Loan Servicing Industry Day Q and A.pdf

Loan Servicing Industry Day

Question and Answer

Question 1. Will we receive a copy of the slide deck?

Answer Yes. The slide deck will be published next week

Question 2. Vendee Loans, who originates the loan?

Answer Yes. Those are originated by whoever is doing the servicing contract.

Question 3. What is the volume on the Vendee loans?

Answer 1,071 total. Less than 50 a month

Question 4. Can the same company hold both contracts?

Answer Yes. You can bid on both contracts.

Question 5. For the VASP portfolio and the VASP loans, it’s pretty substantial amount of loans. It’s my understanding that program has been discontinued. Has this program been discontinued?

Answer Yes, it is discontinued. But we have a lot in the portfolio. We will work through some of those loans, but it is pretty substantial.

Question 6. In terms of the partial claims, what are you seeing so far in productivity?

Answer New PC program. We have not booked any new PCs, but they will go into the portfolio, they will be retained by the services that does the PC on behalf of the Veteran. The work on this contract is specific to the existing PCs.

Question 7. Will the underlying notes, held by someone else for the new PC Answer New PC will be held and serviced by the current service holder.

Whoever currently holds the PC will retain the PC. Currently, the plan is for them to come into whoever gets the contract to complete the final accounting, and they will submit through the payment system.

No monthly collection on PC. The note is generated and completed by the current service holder. They will let the contract holder know they have one, they will send the funds to you to create the receipt and send to the government. The intent is not to process any new PCs.

Question 8. Most government contracts require you to originate a service loan in every US state, territory, jurisdiction, et cetera. Is American Samoa included as well?

Answer Yes.

Question 9. Can you walk through the timing for the procurement to go live?

Answer Industry day is today. We don’t have an exact timeline, but we will solicit as soon as possible. There will also be a transition period between the current and new contracts. We are in our last option period. We expect there to be some overlap to transition items before the current contract expires.

Question 10. Will the procurement be live in the 4th quarter?

Answer We anticipated early in the new fiscal year (October – December)

Question 11. Do we have an anticipated contract vehicle? GSA MAS, IDIQ, etc.?

Answer Current award is a contract, not an IDIQ. The new contract type/vehicle has not been determined.

Question 12. Will you require all new systems by FedRAMP and NIST compliant?

Answer Yes. We are not expecting you to develop new software, but we are expecting you to be FedRAMP certified. Please refer back to the PWS.

There will likely be requirements to integrate into our systems. We do not expect custom software, but we do expect data on a real-time basis.

Question 13. From the original PWS last year, to the current PWS released with Industry Day, it went from $30M to $50M – What was the justification for that?

Answer Advances. The advances on delinquencies went up, which caused a difference in reserve amount. The delinquent VASP loans created advances in escrow and taxes.

Question 14. What about the reimbursement?

Answer At termination.

Question 15. How do you envision the portfolio over time?

Answer What’s in there is stagnant, so you won’t get any more VASP.

Originations are typically vendee, we aren’t doing many of them right now. There isn’t a whole lot of originations going on.

What you see in the portfolios is pretty much what you are looking at.

It will be stagnant for a while. There will be some moving out as you work through the delinquencies and VASP loans, resulting in the portfolio going down. There will be partial claims as well, which are payoffs and the numbers will dwindle.

Question 16. In the diagram, what is the refunded category?

Answer Think of it like the old VASP. It’s the old refund program, the traditional servicing purchase.

Question 17. It used to be that before closing the VA purchased the loan from either the lender or any of you guys. Where would that go? Is that repurchase?

Answer Refunds.

Question 18. Repurchase?

Answer Repurchase is repurchasing loans. We used to do the old loan sales and the trusts, we would sell some of those. If we had to rebuy them, they would be repurchases.

Question 19. Speaking in the realm of collection activity, I noticed that the R value spoke to skip-tracing. Why are you focusing on that?

Answer This has been in there for a long time. We typically focus on repayment. Debt tracing, we hand over to Federal Treasury. We don’t track down for missed payment. That is sent to the crediting agency.

Question 20. If a company doesn’t have all the required licenses, Mortgage licensing requirements, debt collection licensing requirements, etc., across all 50 states and territories, would you be open to teaming arrangements in order to meet the licensing requirements?

Answer It depends on what the arrangements are. But the idea is, we have one vendor who we work with. We don’t control the subcontractors you work with.

Question 21. For real-time data, it wasn’t self-evident from the PWS what the expectations are for the level of access or timeliness.

Answer We request live read only access to your systems so we can do oversight. Collateral and things like that we expect to have access to.

The reporting library shows what we are looking for, monthly reports, dashboards, etc. The more you give us ahead of time the better. We do not want to manipulate your system, only access reports and related items.

Question 22. Is Valerie the system of record?

Answer No, it would be your system, but it would integrate with Valerie. We’re currently using a Web Service not an API.

Question 23. Growth in the portfolio. Can you speak to potential surge needs?

Answer 5000-6000 size because of VASP. We’re going 5 years because this will likely normalize the portfolio. There isn’t a whole lot of originations. It isn’t going to grow. There will be a lot more payoffs than growth. There is a pretty high delinquency rate for VASP. Once you get past the second year, VASP will normalize. Delinquency rates are typically in the low teens (12-13%). Right now, we have a higher delinquency rate because of VASP. If things change in the next 5 years, we could be looking at something different.

Question 24. I noticed there is a lot of oversight with decision making at the VA. What is the timeline for the decision making process?

Answer 2-3 days. We have a waterfall approach for the normal decision making so things will flow quickly. Congressional related decisions and other big decisions requiring a lot of time won’t reflect in your portfolio. Those types of situations the VA is making the decisions, not the contractor.

Question 25. Could you clarify trigger points for oversight process?

Answer We have our normal oversight process based on pulling samples.

There will also be reviews going the other way, complaints, hotline boxes, congressional reviews, etc. There are many reasons why there will be a review/audit, but usually due to the standard desk review, or complaints. All final approvals come through the VA through the waterfall process. Reviews, all yes and one no, we look at the no.

Otherwise, we’ll skim the yesses and randomly select one for review.

Question 26. Will both solicitations be published full and open? What if we have a teaming agreement?

Answer This solicitation will be posted full and open, no set-aside. Details related to SDVOSB/VOSB will be included in the solicitation.

Question 27. Will there be one waterfall for everything, or a separate one for VASP?

Answer VASP will have its own waterfall.

Question 28. How many total staff are involved with the waterfall decisions and oversight?

Answer Approximately 13 people. Policy and oversight are separate groups, but that is seamless.

Question 29. Other than congressional, can you speak to other decision types, like IG?

Answer IG is once a year. We will send out a sample 2-3 months before audit.

It’s a new contractor so high touch. If we do an onsite, it will be a one week review at your location. Usually at one of reginal sites. IG can become involved in anything when they find a need, if something is reported.

Your role is principally documentation and answering questions about your process. Decisions are IGF by the VA. Reserved functions for VA, program is open to talking to contractor to make things seamless. We cannot anticipate engagement on modernization over the years. Would like to fund initiatives for automation.

Quarterly meetings. VA and contractor will go over portfolio, process, and policy. You will get that feedback on a quarterly basis.

Phone calls as outliers arise for one-off loans that may have an issue.

Question 30. Of the loans, do you have a vacancy percentage? Are there any vacant?

Specifically, where the borrower is nowhere to be found?

Answer Yes. We have loans where there is no one in them. But there are also loans where individuals won’t leave. Some have entered into foreclosure. Vacant and delinquent loans will go to foreclosure.

Question 31. If it’s vacant/abandoned, I assume you will not repurchase and it will go straight to foreclosure?

Answer Yes. If it’s vacant/abandoned, it will go straight to foreclosure.

Question 32. Consistency, completeness, accuracy of data during transition. Is it pretty clean?

Answer Yes. For VASP, we have worked through most of the problems and sent back what we can. There will be some items we need to work through, but we’re in a good place knowing what we have. There will be some transition you will need to work through.