Mortgage Regulatory Solutions Brochure
Consumer Financial Services
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May 05, 2023
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Mortgage lenders are consistently under regulatory scrutiny. Risks related to both origination and servicing remain significant and include possible regulatory misstep resulting in violations or substantive fair lending actions. Additionally, the regulatory risk landscape constantly evolves to which mortgage lenders must adapt their mitigation strategies.
Providing Mortgage Process and Regulatory Solutions
FTI Consulting’s Consumer Financial Services (“CFS”) experts have the talent and experience to partner with mortgage lenders and servicers to proactively build or enhance processes and compliance programs as well as create and assist with remediation activities, such as look-back reviews.
Today’s mortgage lenders face numerous challenges. Regulators’ focus on mortgage origination and servicing activities have evolved over the past few years to include bias in appraisals and redlining in digital marketing activities. Additionally, mortgage servicers continue to adjust loss mitigation activities as well as payment solutions to provide the best customer service experience while adapting to regulatory expectations.
The mortgage line of business is responsible for owning these regulatory and operational risks and ensuring controls are in place to mitigate. The compliance team is often tasked with identifying gaps and suggesting solutions to further alleviate these risks. FTI Consulting’s professionals provide solutions to assist both the mortgage line of business and the compliance team with addressing these challenges.
Mortgage Regulatory Solutions
We employ our deep industry knowledge to partner with clients to proactively mitigate regulatory risk and scrutiny through the assessment of mortgage product offerings, relevant laws and regulations and fair lending risk.
Mortgage Product and/or Regulatory Assessment
Risk must be measured in order to effectively manage mortgage regulatory and operational risks. We have a team with expertise in reviewing mortgage processes and products under regulations such as TRID, RESPA, TILA and Flood. We also have expertise in reviewing and/or developing controls related to complex operations including loss mitigation, loan officer compensation, market service agreements, among others.
IMPACT
FTI Consulting reviewed mortgage loans to ensure the files contained proper documentation and execution under new regulatory guidelines. Through FTI Consulting’s analysis, the client was able to submit a timely and detailed response to regulators regarding the status of the loan portfolio to updated guidelines. The regulator provided exemplary feedback to the client for the inquiry response and work performed by FTI Consulting.
Account and Transaction Testing
Financial institutions regularly find themselves with the need to perform transaction testing across many processes and regulations. These transaction reviews can be complex and time consuming. Manual reviews require a significant time commitment depending on the size and scope of the review. FTI Consulting works with clients to perform comprehensive testing to ensure accurate, efficient and complete results.
IMPACT
FTI Consulting reviewed approximately 4,000 mortgage loans in 90 days as required by a regulatory issued Matter Requiring Attention (“MRA”). A comprehensive test plan and automated model was developed to streamline the identification and quantification of potential borrower remediation. As a result of FTI Consulting’s analyses, the client was able to respond to the MRA and remediate all affected borrowers timely.
Fair Lending and Appraisal Bias
FTI Consulting takes a holistic approach when assessing fair lending compliance programs, leveraging a team of PhD statisticians, regulatory compliance experts and former CFPB examiners. We review the fair lending analytics, including regression analysis, redlining analysis, keyword identifiers and comparative file reviews employing the same analysis used by the regulators to identify possible risks
IMPACT
FTI Consulting conducted mock regulatory exams, including analysis of model bias for fair lending compliance. The reviews included Compliance Management Systems (“CMS”) assessments, statistical analyses and file reviews as well as model inputs/outputs including proxy review. Recommendations included specific procedure and model enhancements, allowing the institutions to improve internal fair lending controls in advance of regulatory examination.
We have the expertise and the ability to assist clients in adapting to new and amended regulations as well as developing strong Compliance Management Systems (“CMS”). We help clients prepare for upcoming regulatory examinations.
HMDA
Implementation of the Home Mortgage Disclosure Act (“HMDA”) can be complicated and challenging. The requirements to gather and report certain information related to mortgages demands collaboration across the institution. Lenders must constantly test processes to ensure the correct information is entered into its system of record as well as collected and mapped appropriately.
IMPACT
FTI Consulting’s experts have performed many reviews to test the accuracy of the information in the client’s HMDA-LAR. As a result of FTI Consulting’s work, mortgage lenders have enhanced their processes to ensure accurate and complete information is gathered for internal and external analysis. FTI Consulting’s Data and Analytics team has assisted institutions in data mapping processes to ensure data and reporting accuracy.
Compliance Management System Assessment
The CMS program assessment is guided by our regulatory insight as well as examination objectives issued by the CFPB, OCC, FRB and FDIC. Our review includes an assessment or build of the key components of an effective CMS including governance, policy and procedure review, change management, complaints management, training, testing and third-party risk management.
IMPACT
FTI Consulting conducted CMS reviews and recommended, as well as implemented, CMS program enhancements including policies and procedures, governance, monitoring, training programs and change management processes. The revised CMS programs provided the institutions with improved internal compliance controls resulting in reduced risk and heightened regulatory preparedness.
CFPB Readiness Evaluations
We are leaders in CFPB compliance solutions. Our team consists of former CFPB examiners who can provide valuable examination insight and guidance. FTI Consulting has developed mock examination processes as well as provided clients with a roadmap to successfully manage compliance responsibilities and self-identify problem scenarios and risk areas for remediation in advance of CFPB examinations.
IMPACT
FTI Consulting professionals worked with financial institutions approaching the $10 billion threshold as well as larger organizations preparing for CFPB examination. The end-to-end review assessed the CMS and provided for mock examination testing of the highest risk products or processes. FTI delivered gap identification and remediation, interviews and training, and best practice exam readiness.
FTI Consulting experts regularly assist clients in providing responses to regulators. Our professionals have the experience to act as subject matter expert witnesses. In addition, FTI Consulting supports compliance and/or operational staff as temporary secondments or in management roles such as interim Chief Compliance Officer.
Regulatory Response
Our team of professionals are highly experienced in providing support to time-sensitive post- examination MRAs, Supervisory Recommendations and Consent Orders. We manage or assist with current state assessments, independent reviews, look-back transactional testing, recommendations for remediation and independent investigative reports for presentation to regulators.
IMPACT
FTI Consulting professionals acted as independent consultants conducting large-scale lookback reviews, identification of restitution and validation of remediation. As a result, financial institutions were able to respond timely and accurately to MRAs and Consent Orders.
Compliance Staff Augmentation
We can provide interim or longer-term resources allowing institutions to concentrate on their most pressing needs. Examples include Chief Compliance Officer secondment, first or second line of defense compliance risk support within a line of business, or staff support for compliance departments. Our staff augmentation resources are under the institution’s direction providing expert needs on a variable work force basis.
IMPACT
FTI Consulting placed experts in roles reportable to the institutions’ Boards or Chief Executives, including placement of interim Chief Compliance Officers. Our professionals have led or provided teams allowing for support or backfill during a time of ramp up or specific regulatory need including remediation efforts. These interim roles allowed executive management to concentrate on strategic priorities.
Expert Witness
We deliver valuable insight during every stage of a contested matter. Our senior professionals are highly skilled at communicating findings through expert testimony in various settings including court, arbitration and mediation proceedings. Key services may include documentation and transaction reviews, critiques of opposing expert analyses, regulatory research and report preparation.
IMPACT
FTI Consulting supported private causes of action as well as clients with the defense of government investigations. Based on FTI Consulting’s professionals’ subject matter expertise and direct industry experience, we effectively provided independent opinions resulting in positive client outcomes in the resolution of adverse matters.
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Published
May 05, 2023
Key Contacts
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Senior Managing Director
Senior Managing Director
Managing Director