NEWSROOM

Fair Lending Doesn’t Stop at Closing

April 28, 2022

Speakers:

Scott Weintraub, MQMR

Jerry Jamieson, New American Funding

Agenda:

Consistent Procedures for Servicing

Customer Service Calls

Collections Calls

Applications for Loan Modification / Loss Mitigation

Applications Received after Referral to Foreclosure 

Exceptions and Process

Tracking and Reporting

Q&A

Fair Servicing

 “Under the Equal Credit Opportunity Act (ECOA,) it is unlawful for a lender to discriminate on a prohibited basis in any aspect of a credit transaction, and under both the ECOA and the [Fair Housing] Act, it is unlawful for a lender to discriminate on a prohibited basis in a residential real-estate-related transaction. A lender may not, because of a prohibited factor: […] Fail to provide information or services or provide different information or services regarding any aspect of the lending process [or] treat a borrower differently in servicing a loan or invoking default remedies.”

Fair Servicing Compliance Best Practices

• Include Servicing in Fair Lending Program
• Policy and Procedures
• Designation of Fair Lending/Servicing Officer
• Fair Lending/ Servicing Committee, with representatives from Executive Management and/or Board of Directors
• Fair Servicing Training Requirements
• Monitoring of Loans for fair servicing issues 
• Fair Servicing Data Analysis
• Action Steps to implement change as needed

Consistent Policies and Procedures

Ensure that all borrowers are treated fairly in every stage of the servicing process such as:

• Servicing Transfer – Does the borrower have a pending application for Loss Mitigation 
• Payments
                  □ Applied consistently and compliantly
                  □ Suspense Account Funds 
• Applications - Loan Modification and Loss Mit
• Fee Waivers – Late Charge / NSF

Training

• Ensure that all employees understand that Fair Lending extends to Servicing as well
• Include targeted, job-specific training
• What can your company’s employees do, while performing their job duties, to ensure Fair Servicing?
                  □ Outreach to customers in geographic areas hit hardest by COVID – 19
                  □ Strategy for LEP customers
                  □ Document efforts made to assist customers prior to referral to foreclosure

Customer Service

• Are you providing fair and equal service to all borrowers?
• SLAs for Responses to Borrower Questions
• Requests for documentation - payment history, payoff statement
• Payment Options – Phone, Internet, Check
• Are free options communicated?
• Escrow Analysis / Balance / Statements
• Forced-Placed Insurance
                □ PMI Removal

Collections

• How are borrowers treated once they are in default?
• Collections Calls – Are frequency and tone of calls the same?  Are borrowers provided the same opportunities, such as a Loss Mit Application?
• Fee Waivers – How does actual practice compare with company policy?
• Letters – Do borrowers in similar situations receive the same notifications across the same timeframes?
• How are inbound calls handled?
• How is the LOS Updated?

Loss Mitigation Applications

• How are incomplete applications treated?
                  □ Is there a consistent process for follow-up on the items needed for a complete application?

• Tracking and Reporting – Are you tracking incomplete applications, including the number of follow-ups and whether contact with the borrower was successful?
• Decisions – Do borrowers in similar situations receive the same outcome?
                  □ Are you performing Fair Servicing Data Analysis?

• How are applications treated when received after the loan has been referred to foreclosure?
                  □ Is there a consistent process for notifying the foreclosure attorney to prevent the next step in the process from occurring?
                  □ Is there a consistent policy for when a Loss Mit Application would be considered prior to a foreclosure sale?
                                  ◉ Do you follow CFPB and/or State Law, or would you go beyond?
  
  

Exceptions and Process

• Does your company allow for exceptions:
              □ Fee Waivers
              □ Loss Mitigation Decisions / Terms
              □ Considering a Loss Mit App in advance of foreclosure sale
• Is there a consistent process?
              □ How to request an exception
              □ Criteria for approval
              □ Documentation of reason(s) for approval or denial and GMI info

Tracking

• Does your company track the following:
              □ Fee Waiver Requests
              □ Customer Service / Collections Calls
              □ Incomplete Loss Mitigation Applications
              □ Loss Mitigation Decisions / Outcomes
              □ Consideration of Loss Mitigation Applications
              □ Exceptions
• Do you have the GMI for all borrowers that provided it during the application process?

Data Analysis

• Loss Mitigation Applications
• Loan Modification Decisions
• Loss Mitigation Outcomes – home retention vs. disposition 

Initial Analysis

• Incomplete Applications
            □ % completed vs. closed

• Considering Applications
           □ Received while in foreclosure

• Application Decisions
          □ Loan Modification & Terms

• Loss Mitigation Outcomes
          □ Retention vs. Disposition

Regression Analysis

• When should you perform it?
            □ If you have already identified disparities in your data that are statistically significant, but are not exactly sure what is driving the disparities.
            □ Want or need a deeper understanding of the story that your loan servicing data tells.
• Factors to consider:
           □ Payment history, Previous loss mitigation history, BK history
           □ Will also identify outliers for match pair comparative file review.

Corporate Governance

• A Fair Lending/Servicing Committee is comprised of executive management and/or the board of directors. The committee should meet on a quarterly basis and should address the following items:
        □ Status and results of company-wide Fair Lending/ Servicing training
        □ Review Fair Lending / Servicing Data Analysis Reports
        □ Develop course of action for any protected class that appears to be adversely treated
        □ Update, review and approve policies, procedures and/or internal controls
  
  

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