Susan Stewart: COVID-19 Puts Risk Management, QA, Fraud Prevention ‘Front and Center’ (MBA LIVE)

Mortgage Bankers Association Chair-Elect Susan Stewart kicked off the MBA Risk Management, Quality Assurance and Fraud Prevention Forum with an astute observation: the coronavirus pandemic has put such issues “front and center.”

“Virtually every loan is riskier than it was when we began this year, and as a consequence virtually all companies have modified their manufacturing process to identify and mitigate those additional risk,” Stewart said.   

Stewart, CEO of SWBC Mortgage, San Antonio, noted her company is dealing with the same changes and challenges as many others in the industry. “One of my more sage co-workers often reminds me that she doesn’t want to be in a foxhole with someone braver than her”—wise words from a former risk officer and current COO.”

Stewart said historically low interest rates and resulting unprecedented volume is testing the real estate finance industry.

“We all recognize that we cannot let loan quality slip, even a bit,” Stewart said. “It’s easy to declare, but hard to effectuate, given the sheer fatigue of our hard-working teammates.” 

Stewart said risk managers in particular continue to step up to new challenges. “The output and engagement continue to be astonishing,” she said. “Certainly, the last six months haven’t been easy. We’ve had to deal with two big shifts at the same time, leading to longer hours and extra work.”

First, the industry had to adopt a remote workplace virtually overnight. “You’re balancing the demands of home with the demands of the job,” Stewart said. “It’s a lot to handle for all and for parents with school age children it may seem near impossible.”

Second, most have added new steps and instituted new processes to ensure loan quality, such as added verification calls, 60-day locks, borrower certifications and attestations about employment and forbearance.

“The checking and rechecking can seem endless but it is necessary,” Stewart said. “These two changes are tough enough on their own. At the same time, volume has gone up. Originations up 85% in Q2, from Q2 last year. Month after month beginning in March volume has continued to flow in with no obvious end in sight.”

MBA has been working hard to provide support, Stewart noted. “We’ve achieved some big wins in recent months. Like you, the MBA team has been working 24/7, she said. “We worked with FHFA and the GSEs to give you flexibility: appraisals, employment verification and power of attorney. We secured clarity on IMB liquidity requirements  and helped the GSEs get their forbearance options and scripts rights. We worked with the GSEs to ensure they would purchase loans in forbearance and to expand options for borrowers to refi after forbearance eligibility after they make three payments on a deferral plan, repayment plan or loan mod. Working with the Fed, we ensured that the mortgage markets have the liquidity they need, including for servicers.”

From a technology standpoint, Stewart said MBA has worked with regulators and lawmakers to allow Remote Online Notarization. “We’ve succeeded in 27 states so far and worked to get others to expand via executive order during pandemic,” she said. We are working with the federal government on a national system.” She said MBA has also been pushing for wider use of eNotes, citing a recent announcement by the Federal Home Loan Bank of Des Moines to accept eNotes.

“The move toward digital has been one of the best developments,” Stewart said. “Finally, our industry has truly adopted digital as a means to move more quickly, serve remotely 24/7, and finally capture the long-awaited increase in productivity. Progress has been made but with time and commitment digital will offer us so much more.”

MBA will continue to advocate on your behalf,” Stewart said. “I don’t know when things will go back to normal. Remote work, high volume, extra steps – they’re here to stay perhaps until years end or even a bit longer. But I do know that we’ll come through this – and we’ll have you to thank. You’ve done incredible work this year. I know you’ll keep up the good work too.”