The Spring 2017 edition of
Supervisory Highlights described
Supervision’s service provider program, which involves the direct
examination of service providers,
particularly in the mortgage origination and mortgage servicing
markets. Examiners are focusing
on the structure, operations and
compliance management systems
of various service providers, as
well as certain other targeted areas.
Examiners reviewed whether
one or more service provider(s)
adequately considered certain re-
quirements of the Title XIV Final
Rule in developing products for
mortgage servicers. 45 Examiners
found that the service provider(s)
developed a mortgage servicing
information technology (IT) system
functionality that failed to imple-
ment certain Regulation Z require-
ments for periodic statements.
The service provider(s)’ billing files
failed to list the total sum of any
fees or charges imposed, and the
transaction activity that occurred
since the last statement. 46 More-
over, the service provider(s) did
not adequately consider client
concerns about the issue. Super-
vision concluded that these weak-
nesses contributed to the clients’
violations of Regulation Z and
directed the service provider(s)
to implement policies and proce-
dures that span systems design
and application controls to ensure
that the billing files made avail-
able through the mortgage servic-
ing IT system functionality enable
compliance with Regulation Z. In
addition, Supervision directed the
service provider(s) to ensure that
when clients communicate poten-
tial regulatory issues, the service
provider(s) analyze and implement
changes as appropriate to enable
users of the mortgage servicing
IT system functionality to comply
with Regulation Z.
42 November 2016
32 12 CFR 1024.41(b)(1).
33 12 CFR 1024.41(b)(1).
34 12 CFR 1024.41(c)(2)(ii) and (iii).
35 12 CFR 1024.41(b)(1) and
Comments 41(b)(1)- 4.iii and 41(c)(2)
36 Comment 1024.41(b)(1)- 4.iii.
37 Comment 1024.41(b)(1)- 4.iii.
38 12 CFR 1024.41(b)(1).
39 12 USC 5536(a)(1).
40 12 CFR 1026.36(h)(2).
41 See Supervisory Highlights: Winter
2013, at 6, available at
42 See 78 Fed. Reg. 30662 (May 22,
2013) (codified at 12 CFR part 1005),
43 Regulation E implements the
Electronic Fund Transfer Act (EFTA).
44 15 USC 1693o-1(a)(1).
45 Title XIV Final Rule updates
effective January 10, 2014, with
the exception of the appraisal
requirements effective for
applications received on or after
January 18, 2014.
46 12 CFR 1026.41(d)(2)(ii); (d)( 4).
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