If your internal audit department has not already done so recently, ask them to perform some loan level audits to be sure you are fully compliant with current RESPA, and TILA regulations. Don't fear an internal audit, they can often uncover a potential problem before it becomes a real problem.

Some think the economy is poised for an extended period of rising rates, due primarily to the huge federal debt. Does your current strategic plan contain a rising rate scenario?

Speaking of US debt: we are fast approaching $15 TRILLION or about $137,000 per average taxpayer. This does not count another $115 Trillion of unfunded liabilities for social security, prescription drugs and medi-care. Our individual liability on that monster is about another $1,025,000 for total individual tax liability over $1,150,000. That amounts to a $29,000 annual tax bill just to pay for our mess and that is before we try to pay for the annual budget.  

It is almost mid year, perhaps you should take out your 2011 Strategic Operating Plan and review it from a defensive “what if” perspective. What if rates rise more than anticipated? What if the administration backs away from buying mortgages? What if the Federal Reserve stops subsidizing the treasury auction? What if the real estate market seeks out a new bottom? What if margins contract? Review these issues and others from a survivor’s perspective. How will you capitalize on market changes?

A recent limited scope review of the secondary marketing department for a mid sized mortgage banker was conducted to assess lackluster results following the conversion to mandatory delivery. The companies opinion was that either mandatory delivery had no real gains or that the advisory firm they contracted with simply did a poor job. Our review concluded the poor performance was  due to inadequate management of the department ad had nothing to do with the hedge advisory firm. A few simple adjustments were necessary to add another 17 basis points to the bottom line. To put it another way, we eliminated 17 bps of unnecessary waste. 

During a recent assignment for a west coast bank, it was discovered the post closing department was frequently behind schedule satisfying investor pre purchase conditions. This was due in part to inadequate resources, supervision, training and systems. To make matters worse, department staff simply changed the purchase price to adjust for investor penalties. Each of these conditions was entirely avoidable.

This same bank thought a loan origination program and a doc service was all they needed to operate. A low cost mortgage platform could have helped track late deliveries and penalties; moreover, they would have been able to reduce costs and deliver in a paperless environment.

Despite having their hands full with seriously ailing institutions, regulators continue to keep pressure on otherwise healthy institutions to shore up operations and seek out new ways to achieve best practice standards.