As with any technology, our industry can construct many checkpoints to assure efficient production is balanced with quality and compliance.
In the case with robo-signers, had there been a foreclosure platform tracking production volumes — with time studied allowances for appropriate compliance — then it would have been readily apparent that the time allotted for document review, notary acknowledgment and legal compliance was insufficient.
Of course, any technology is only as good as the detail and concern used to define work flows, compliance tasks and process points.
The robo-signing breakdown is very much a consequence of many pressures that were not foreseen two to three years ago. Given the many priorities lenders faced implementing technologies for multiple loan modification programs, government short-sale solutions and borrower response demands, it would have been difficult to predict this specific fail point in any technological scheme.
The key in my mind is to start with the endpoint, which in this case, is a fully compliant foreclosure transaction and work backward to define all the events, stakeholders and checkpoints needed to build to the result.
If that result was a fixed target, then designing the inputs would be quite easy.
But as we have seen, this market breakdown is unique for its breadth and extended length, which has resulted in the traditional foreclosure process being redefined by government intervention at both the federal and local level, to say nothing of the demands financial investors made along the way.
As for other solutions, certainly, special servicers can have a focus on process and execution that is more targeted and most likely more efficient as they have designed models using expertise to avoid any delay or short cut that could represent a compliance risk because they would then incur redundant corrective action costs.
However, even the best special servicer processes are prone to breakdown when overwhelmed with unprecedented volumes, so organizational discipline to be diligent about constantly monitoring capacity management is paramount.
In this sort of unstable market, with its many disparate demands on servicers, a partner organization that has demonstrated agility in managing its people, processes and technologies is a real asset to successfully navigating the default/foreclosure cycle we are experiencing.
