The mortgage industry asked for and received six months to put the Department of Veterans Affairs' new partial claim-related processes in place, but some companies are ahead of the curve.
Nonbank mortgage company Pennymac recently announced its readiness for
"The flexibility and ability to execute our own timeline is at the forefront, so we can move very quickly in deploying a product like this for our veterans," said Mark Acosta, chief servicing officer at Pennymac, in an interview.
Servicers reliant on third-party technology may find their vendors already have some automation set up to handle the change.
Outamation, a technology provider specializing in distressed mortgage workflows, said its system was ready for user acceptance testing of the new VA partial claim.
"The rules are built and we are testing them on real scenarios in an environment a client can get into. We are not still writing code. So the client is validating and setting it up for their own shop instead of waiting on us," Sapan Bafna, Outamation's founder and CEO, said in an email.
Bafna said deciding which approach is better depends on the servicer.
Big players with their own development team may want to build their own technology if they're comfortable managing ongoing VA updates, keeping the logic current and managing the representation and warranty risk, according to Bafna.
Acosta said Pennymac has been comfortably using its system to quickly set up and maintain multiple rule changes from Coronavirus Aid, Relief, and Economic Security Act provisions to the
As in previous instances where Pennymac has taken the lead in gearing up for servicing policy changes, the company will share tips on adoption with groups like the Mortgage Bankers Association and Housing Policy Council to help the broader industry as it learns more, he said.
Implementation advice
Acosta advises companies with in-house servicing operations to make sure they "know their tech organizations, operations and the client groups," so they can coordinate them to focus on implementation.
Those working with vendors should take a similar approach with their provider, he added.
"There are a number of decisions that need to be made in how you proceed and translate the requirements to your platform, and so the more they engage with the service provider in developing that, I think they can help speed the process to go to market," Acosta said.
The changes to waterfall of decisioning for distressed borrowers with VA guaranteed loans may appear complex and tend to draw the most focus in implementations. But Bafna said the challenges he has run across to date have been in other areas.
"Most teams focus on the decision logic, but the waterfall itself is pretty clear once you map it out," he said.
Bafna suggested focusing instead on the integrity of loan data inputs.
"The part that trips people up is the data going in. If your loan status, delinquency and payment history are not clean, you find that out fast once you run real loans," he said.
Bafna also flagged a specific part of the process that his early experience suggests should be a priority.
"The one area we spent the most time on was resuming the borrower's monthly payment after the partial claim goes on. The sequencing and re-amortization there has to be exact. It was not a big problem for us, but it is the piece I would test first, not last," he said.
While it's easy to get caught up in the operational complexities of the waterfall around the new VA partial claim, Acosta recommended keeping in mind that the goal is to help struggling borrowers, and that involves letting them know to reach out if they need assistance.
"The most important thing is the veteran homeowner who needs relief from whatever hardship they may be facing. I encourage them to contact their servicer and find out what options are available," Acosta said.
