HousingWire: As financial institutions plan for 2023, what is their best line of defense in maintaining loan quality and mitigating risk?<\/strong><\/p>\n Amanda Phillips<\/strong>: We agree with other market players that 2023 will be a challenging origination environment. Fannie Mae projects that single-family mortgage origination volume for 2023 will decline 20% from $1.66 trillion to $1.33 trillion along with a 20% decline in home sales. As a result, margins will be tight as origination activity slows and lenders earn less per loan.<\/p>\n Many lenders will look to servicing revenue to carry them through this slow originations market. To confidently rely on that revenue, however, servicers must assess the integrity of their servicing portfolios and staff to ensure compliance with all relevant servicing rules, guidelines and regulations. These teams will need to rely on updated technology not only to stay on top of regulatory changes but to communicate effectively and efficiently with other internal stakeholders.<\/p>\n Ultimately, there are inherent risks in the servicing process. Ideally, risk management teams have already identified those risks and internal audit is making sure the proper processes and procedures are in place to address those risks. From a transactional standpoint, it is then up to the QC team to ensure that the organization is following those policies and procedures and are mitigating the risks. Without technology, this will be an overwhelming burden. So, I would say one essential line of defense is to make sure your technology and staff are up to the challenges ahead.<\/p>\n HW: How can lenders keep up with evolving servicing regulations, and what trends do you expect to see this year from a servicing perspective?<\/strong><\/p>\n AP:<\/strong> With recent and upcoming regulatory requirements, servicers are gearing up to deal with borrowers exiting COVID-era forbearance programs. Servicers haven\u2019t faced this much regulatory oversight since 2012. However, as cyclicality is a hallmark of the mortgage industry, the fact that regulatory focus has once again turned to servicing should be no surprise, especially given the looming fears of another foreclosure crisis.<\/p>\n Inevitably there will be homeowners unable to bring their mortgage current as they exit forbearance, which means mortgage servicers will need to engage in loss mitigation processes and options for those consumers. If the servicer is ultimately unable to find a successful loss mitigation option for these borrowers, then the servicer may ultimately enter the foreclosure process, with its own requirements, timelines and potential costs.<\/p>\n Servicers will need to comply with requirements from CFPB<\/a>, the GSEs (or other investors), as well as state and local regulators \u2013 and that\u2019s going to take technology that can be quickly adapted as new requirements emerge. For example, to ensure our clients could prepare and audit up-to-date guidelines, ACES Quality Management was the first to incorporate Fannie Mae\u2019s updated guidelines into ACES Quality Management & Control software and publish on our Compliance NewsHub<\/a>.<\/p>\n![\"Mandy-Phillips-Headshot\"](\"https:\/\/www.housingwire.com\/wp-content\/uploads\/2023\/02\/Mandy-Phillips-Headshot.jpg?w=683\")
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