Staff shortages, office closings, and high volumes created ongoing disruption for the mortgage industry in 2021.
And, based on MetaSource’s annual analysis of third-party QA reviews, some MERS processes suffered as a result.
Overall, our analysis showed that the top three areas of MERS compliance challenges fell along familiar themes. We also discovered that while the overall exception rate increased from 11% in 2020 to 19% in 2021, some notable improvements were made.
This report discusses why these improvements occurred, details surrounding what MERS Members struggled with the most, and best practices for overcoming these struggles in the future.
Top MERS QA Audit Findings for 2021
Here are the MERS QA challenges that Members struggled with most in 2021:
- Written internal policies and procedures were missing or did not contain enough detail to ensure compliance with the most recent MERS requirements
- Failure to conduct monthly or quarterly data reconciliation based on requirements and volume
- Failure to properly manage/monitor internal audits, subservicer, or third-party vendor through reporting of QC reviews to confirm MERS standards are met
The Challenges of Maintaining Detailed, Up-to-Date Policies & Procedures
Ensuring that internal policies are thorough and up-to-date is a perennial struggle for many MERS Members. But it was heightened in 2021 when additional difficulties, including staffing shortages, left some servicers without the MERS support they needed. Many servicers were left to rely on staff members who were unfamiliar with MERS requirements and the level of detail necessary to meet current policy and procedure expectations.
Other servicers fell short of MERS requirements for written policies and procedures as their monthly volumes swelled and, for the first time ever, pushed them over the 1,000-mortgage identification number (MIN) mark. MERS Members over this MIN mark as of March 31 are required to obtain a third-party review, which includes a thorough review of MERS Members’ operational policies and procedures in preparation for the MERS eAnnual report due each year by December 31. Those new to this MIN volume level last year were left subject to monthly reconciliation requirements and third-party reviews for the first time. Similar to those experiencing staffing shortages, these servicers were unfamiliar with the requirements and failed to provide adequate written internal policies and procedures.
This unfamiliarity undoubtedly led to an increase in policy and procedure-related challenges and a rise in the overall exception rate. “About 90% of the Members I reviewed last year did not have detailed procedures,” said Rachel Pylant, MetaSource Director of MERS Services.
The Areas that Showed Improvement
While more Members struggled to meet written internal policy and procedure requirements last year, there were signs of improvement in other areas.
Download the full report to learn what these areas of improvement were, the main reasons for the improvements, and the best practices for ensuring MERS compliance in 2022.
Download the 2021 MERS QA Findings Report