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Making Sure You’re Still In Compliance in Time For Your Fannie Mae or Freddie Mac Audit

Are You Still in Compliance?

In April, the CFPB warned mortgage servicers that being “unprepared is unacceptable.” The foreclosure moratorium lapsed on July 31, 2021 and lenders and loan servicers are gearing up to address defaulted loans. With the backlog and the expected influx of defaulted loans being referred for litigation, lenders and their servicers cannot lose sight of their compliance obligations and expectations to be proactive in assisting borrowers before proceeding with foreclosure actions.

This is especially true if the servicer is onboarding new staff. Fannie Mae and Freddie Mac conduct annual audits in where a big focus area is employee training. Now is good time for lenders and loan servicers to conduct internal audits or prepare for their annual Fannie Mae/Freddie Mac audits so they can focus on moving their cases once litigation activity picks up. Here are some areas of interest during audits:

Policy/procedure review which includes but is not limited to:

  • Governance procedures and compliance
  • Cash management and Investor reporting
  • Maintaining servicer status
  • Escrow administration
  • Default servicing (e.g., collections, loss mitigation, bankruptcy, foreclosure)
  • Training requirements including ongoing training needs
  • Capacity models and plans for staffing
  • Business Continuity and Disaster Recovery Plans/results of IT assessments performed (e.g., call tree exercise, network security assessment, penetration testing, etc.)
  • Document Custody and Record Retention
  • Physical environment controls (e.g., visitor badges, locked server rooms, cameras, etc.) and the protection of non-public borrower information (NPI)

Quality assurance reviews which may include:

  • Collection activities (call requirements, call quality, skip tracing)
  • Customer Service activities (call quality, customer satisfaction, escalations)
  • Escrow management (e.g., timely disbursements, HOA, past due analyses)
  • Loss mitigation activity (solicitation packages, evaluation notices sent timely)
  • Payoffs (posting process, calculations)
  • Loan boarding process (new loan set-up, data integrity)
  • Notices sent to borrowers (e.g., breach letter, ARM adjustments, escrow analysis, lender placed insurance, billing accuracy)
  • Bankruptcy, Foreclosure, and REO Management (adherence to payment plans/payment posting, discharges, MFRs filed timely, claims processing, timely referrals)
  • Property inspection, property repair, property maintenance/ preservation and property hazard insurance services
  • Expense management and timely submission of claims

The Trembly Law Firm can help with audit preparation, perfecting policies and procedures, and employee training. If you need assistance, call our office at 305-431-5678 or email us, and get the help your business needs.

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