DS News sat down with John Vella, Chief Revenue Officer at Altisource Portfolio Solutions, to talk about compliance with Federal Housing Administration loans, delinquency risks, and more in this exclusive interview.
DS News: What are some of the risks of not complying with FHA guidelines, and how can mortgage companies avoid these risks?
Vella: Noncompliance will result in missed milestones and elongated timelines, incurring additional holding costs, property preservation requirements, and penalties.
To combat these risks, many servicers have developed teams trained as experts on FHA guidelines and requirements. Doing so ensures that both internal processes are running efficiently and effectively, and these teams are also well-equipped to manage third-party vendors responsible for servicing the FHA portfolio. Hiring vendors that are well-versed in the guidelines is a key component to risk avoidance. Vendors can help ensure timelines and requirements are met through the use of technology, integrated services, and operational expertise.
DS: Can you talk a bit more about delinquency risks? How do you combat these in particular?
Vella: Servicing requirements for delinquent FHA loans include prescriptive and detailed property preservation, conveyance, and claims processing guidelines. In order to mitigate risk, keeping an asset in conveyance condition is a priority. Maintaining property condition and proper title throughout the process is critical to avoiding unnecessary costs for servicers. The associated regulations and guidelines can be very tricky, so it’s important to have an experienced team dedicated to this type of loan servicing to avoid unnecessary risk.
DS: Many mortgage companies are hiring vendors that can supply bundled FHA services in advance of the completion of a foreclosure sale. Do you agree with this method?
Vella: Yes, bundled services can often streamline processes and make things run more smoothly while expediting timelines and ensuring compliance standards are met. It is important to choose the right vendor who can handle valuation, title, property preservation, marketing, and auction services prior to the foreclosure sale date to ensure timely compliance and disposition.
DS: We saw FHA originations grow in 2017, causing an increased need for FHA loan servicing and greater focus on driving adherence this year. Do you expect this trend to continue into 2018, or is it more likely to stabilize in the coming months before we enter the new year?
Vella: We expect this trend to continue as the overall percentage of new FHA originations continues to rise. Economic conditions will remain fluid, but servicers are preparing their staffs and systems for this increase in volume.
DS: During the recruiting process, how important is it that prospective members of your team be well-trained and knowledgeable about FHA loan servicing? Is this something they should come into a job knowing, or do you think it’s more beneficial for them to learn on the job?
Vella: Finding employees with deep FHA experience can be difficult. We have found that employees with an eye for detail, commitment to quality and comfort bring strong performance to our FHA processes. FHA servicing is a very prescriptive process, and the right personality can pick up the playbook and execute at a high level, provided the right tools, reports, and environment. We strive to give each individual on our FHA service team the necessary tools to succeed. The combination of hiring experienced staff and new staff with the proper background.