On Monday, Steve J. Baum P.C., one of the nation’s largest defaults servicing law firms confirmed it is closing – the second to do so after last fall’s robo-signing scandal and subsequent regulatory investigations. In October, the firm had agreed to pay the Department of Justice $2 million and change its practices to resolve a probe of faulty foreclosure filings. Since then, Fannie Mae and Freddie Mac had quit referring new cases to the firm and many of the country’s largest financial institutions had stopped using them as well.
Baum’s closing underscores the need for mortgage lenders, servicers and the third party firms they do business with to have knowledgeable staff members that are thoroughly educated on compliance requirements, particularly those tied to loss mitigation and foreclosure processing. This requires ongoing training and instruction to help staff stay on top of the latest lending program guidelines. And servicers must put controls in place to make certain staff members fully comprehend the guidelines and make adhering to them part of their everyday duties when it comes to servicing these loans.
It’s understandable if lenders and servicers are overwhelmed by and frustrated with the complexity and cost of complying with today’s regulatory and internal policy and procedure requirements. After all, the servicers that survive the current economic weakness, and ultimately do so profitably, will be the ones that have the lowest cost of production on their portfolios. It’s critical, therefore, for servicers to make compliance with both as efficient as possible.
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