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13 October 2024 ยป E D I T O R I A L A D V I S O R Y B O A R D Michael Merritt serves as SVP, Customer Care & Mortgage Default Servicing for BOK Financial. Merritt oversees mortgage servicing contact centers and default servicing divisions at BOK Financial, encompassing Customer Service and Default contact centers, as well as managing the Loss Mitigation Processing, Foreclosure, Bankruptcy, Claims, Post-Sale, and Loss Analysis teams. He previously managed mortgage subservicers at Goldman Sachs and played integral roles at Mr. Cooper Mortgage, primarily in Customer Care, Loss Mitigation, and First Line of Defense. Merritt holds an MLS in Risk Management from Texas A&M School of Law, an MBA from Texas Tech University, and a BA in organizational leadership from Arizona State University. Q: What risks are keeping you up at night? Merritt: The main risk that keeps me up at night is the rapidly evolving cyber- security risks we face as an industry. It seems like every aspect of our industry is under attack by bad actors from servicers themselves to key vendors and partners. Bad actors are becoming more and more advanced by the day with social engi- neering and other types of attacks. Servicing leaders need to understand their control environment to gauge the risk they face. Training every employee is a critical step to minimize the risks as much as possible. The message has to be that every employee, regardless of position, has to be focused on protecting the company and our customers. Q: What is one area where servicing should be focused on innovating or improving, and why? Merritt: Artificial Intelligence has the chance to disrupt our industry more than any other technological advancement in recent memory. Servicers, vendors, and regulators have struggled with how to in- corporate these advances into our indus- try in a thoughtful and ethical manner. I think an important step is to define what constitutes AI and to educate about the differences in different types of AI. For example, generative AI that produces de- cisions should be viewed from a different lens than an automated workflow that simply completes a defined task. While there are risks with AI, the benefits outweigh those risks. AI is a tool that can greatly improve customer experience and back-office functions to improve efficiencies across mortgage servicing. To ensure this is done the right way, you need to define how AI will be used, test the outputs through develop- ment, and have ongoing oversight of the process after implementation. The indus- try has spent the last 15 years building robust control frameworks and enhanc- ing reporting to show every aspect of our business. These improvements can help monitor AI-driven processes to ensure fair treatment of all customers, the same way they do for vendors and other third-party providers. As margins tighten, AI can help ensure we are meet- ing our customers' needs in the most efficient manner. Kim Yowell serves as EVP of Servicing at Fairway Independent Mortgage Corpora- tion. Yowell, CPA, holds a BBA in accounting from Texas Christian University and has over 30 years of management experience in the financial services industry. She started her career in the accounting and finance side of the mortgage business and has been focused on servicing and operations for the past 20 years. Yowell has held key leadership positions at CTX Mortgage Company, First Horizon Home Loans, Metlife Bank, and BoK Financial and is currently the EVP of Servicing at Fairway Independent Mortgage Corporation. Yowell has also served on the Freddie Mac Advisory Board, the MBA Loan Administration Committee, the Black Knight Servicer Advisory Board, and the Fiserv Servicing Advisory Board. Currently, she is a Five Star National Mortgage Servicing Association member and serves on the Texas Mortgage Bankers Association Board and the MortgagePoint Editorial Advisory Board. Q: What is a recent "win" you or your team have celebrated? What lessons did you take away from this achievement? Yowell Recently, after exhausting efforts providing documents and loan-level data covering multiple years, we (Fairway as servicer, utilizing a subservicer) achieved a 0 finding audit result from (what is fair to say) one of the most historically tough- est servicing audits. The experienced exit auditor, having only witnessed one previously, congratulated us and noted that 0 finding results are very rare. Our oversight team, being primarily based in Texas, immediately took that as deserved "bragging" rights. Your chest swells up with pride, you can't contain your smiles, and you have to tell everyone about it, whether they care or can appreciate it. Remain vigilant. Strong controls, ex- perienced talent, and high expectations provide peace of mind and protection for your company, your customers, and your investors. EAB Outlook Members of MortgagePoint's Editorial Advisory Board share their insights into the trends and challenges shaping the industry landscape.