SBorgerson Consulting LLC

  Here is my story….and you can benefit from my experience. 

 I joined the Credit Union in March of 2023, filling the role of Vice President and Lending Manager. I was in charge of all the Lending functions of the Credit Union including Residential and Commercial Loan Origination, Home Equity Loan/Line Origination, and Loan Servicing. This role was one I have held for a number of years, and one I was experienced at. My start date was a full seven months after the Credit Union went through a core system conversion. They had migrated from a FiServ core banking system to the Corelation Keystone core banking system.

The previous management team, none of whom were still on staff, had signed the contract, had done all the preparation work, had done all the mapping work, and had done all the system and product set up. The person who was responsible for the lending set up and prep work was not a lender, they knew nothing about lending, and knew nothing about loan compliance. 

So, what could go wrong?

The new management team came on board less than 60 days from the conversion and had no choice but go forward with it. The lending issues that would result from the poorly planned conversion were then compounded by a lending team that consisted of three people who didn’t have the knowledge or the skill set to roll out a new core servicing system. They were good people, and good employees, but none of them had been trained to service loans. You know the old saying “they didn’t know what they didn’t know?” 

Well, they didn’t know what they didn’t know, but I did know what they didn’t know. 

 What I learned in my first weeks and first few months was that the Credit Union was not servicing loans compliantly, loans were not operating per their notes, and the lending team didn’t know what the core was doing correctly or incorrectly. They had no servicing reports other than the delinquency report and the closed loan report. Without reports, they had no mechanism or opportunity to identify issues. Neither did they have any written procedures, so they had no vehicle to tell them what they should be doing or how to do it. It took me a good 4 months to identify and remediate all the deficiencies and to put together a 200-page procedure manual that contained 55 Lending related procedures. 

 Everything I learned during this experience, every fix and adjustment I made, I can now share with other Corelation users who could benefit from a system “tune up", a system tune-up from a Banker 

How Our Loan Serving area went from Non-Compliance to Complaint

I have always believed and preached that if you have no loan servicing reports you really do not have a Loan Servicing Department, you just have customer service.  As I had done at each of my previous employers, I knew I had to start by putting together a report management program that would provide me with the tools and controls needed to service loans correctly and compliantly, so that is where I started.

The second challenge was learning the system. There was no help from my current staff, so I turned to Corelation, the owner and operator of our core system. Within one week of my joining the credit union I connected with our Client Rep Kurt S. That was when we started rocking and rolling! Kurt was a godsend, he had 30+ years’ experience working at a Credit Union, and we spoke the same language: Banking. He and Alicia did a fantastic job listening to my needs, understanding where I was coming from, and getting those needs met. They both had the patience of a saint, and they both were way more patient with me than I deserved. They were immensely helpful in getting our program to where it needed to go.

Kurt immediately set up a zoom meeting with our managers and their sales team. They gave us the full sales pitch. This was a great place to start, as we learned the key features of the system and its functionality. Kurt was a great partner and asset as he understood our needs, and more importantly to me, he also understood the inability of previous team members to address issues.  He, Alicia, and I, immediately started improving our servicing area, one fix at a time.

Righting the Ship

As mentioned above, the first thing I did was create a Servicing Report Management Program. The program I put together consisted of seventeen reports, looking both forward and backwards, and they provided me information needed to manage a loan servicing department properly. These reports were pulled, reviewed, and signed off on monthly. Only by reviewing these reports and sampling the data, was I able to identify the deficiencies and weaknesses in our servicing area. Almost across the board, with the first printing and review of a report, a deficiency or issue was identified.  These reports provided me with the controls I needed to ensure the Credit Union was meeting its regulatory servicing requirements, and that the transactions and maintenance being reported on them, was appropriate for the activity.

The Outcome

Armed with my seventeen reports, I identified, and remediated the following deficiencies:

-  Adjustable-Rate Mortgages were not adjusting. 

-  Loans were not being discharged properly, and the discharges were not being recorded.

-  Expiring HELOC's were not getting the proper notification.

-  PMI expiration's were not being properly monitored. 

-  Late Fees were pyramiding, or not being charged at all.

-  The Credit Union was only reporting loan histories to one bureau.

-  Payments were not being applied as required by their Notes.

-  Partial mortgage payments were not being put into an "unapplied" bucket, something created 

   endless  service issues.

-  FASB Balances and amortizations differed significantly from the accounting system data.

-  Delinquent notices were being sent without backers.

-  Returned ACH loan payments were not being assessed the appropriate return check fees or managed.

-  The Non-Accrual System was not operating correctly.

Kurt and Alicia were instrumental and proactive in helping me address the above issues and were constant advocates for the Credit Union. After four months, and a lot of work, the Credit Unions Loan Servicing area was where it needed to be. I was rewarded for all my hard work when the first 3rd Party Servicing Audit since my arrival returned a final report with no findings. This success was duplicated a month later when Fair Lending and Mortgage Loan Compliance Audits also came back with no findings or suggestions. 

Please note that a poorly handled core conversion is not the only cause of servicing weaknesses and deficiencies, all it takes is having an untrained or weak team member on staff at any point in the preceding 10 years. A couple of small deviations from procedures, a system setting change here and there, a loan booked and uploaded to the core with incorrect data, all of these scenarios can lead to long lasting deficiencies in a loan servicing area.  Deficiencies, which in many cases, led to a reduction in income. To properly service loans, an institution must have strong management, a strong reporting program, proper system settings, and a procedures manual that covers every task done by the department. 

If your Loan Servicing Area audits continually report findings and weaknesses, consider bringing SBorgerson Consulting in for a short-term consultation, to ensure your long-term success.