– This year, there are expected regulatory changes for mortgage servicers in the VA servicing program, CFPB’s Regulation X, and FHA’s partial claim process.
– Sandra Madigan, head of mortgage servicing product strategy and development for ICE Mortgage Technology, emphasizes the importance of agility and adaptability in the face of regulatory change.
– Five considerations for incorporating an agile transformation mindset include starting with an “outside-in” approach, allowing teams to fail quickly, pivoting fast and without mercy, breaking down problems into smaller processes, and working together with industry regulators.
– Collaboration with regulators can help understand their perspective and find common ground in serving the end consumer.
– The ability to pivot and be agile will become even more valuable in the evolving mortgage industry.
This year looks to be big for regulatory change, particularly for servicers, with potential changes coming for the VA servicing program, the CFPB’s Regulation X and the FHA’s partial claim process, among others.
“As a servicer, when you are faced with this amount of potential regulatory change, it really does take a small army of people to adapt and confirm that you have the systems and the processes in place to assist you with compliance,” said Sandra Madigan, head of mortgage servicing product strategy and development for ICE Mortgage Technology. “When you don’t have agility built into your organization, it becomes crippling — you’re basically using everything that you have to stay compliant, as opposed to it becoming part of your normal, everyday process.”
ICE has built that agility directly into its organizational workflow. Madigan offered five considerations on how to incorporate and use the agile transformation mindset to adapt quickly to regulatory change.
Start with an “outside-in” approach
“If you approach the problem just from your tiny corner or purview, you’re likely to miss something,” she said.
Instead, you should think of the “Why?” rather than the “What?” of the problem. For example, in terms of loss mitigation, approach the problem from the goal of keeping more homeowners in their homes, rather than thinking of the changes to make to the waterfall for your workout.
Allow teams to fail — but fail quickly
Give your teams the space to be comfortable with failure, and to fail quickly. For example, give a team two weeks to code a solution prototype to see if it works. If it doesn’t, that failure can provide valuable information on what else on the table might not work.
“That gets you to a faster answer or resolution without spending way too much time and coming out at the end months later and realizing that you missed the mark at the beginning,” Madigan said.
Pivot fast and without mercy
“When a new regulation is proposed, when there are talks about changing certain things, our teams have a quick approach,” she said. “If the timelines get compressed, what could we do to still help our clients, understanding the time it will take our clients to implement, test and adopt any change that we make?”
Step back and break the problem down
The ability to step back from a problem and break it up into smaller processes can help with moving quickly. You can figure out what can be done differently with the resources you have and even approach problems from a different perspective to help clients mitigate tight timelines better.
Work together with industry regulators
“We have a group of people that meet regularly with regulators to explain the mindset of what we’re doing, and it’s been pleasant that a lot of regulators in the industry are starting to think the same way,” Madigan said.
Those regulators might explain their concept of a program, the reasons and benefits behind it and their approach, and you can present the same problem from a different angle.
“It may be a slight tiny pivot but we’re able to come to the real value of what we’re all trying to do, which is to help that end consumer,” she said.
With the way the industry is evolving, this ability to pivot will only become more valuable, Madigan said.
“As time progresses, we’re going to have to become nimble and agile in that way, even at a much faster pace,” she said. “Building that agile mindset within an organization to be able to react quickly will become indispensable.”
For more: ICE Mortgage Technology
Property Chomp’s Take:
In terms of regulatory change in the mortgage servicing industry, the
Sandra Madigan, head of mortgage servicing product strategy and development for ICE Mortgage Technology, emphasizes the importance of incorporating an agile transformation mindset to quickly adapt to regulatory changes. She offers five considerations on how to do this effectively.
Firstly, Madigan suggests adopting an “outside-in” approach. Instead of focusing solely on specific changes, mortgage servicers should understand the overarching goals and impacts of regulatory changes. This broader perspective allows for better problem-solving and decision-making.
Secondly, Madigan advises allowing teams to fail but fail quickly. By giving teams the freedom to experiment and learn from their failures, servicers can identify potential issues and solutions more efficiently. This approach saves time and resources in the long run.
Thirdly, Madigan emphasizes the need to pivot fast and without mercy. When faced with compressed timelines, servicers should proactively explore alternative approaches to help clients while considering implementation and adoption challenges.
Fourthly, Madigan suggests breaking down complex problems into smaller, manageable tasks. This approach enables servicers to identify areas where improvements can be made and find alternative solutions with the available resources.
Lastly, Madigan highlights the importance of working together with industry regulators. Regular communication and collaboration with regulators can lead to a better understanding of the objectives and requirements behind regulatory changes. By aligning perspectives and finding common ground, servicers can better serve the end consumer.
In conclusion, while the