Client Bulletin 3/02/22

Business Units Adopt Enhanced Risk Management Approach

We wanted to update you on Cenlar’s mission to continually improve how we serve you and your homeowners, as we’ve redoubled our commitment to strengthening our risk management program.

The following — while not the entirety of our work — are some examples of how we’re doing this across our operation.

Core Operations: Providing focused measurement for effective risk management

We’ve centralized servicing analytics and servicing reporting within our Core Operations team.

This effort is enabling meaningful changes to our monthly operational review, where all parts of the business will 1) discuss critical metrics that run our business as identified by our enhanced Risk Enterprise framework and 2) develop a plan of action.

Core Operations, under the leadership of Senior Vice President Bill Moffett, is working with Cenlar’s risk partners to come up with a revised risk methodology for the monthly operational review. Their enhanced approach puts the most vital metrics — including risk intel from process errors, complaints, issues inventory and quality testing results and trends — in front of a cross-section of senior leadership and Cenlar’s board.

Core Operations also has added an independent team to work with our risk teams to ensure that any metric that’s put in place has the right controls in order to be compliant. This detailed process puts a microscope on our metrics so that they pass every aspect of the risk environment on top of the business requirements. Going forward, any metric we establish will first be reviewed by the compliance, risk and analytics teams before we put it in place. Core Operations will then use a risk methodology to link the metric to the control and to the subject area.

In order to establish these changes, Bill has worked closely with the Issues Management team, under Vice President of Issues Management Scott Goldman and Lynn Tarantino, as well as the teams of Sara Avery and Chief Compliance Officer Jennifer Rowen.

Their work is a key piece in our evolution. Our aim is to use this transformative approach to enhance our risk philosophy, allowing us to run our business in a more-sophisticated and fine-tuned manner.

Default Call Center: Additional controls, enhanced review ensures our strategy works correctly

In our Default Call Center (DCC), it’s always been part of our DNA to be able to adapt rapidly to new requirements while following a rigorous and proactive process. With the onset of the pandemic and ever-evolving guidance from regulators and investors, our focus on the change management process has heightened even more. In addition to pandemic-related requirements, DCC simultaneously faced another shifting landscape with revisions to call frequency and right-party contact regulations last year.

In support of these changes, we added additional controls, as well as introduced an enhanced review process to give us assurance that our strategy is working correctly and that all requirements are being met.

The DCC, led by Chris, also worked with our business controls team to do a comprehensive review of its risk and control matrices (RCMs) to find what’s working and what needs to be refreshed and to ensure controls are mapped properly.

The Default Call Center is just one area where we’re revisiting RCMs, performing control effectiveness testing and implementing an updated Risk and Control Self-Assessment (RCSA). Lynn Tarantino and the business control team, under the leadership of Vice President of Business Control and Assurance Stephen Benetz, have partnered with leaders to take a detailed look across the organization. This effort enables us to understand our risk profile at any given point in time.

Default Management – Pre-Foreclosure/Foreclosure: Considering what we do down to the smallest detail

As part of a company effort to review risk and control matrices (RCMs), the default management team in the pre-foreclosure and foreclosure areas went down to the smallest detail to examine its existing process flows, risks and controls. The team, under the guidance Vice President of Default Management Cheryl Young and Director of Default Shannon Tomasso, then took that information, and mapped it all out to see what we needed to further enhance, from the outset of a process to documenting at the end, important steps to ensure protection against vulnerabilities.

In addition to our two-tiered pre-foreclosure review, we’re also in the process of implementing a review at the end of each month that analyzes the pre-foreclosure processes completed in that period. This review checks for overall quality by ensuring compliance with investor requirements, regulatory requirements and our procedures. We already do this for our foreclosure team, and have found it gives us monthly feedback on not only our processes but also the processor, providing us additional opportunities to identify risks and opportunities for enhanced training.

The Latest on HAF Program Implementation

Since our last communication on the Homeowner Assistance Fund (HAF) in late January, nine HAF plans – from states, tribes and territories – are still under review by the U.S. Treasury. Cenlar has executed and delivered agreements to 13 states, including AZ, AR, CA, GA, HI, KS, LA, MA, MD, NJ, NY,VT and WI. Processing for those states is underway and we continue to work with all jurisdictions as they become ready to start processing HAF applications.

We know that you all agree homeowners will benefit from the HAF programs. At Cenlar, we’ve been working hard to map and execute the various programs. We’ll begin to process executed contracts for the additional states as our automated process begins in March. Automation will enable us to process large volumes of records and get homeowners the help they need.

Additionally, you may be aware of the differing expectations concerning HAF programs among consumer advocacy organizations and investors. Advocacy groups are urging servicers to halt all foreclosure activity for 60 days when a homeowner applies for HAF and the servicer receives the initial I-Record.

This is contrary to the current process and what is outlined by some investors. As a result, and in the best interest of homeowners, Cenlar has decided to put the foreclosure action on hold (or pre-foreclosure) when we are notified by a jurisdiction that the homeowner is participating in the HAF program.

Homeowner Information

As promised, we have shared links to state Homeowner Assistance Fund programs on CenNet (https://policies.loanadministration.com/state_assistance_resources). Access to the page is also available on Cenlar.com. And homeowners may request a link to the page through the IVR. Please note, not all jurisdictions have sites dedicated to HAF, so we have listed those that are available. Homeowners should apply directly with each state’s HAF administrator.