How Did You And Your Vendors Score?

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.

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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.

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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

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>>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 and Karen Stephens

(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.

Black Knight Looks To Revolutionize Mortgage Servicing

Black Knight, Inc. has introduced LoanSphere Servicing Digital, a powerful and innovative new solution to help mortgage servicers deepen customer relationships and increase retention. LoanSphere Servicing Digital delivers detailed, timely and highly personalized information to customers about the value of their homes and how much wealth can be built from these real estate assets. A consumer-centric solution, this interactive tool gives customers the ability to easily perform tasks and find information related to their mortgages, while providing a platform for continual engagement between servicers and their customers.

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“Our goal with LoanSphere Servicing Digital is to give our servicing clients an engaging, consumer-centric tool for customer retention,” said Anthony Jabbour, CEO of Black Knight. “For many people, a house is the single greatest asset they’ll ever own. With that in mind, and employing a ‘design thinking’ approach, we’ve developed a solution that lets our clients provide their customers with ongoing, detailed information about their loans and homes, as well as the tools to help manage the wealth they have built in their homes.”

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Offering useful information specific to a customer’s mortgage, property and local housing market, LoanSphere Servicing Digital gives customers the tools to make more informed financial decisions related to their homes. In delivering this information, Black Knight draws upon the servicer’s data via the company’s comprehensive, end-to-end LoanSphere MSP system, as well as Black Knight’s industry-leading property records database; advanced analytics; and automated valuation models. The app – which features loan, home and neighborhood dashboards – presents information in a clear, intuitive design, with easy-to-use navigation that has been built for and tested by consumers.

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“Increasing engagement and providing tools that add value are key to deepening the servicer-customer relationship,” said Joe Nackashi, president of Black Knight. “By providing anytime, anywhere access to an array of customer-specific information and functionality, LoanSphere Servicing Digital enhances the consumer’s servicing experience and adds value on an ongoing basis, which results in higher retention rates.”

LoanSphere Servicing Digital provides customers with easy access to specific information about their mortgages, such as type of loan, interest rate and estimated PMI drop date. It allows mortgage customers to make payments, view detailed payment history and perform other self-service functions within the application. Customers can also explore various “what-if” scenarios, including options for building equity more quickly or the relative benefits of paying down or refinancing their loan. In addition, LoanSphere Servicing Digital provides up-to-date and valuable neighborhood information, such as recent sales, local school data and demographics, as well as transaction and lien history on the property.

The white-labeled solution can be branded to match the servicer’s brand identity, and will be offered as both a native mobile app and responsive web design. By providing loan and home information to customers wherever they are, when they need it most, LoanSphere Servicing Digital helps servicers regularly engage customers with insightful, value-add information that enhances the borrower relationship and supports customers’ financial well-being.

About The Author

Tony Garritano

Tony Garritano is chairman and founder at PROGRESS in Lending Association. As a speaker Tony has worked hard to inform executives about how technology should be a tool used to further business objectives. For over 10 years he has worked as a journalist, researcher and speaker in the mortgage technology space. Starting this association was the next step for someone like Tony, who has dedicated his career to providing mortgage executives with the information needed to make informed technology decisions. He can be reached via e-mail at

Surplus Funds: What Mortgage Servicers Can Do To Recover These Funds

All properties owe real estate taxes to their local government agencies. However, some of the real estate tax collecting agencies may also collect various local delinquencies including utility bills (i.e. water, sewer, and trash) and fire district taxes (primarily northeastern states). These taxes pay for roads, schools, and other government operations to keep communities functioning and safe. When taxes owed are not paid, the property is typically sold at tax deed sale or tax lien certificate sale, allowing the government to collect the delinquencies, incurred costs, fees, etc. Once the property is sold, the jurisdiction deducts what is owed in delinquent taxes, fees, etc., and any funds leftover are deemed Surplus or Excess Funds.

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Typically, surplus funds can be recovered by the owner of the property at the time of the tax sale, by the recorded owner of each security deed associated with the property, or by any other party having a recorded equity interest or claim at the time of the tax sale. However, not all states allow the distribution of surplus funds. For those that do, the amount of surplus funds can vary between a few hundred dollars and hundreds of thousands of dollars. For example, Erie County, New York often has millions of dollars in surplus funds owed to thousands of former property owners after a single tax sale.

In the aftermath of the Great Recession, an entire industry dedicated to recovering surplus funds emerged. Throughout the internet, infomercials promise fast money by collecting surplus funds for other people on a contingency basis. They promise a six-figure income while working out of the comfort of your home and will sell you the tools to do it, which is often just a simple list of specific locations with surplus funds.

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Asset recovery companies were created to collect surplus funds for a percentage of the recovery, like collection agencies. These percentages have ranged anywhere from 12 percent all the way up to an astonishing 75 percent. To protect consumers, several agencies have enacted laws to prevent usurious fees. In 2017, Florida limited the total compensation to 12 percent and requires recovery companies to qualify and register as a “surplus trustee” in order to assist homeowners in claiming surplus funds. Regardless, these companies are still aggressively seeking to recover surplus funds. Another key fact is these asset recovery companies are not attorneys and are often not familiar with the laws concerning how to collect surplus funds. This ineptitude has not only caused delays in the distribution of funds but has also caused agencies to require attorney representation and subsequent court proceedings to collect funds, which adds tremendous time and costs to the process.

Surplus fund distribution varies from state to state, and sometimes even differs by agency, but all are usually managed by the county. In some agencies, these funds are automatically sent to the homeowner on record at the time of the sale. In other states, the process is more complex. Jurisdictions are often not in a hurry to distribute these funds because unclaimed funds are escheated to the state if uncollected. So, what can mortgage servicers do to increase their chances of recovering surplus funds?

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1.) Ensure the proper assignment of mortgage is filed timely and accurately to prove interest in the sold property. If the mortgage was not recorded and the county could not locate the homeowner at the time of the tax sale, the unclaimed funds revert to the state. Having valid proof of interest in the property is the first step to attempt to recover the funds, as the notice of surplus funds is sent to the last recorded mortgagee and to the homeowner at the address of the property sold.

2.) Different states/different rules. A solid working relationship with the jurisdiction can make the process go smoother and reduce the cost of claiming surplus funds. Therefore, it is important to partner with an experienced tax servicer who has relationships with property tax jurisdictions throughout the country and is familiar with surplus fund collection requirements.

3.) If the surplus funds case goes to court, having legal representation that is knowledgeable about the collection of surplus funds is key. This type of law can be simple until there are complications. Attorneys who are trained regarding the collection of surplus funds are crucial because they know the decision makers and they know the legal landscape. Changes in the legal landscape surrounding surplus funds, such as the DLT LIST case in Georgia, argues that surplus funds are personal property and any lien against real property does not attach to surplus funds, despite Georgia law allowing the owner of security deeds to submit claims on surplus funds.

4.) Educating appropriate mortgage servicing team members about surplus funds and the mortgage servicers rights to those surplus funds is important. Surplus funds collected can be applied to the outstanding mortgage balance and reduce the loss of the asset, i.e., the property, to the mortgage servicer

No one wants a property lost at tax sale. However, if it happens, mitigating losses by collecting surplus funds can be effective if done properly. With the emergence of recovery firms and “get rich quick” schemes trying to collect surplus funds, the process has become more complex and competitive. Mortgage servicers need to be diligent in collecting the funds in order to mitigate potential losses.

About The Author

Greg Oppenheimer

Greg Oppenheimer is a specialist with LERETA’s Claims and Lost Property Department team processing escalated claims and providing loss mitigation research on properties lost at tax sale. Before becoming part of LERETA, he was on the Client Support team at QBE First where he spearheaded client support issues relating to delinquent property taxes and title curative issues for outsourcing customers. Oppenheimer is a graduate of Dickinson College.

Title: Technology For All, No Really

Amazon opens a grocery store where you do not need to check out. Banks let you transfer money to your friends via your cell phone. You use an app to track everything from your health, to your child’s grades, to the news from around the world. Yet, in the tax service business, we still use fax machines.

So, why hasn’t the tax service industry kept pace with technological development? It’s a simple question with a multitude of complex answers. The foremost reason is the sheer variation from collecting agency to collecting agency across the country. Variations on how the data is consumed play a role as well. Add to that the fact that property tax collection, generally governed by state law, must work within the framework of lending laws, where federal legislation and oversight play a key role.

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In states such as Pennsylvania and New York where taxes are collected at the local level, lack of standardized data collection practices is a big hurdle. Smaller collectors prefer doing things the old-fashioned way with paper bills, single checks for each payment and often fulfilling requests for information through phone contact and yes, sometimes a facsimile. The requirements for how tax information must be requested vary by method, frequency, authorization, timing and cost. For some agencies, when the request for tax payment is scheduled, the data is provided either through an automated email or tax roll at no charge, and the process can be completely automated through file exchange. In other jurisdictions, a requester is only able to supply a list of properties they service as opposed to receiving a full file of the tax roll. Having access to the full tax roll permits the tax service provider to provide data to clients on properties added throughout the tax cycle. Some of these requirements vary due to local practices and some are governed by state or local statute.

The requester only has access to the specific parcels the company intends to pay as opposed to receiving a full file of the tax roll. Some of these requirements vary due to local practices and some are governed by state or local statute.

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The availability of tax billing data via file exchange for the procurement of property tax data needed for payment continues to increase across the country. The cost of data storage, at one time a major barrier for agencies and tax service providers, has decreased at a rapid rate. This builds the foundation for the further use of automation to disseminate tax payment information.

As more and more collecting agencies open their files, industry players must use technology with the ability to receive data in a multitude of formats. That data needs to be stored and be accessible in order to customize output as needed to meet lender requirements satisfying their processes for compliant payment and remittance.

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Despite all the variations, there are new ways to maximize the use of automation to reduce errors and improve availability. First, it is necessary to build the foundation to automate the steps traditionally used by tax service providers to report tax information. Technology available today can mimic those steps once the data is available to remove the elements of manual data entry and the accompanying delivery of reporting. The implementation of optical character recognition technology may help convert the information that is still received by paper to electronic data.

The second and perhaps more challenging step is increasing the availability of data from the agencies. The industry must step up ways to address the remaining agencies that operate using 20th century practices. Some strategies that should be aggressively pursued include: 1.) lobbying more to remove legislative barriers to providing data to service providers, 2.) increasing direct partnerships with the collecting agencies to find solutions toward automation that benefit the collector and the payer, and 3.) establishing strategic alliances with data providers that service the collecting agencies. By building alliances with third-party providers that already have access to the data, the tax service industry can increase electronic data availability without burden to the collectors. Taking these steps may someday help the industry bid adieu to that dusty old fax machine.

About The Author

Jim McGurer

Jim McGurer is a first vice president at LERETA, LLC and is responsible for general oversight on data acquisition and property Search operations. McGurer has 25 years of experience in the mortgage servicing/tax servicing industries.

Enhance Productivity Through Employee Wellness

As we reflect, it comes as no surprise that employers not only in the mortgage but across all industries are concerned with their employees’ health and wellbeing. Healthy employees are generally happy employees, have a better focus and have higher levels of productivity than unhealthy employees. As a result, they experience more success in business. Employee Wellness programs have become incredibly popular during the last few years, offering everything from paid gym memberships to company running groups and yoga classes to having fresh fruit bowls in the break room.

While many employees are currently taking advantage of these wellness programs, there remains a substantial number of non-participants, almost 60 percent according to the HealthFitness survey conducted between 2015 – 2016. What is holding them back? The survey pointed to inconvenient programs options, a non-supportive company culture, plus trust and privacy concerns.

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Employee health does have a significant effect on the success of companies. Employees at many companies in the mortgage industry, especially those in the technology space, have traditionally worked long hours, increased happy hour participation and not eaten a very healthy diet due to the nature of the job. The way an employee feels during the workday does impact his or her productivity and the quality of the work. In addition to the effect on the employee, poor health can actually impact the employer’s share of medical premiums. Employee Wellness programs have become a critical component to improving employee productivity and effectiveness and the company’s bottom line.

Chronic diseases and conditions are common among employees. They are costly, and in many cases, preventable. As reported by the Centers for Disease Control and Prevention (CDC), as of 2012, about 50 percent of all adults had one or more chronic health conditions such as heart disease, cancer, obesity, and diabetes, and 25 percent had two or more chronic health conditions. Between 2011 and 2014, 36 percent of adults were obese.

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When employees experience health issues, productivity and work quality is often compromised. The most obvious impact is the simple matter of showing up to work. When employees experience health issues, their attendance can suffer and service to customers and contributions to company initiatives can often be impacted. The significance of this can be demonstrated in the total estimated productivity related cost of diagnosed diabetes in 2012. The cost was $69 billion in decreased productivity according to the CDC. These productivity costs were a result of employees being absent from work, being less productive while at work, or not being able to come to work at all. In addition to experiencing staffing shortages, poor employee wellness can lead to low energy levels and moodiness, resulting in negative interactions with customers causing decreased sales. Poor interactions with co-workers that can result from a lack of employee wellness can cause even further sub-standard customer service.

The company’s bottom line is greatly affected by the state of employee health in other ways. Employers carry a large share of employee medical expenses by way of the monthly premiums they pay. According to the Bureau of Labor Statistics (BLS) in 2016, private industry employer costs for insurance benefits averaged 8.0 percent of total compensation. According to a 2016 Society for Human Resource Management Survey (HRMS), employers spent an average of $8,669 per employee annually on health care coverage. Chronic diseases account for a large percentage of health care costs in the United States. As reported by the CDC, total annual cardiovascular disease medical expenses were $189.7 billion in 2012-2013. Cancer care cost $157 billion in 2010. Diabetes and obesity have also been identified as chronic diseases common among people in the United States and the direct medical costs are significant. The total estimated direct medical cost of diagnosed diabetes in 2012 was $176 billion, and in 2008, $147 billion for obesity. Annual medical costs for people who were obese were $1,429 higher than those for people of normal weight in 2006. The main point I want to share is this – health insurers assign medical premium rates on employer plans in part based on the claims incurred by the employee population being insured. A company that covers employees with some of these chronic conditions will incur related medical claims and, as a result, significant increases in annual medical premiums.

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Employers can take the reins by working with employees to improve their health by addressing certain health risk behaviors. As reported by the CDC, “Four of these health risk behaviors – lack of exercise or physical activity, poor nutrition, tobacco use, and drinking too much alcohol – cause much of the illness, suffering, and early death related to chronic diseases and conditions.” According to their reporting in 2015, 50 percent of adults did not meet recommendations for aerobic physical activity, and more than one in three adults had at least one type of cardiovascular disease. They also revealed that 40 percent of adults ate fruit less than once a day, and 22 percent ate vegetables with the same frequency, while 90 percent consumed too much sodium. Their reporting also estimated that 15.1 percent of adults smoked, and many adults reported binge drinking an average of four times each month where they averaged eight drinks.

Companies can implement programs to address wellness in the workplace, and enhance the effectiveness of their overall workforce. At LERETA, we have done just that. The foundation of our program rests on our employees completing an annual confidential health questionnaire and biometric screening. We then utilize the results reported by each of our individual work locations to implement program components designed to improve the health behaviors of our employees. Some of the tactics we put into place include:

Confidential Health Coaching – certified health coaches work with employees whose biometric screening results reveal the presence of Metabolic Syndrome to develop strategies for improvement. Metabolic Syndrome exists if you have at least three of the following – high triglycerides (cholesterol), low good cholesterol (HDL), high blood pressure, high blood sugar or high waist size.

Healthy Nutrition Support – we have partnered with a vendor that utilizes the biometric screening results for each employee to suggest healthy recipes for every meal of the day. Employees can simply select a type of food they are interested in, or key into the web portal the ingredients they have on hand in their kitchen to find a recipe that sounds tasty. Employees can then narrow down the recipes to those that can be made in 30 minutes, or ones that are kid friendly for example. They are even directed to local stores where the ingredients are available on sale or that offer home delivery.

Exercise Programs – hosting daily group walks during breaks and lunches to increase energy levels, mobility, with the added benefit of enhancing employee camaraderie have been very well received. We provide fitness trackers to employees to motivate them to increase their daily steps and exercise minutes. They receive wellness-related rewards for achievement, and are proud to “show the off” to their colleagues.

Health Education Workshops – employees are offered virtual seminars on various health topics such as diabetes management, “stretch and flex at your desk” techniques, and stress management strategies.

Wellness Challenges – employees form teams to compete in competitions geared toward fitness, nutrition, stress management, and weight control. Participants get a daily snapshot of the progress of each member on their team to increase the competitive spirit and as a result, healthy behaviors.

Every company should encourage their employees to engage in a wellness program which in turn will also help their bottom line. In exchange for participating in a required number of these wellness activities, one idea that is popular at LERETA includes employees earning a discount on their monthly medical premiums. Overall, the health of every employee is critical to the success of your business and the service that you provide your customers. Health is a state of mind and wellness is a state of being. Which state would you rather your employees have? As the American author Greg Anderson said, “Wellness is not a ‘medical fix’ but a way of living – a lifestyle sensitive and responsive to all the dimensions of body, mind, and spirit, an approach to life we each design to achieve our highest potential for well-being now and forever.”

About The Author

Brian Blake

Brian Blake is First Vice President, Human Resources Director at LERETA. He leads the human resource team for LERETA. He has managed human resource and training functions in a variety of industries, including financial services, retail and healthcare for the last 30 years. Blake has made improving employee wellness a primary focus for the teams at LERETA.

The True Cost Of Buy Vs. Build

The age old question to build or to buy technology solutions seems to be more prominent and perplexing in the modern mortgage banking age than in past.

Once the digital revolution found its way into mortgage finance – despite valiant opposition – it has pushed technology strategy to the top of the agenda at board meetings.

Concerns run the gamut from seeking competitive advantage to regulatory compliance and everything in between. Then add the desire to improve the consumer’s experience.

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Therefore, it is no surprise that technology budgets are the fastest growing component of mortgage bankers’ expense profile during the last two years.

While much has been written about this classic dilemma, and even more money has been spent on consultants to assist in the decision-making process, there is no hard-and-fast template to guarantee the correct decision.

There are, however, some guidelines beyond the standard template that may be worth considering to ease the pain of the process and at least help management ask the right questions.

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Five Stages of Decision Making

In a recent conversation with the COO of a top 50 residential mortgage lender, he likened the decision making process of whether to develop proprietary technology for pre-funding QA and post-closing QC to the five stages of grief; denial, anger, bargaining, depression and acceptance. His honesty was as refreshing as it was revealing as he concluded, “Since we are now in the acceptance stage, you may expect an RFP in three months.”

It was a tortuous process to first recognize a technology solution was needed and then to finally conclude that for their particular situation, buy, not build, was the answer.

The COO went on to explain that one of the lessons he has learned over time regarding technology strategies is that changes in the business environment are often misinterpreted as temporary instead of longer-term solutions, Band-Aids are applied. For example, when the Dodd-Frank legislation passed in 2010, many companies did not appreciate the gravity of the change in federal regulatory oversight. In turn, these companies did not realize the need for technology from a strategic perspective to help with the implementation of Dodd-Frank rules as they should have.

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So, while some people may argue that exigency forced Excel spreadsheets, Access databases and other end-user programs to be deployed, their salve was temporary. The solution was temporary because it delayed a more strategic decision like purchasing software specifically designed for compliance.

Now, even eight years later, many companies are struggling again with decisions to build, buy or outsource regulatory compliance solutions, which go beyond federal to state, agency and investor.

Few of us with any experience in the industry have not been involved in these herculean struggles regarding the choice of a technology solution. And haven’t we all enjoyed providing evidence for the axiom that the time to make a decision is inversely proportional to the desired implementation timeline?

“Hurry up and wait” and “It must be in production by yesterday” are often-heard during group commiseration time.

We all have seen the various formulaic approaches to the buy/build question, which are a necessary part of a complete analysis: ROI, TCO and other metrics that live and die by the assumption.

So where is the edge? What could be done differently in addition to the normal analyses and decision making that will increase the probability of success?

What’s Mine is Mine and What’s Yours is Mine?

Notwithstanding the ROI on building proprietary solutions, a frequent variable that may get overvalued is retaining intellectual property and its corollary, establishing a competitive advantage. However, when it comes to cost in direct expenses and time associated with such an undertaking, companies have historically, and wildly, underestimated these projections.

Many times the build decision is driven by CTO zeal and not the discipline and self-awareness needed to make the best decision. Sometimes it simply comes down to an identity crisis: are we a technology company or a lender?

The CEO of a large correspondent lender explained the issue in the context of retaining and enhancing a legacy LOS or seeking an outside solution. “We have a stellar tech team that is capable of developing just about anything and if given the budget, they will.”

Outside of analytics that everyone uses, these leadership decisions are probably the most critical. It is incumbent upon business leadership to force the issue and really determine the need for proprietary compared to off-the shelf solutions despite the sometimes strong push from internal IT to build.

While IQ (intelligent quotient) is indispensable; EQ (emotional quotient) may be the final differentiator between a boondoggle and a successful initiative.

Key Considerations: Pluses and Minuses

Here are some key factors to consider when developing a strategy to implement new technology:

Third-Party Tech Solution

Plus: These systems are typically written by the vendor with domain expertise in the product they have built.

Plus: Release updates allows all uses to take advantage of ideas from other customers that would be beneficial to all.

Plus: Spread the costs of regulatory items across the entire customer base.

Plus: With multiple customers using the same core package, there is a better chance of one customer finding a bug (not all systems have bugs) that can be fixed.

Plus: Typically, there is a dedicated budget to enhance the system.

Minus: Could be a challenge getting your secret sauce request prioritized because the company must consider its entire customer base for prioritization of enhancements.

Minus: Once installed, the vendor could raise prices, and it could sometimes be difficult to change the application if your company has other pressing needs.

Home Grown

Plus: Typically, any enhancements can be implemented faster

Plus: Your great ideas can remain proprietary to your company and not shared across the industry; however, this is a factor that is only valuable for true differentiators. For example, there is no advantage to having the best bankruptcy solution because the same laws/process apply to everyone.

Minus: If in a highly regulated environment, the company must spend money to stay current with regulations and do so without the help from a third party.

Minus: As organization change occurs, budget allocations can change overtime and if a company does not invest in its homegrown application, it can become an inhibitor over time.

More Cooks in the Kitchen

Another common approach to turn the dichotomy into a trichotomy is to consider using multiple technology providers to deliver a solution. While this presents its own set of headaches, including two integration points that must be maintained and increased operational risk. There may be some benefits to different functional areas having more independence and the ability to apply a domain-specific platform to their world. The mortgage servicing industry is a classic example of this approach especially in the default servicing area where many companies have specialized in technology to assist with non-performing loans and there is now a market with mature products to assist servicers.

This trend is continuing where not only are there more specialized services for residential mortgage servicers available but, third-party service providers have developed enabling technologies to increase benefits. And this trend has gone beyond default servicing and includes other business activities that service bureaus could not provide and developing proprietary technology would be impractical.

For instance, some third-party providers in insurance tracking, loss-draft processing and performing loans that offer such services as bank reconciliation, investor reporting and billing have added technology to their services to bring additional benefits and cost saving to the servicers.

In the end, no matter where you land in determining whether to buy or build, your decision will only be as good as the questions you ask and the leadership strength you exert to coax out the best result.

About The Author

Camillo Melchiorre

Camillo Melchiorre is President at IndiSoft. Columbia, Md.-based IndiSoft, LLC develops collaborative technology solutions for the financial services industry. Its flagship products, RxOffice Compliance and RxOffice Vendor Management, enhance risk-based assessment and help companies, including servicers and sub-servicers with increased regulatory concerns. The company provides efficient, reliable and scalable solutions for companies that want to remain compliant, effectively manage workflow and maintain a competitive edge.

The Educated Customer

Companies across America spend billions of dollars a year to gain an edge to separate themselves from the pack. This includes creating marketing campaigns driven by seasonality, monitoring forecasted changes in trends and using information from data research to remain competitive. In a time where data and social media rule, now more than ever, we must be vigilant with the public’s perception of our brand and company. Reviewing the Consumer Complaint Database, managed by the Consumer Financial Protection Bureau (CFPB), can provide a company with insights into what is important. Companies that review this database periodically, make adjustments, and take the time to educate consumers will have the upper hand on competition and possibly reduce any complaints.

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The database tracks and monitors consumer complaints related to banks, lenders and other financial institutions to ensure fair treatment for all consumers. Complaints logged at are reviewed and routed to the financial institutions on consumers’ behalf. Companies are given time to work with the consumer and respond to the complaint (often within 15 days). The final step of the process is to publish complaint-related information to the database giving the customer an opportunity to provide feedback, if desired.

These complaints yield valuable insights into consumer behavior and their understanding of our industry’s products and services. Even if a company does not receive multiple complaints, there are still lessons within the data. Here are a couple of examples:

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FACT: 93 percent of all mortgage-related consumer complaints are NOT resolved in favor of the customer.

INSIGHT: The consumer may perceive the lender in a negative light despite not doing anything wrong, un-ethical or with malice.

FACT: Upwards of 90 percent of the complaints are closed with an explanation.

INSIGHT: Improved communication between lenders and customers may lead to a better understanding of mortgage products and services, which in turn will lower the number of complaints considerably.

Tech companies often speak of usability and user experience, especially when referring to websites and apps. When a user tells you they struggled to navigate your site or struggled to find the one thing that took them to your site in the first place, it is important to listen and to see if there is a theme. If someone does not understand what you do, what you sell or why you do it, they often will not buy from you. In fact, you risk losing the customer permanently.

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There is a lesson that mortgage companies can learn from this information that can help them improve their business practices. Escrow accounts, property taxes and mortgages are not simple and are not easily understood by most consumers. With complex federal, state, county and city specific regulations undermining the ability to understand exactly how property taxes are calculated, it is understandable why consumers are confused. Consumer confusion and consumer perception may well be the same thing. If they are confused or frustrated with your product and/or services, their perception of the company will no doubt be negatively affected.

In the beginning of the second quarter of 2017, the CFPB expanded the number of issues tracked from six to 18 under the mortgage product type within the complaints database. With this increased delineation of issues, we will have the ability to see more accurate trends within the industry.

At the beginning of the fourth quarter of 2017, the leading mortgage complaints were payment processing issues, struggles to pay mortgage/loan servicing and escrow account issues. These collectively account for 66 percent of all mortgage-related complaints in 2017.

Though credit reporting and debt collection complaints have soared to the top of the list in 2017, mortgage related complaints still represent a large portion of all complaints logged in 2017.

Effectively addressing the concerns of consumers and educating them on mortgage related issues is no longer an option. It can mean the difference between an educated consumer and a host of consumer complaints.

About The Author

Mike Ponce

Mike Ponce, vice president and manager of business intelligence at LERETA, is a data professional that has spent his entire career disseminating data and telling its story to businesses across multiple industries ranging from public utilities, healthcare and the FinTech industry. Ponce has more than 17 years of experience focused on delivering valuable data insights to business leaders from a seemingly endless sea of datasets.

LERETA Launches Advanced Tax Status Reports

LERETA, a national real estate tax and flood service provider, has launched advanced Tax Status Reports (TSR). These reports standardize the delinquent tax research format regardless of the variations between agencies. They can accelerate the determination of whether real estate tax payments have been made or are owed.

The reports supply the delinquent status of loans that are not in cycle and may have not been monitored for property taxes. Typically, an employee will conduct time-consuming research to identify a specific tax agency and parcel numbers for accurate tracking in order to eliminate costly delinquency and penalty fees. Now, the company’s reports standardize the format regardless of the agency.

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“Existing delinquent tax research methods are limited and overly complicated, creating an environment where mistakes can easily occur and speed to payment is restricted,” John Walsh, CEO of LERETA, explained. “With unmatched service level agreements, LERETA has proven time and again that we have the best interest of our clients in mind when we develop such products. Our Tax Status Reports streamline processes and make it easier for lenders and investors to reach secure, qualified decisions. We are breaking new ground and advancing the industry to a new level of excellence with this new method of reporting. These reports allow LERETA to set a higher standard for delinquent tax research. We are proud to provide our customers with an advanced solution that will help them better manage the process.”

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Reporting, labeling and collecting delinquent taxes is a complicated process. Having a standard format automatically eliminates manual errors, and allows for more accurate tracking of payments and fees. This new approach expands current tax status report combinations from four to 13 possible variations, creating a robust reporting system that is customizable to each customer’s needs and allows for a more thorough risk assessment. Lenders and investors can now better analyze risk and tax payment data, while reducing the time needed to make payment decisions.

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“In our tax status reports, we provide a unified look and feel across the board, making it easier for lenders to digest the abundance of information provided in delinquent tax research,” Walsh said. “We want to create tools that will give the industry an opportunity to advance and grow as the market does. These reports will save time and eliminate mistakes, alleviating the burden on internal resources and improving the method and outcome of tax research.”

The LERETA advanced reporting system searches all loans in a portfolio for delinquent real estate taxes. Reports can be timed in accordance with the posting of payments by tax collecting agencies to ensure payments are made on time to minimize delinquency fees and penalties.

About The Author

Tony Garritano

Tony Garritano is chairman and founder at PROGRESS in Lending Association. As a speaker Tony has worked hard to inform executives about how technology should be a tool used to further business objectives. For over 10 years he has worked as a journalist, researcher and speaker in the mortgage technology space. Starting this association was the next step for someone like Tony, who has dedicated his career to providing mortgage executives with the information needed to make informed technology decisions. He can be reached via e-mail at

Whose Money Is It Really?

The fourth quarter is the busiest time of the year for tax payments. Borrowers want their taxes paid by year end for tax purposes, which creates a mad rush to pay, pay, pay. The title company pays, the lender pays, the borrower pays and/or the third party pays. All of these different sources of payments could ultimately lead to refunds. Those refunds mean the servicer is faced with refunds and the time consuming task of conducting research to determine who the money belong to.

Let’s take a closer look at a few factors around refunds including what causes a refund; what effect do they have on the servicer; and what can be done to prevent them.

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There are several factors to consider when determining what causes a refund. One of the primary causes of a refund is when more than one person or entity pays taxes on the same parcel and for the same tax year; this results in a duplicate payment. In some cases, the borrowers are not educated about who is responsible for paying the tax bill. So when they receive a copy of their tax bill, they will pay it and at the same time, the lender has paid it. Therefore, the tax agency may apply the first payment received and return any payments later received. Or they may apply the additional payment to the next installment or they deposit the funds and require a refund request to get them back.

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Another scenario that could cause a refund situation is the initial set up of tax line data on an escrowed loan. Generally, tax lines are set up according to the closing documents. If the documents show that taxes will be paid at closing, then the tax line would reflect a future date to avoid a tax payment. If the line has a current date indicating the taxes are due and the servicer pays them when in fact they were paid at closing, the result is a duplicate payment and the need for a refund.

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Yet another scenario that could create an overpayment is tax exemptions that could cause a decrease in the tax amount due, especially if the tax bill was paid and it was not reflected as tax exemption, which would cause an over payment. Paying the incorrect amount based on human error when keying an amount to pay or an error with the agency reporting an incorrect amount could require a refund as well. If the incorrect amount paid is more that the tax bill, it would create an overpayment possibly resulting in a refund or the agency may choose to simply apply the overpayment to the next installment. This could create a problem for future installments if the agency does not provide a notification that funds were posted to the next installment. When the next installment is due, the full amount would be paid, again creating yet another overpayment.

While over payments may not seem like a big deal, there are some serious effects refunds have on the servicer. For example, the amount of research involved to resolve the refund is costly. The servicer must contact the agency to determine what caused the refund, duplicate payment, overpayment, etc. Then the servicer needs to verify if the intended parcel matches the borrower’s name and address. The taxing agency should be able to advise who made the payment, whether it was title company, borrower, third party, etc. And if the servicer is requesting a refund, it has to provide proof of payment. Very few agencies automatically refund overpayments. Most agencies require a refund request be provided along with proof of payment.

Other time consuming and costly activities that are often prompted by refunds are an escrow analysis of a borrower’s account and additional resources in the call centers as activity generally increases due to borrower inquiries regarding refunds.

There are ways servicers can prevent or reduce refund volume including:

>>Establishing rules with closing agents regarding the payment of taxes,

>>Reviewing tax line due dates with closing agents to ensure business rules are well documented to prevent the duplication of tax payments,

>>Conducting an audit on new orders to ensure tax lines are built correctly to avoid duplicate payments,

>>Performing root cause analysis of refunds and addressing the findings,

>>Educating borrowers to understand what tax bills they should or should not pay, and

>>Advising borrowers to always examine their property assessment.

Left uncheck, taxing authorities could take months to acknowledge duplicate payments let alone sending a refund. This could create the need for additional research on the part of the servicer and will increase customer inquiries from borrowers. Being vigilant in addressing the cause of refunds can save a company time and money as well as build confidence among borrowers.

About The Author

Adrienne Williams

Adrienne Williams is the vice president of outsource and current disbursement manager. Her main focus is managing a team to ensure taxes a paid properly for borrowers on behave of the lender. She has been at LERETA for more than five years and has more than 30 years of experience in the mortgage industry.

Fighting Blight

As we say good-bye to 2017 and we set our sights on 2018 and beyond there are always a number of articles on predictions for the New Year and trends that will be taking place. This not only occurs on a grand consumer scale, but also in niche industries such as asset and default management.

In 2017 we experienced historically low foreclosure rates with many industry experts predicting those levels to remain pretty constant in 2018. With so much talk and articles being written about foreclosures reaching historical lows, many people falsely believe that our work is done. This is one thought and trend that could not be further from the truth.

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Foreclosures are still taking place, individuals are struggling to pay their taxes, and communities are forced to deal with vacant properties and the negative impact they have on our communities. Yes, we have come a long way over the past couple of years- but our work in helping restore communities is far from over.

Blight is real and continues to plague communities nationwide. Municipalities across the country are working to turn the page on the housing market collapse and address the ongoing concerns of community blight. The negative impact has been well documented that blight has on communities. These include: abandoned buildings and vacant properties, which create opportunities for crime, violence, drugs and other illegal activity.

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Blight has additional adverse effects on communities besides crime, such as a decline in property values, lower tax base and heavy burdens on the resources of municipalities. These challenges are real and will not go away just because foreclosures are declining.

The goal in 2018 is to make these communities Safe, Sound and Secure. It starts by helping to restore these communities one property at a time. To accomplish this, there needs to be collaboration amongst mortgage servicers, municipalities, local governments, policymakers, state and federal regulators, contractors and vendors who have boots on the ground and the individuals living in these neighborhoods.

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It is clear that a “one-size-fits-all” approach to blight doesn’t work. There are some over-arching strategies such as clear boarding, improved vacant property registration, and new regulations from Fannie Mae and Freddie Mac that can be applied across the country to help reduce blight.

The key to successfully fighting blight is collaboration between the parties listed above to create individualized community programs- that increase awareness of blight, leverage skills and expertise, and pull together resources for the common good.

As we close out 2017 and prepare for 2018, let’s not forget that there is still a great need to come together to fight and eliminate blight in our communities.

About The Author

Nickie Badalamenti-Kalas

Nickie Badalamenti-Kalas is president at Five Brothers. She works directly with Five Brothers CEO, Joe Bada, to oversee the daily operations and long term strategic vision of Five Brothers. A dynamic entrepreneur, business leader, and skilled executive who brings leadership, insight, and new strategies that drive customer satisfaction, revenue growth, and profitability.