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It’s that time of year again when Servicers should begin working with their independent third-party reviewer to complete their mandatory annual MERS quality assurance attestation. Waiting until the end of the year does not allow time for a comprehensive assessment or time to set a remediation plan in place, which jeopardizes a servicer’s compliance position.
As an experienced reviewer, LoanLogics recommends the engagement period span a three- to-four-month period. This gives the reviewer the ability to fully attest to MERS compliance and issue the final annual report on behalf of the servicing organization. It is also important that the audit itself includes preparation from both parties.
The team on the servicer side should, at a minimum, include the primary MERS operations contact and any applicable internal quality assurance (QA) resources. If a subservicer is involved, they too will be interacting with the reviewer to varying degrees throughout the process. An executive sponsor should also be named to spearhead the audit.
Together with this team, independent reviewers should tackle four main areas during the audit. Let’s investigate the goals of each of these steps further.
Assess Procedures – During the procedural assessment phase, reviewers should take the time to ensure every MERS requirement outlined in the Member’s eQA plan has a control.
Perform Testing – The importance of testing cannot be stressed enough. Investigated controls often include but are not limited to documented procedures, servicing system information, assignments, transaction logs, lien releases and other MERS compliant documents.
Discuss Findings – The entire MERS team designated at the beginning of the year and/or audit should be involved in a detailed review of the auditor’s findings. This will level set the team and get a quick understanding of the overall health of the audit.
Remediate Issues – By conducting a complete and thorough review, the 3rd party can provide the detail on what is not working in the servicer’s processes and procedures. Alternatively, a complete review can also tell them where things are going well.
It is best practice for service providers to work alongside their clients throughout the year to identify compliance issues before they become larger problems. Should one arise, they can be available to help course correct prior to the official year-end audit.
Once the audit is completed, the reviewer and servicer can confidently issue the MERS eAnnual report.
When a reviewer signs that report, they attest that they have “monitored” the servicers performance against the eQA Plan, not that they “came in and did a onetime test,” which illuminates the need for a true partner in MERS compliance.
With the end of year a few short months away, Servicers should start engaging now with their independent 3rd party reviewer for their annual MERS quality assurance review for the best results.
*A portion of the content from this blog was extracted from a recent LoanLogics white paper, How to Get the Most from Your MERS® Annual Review. Download more preparation insights in the full paper here.
Well-stated guide to a successful MERS Annual Review.