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Continuing our series on Internal Controls as they relate to Loan Servicing, this post focuses on several other types of Internal Controls that do not fall into the previously covered Preventative or Detective categories defined earlier in this series -- Directive, Corrective and Recovery controls.

Directive controls provide employees with “the rule of the road,” outlining what activities and action are or are not allowed. Examples include policies and procedures; laws and regulations; training; job descriptions; meetings, etc. Corrective controls proscribe an established remediation process for employees to follow when an error or trigger has been identified. such as removing system access for previously terminated employees or research/adjustment that must be made when an account does not balance. Lastly, Recovery controls ensure an organization continues to have access to documents and data in the event of a natural disaster or other business/service disruption. These include backing up data, retaining documents in a secure environment and the retrieval process following an event.

As previously noted, regulators, auditors, executives and rating agencies all expect to see the full range of internal controls in place. The ability to provide documented evidence that control activities were performed is equally as important as having the controls in place and properly executing them in the first place. This may consist of something as simple as initialing and dating a control exception report; or creating a list of frequent and consistent control reports and signing and dating the list. In summary, while the mortgage servicing industry is constantly striving to maintain regulatory compliance; it is critical that servicers remember documented control activities are necessary components to a strong internal control environment and realizing company goals and objectives.  

If you are concerned that your internal controls aren’t what they should be, let us put your mind at ease. Contact resources@mqmrnews.com to discuss how MQMR and our servicing focused sister company, Subsequent QC, can help you identify your risk and recommend the appropriate controls to leave your organization better protected.