NMP’s Inside Look S E C U R E
S E T T L E M E N T S
I N C .
Independent Risk Evaluation and Vendor Management Ready for Prime Time An Interview With Andrew Liput President and CEO of Secure Settlements Inc.
MARCH 2014 n National Mortgage Professional Magazine n
NationalMortgageProfessional.com
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ndrew Liput is president and CEO of Secure Settlements Inc. (SSI), a leader in independent risk evaluation and vendor management for the mortgage industry. Based in Parsippany, N.J., SSI is the first company to offer a standardized risk management process and information database of fully riskassessed mortgage closing professionals that protects both consumers and lenders, thus reducing fraud and ensuring that federal regulatory expectations are met. The SSI process delivers an advanced closing fraud risk analysis and helps lenders meet the risk management expectations for qualified risk assessment of third-party vendor relationships, as outlined by Consumer Financial Protection Bureau (CFPB), Office of the Comptroller of the Currency (OCC), U.S. Department of Housing & Urban Development (HUD), Federal Deposit Insurance Corporation (FDIC), Fannie Mae, Freddie Mac and the National Credit Union Administration (NCUA). National Mortgage Professional Magazine recently sat down with Andrew to get an update on SSI.
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Can you tell our readers the reasons/catalysts that drove you to start Secure Settlements Inc.? Liput: SSI began as a concept in 2002, when I was a closing agent for banks as an attorney. I found it remarkable that lenders would wire proceeds and send documents to the closing table without any effort to screen and evaluate, especially with their money “wet” and their collateral security documents unsigned. I also thought it was risky to send agents a borrower’s personal and financial information for privacy purposes
without some level of vetting for risk. This drove me to spend the next 10 years studying closing and escrow fraud cases, mortgage repurchase issues, the weaknesses of exclusionary lists and the over-reliance on the closing protection letter, as well as operational risk issues. During this period, I also sought valuable input from risk analysts at Lloyds of London, senior managers at Fidelity and First American, and several warehouse banks. All of this research and experience led to the creation of a proprietary risk evaluation program backed by technology that launched SSI in January of 2012. What are the keys to the success of SSI’s product offerings? Liput: Our process and staff are the best in the business. We don’t just repackage public data into a report. We collect 110 unique data points, subject them to a complex system of risk metrics that involves multiple public and private data sources. We take a position by having each file analyzed by experienced risk analysts for accuracy and assign a risk rating of high, caution or low. In addition, all public data is monitored 24/7, 365 days a year for changes, and all private data is verified at the source with the tracking of key information, including license and insurance expiration dates. Finally, we voluntarily comply with the spirit of FCRA [Fair Credit Reporting Act], by interacting directly
with the people we evaluate, holding the publication of any risk rating until the individual or entity has an opportunity to refute, clarify or explain any derogatory findings. We want to be fair, but most importantly, get it right. Where does SSI fit into the lending value chain? Liput: We are a key component of prefunding loan quality assurance and overall enterprise risk management. Thirdparty vendor management, particularly the evaluation and monitoring of closing agent risk is now an accepted regulatory mandate. The CFPB, FDIC, NCUA, OCC and HUD all consider the monitoring of third parties a key component of operational and reputational risk. Vetting improves loan quality and secondary market confidence, reducing the likelihood of repurchases and incidence of fraud losses, while demonstrating a commitment to consumer protection. What is SSI’s current client focus and what is the company’s business model? Liput: Our clients include national banks, community banks, mortgage lenders and credit unions. Our sweet-spot is lenders closing 50-500 loans monthly, who are committed to quality control and compliance, but do not have the resources and staffing to handle vetting services in-house. Larger banks that have a good internal solution will use SSI as a quality control check, much like lenders
send loans pre- and post-closing to evaluate processing and underwriting controls. Our key product remains our Closing Guard settlement agent vetting and monitoring system and national database of risk data. But, we also offer risk vetting for other key players in the mortgage process including employee screening to meet SAFE Act and GrahamLeach-Bliley data privacy and security requirements, and enterprise risk evaluation reports to assist lenders in assessing their quality control and loan quality assurance programs. Our key program is subscription-based, costing lenders on average 3/4s of a basis point per loan, while our other products are billed on a per report basis. What type of growth is the company experiencing? Liput: This year, we are poised to have our best year ever. Our business has grown significantly in the past six months, and since Jan. 10, 2014 when the CFPB’s qualified mortgage (QM) and Ability-to-Repay (ATR) rules became finalized, requests for demos and program details have significantly increased. The first quarter of 2014 will result in the largest increase in lender contracts in our history and include many big industry names. In the past, the industry was not ready for independent risk evaluation and vendor management because none ever existed. We had to conduct a great deal of education. The regulators helped us by universally adopting directives addressing the problems we were created to solve. Today, the notion of closing agent vetting, monitoring and reporting is widely accepted and generally embraced by even the most reluctant professionals. Recently, the American Bar Association (ABA) recognized that attorneys are not