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Representative Engagements

Anti-Money Laundering/Bank Secrecy Act

CrossCheck performs Anti-Money Laundering/Bank Secrecy Act independent audits for the various client segments it serves. Our approach is based on the examination guidelines published by the Federal Financial Institutions Examination Council (FFIEC) and FinCEN requirements. An independent audit provides management with an unbiased assessment of compliance with the anti-money laundering requirements and raises the state of regulatory compliance within the institution. The recommendations we provide help improve operational and compliance controls.

Client Type

Mortgage Banking – Originator

Mortgage Banking – Servicer

Intermediate Banks ($1 – $10 billion in assets)

Community Banks (<$1 billion in assets)

 

Service Type

Independent Audit


Audit Co-Source

Continued growth and increased regulatory scrutiny prompted a client to have CrossCheck assist them with the implementation of an internal audit function. After developing an audit charter, performing an audit risk assessment, and providing a multi-year internal audit plan, we assigned experienced internal audit consultants to complete the audit plan. The goal of an internal audit is to identify areas for improvement in the institution’s control environment, policies, procedures and practices, and to provide practical, sustainable recommendations that address the root cause of issues identified. Each internal audit consultant assigned to the engagement was equipped with the knowledge and experience needed to fully understand the functional area being audited and make value added recommendations. In addition to completing the audit plan each year, we regularly provide reports to the Audit Committee of the Board of Directors, and provide ongoing consultation to the institution as needed.

Client Type

Mortgage Banking – Originator

Mortgage Banking – Servicer

Intermediate Banks – ($1 – $10 billion in assets)

Community Banks (<$1 billion in assets)

Credit Unions

Service Type

Audit Function Development


California Department of Business Oversight (DBO) Per Diem Interest Audit

The California Department of Business Oversight (DBO) alleged a large mortgage lender had not properly computed per diem interest on California loan closings. The lender engaged us to perform an audit of a sample of loans selected by the DBO and recomputed per diem interest. We found, and documented in a report, the lender’s proper compliance resulting in dismissal of the DBO action and avoidance of significant fines.

Client Type

Mortgage Company

Law Firms

Service Type

Compliance Audit


CFPB MOU Remediation

After receiving a memorandum of understanding (MOU) from the CFPB, one of the largest independent mortgage originator/servicers engaged CrossCheck – upon CFPB non-objection – to conduct a look-back of several thousand loan modifications made over a two-year period. We reviewed each modification to determine if fees assessed and cash contributions granted as part of the approved loan workout were calculated and disclosed properly to the borrower. Detailed reporting, including identifying refunds to affected borrowers, was provided to the CFPB. As a result, the client was able to meet the CFPB’s requirements in a timely manner.

Client Type

Mortgage Banking – Servicer

Service Type

Compliance Consultation – Issue Remediation


CFPB Readiness Exams

With implementation of the Dodd-Frank Act, mortgage companies became subject to examination by the Consumer Financial Protection Bureau (CFPB). Mortgage originators and servicers alike have engaged CrossCheck to assess their readiness for these examinations. Our approach for the review is based on the CFPB examination guidance and our findings enabled the originator/servicer to remediate issues prior to the exam thereby improving their compliance management system and reducing the potential for regulatory criticism.

Client Type

Mortgage Banking – Originator

Mortgage Banking – Servicer

Service Type

Compliance Consultation


Commercial Loan Portfolio Annual Review

CrossCheck performs reviews of an institution’s commercial loan portfolio that includes assessment of underwriting and credit administrations standards and practices; effectiveness of risk identification activities, including the ratings attributed to individual loan relationships and the overall portfolio; and risk management protocols to identify, measure, monitor, and manage portfolio risk. The review provides the institution with an evaluation of its process and verification of the level of credit risk in its commercial loan portfolio.

Client Type

Intermediate Bank ($1 to $10 billion in assets)

Service Type

Independent Loan Review


Compliance Management Systems (CMS)

As non-depository mortgage entities and fintechs align their internal control structures with the expectations of the CFPB, numerous clients have engaged CrossCheck to perform compliance management system (CMS) assessments of the four pillars of an effective CMS which include:

  • Corporate governance and oversight of the compliance function
  • Compliance program (policies and procedures; compliance training and ongoing compliance monitoring)
  • Consumer complaint response process
  • Independent audit of compliance

Our approach is based on the CFPB supervisory guidance and industry best practices. Our findings assist the client in strengthening the pillars for a more robust, fully operational and sustainable CMS.

Client Type

Mortgage Banking – Originators

Mortgage Banking – Servicers

Fintechs

Service Type

Independent Compliance Reviews


Compliance Policy and Procedures Development

As the regulatory environment and the requirements imposed on financial institutions continue to evolve, CrossCheck has been engaged by a variety of mortgage entities and community banks to review and enhance compliance related policies and procedures. This has also included the development of required policies that previously did not exist, enabling the client to strengthen the governance and internal controls within the organization.

Client Type

Mortgage Banking – Servicer
Community Banks (<$1 billion in assets)

Service Type

Compliance Consultation


CRA Parity Analysis

We assisted the bank in developing a Community Reinvestment Act (CRA) parity analysis to identify gaps in mortgage, small business, and small farm lending performance. Parity was established using owner occupied properties for mortgage and the distribution of businesses and farms for small business and small farm lending performance comparison. Distribution analysis identified deficiencies in the bank’s assessment area and at the branch level. The information provided the institution an opportunity to proactively address its HMDA and CRA lending performance.

Client Type

Intermediate Bank ($1 to <$10 billion in assets)

Service Type

CRA Parity Analysis


CRA Performance Review

We prepared a Community Reinvestment Act (CRA) performance evaluation for the bank in anticipation of its upcoming CRA examination. The performance evaluation is based on the regulatory CRA examination procedures and describes the bank’s efforts to meet the needs of the communities it serves. The engagement addressed the bank’s performance under the lending test, service test, investment test, and related community outreach efforts. Performance analytics incorporate performance context including demographics, peer performance, and other socioeconomic data.

Client Type

Intermediate Bank ($1 to <$10 billion in assets)

Service Type

CRA Performance Review


Credit Needs Assessment – MSA

Lenders need to understand the credit needs in the market areas they serve in order to design and provide products and services commensurate with those needs. We conducted a mortgage credit needs assessment of a selected MSA to identify product and service opportunities in majority-minority neighborhoods. The review included demographic, socioeconomic, and housing statistics, as well as historic trends in HMDA lending. Interviews of various community organizations provided additional information on current and planned housing initiatives. The outcome of the credit needs assessment helped the bank identify housing needs, obstacles, and opportunities to enhance its fair lending performance.

Client Type

Regional Bank ($10 – $50 billion in assets)

Service Type

Credit Needs Assessment


Due Diligence Review

An assessment of an acquisition target’s commercial loan portfolio and other real estate owned to identify concerns regarding the quality and collectability of the portfolio prior to purchase. CrossCheck’s review uncovered the lack of both adequate loan monitoring and basic loan administration procedures. This independent assessment allowed our client, the acquiring bank, to proceed with the transaction informed of the potential risks inherent in the portfolio.

Client Type

Community Bank (<$1 billion in assets)

Service Type

Due Diligence


Fair Lending Advisory

We provided fair lending advisory services to a national lender on development of statistical models designed to assess fair lending risk associated with marketing, underwriting, pricing, and loss mitigation. Assistance included the review of analytical results to assess and identify potential risk of disparate treatment, disparate impact and redlining. One of our fair lending practice experts participated in client meetings to review model data requirements, analytical approach, methodology for identifying fair lending risks, and review of results.  Our advice and guidance resulted in the modification of existing models and development of new models to enhance fair lending risk management efforts, as well as internal business justification of specific business practices.

Client Type

Consumer Finance

Large Bank ($50+ billion  in assets)

 

Service Type

Advisory


Fair Lending and UDAAP Audit Program Development

One of the pillars of an effective fair lending compliance management system (FL CMS) is the independent review or audit of the fair lending and responsible lending program. We assisted the company’s internal audit function in developing audit programs to assess the effectiveness of fair lending and Unfair, Deceptive or Abuses Acts or Practices (UDAAP) risk management efforts. The audit program addressed both loan origination and servicing processes and was based on the Consumer Financial Protection Bureau’s examination procedures and industry best practices. We conducted management interviews to ensure a clear understanding of the products and services in order to tailor the audit program to the company’s activities. These interviews provided the ancillary benefit of added fair lending awareness for the management team and the internal audit function. The mortgage company received a customized audit program designed to address fair lending and UDAAP risks associated with their business model.

Client Type

Mortgage Company

Service Type

Program Review / Audit


Fair Lending Examination Assistance

Subsequent to a regulatory examination, we were engaged in an advisory role and in partnership with the bank’s legal counsel. Assistance included responses to examination requests for additional information, independent review of redlining risk and preparation for potential referral to the Department of Justice.

Client Type

Regional Bank ($10 – $50 billion in assets)

 

Service Type

Advisory


Fair Lending Performance Review

We performed an analysis of the bank’s HMDA lending activity to identify 1) differences in levels of assistance based on the timing of decisions and final disposition of applications; 2) disparities in application outcomes including origination, denial, and non-decisioned applications; 3) pricing variances related to the frequency and magnitude of differences in APR and rate spread; 4)  steering of applicants to particular products or sales channels; and 5) redlining analysis to identify potential geographic and demographic gaps in higher minority geographies. The analyses provided the bank the information necessary to effectively manage fair lending performance risk.

Client Type

Intermediate Bank ($1 to <$10 billion in assets)

Service Type

Performance Analysis


Fair Lending Program Audit

We were engaged to perform an audit of the bank’s fair lending compliance management system (FL CMS) in coordination with the internal audit department. The objective of the engagement was for CrossCheck to provide deeper expertise to the audit team. The scope of the audit included program governance, roles and responsibilities, policies, monitoring, and analytics. Line of business interviews helped to identify risks associated with marketing, access to credit, credit risk management, and loan pricing. The audit team now has a better understanding of fair lending risks and controls and management has received valuable feedback to help improve its fair lending CMS.

Client Type

Regional Bank ($10 – $50 billion in assets)

Service Type

Program Review / Audit


Fair Lending Program Review

We conducted a comprehensive evaluation of the bank’s fair lending compliance management system (FL CMS).  The review included an assessment of board management and oversight, preventive and detective controls, complaint management, and third party risks.  We provided recommendations to enhance the bank’s fair lending program and assisted in the revision of policies and procedures.

Client Type

Regional Bank ($10 – $50 billion in assets)

Service Type

Program Review/Audit


False Claims Act Lawsuit

Realtors, on behalf of the federal government, brought a False Claims Act lawsuit against one of the largest mortgage servicers. CrossCheck reviewed and responded to the realtors’ allegations, providing expert testimony that allowed the client to achieve a favorable settlement.

Client Type

Mortgage Servicer

Law Firm

Service Type

Expert Testimony


Foreclosure Management Look-Backs

CrossCheck has executed numerous default management and foreclosure reviews. The objectives for these reviews aligned with the lookback requirements outlined in the Consent Orders issued to the 14 largest loan servicers in 2011. Each review included the requirements set forth by the CFPB related to early Intervention with delinquent borrowers, continuity of contact, loss mitigation procedures, and foreclosure processing. These reviews have kept the clients in compliance with regulatory requirements and allowed the clients to improve their operational controls.

Client Type

Regional Bank ($10 – $50 billion in assets)

Mortgage Banking – Servicer

Service Type

Loss Mitigation


GSE Repurchase Reviews

CrossCheck has assisted a number of its clients who received repurchase requests from Fannie Mae and/or Freddie Mac. CrossCheck performed a forensic review to verify the allegations in the GSE repurchase demand. Where appropriate, CrossCheck prepared the rebuttal letter and supporting evidentiary file, successfully rebutting thousands of repurchase demands.

Client Type

Large Bank ($50 billion + in assets)

Service Type

Portfolio Review


HAMP Class Action

A plaintiff brought a class action regarding HAMP modifications against one of the largest banks. Counsel engaged CrossCheck to review the mortgage servicing files. We prepared an expert report and provided deposition testimony, which resulted in denial of class certification.

 

Client Type

Large Bank ($50 billion + in assets)

Law Firm

Service Type

Expert Testimony


HAMP Expert Testimony

Counsel for a top-five bank engaged CrossCheck on several cases to review plaintiffs’ declined HAMP modifications. We prepared an expert report and provided deposition testimony, resulting in favorable settlements for the bank.

 

Client Type

Large Bank ($50 billion + in assets)

Law Firm

Service Type

Expert Testimony


HMDA Data Integrity

We have assisted numerous mortgage companies in validating the accuracy of Home Mortgage Disclosure Act (HMDA) data previously submitted or in preparation for an upcoming submission. Our approach to HMDA data errors and omissions testing integrates systemic data routines to identify conflicts between loan origination systems (LOS) and HMDA data. Identifying statistical anomalies or “red flags” when compared to peers and/or national aggregate data is a first step that helps focus the review. Through this approach we are able to ascertain the root cause of identified data issues, provide the framework for enhancing system controls, and enabling automated corrections to the LAR resulting in improved data integrity today and for future submissions.

Client Type

Mortgage Company

Service Type

HMDA Data Integrity


Internal Audit Plan Development and Risk Assessment

Continued growth and increased regulatory and investor scrutiny have prompted a number of mid-size, private non-depository mortgage servicers, originators, and fintech companies to implement an internal audit function. CrossCheck deploys experienced and certified internal auditors to assist with development of an internal audit plan including a risk assessment, audit schedule, and management and board reporting. CrossCheck also executes the plan and provides consultation to the institution as needed on a full out-sourced or co-sourced partner arrangement. As a result, clients have an understanding of the key operational and compliance risks in their company and are successful in meeting investor (e.g. Fannie Mae MORA), state, and CFPB requirements.

Client Type

Mortgage Banking – Originator

Mortgage Banking – Servicer

Fintech

Service Type

Audit Function Development


Loan and Credit Risk Process Review

A credit union experiencing rapid growth of its member business loan portfolio requested an independent review of its business loan portfolio and related loan policies and procedures to ensure adherence to safety and soundness expectations. While overall policies and procedures were satisfactory, recommendations were made to enhance loan review procedures and compliance with the Flood Disaster Protection Act and implementing regulations. Our review facilitated a stronger business loan risk management process and attendant flood compliance procedures to help avoid potential monetary penalties.

Client Type

Credit Union ($1 – $10 billion in assets)

Service Type

Member Business Loan Review and Policy and Procedures Review


Loan Exception Policy and Procedure Review

CrossCheck conducted an independent review of the bank’s updated policy and procedure for the tracking and reporting of loan exceptions pursuant to criticism from its prudential regulator. Applicable regulatory requirements, prudent business practices, and CrossCheck’s years of experience were the basis for recommendations to further enhance controls and processes and meet regulatory and business requirements.

Client Type

Intermediate Bank ($1 – $10 billion in assets)

Service Type

Policy and Procedures Review


Mortgage Electronic Registration Systems, Inc. (MERS®) Independent Audit

Mortgage servicers with more than 1,000 loans registered with MERS® are required to have an independent third party monitor their performance against their quality assurance plans. We have performed this role for a number of servicers, providing both the servicer and MERS® with an unbiased evaluation of the servicer’s procedures for complying with MERS® rules and requirements. Additionally, in anticipation of meeting the 1,000 registered loan threshold, CrossCheck has assisted other servicers in developing and implementing the procedures needed to successfully meet the MERS® annual requirements.

Client Type

Mortgage Banking – Servicer

Service Type

Operational Audit


Mortgage Fraud Review

The mortgage subsidiary of one of the nation’s largest banks requested a forensic review of residential mortgage loans acquired from various mortgage lenders and correspondent banks. CrossCheck’s team of mortgage fraud experts reviewed loans to determine the existence of material misrepresentation, which would result in a request to repurchase the loan. CrossCheck determined on which loans repurchase should be requested and prepared the supporting evidentiary file, resulting in millions of dollars in mortgage putbacks.

Client Type

Large Bank ($50 billion + in assets)

Service Type

Portfolio Review


Mortgage Operations Audit

The client requested CrossCheck perform an assessment of its mortgage and home equity operations. The scope and objective of this review included an assessment of compliance with applicable consumer and safety and soundness regulations, evaluation of internal controls, determination of adherence to and effectiveness of the bank’s policies and procedures, and comparison to industry standards and best practices. This independent review provided the client with an unbiased evaluation to strengthen its operations and reduce its overall risk exposure.

 

Client Type

Regional Bank ($10 – $50 billion in assets)

Service Type

Compliance Audit
Operational Audit


Mortgage Servicing Review

One of the nation’s largest banks, serving as trustee on various mortgage-backed securities, wanted to assess the performance of the servicer of the trust’s loans. CrossCheck performed this review, allowing the trustee to have a reliable understanding of the servicer’s performance.

Client Type

Large Bank ($50 billion + in assets)

Law Firm

Litigation Support Firm

Service Type

File Review


Mortgage-backed Securities Settlement Evaluation

CrossCheck partnered with a major litigation support firm to provide an opinion as to the fairness of a proposed settlement between an RMBS issuer and various investor groups. CrossCheck supervised the review of several thousand loans sampled from multiple RMBS trusts in order to evaluate the proposed settlement amount. The work resulted in approval of the proposed settlement.

Client Type

Large Bank $50 billion +

Litigation Support Firm

Service Type

Expert Support


Post Closing Quality Control/Denied Applications

Wishing to assure the quality and integrity of its consolidated student loan originations, a bank has engaged CrossCheck to perform quality control reviews on a sample of its monthly originations and denials. CrossCheck reviews the underwriting and compliance of the loans, and provides a monthly report on its findings, which includes trending analysis. As a result, the bank has confidence that its student loans and securities they back conform to the bank’s and markets high standards.

Client Type

Community Bank (<$1 billion in assets)

 

Service Type

Quality Assurance


Post-Purchase Portfolio Review

Upon acquisition of the assets of a failed bank, CrossCheck performed a credit and documentation review of the acquired loans and interviewed loan department personnel at the failed bank. The review uncovered issues and loan documentation errors that posed credit and financial risk to our client. Our review provided the information needed to address ongoing administration of the acquired loans thereby mitigating future credit and financial risk of loss.

Client Type

Intermediate Bank ($1 – $10 billion in assets)

Service Type

Portfolio Review


Predatory Lending Litigation

A borrower sued the client, a national mortgage lender, alleging that the lender engaged in predatory lending and loan flipping. CrossCheck reviewed the underwriting of the subject mortgage loan and provided expert opinions on the quality of the underwriting (including the borrower’s ability to repay), benefit to the borrower, and suitability of the type of loan. As a result, the client was able to achieve a favorable settlement of the case.

Client Type

Mortgage Banker

Law Firm

Service Type

Expert Testimony


RMBS Investor Litigation

Mortgage-backed securities investors, including government-sponsored enterprises regulated by FHFA, have filed actions under the Securities Exchange Act of 1933 and various state investment acts. Defendants’ counsel has retained CrossCheck to provide loan file review and expert testimony on many of these cases. We review the mortgage loan files underlying the security to evaluate the original underwriting and due diligence process. We determine the consistency of the loan portfolio’s attributes with security offering documents. CrossCheck has utilized its experience with loan products and underwriting standards to provide evaluations relevant to the historical context in which the loans were originated. Our work has culminated in expert reports, deposition testimony, and trial testimony.

Client Type

Large Bank ($50 Billion + in assets)

Law Firm

Litigation Support Firm

Service Type

Expert Testimony


Second Lien Portfolio Repurchase Review

A large regional bank, who had purchased a large portfolio of second lien loans on a servicing retained basis, was concerned that the original underwriting was not as represented and was dissatisfied with the servicing. CrossCheck reviewed the loan origination and servicing contracts to understand each party’s rights (e.g. repurchase, termination of servicing) and performed a thorough review of the loan origination and servicing files. We provided our opinions regarding servicing in accordance with the contract and industry-standard practices. We also evaluated underwriting exceptions, compliance issues, and misrepresentation. As a result, the client was able to negotiate a favorable settlement and move the portfolio to another servicer.

Client Type

Regional bank ($10 – $50 billion in assets)

Service Type

Portfolio Review


Training

Clients taking a proactive approach or responding to regulatory finding have engaged CrossCheck to prepare and conduct a variety of training sessions for business lines, senior management, and board committees. Training topics included Home Mortgage Disclosure Act; Community Reinvestment Act requirements; Bank Secrecy/Anti-Money Laundering, and loan servicing rules. As a result of the training, clients have enhanced internal training curriculums and procedural documentation.

Client Type

Mortgage Banking – Originator
Mortgage Banking – Servicer
Community Banks (<$1 billion in assets)

Service Type

Compliance Consultation


Truth in Lending and RESPA Integrated Disclosure (TRID) Compliance Monitoring

With all the challenges and nuances of the new Know Before You Owe (TRID) rules, management requested CrossCheck perform quarterly monitoring of its compliance with the TRID requirements. We established a quarterly process to select and review a sample of the bank’s new loan production, stratifying the sample for higher risk issues and out of tolerance situations that could result in expensive customer reimbursements. We identified the root causes of many of the issues, and recommended operational enhancements to reduce recurrence of errors. Management used the trending analysis reports we provided to track progress over time, and was able to make the operational changes it needed to address compliance going forward.

Client Type

Regional Bank ($1 – $10 billion in assets)

Service Type

Compliance Audit


Unfair, Deceptive, or Abusive Acts or Practices (UDAAP) and Debt Protection Products

Due to regulatory concerns related to UDAAP compliance, the bank requested CrossCheck assist with a multi-phased review of its administration of debt protection products including a look-back of thousands of customer loans with debt protection originated over several years. We provided a project manager and a team of a dozen consultants.The project manager assisted in developing the methodology to complete the review, trained the review team, provided management reporting, and maintained quality assurance throughout the project. Detailed analysis of each customer’s activity and loan servicing was performed over the life of the loan to identify situations that resulted in customer harm. Recommendations for customer remediation were provided to management. We also provided management with the information it needed to evaluate its practices, and take appropriate corrective action to mitigate any future risk and the potential for consumer harm.

Client Type

Regional Bank – ($10 – $50 billion in assets)

Service Type

Compliance Consultation – Issue Remediation