News and Information from HLP MAR 2015

HLP Expanding to Offer New Industry Solution for Bulk MSR TransfersTo help solve problems associated with bulk MSR transfers, Hope LoanPort is creating a new solution based on existing technology in place since 2013.

In The Community

A partial list of recent and upcoming events where you will find HLP executives:

Five Star Government ConferenceMarch 18Washington, DCEVP, Mark Cole to attend

National Community Reinvestment Coalition Annual ConferenceMarch 25-28Washington, DCEVP, Mark Cole to attend

Source Media Mortgage Servicing ConferenceApril 22-24Dallas, TexasCEO, Cam Melchiorre and

Jon Ballard to attend

More than 1 million case documents have been securely stored in Hope LoanPort without a single lost document.

For the past two years, mortgage servicers

with cases in Hope LoanPort have been able

to exchange data and documents for home-

owners impacted by MSR transfers. This has

been a simple, easy way to ensure there are

no breaks in communications and that home-

owners involved in a workout stay on track to

avoid foreclosure.

The new national data exchange will expand

these capabilities, enabling all mortgage ser-

vicers to work together to overcome problems

that have plagued recent transfers of bulk mort-

gage portfolios, especially loans going through

the workout process. Called the National Ex-

change for Servicing Transfers (NEST), the new

solution utilizes existing technology. It also has

an open, neutral architecture and interface and

its national standards ensure consistent treat-

ment for all homeowners.

Hope LoanPort is now seeking companies to

participate in a pilot program to demonstrate

NEST’s capabilities. HLP has worked closely

on the national data exchange with the Mort-

gage Bankers Association’s MST committee,

which has authorized the pilot program.

“We’re creating a national data exchange that

allows two mortgage servicers to transfer all

of their documents using existing technology,”

says Cam Melchiorre, Hope LoanPort’s chief

executive officer. “We will provide a central,

neutral platform that can perform bulk transfers.

We also provide an audit trail, so it helps ser-

vicers meet their compliance needs. And, of

course, we protect the consumer by making

certain they get all of their documents from

their new servicer.”

The NEST will offer a simple, transparent pro-

cess that enables bulk transfers to occur

seamlessly. In a nutshell, the process involves

these steps:

• The seller identifies mortgage loans in

the workout process;

• The seller uploads all documents,

including case management data,

into the exchange;

• The buyer accesses cases from the

exchange; adds new loan numbers,

SPOC;

• NEST alerts homeowners and other

stakeholders that the loan has been

transferred.

The biggest problem now among servicers

during the transfer process occurs with mort-

gage loans in the loss mitigation process.

When these loans are transferred, servicers

…continued on page 3

Take Five is a regular feature that enables a leader in the housing sector to share valuable insight on important and emerging topics. Future “Take Five” Q&As will feature leaders from mortgage companies, counseling agencies and investors.

David Pauken is chairman of the Mortgage Bankers Association’s Servicing Transfer Workgroup and chief executive officer of Convoke. The group’s purpose is to study the problems associated with the transfer of mortgage servicing rights and recommend solutions. Our “Take Five” interview with Dave helps our readers better understand this issue and possible solutions.

The MBA’s Servicing Transfer work group says that failure to communicate among servicers is the leading reason transfers have problems. Why can’t that be easily fixed?

Mortgage servicers’ systems are complicated and often have customized, proprietary or unique data fields. Communication between systems can be a complex process. Effective servicing transfer also requires the delivery of documents, in addition to data, to multiple parties. These parties include the acquiring servicer and often a new custodian, government sponsored entity, and other third parties that make up the mortgage indus-try. And if a transfer deals with a delinquent borrower, the discussions with the borrower are highly regulated and can be difficult to translate into data for a servicing transfer.

What are the committee’s recommendations and next steps?

MBA has approached the issue from multiple angles. As an initial step, the work group has put together a matrix that reflects investor requirements, suggested best practices, and checklists to follow when thinking broadly about a servicing transfer. The group is also working with the Mortgage Industry Standards Maintenance Organization (MISMO) to try and develop common data standards that will make servicing transfers easier to execute.

The group is exploring and socializing technological solu-tions—like a centralized exchange for servicing data—that could provide a robust long-term solution.

Is there a time frame to implement your recommendations?

We hope to finish work on the matrix and circulate it later in

the year. MISMO’s work is currently ongoing. The potential technology solutions are longer term and it is important to understand that there is no quick fix.

Can you cite examples of how similar solutions have worked in the financial services industry?

There are numerous examples of simple checklists. A mortgage closing checklist is just one example so it is easy to see how a “servicing transfer” checklist could help to improve the process. The financial services industry has pursued standardization in many areas over the years. This includes standard disclosure forms, and mortgage appli-cations. Movement toward data and document standards for servicing transfers would be just one more additional step by helping everyone to speak the same language, re-ducing errors, and mitigating the risk of consumer harm.

Another example is unsecured lending. An exchange has been built by a company called Convoke (full disclosure—I work for Convoke) and it is operating to connect unsecured lenders to third parties for the purpose of exchanging data, documents, and audio files. Finally, Hope LoanPort is an exchange for the mortgage industry that is operating today.

If the industry doesn’t solve the problems in MSR bulk transfers, what will happen?

Mortgage servicing rights are like any other asset and de-pend on a deep and liquid market in order to be traded efficiently. If it becomes harder to trade MSRs, the appetite for the asset will naturally decrease and eventually this will be felt throughout the mortgage market—including by the consumer at origination of the loan. If servicing rights can easily be transferred, it will be good for homeowners, the mortgage industry and for the economy.

We’ve taken the liberty of signing you up for this newsletter. If you would prefer to have the newsletter delivered to an alternate email

address, or if you ever want to unsubscribe, just send me a note. Do you have suggestions for future content? We want to hear your

feedback. Please let me know your ideas. —Mark Cole, Executive Vice President, Chief Strategy Officer

“Unifying the Efforts to Help Families Achieve and Sustain Homeownership” MCole@hopeloanportal.org | 410.942.6464 x1021 | 100 International Drive | 23rd Floor | Baltimore, Maryland 21202

Coming Next MonthMore than 1,100 counseling agencies around the nation utilize Hope LoanPort, primarily

to help their clients seeking to avoid foreclosure. But our technology platform provides

counseling agencies with many new tools and better ways to serve clients, ranging from

applicant preparation services to servicer referrals to affiliate management systems. Read

the April issue of Convergence to find out more about how we can help your organization.

5 Things We Learned about MSR Transfers at the MBA Servicing Conference. Here are the most important items we learned during a roundtable discussion at last month’s Mortgage Bankers Association Servicing

Conference in Dallas:

1. The MBA reports that non-banks now hold 15 percent of mortgage loans, up from just 1 percent in 2008.

2. A simple lack of communications is the leading culprit for the industry’s problems. This includes the inability to provide the right

documents or complete information.

3. Government regulators may be losing patience. In August 2014, CFPB Director Richard Cordray said: “We will not tolerate

consumers getting the run around when mortgage servicers transfer loans.”

4. To improve bulk transfers, the MBA’s MSR work group is exploring developing of a matrix tool—in effect, a checklist—to be used

by servicers.

5. Momentum is building for a solution that leverages an existing technology where servicers can exchange data. The MBA’s MSR

committee calls this solution a Servicing Transfer Exchange and Repository.

Hope LoanPort handled its first MSR transfer in 2013.

More than 2 million messages have been sent over Hope LoanPort between mortgage servicers and counselors since 2009.

…continued from page 1

Bulk MSR Transfersoften lose documents, including sale dates of

foreclosures and other critical data.

Regulators, including the Consumer Financial

Protection Bureau, are also concerned about

problems during the transfer process that affect

homeowners. The national data exchange will

enable servicers to comply with the CFPB reg-

ulations.

“The pain point during the transfer process in-

volves the mortgage loans in the loss mitigation

process,” said Nick Figlo, Hope LoanPort’s senior

vice president of Solutions Design & Analytics.

“We can fix that problem. We will be able to load

these loans into the NEST, allowing the transfer to

occur without a hitch.”

To participate in the pilot project, servicing com-

panies should contact Cam Melchiorre at

CMelchiorre@hopeloanportal.org.