As the Consumer Financial Protection Bureau (CFPB) puts a more focused eye on mortgage servicing transfers, one document processing firm says faulty servicer database records could impact hundreds of thousands of homeowners across the country.
In an in-house study, Florida-based Nationwide Title Clearing (NTC) found that out of nearly 2.3 million servicing database records that had been verified against the collateral file, more than 24,000 had significant discrepancies. Extrapolating that data to the 49 million outstanding residential mortgages in the United States, NTC says as many as 490,000 homeowners could have major discrepancies in their records.
NTC says it has already taken steps to remedy the problem with its forensic audit and remediation services, wherein clients receive a copy of both the data fields and an imaged copy of the original file, which are compared to each other and reviewed for discrepancies. These steps are taken to ensure database and file accuracy through pre-transfer audits and post-closing quality control checks.
The company's report comes months after CFPB released a compliance bulletin notifying servicers that—among other things—both the buyer and seller in a mortgage servicing rights transaction bear the responsibility of ensuring the integrity of data and documents for all loans involved in the transfer.
Given the findings of NTC's study, a lot of inaccurate information is currently being transferred between servicers, putting many at risk of noncompliance—making it all the more important to find a reliable quality control mechanism, says company COO Michael O'Connell.
"These database inaccuracies might have represented 'acceptable risk' in times past—but in today's compliance-oriented landscape, such a high number of errors could bring increased scrutiny and penalties from CFPB regulators, not to mention putting a cloud on title and cause trouble for homeowners," O'Connell said.