Due to the collapse of numerous high-volume foreclosure legal service providers, regulators have become increasingly focused on servicers’ oversight of third party vendors. Indeed, the Office of the Comptroller of the Currency and the Federal Reserve System now require servicers to certify that default legal service providers are in compliance with applicable state and federal laws, rules and regulations, judicial requirements, and other work standards.
Since 2010, BABC has been at the forefront of servicer and GSE efforts to develop and implement comprehensive, sustainable, and effective default firm vendor management programs for national default firm platforms. Combining expertise developed through conducting internal investigations for clients and with an unparalleled knowledge of the mortgage servicing industry, BABC has participated and managed hundreds of default firm legal compliance interviews across the country for servicer and GSE clients.
BABC’s third party vendor management program will identify and assess risk associated with law firms, will evaluate and monitor law firm compliance with applicable laws, and will provide centralized governance and consistency in managing legal service providers. BABC will work collaboratively with Green Tree Servicing to construct vendor management programs and state-of-the-art assessment tools that facilitate efficient management of Green Tree Servicing’s law firms and trustees. As part of these services, BABC has created internal screening and reporting protocols for identifying potential default firm risk areas that allow clients to respond to issues ahead of the national curve. These proprietary processes are so integral to client programs that they have been formally adopted as part of submissions by those clients to government regulators.
BABC also is collaboratively working with the FHFA, the MBA, and the USFN to standardize legal compliance reviews of default firms across multiple servicers and GSEs. A standardized framework would assist in efficiency and effectiveness, promote cost-sharing, and certify law firms pursuant to regulator expectations.