Strategic Partnership Forms For Advanced Compliance Monitoring


Technology is helping servicers with programs that provide systematic and automated approaches to loan due diligence, leading to partnerships that will enhance market compliance.

Third-party subservicer Cornerstone Servicing, headquartered in Englewood, Colorado, announced last month that they are using compliance technology from Bizzy Labs to perform daily exception processing on servicing portfolios. The goal is to reduce errors, provide business risk transparency, and reduce per loan servicing costs.

Bizzy Labs is an affiliate of BSI Financial Services in Irving, Texas, and their compliance technology, Libretto, uses a comprehensive library of over 1,000 business rules to identify servicing deadlines and data quality anomalies that could lead to red flags.

Toby Wells, the president of Cornerstone Servicing, and Gagan Sharma, the CEO of both Bizzy Labs and BSI Financial Services, told The Mortgage Note in a recent interview that the companies are taking a forward-thinking approach to servicing loans.

Sharma said that servicers produce so much data and information that finding an exception can be like finding a needle in a haystack. Companies like Cornerstone Servicing can benefit from using a program like Libretto because it uses automation to find those exceptions for the employees who will have to deal with them.

“Before the servicer’s team, the employees show up in the morning, the rules engine has already run on the entire data and identified any exception that needs to be worked on that particular day,” Sharma said.

Wells explained that their work is dynamic, not linear, like originations. There are all kinds of scenarios that are hard to anticipate over the course of a 30-year mortgage.

Wells said they have invested heavily in data structures so that their information was available and organized in an intuitive way. But it was time to take it a step further so that is why they reached out to Bizzy Labs.

“We really wanted to look for technology that would assist us in what we would call constant monitoring, or near real-time constant monitoring. And frankly, Bizzy had honestly a perfect tool at the time for us,” Wells said.

Sharma said Libretto was not available on the market until recently. It was built for BSI, but leaders there saw the potential for it to help other members of the industry.

“There was a question of, ‘Are we sharing our secret sauce with some of our peers?’ But on balance, we think that it is a tool that helps the market be more compliant. There’s a lot of value in it for that,” Sharma said.

“If we can be part of the solution that structurally makes the market more compliant, and deliver better service, I think everybody wins in the end.”

When asked about the future of compliance technology, Sharma said the next step is using artificial intelligence to fix issues when they are found. AI can also be used to pull information from new regulations when they are put into place.

Wells said their focus remains on the people they serve.

“It’s really about how do you deliver a quality product to your clients and your customers. And we are going to use whatever the best tools that are available to do it,” Wells said.

Cornerstone Servicing works with homeowners to create customers for life. Their subservicing clients include lenders and investors of all sizes, according to company leaders.

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