A regular review of existing relationships with vendors and a look at how a company measures up on managing service level agreements (SLAs) could prevent unwanted surprises and fees as well as ensure a company is in compliance with federal regulations. This exercise will also give companies a chance to review SLAs with vendors. While SLAs are important for all products and services provided by vendors, it is particularly important for the tax services industry because it directly affects borrowers as well as exposes lenders to penalties and interest fees. This review also gives a company the opportunity to determine if the right tracking tools are in place to accurately prove performance results. These are all necessary internal and external practices in this advanced regulatory age.
Now is the perfect time to review and re-evaluate a company’s processes with internal and external partners. Doing so will provide an opportunity to document and discuss the need for any process and control improvements. Vendors should be excited to partner with a company and make improvements wherever needed. If they are confident in the service they are providing, vendors should have no problem proving that they are the right partner. If they are hesitant to have these discussions, perhaps the company should consider other servicing options.
Below are a couple of examples to ignite some thought around reviewing SLAs for tax outsourcing practices. Companies should consider what is being monitored along with the controls. More importantly, these points will require a company to think about current processes and controls and how they will support future efforts.
Evaluation example number one – delinquency and research task processing
>>Determine if the internal team or vendor is processing your delinquent and research items in a timely manner and what provides proof.
>>Determine if the internal team or vendor are “touching” research-related items the day before, or even worse, the day of the SLA expiring. (Note about SLAs: If an item is not “touched” until the day of the SLA expiring, there is a risk of missing the SLA because it could not be resolved the same day due to agency dependencies. So if the vendor or department “touches” the item the last day of the SLA and they cannot resolve the item AND they mark/count the item as “uncontrollable due to agency dependencies,” this would be false or incorrect reporting because it was controllable and failing to review the item until the last minute should count as a fail.)
>>Determine whether the team or vendor is reporting such items as meeting the SLA out of their control due to agency dependencies. If so, can this information be validated?
Evaluation example number two – quality control
>>Consider what percentage of the total population is being reviewed for quality
>>Look at whether the internal team or vendor is able to provide the loan detail for items being reviewed.
>>Determine if they analyze the detailed reasons for the errors and track improvement of these errors going forward.
Additionally, some other things to consider are whether the SLAs truly measure the quality of a vendor’s performance. Are you asking the vendor the right questions? Is the vendor providing meaningful data? If not, this would be a perfect time to determine what the missing elements of their reporting are. A vendor should support these conversations, give a company the opportunity to discuss and partner with them to find solutions that provide results. With some effort and discussion, vendors can directly assist with a reduction in fewer homeowner frustrations and escalated matters.
Not only should a company question any missing elements of vendor reporting, but companies should also hold their business partners accountable for reporting details. While it may not always be easy and may require some follow-up on a company’s behalf, companies need to ensure the data is accurate and provides the oversight to know how vendors are truly servicing a portfolio.
Companies have a right to know and should ask vendors for proof, along with details, showing that the items are being researched and resolved within your standards or expectations. Remember, a servicer’s role is to protect its portfolio and homeowners. Be informed by ensuring the vendor is providing meaningful data and reporting. Now is the time to dig deep into the details and ensure you have a clear understanding of the information that is being provided.
About The Authors
(left to right) Jessica Longman, a vice president and tax operations reporting and payment manager, has been at LERETA for the last 18 years of her 23 years in the mortgage servicing industry. In her tenure, she has managed disbursements, task research, QC, company-wide loss mitigation efforts and processing efficiencies. Longman focuses on strategy, leadership and excels in streamlining processes for the most efficient flow. Karen Stephens, a vice president and outsource manager, has been at LERETA for six years. She has been in the loan servicing and tax service business for 30 years.