first by ensuring their QC and due diligence are heightened, increasing their communication with borrowers, and reviewing their processes for any signs of discrimination practices, even unintentional ones. Moreover, with the CFPB stepping up its enforcement actions and monitoring efforts, technology could again be what separates lenders and servicers who come out on top from those who will get left behind. Meghan Jones-Rolla is the COO and Chief Legal Officer of Mortgage Connect, where she leads the company's default title, document solutions, and capital markets divisions. During her 10 years in the industry, Jones-Rolla has gained extensive knowledge and experience in multiple areas of the business. As General Counsel and SVP for the company since 2019, she has established best practices within the Legal and Compliance teams, ensuring strict adherence to all regulatory compliance and licensing requirements. Feature By: Meghan Jones-Rolla Partnering with a good document provider can help improve that communication gap. Partnering with the right provider can help enhance critical communications and boost servicing efficiency.