Steven Usserey: Compliance Technology is the ‘Guard at the Gate’


PERSON OF THE WEEK: Steven Usserey is vice president of regulatory compliance for IndiSoft, a provider of compliance software to the mortgage industry.

MortgageOrb recently interviewed Usserey to learn more about how technology is being used to help mortgage companies meet compliance, reduce operating costs and improve customer service.

Q: We know federal regulations have put a spotlight on mortgage compliance. Are there other reasons why compliance has moved to the forefront of the mortgage industry?

Usserey: The financial crisis of 2008 can be seen as one of the causes for the increase in new regulations. It was the wake-up call that the mortgage industry needed to have “its hand held” to mitigate future financial downturns. The number of financial institutions cited and/or fined for compliance related issues is an indicator that there was a need for compliance being pushed to the forefront in the mortgage industry.

Companies in the mortgage industry are looking for technology solutions to assist in mitigating compliance exposure and related fines. Proper uses of technology as the “guard at the gate” can be that tool.

Systems can require documentation, verify that the documents are correct before allowing them to be processed, and then ensure that preparations have been made to receive them. Using technology to ask the correct questions, complete the correct actions and put the process back in line when it strays, can be the tool that makes the bumpy road of compliance smoother.

Q: Has every mortgage compliance question been asked and answered? How can technology help in addressing possible answers?

Usserey: I would say yes, based on the published guidance and regulations as they stand today. However, the answer to this question is fluid and ever-changing, due to the complexities of the mortgage industry.

Technology can be leveraged to help mitigate the “question and answer” components of compliance in the mortgage industry. For example, technology can be used to catalog compliance questions and answers that can be used during the life of the loan.

Technology has made our lives more connected and introduced more information for us to sort through on a daily basis. Likewise, federal and state government bodies, as well as the government-sponsored enterprises, have infused the mortgage industry with volumes of guidelines and regulations with which to comply – or face severe consequences.

Locating, interpreting and complying with the volumes of documents issued by these governing bodies has been a challenge for the mortgage industry – and in some cases has resulted in missed actions and financial losses for mortgage servicers. The use of technology to gather, compile, organize and maintain this increased volume of information will become key to assisting the mortgage industry in staying up to date and remain compliant.

Q: From receiving a residential loan application, to closing the loan, to receiving the first payment, how can technology effectively tie-in all the moving parts to ensure that all parties are in compliance with all regulations?

Usserey: I think we all can agree that the starting point in the mortgage industry is the same for everyone. For example, when I applied for my first mortgage loan and the residential loan application form was placed in front of me to complete, I paused at the amount of information that was required. That was more than 18 years ago. While the amount of information required has not changed much, how it is gathered has.

Gathering the information in electronic form is more convenient, the underwriting process appears to be more convenient, and the loan servicing process is more easily done. With all these conveniences, one must ask, “Why, then, is the industry still getting cited with compliance findings and fined?”

I could guess and say that these compliance findings are remnants of actions or non-actions of the past. However, it is more likely due to not having the proper checks and balances in place at the different loan stages; loan application, loan underwriting/approval and loan mortgage servicing.

Technology can be used as the bonding agent for the different stages of the mortgage process. Using systems that present specific questions at specific times and ensure the right response is provided before moving to the next step in the process. Such as, systems that verify that all the information for loan application were received and properly completed before moving the loan forward.

Creating better process standards through technology could be the start to a more effective compliance management environment from both the quality control and quality assurance perspective.

Q: How will the mortgage servicing industry wedge technology into its day-to-day operation during the next five years?

Usserey: The mortgage servicing industry is always looking for ways to reduce operating costs. Artificial intelligence (AI) is being referenced throughout industry and it is likely the next technology tool to be added to the features used to service a loan. As the predictability of the AI technology improves, mortgage servicers will inevitably feel more comfortable integrating this technology into day-to-day servicing operations with the hope that it will results in a reduced cost of servicing.

Q: When was the last time the mortgage servicing industry pulled out the proverbial “crystal ball” to determine what the future holds – and what would it see if it did so?

Usserey: This is a good question – I am not sure of the last time the servicing industry looked into the future. However, if the crystal ball was pulled out today, the servicing industry would most likely probably see compliance and cost of servicing related concerns in the future.

A better idea would entail looking into the future and seeing that technology is being used more efficiently to address compliance quality control issues by adding technology features that prevent issues from initially developing.

In addition, quality assurance steps should be added to the system to proactively look for any potential concerns to address before any issues occur.

The view would also show that mortgage servicers have reviewed and updated all their policies and procedures – and that the staff has been properly re-trained to address borrower inquiries and provide accurate and timely information to the borrowers.

Let’s not forget to ensure that technology updates have been addressed and changes and/or modifications have been added to the servicing operation areas. All of this results in mortgage servicers experiencing a reduction in the cost of servicing. Now we must wait to see if the crystal ball is correct.

Q: What are some questions every mortgage servicer should ask and answer every day?

  • Were there any compliance findings yesterday?;
  • How well did our mortgage servicing operation perform yesterday?;
  • What operational changes are needed so today’s operational performance is better than yesterday’s?;
  • Do we have all the right personnel and tools needed to improve our servicing performance?; and
  • Did we improve on our servicing performance from yesterday?

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