MortgageOrb interviewed Dahiwadkar to learn more about how technology can help servicers improve their operations and meet increasingly stringent regulatory compliance mandates.
Q: How do you see the use of technology increasing among servicers in 2014?
Dahiwadkar: Servicers should take a good, hard look at their technology infrastructure and determine where they may need to make internal changes to meet various upcoming regulatory compliance requirements, such as those required by the Consumer Financial Protection Bureau (CFPB) and other Dodd-Frank-related regulations, and get those changes set in place soon. This is an unprecedented time in the mortgage industry when mortgage servicers are or will be regulated as much as originators. The effective use of technology, such as workflow systems, is the most effective way for servicers to manage additional compliance requirements, as well as core business processes. Compliance enforcement is not possible without the help of technology. The historic approach of throwing extra bodies at the problem is no longer going to work.
Q: Why do you believe it has taken the servicing industry this long to embrace technology?
Dahiwadkar: The mortgage industry has faced many short-term, belt-tightening situations that were solved by adding extra people. It worked in the past because problems had a short life. Initially, many managers in the mortgage industry were addressing the current changes as short-term problems. Now, they have come to the realization that what has changed in last few years is the new norm. Along with the restraints of some new regulations, there are new quality control measures and more focus on managing vendor relationships that lenders and servicers will be responsible for monitoring. The use of technology will be key in all of these efforts.
The concept of how to effectively use technology has been overwhelming for many companies' management teams. They often view technology integrations as multi-level, lengthy and expensive projects that will have a negative effect on their current company processes. Many companies do not want internal system disruptions; on top of that, employees are comfortable with the way they handle their daily routines and fear change. However, there are available systems that will not interrupt a company's processes, but improve it while creating significant efficiencies.
The need to share information between several parties involved in the mortgage industry makes it crucial for servicers to use a system that offers complete transparency and allows users to track data, as well as have comprehensive reporting capabilities. This need will grow as compliance becomes even more of a focus in the industry.
Q: What role do you see compliance requirements and possible audits playing in the use of technology?
Dahiwadkar: The ability to help with compliance will be the primary characteristic companies will look for in any technology solution moving forward. As more systems are able to integrate with existing infrastructure, facilitate compliance and create audit trails, more companies will turn to these systems to further streamline processes.
The second key aspect will be reporting flexibility. Many audits are addressed by a company's ability to show what they did in numerous scenarios. The flexibility to report on any type of request that could be made in an audit will have a significant impact on a servicer's ability to successfully address the auditors' requests. For organizations to be compliant, it is essential that they select technology solutions that are able to capture the verification data points while business transactions and processes occur.
Q: What new challenges can technology address that you see as top of mind for lenders and servicers?
Dahiwadkar: In addition to the proliferation of regulations and compliance with them, servicers can more actively engage with customers and provide more transparency in their processes. Lenders and servicers need to look at technology as a tool to implement the needed process changes. Lenders and servicers that want to pass on the responsibility of regulatory interpretation to technology vendors will be making the wrong move. Lenders and servicers that are willing to retain the ownership of regulatory interpretation as deemed suitable to their situation will benefit the most from new technologies, because they will be able to implement the technology to meet their unique needs. For example, one servicer may want a system that prompts a delinquent borrower to be called on the second day he or she is late, while another servicer may want to call on the 17th day, followed by a written notice.
The regulations that are being implemented today are mainly focused on taking better care of borrowers at any juncture of the loan lifecycle. This includes transparency, as well as proactive communication to borrowers, beyond providing a single point of contact. Web-based, rule-driven applications can give all parties involved access to data that is applicable to just that part of that process. This allows for transparency with the capability of direct secure communication through the application to other parties involved.
Q: What is an optimal technological scenario for the mortgage industry?
Dahiwadkar: The best scenario is for companies to deploy a systematic workflow approach that will effectively improve their business processes while integrating with other technology that is used on a daily basis. This system will capture data that enables the user to quickly pull a report for auditing purposes or and at any time determine if any improvements need to be made. Companies will also use technology to communicate with business partners, vendors and borrowers to fill this gap that currently exists within the mortgage industry. In a nutshell, a real-time collaborative technology (internal, as well as external) is the optimal approach the mortgage industry can take in the current regulatory environment.