Aspen Grove Solutions Articles

At Aspen Grove Solutions, we aim to make your life easier by giving you  useful information on property servicing. If you work in mortgage servicing, property preservation or maintenance, you can rely on our decades of experience in the mortgage default servicing industry to keep you well informed.

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Background Checks: Protecting the Mortgage Servicing Industry

aspen irecordCompliance pressures, increasing costs, and other issues can make it difficult to find peace of mind in the mortgage servicing industry. With the industry standard background check and proof of service, however, Aspen iRecord® makes things easier. We give service providers the tools to control and manage vendors and work orders and help field service professionals streamline the process of inspection and preservation. Associating every background-checked vendor with a unique ABC#, Aspen has helped solve an industry-wide problem. GSEs and servicers, NAMFS, and field services vendors have adopted and endorsed the Aspen iRecord® solution. This robust solution addresses the specific problems facing the mortgage field service industry:

  • Exposure to fraud
  • No clear line of sight to the individual(s) who worked on your property and whether they posed a risk to consumers,
  • No generally accepted set of requirements
  • Cost of multiple checks
  • Confusion and risk associated with a lack of common standards
  • Significant dollar leakage

The Aspen Background Check Solution

With Aspen iRecord®, mortgage servicers, service providers, and field service professionals win. Our solution addresses:

  • cost control and recovery
  • vendor oversight
  • reputational risk
  • compliance risk
  • quality
  • community safety

What’s Covered by the Industry Standard Background Check?

The industry standard background check resulted from collaboration between Aspen Grove Solutions and an industry working group set up in 2013. They agreed on a background check that covers the following:

Social Security Number Verification

The background check company verifies the applicant’s social security number to determine whether the social security number has been used fraudulently. They also identify locations where an applicant has lived that they did not list on their application.

Felony & Misdemeanor County Search 

The background check company conducts a county-level search for felonies and misdemeanors. They do not include infractions and traffic violations.

Sex Offender Database Search (State & National)

This covers a state-specific registry that contains information on sexual offenders who are obliged to register in the state in which they reside

National Criminal Record File Search

This searches the database of fugitive files and government watch lists, sex offender registries, state and county criminal record repositories, state departments of corrections, and administrative offices of the court.

Federal Criminal Search

The federal criminal search checks the U.S. District Courthouse. Bank robbery, bank fraud, and kidnapping are among the federal criminal cases that could be uncovered.

Global Sanction Search

The U.S. and foreign database sanctions that this search covers include Office of Foreign Asset Control (OFAC), FBI Most Wanted List, Terrorist Exclusion List, Denied Parties, and World Debarred Parties Lists.

Levels of Compliance

Once the background check company conducts all searches and completes the background check, the applicant is classified according to four individual compliance levels:

  • IC01: This is the highest level of compliance. The client tolerates certain minor crimes and convictions, but the applicant must have a clean record for at least a decade within the criminal charges screened for.
  • IC02: This is the level below IC01. The client is more tolerant of certain crimes and types of convictions, but the applicant must have a clean record for between five and ten years for the criminal charge categories screened for.
  • IC03: The client has a greater tolerance of specific crimes and conviction types, but the applicant must have a clean record for between two and five years for the criminal charge categories screened for.
  • IC04: The highest tolerance level of crimes and conviction types.

How It Works

You can use Aspen iRecord® simply to order a background check, but take full advantage of Aspen’s solution by adopting its proof-of-service technology. The first step is to secure a background check. So how do you do this?

  1. Register with Aspen iRecord® and choose a background check company.
  2. Submit a contact for ABC# and background check, with consent.
  3. Once the background check is completed, it is adjudicated by the background check company.
  4. View the contact’s individual compliance (IC) result.
  5. Release the result to the contact’s Aspen account.
  6. Share compliance through network connections.
  7. The individual uses the ABC# to check in on site at the property.

Once the field service professional has been background checked and received their ABC#, they can be identified when they check in on site without revealing any personally identifiable information (PII). This means your network of field servicers can demonstrate their compliance in a confidential manner. After they have checked in, they update property condition questions and agree to a code of conduct. From the servicer and service provider’s perspective, Aspen’s proof-of-service technology improves oversight, accountability, monitoring, and risk management. Then, they can use our powerful iAnalytics tool to analyze the results.

The Benefits of Aspen’s Proof of Service Solution

Demonstrating proof of service with Aspen iRecord® offers benefits for mortgage servicers, service providers, field service professionals, and consumers. The system is backed by cutting-edge technology to create a streamlined process that saves time, money, and hassle.

If you are a mortgage servicer or service provider, you get the peace of mind that Aspen has defined best practice for the background check. You know you are compliant with regulations regarding the oversight of third-party servicers. You enjoy the consistency of relying on the same industry background check to satisfy different levels of compliance. You get full visibility of your supply chain with proof-of-service check-in at the property for added protection and transparency. This also limits your exposure to fraud and unnecessary charges.

From a field service professional’s perspective, one standard background check means you avoid the expense of having to get different background checks for different service providers. You know that one, accepted background check will do the job every time. You can also use Aspen iRecord® as a promotional tool to share your marketing profile

Communities are protected because only suitably background-checked individuals are permitted onto properties.

 

To Sum Up:

Aspen’s Background Check & Proof of Service Tell You:

  • Who did the work
  • Whether they were at the right property
  • When they were at the property
  • Whether they were sufficiently background checked
  • The condition of the property (10 binary questions)
  • Whether the work was done in accordance with code of conduct

You know:

  • You meet the industry standard
  • You have demonstrated level of control over third-party vendors
  • You meet standards of compliance and enforcement
  • You can answer auditor questions in a clear, documented approach

 

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The Case for Blockchain in Mortgage Servicing

Blockchain technology is changing the way business operates in virtually every industry across the world. How should it be harnessed for mortgage servicing? Industry thought leaders addressed blockchain and mortgage servicing at the inaugural Five Star Fintech Summit in Nashville, Tennessee, March 21–March 22 , 2018. Aspen CEO Sean Ryan was among the experts exploring how the new technology could increase transparency and reduce the costs of regulatory compliance.

fivestar fintechWhat is Blockchain?

First a quick primer: Blockchain is creating a lot of buzz—and a lot of confusion. Essentially, what blockchain offers is the capacity to record and monitor transactions in what is called a distributed ledger (a decentralized database). Each block is a record of new transactions that is added to the previous one to create a chain of blocks—hence blockchain.

Transactions are recorded in real time in blocks and are visible to everybody with permission on the network. The transactions are tamper-proof once conditions are agreed and written into the ledger because each transaction block is tied in a linear fashion to the previous transactions.

Think about it for a second—real-time recording of transactions, full visibility, and tight security: These are all factors that the mortgage lending and servicing industries need. Lending and mortgage servicing are processes associated with significant risk and low levels of trust from origination through to servicing of the loan. We need to consider any approach that would reduce that risk and improve trust levels.

Key Blockchain Features that Could Benefit the Mortgage Servicing Industry

Blockchain’s defining elements could add efficiency and transparency to the workings of the mortgage servicing industry. These elements are:

Distributed Ledgers

Blockchain works on the basis of decentralized databases called distributed ledgers. Instead of one party holding the information on a central ledger, it is stored on a public blockchain that offers a distributed way of validating a transaction. A distributed ledger could be created to contain real estate titles, planning permissions, deeds, and any other information relevant to the mortgage industry. Distributed ledger technology allows for shared control of data—specifically, who can alter or supplement the data and how they are authorized to do so. The blockchain network is distributed across multiple computers, creating a virtually unbreakable chain of protection against transaction falsification and speeding up the collection of mortgage-relevant information by mazimizing the ledger’s accessibility and availability.

The process tracks digitized transactions, so when authorized users validate these transactions on the blockchain they enhance transparency for audit and compliance purposes. Banks and lenders get clear line of sight of precisely what happened during the lending process—the parties involved, the individuals managing the authoritative copy of the digital assets, and the ultimate owner of the assets.

In blockchain banking, multiple network computers record transactions, which are settled by many individuals.

blockchain in mortgage servicing

In blockchain banking, multiple network computers record transactions, which are settled by many individuals.

Smart Contracts

Smart contracts, otherwise called self-executing contracts, help you exchange items of value in a secure, transparent way without relying on an intermediary. The concept works on much the same principle as a vending machine, with the required item (e.g. digitized mortgage documents) being supplied on fulfillment of the required terms. Smart contracts operate on an If-Then premise, so they both define the rules and penalties around what the contract does and enforce those obligations.

The decentralized ledger could be used for smart contracts to digitize mortgage documents for storage and tracking by the network of computers that run the blockchain. This would also result in ledger feedback such as automated mortgage payments. This, in turn, would result in a substantial drop in operational costs and processing time of mortgage transactions, which would be beneficial to both the consumer and mortgage industry players.

A report by Capgemini Consulting called “Smart Contracts in Financial Services: Getting from Hype to Reality” states that the adoption of smart contracts by the mortgage loan industry could potentially save consumers between $480 and $960 per loan. It also calculates that banks could save between $3 billion to $11 billion annually by reducing processing costs in the origination process in the U.S. and European markets. These savings would result from the automation, process redesign, shared access to digitized legal documents, and access to such external documents associated with smart contracts.

Inherent Security

The length of the mortgage-lending life cycle and the sheer number of contracts and sensitive documents involved make it vulnerable to risk through all stages from origination to fulfilment of the loan. Many financial institutions still rely on paper for such valuable documents as mortgage notes, whose value disappears if they are lost or destroyed. Even electronic loan documents require strict oversight of chain of custody and ownership to maintain the integrity of the loan and the overall lending process. The distribution of the blockchain network across many computers creates an inherent layer of security that makes it incredibly difficult to falsify transactions. Furthermore, because each transaction block is tied to all previous transactions, it cannot be tampered with once the conditions are agreed and written to the ledger. Cryptography authenticates and verifies transactions, maintains privacy and allows participants to see only the parts of the ledger that are relevant to them.

Digital Payments

Blockchain’s first and most famous application centered on digital currency. The cryptocurrency Bitcoin was invented in 2008 as blockchain’s public ledger, and digital currency remains an intrinsic feature.  Digital payments can be exchanged automatically for digital assets such as property titles in a synchronized process without the intervention of a notary or legal representative. Ultimately, if central banks created digital fiat currencies, they would have tighter control of monetary policy and improved oversight of financial payments, but they are likely to proceed cautiously. Commercial banks could speed up the process by creating their own private digital currency to allow clients to transact directly among themselves. If successful, they could inspire central banks to follow suit.

 

What the Mortgage Servicing Industry Needs to Consider

The mortgage servicing industry is not known for embracing innovation early, and it will take several successful implementations before blockchain is adopted as a viable technology. In any case, blockchain is not without its challenges, and several technical obstacles need to be overcome before blockchain is accepted generally in the market:

Technical Challenges

  • Data privacy concerns are a significant issue in an open distributed environment. More work needs to be done in the areas of math and cryptography to reduce the trade-offs between privacy, efficiency and trust.
  • Security can be an issue with private blockchains. Any changes made to the database should be sent to all users immediately so that the record is secure. Once everybody has a copy of the data, the integrity of the overall database can withstand hacks on some users.
  • Regulatory uncertainty hangs over the technology. The U.S. federal government has not regulated blockchain to the exclusion of states, so the states may introduce their own rules and regulations. So far, Arizona has recognized smart contracts, Vermont now accepts blockchain as evidence, Chicago is running a pilot project on real estate records, and Delaware has an initiative pending that would allow registration of shares of Delaware companies in blockchain form.

Despite these technical challenges, the future of blockchain in financial services seems unavoidable. The inherent transparency, efficiency, and security benefits of employing the technology suggest that blockchain will be an integral part of mortgage servicers’ future, and those institutions that embrace its benefits early will the ones that gain most.

Blockchain & the Five Star Fintech Summit

The inaugural Five Star Fintech Summit set out to jumpstart a new route for the U.S. residential mortgage and real estate industry, covering all aspects of financial technology and its future applications. Speakers from the technology, operations, and mortgage industry discussed the latest approaches to prioritizing consumer fintech. This two-day event focused on transparency, accessibility, and ease of use, with the aim of giving participants practical help in the form of actionable ideas and processes they can implement at their own organizations.

The organizers scheduled three sessions to discuss the role of blockchain in mortgage servicing. The first dealt with blockchain’s native capabilities as a platform for cross-border payment networks. Session two focused on the arguments for incorporating blockchain in servicing, mortgage, and title. Aspen CEO Sean Ryan participated in this discussion, together with Katie Jo Keeling of McCarty & Holthus, Marvin Stone of Stewart Title, and Jessica L. Fox of Freddie Mac. The final session dealt with the importance of incorporating blockchains properly in the highly regulated mortgage servicing environment.