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IntroductionThere are two main components in the mortgage industry: origination and servicing. After origination and closing, it is common for a lender to sell the mortgage loan on the secondary market. Loans are packaged together into Residential Mortgage Backed Securities and sold to investors. This process frees the lender’s capital, which increases the availability of mortgage credit. The secondary market came about with the establishment of the Federal National Mortgage Association (Fannie Mae). After the great depression, obtaining a mortgage was costly and difficult. Lenders required significant down payments, typically 35% of the purchase price, the loan term was 5-10 years and carried an interest rate of 8-10%. Lenders also required borrowers have perfect credit. Lenders had limited capital so carrying a large loan for an extended period presented a great risk. Fannie Mae began purchasing loans from lenders, which allowed them to originate more loans. This was vital to the growth and expansion of homeownership in the United States.The expansion of the secondary market created the need for mortgage servicers. Servicers handle the day-to-day administration for investorsSelect Portfolio Servicing, Inc. is a leader in the residential mortgage servicing business. SPS specializes in servicing and resolving sub-performing, and non-performing, single-family mortgage loans. History of Select Portfolio ServicingSelect Portfolio Servicing started out as Fairbanks Capital in 1989 with an office in Park City, Utah. The initial portfolio consisted of 300 loans. By 1997, the portfolio had grown to 2000+ loans and the company moved its headquarters to Salt Lake City, Utah. From 1997 to 2002, Fairbanks Capital acquired the servicing rights from multiple companies, including a company in Jacksonville, Florida. The loan count had grown to 400,000 + loans. The infrastructure and management Fairbanks had in place was incapable of handling such a large portfolio. Loans were not being handled correctly. The Federal Trade Commission fined Fairbanks Capital and the company was required to enter into a consent agreement. After the FTC sanction several changes were made to the company, including a complete overall of executive management. To celebrate the positive turn around Recognizing the positive movement Select Portfolio made, Credit Suisse purchased SPS in 2005. SPS is a wholly owned subsidiary of Credit Suisse; however, they operate with their own policies and procedures. Credit Suisse is a financial services company, headquartered in Zurich, Switzerland, founded in 1856. Having the financial backing of Credit Suisse and the association with their stellar reputation has allowed SPS to become the company they are today. Meet the StaffTim O’Brien is the CEO and president of the company. Tim takes great pride in the success SPS has achieved. He believes “before making a decision, you have to analyze all of the data.” He is very analytical and yet very personable. He is very visible with all of the employees. Tim also believes in hard work. Each year the executive staff meets to set the corporate objectives for the year. Even with the high ratings from all three major rating agencies, Tim called for optimization for 2012. He says, “Once you become the best you have to optimize your skills, fine tune them.”Another member of executive management is Executive Vice President of Default Operations, Jeff Graham. Jeff was Chief Compliance Officer for seven years prior to his promotion to EVP. Despite his responsibilities with the Default Operations department Jeff has remained very involved with the Compliance department. Jeff believes firmly in operating “Not only by the letter of the law, but also by the spirit of law.” Jeff is also very approachable and very personable. SPS believes that people are at the core of their success. SPS’s employees are recognized industry leaders with diverse experience in the mortgage and financial services industry.BenefitsSelect Portfolio values their employees. Every employee is eligible for the following benefits:Health, Dental and Vision Insurance401k with Company ContributionPaid Time Off8 Paid HolidaysTuition ReimbursementAll employees receive an annual review with the potential for a merit increase. There 25+ departments within the company and each department have a unique performance incentive plan. SPS also caters lunch for the entire staff each quarter. Year End is celebrated with a companywide luncheon, were a raffle is held for prizes. The prizes range from $50-$100 gift cards to 40” HD TVs. Every employee is given a holiday gift; past gifts have included Rossignol fleece jackets and Ogio gym bags. Summer is celebrated with a company party. The summer party for 2012 was held at Lagoon Amusement park. SPS provided all-day passes for all employees and their families. Culture of ComplianceIt has been said, “That the mortgage industry is more heavily regulated than even the nuclear waste disposal industry.” Mortgage servicers have to comply with several federal regulations. In addition to the federal regulations, each state presents its own rules and standards for mortgage servicing. The rules and regulations change often. Each SPS employee attends annual compliance training to ensure compliance with all regulations. SPS also has a Change Management Committee that meets monthly to review compliance changes and ensures that SPS remains compliant. Each department has policies and procedures specific to their job function. These policies are posted on a company portal and are easily accessed by employees. SPS also has implemented several “best practices” that are now becoming industry standards. Recently several large banks were forced to enter into a consent agreement with the Department of Justice and 49 state attorney generals. This consent agreement was written to correct foreclosure and modification abuses. The changes to servicing standards have not been mandated on all servicers; however, SPS has taken the initiative to ensure full compliance with the new servicing standards. Select Portfolio also has an internal audit group called Servicing Risk Management (SRM). SRM completes an annual audit for each department. They report their findings directly to the CEO who then works with department management to correct any issues. Customer contact is crucial. Customer contact associates have their calls monitored by SRM to ensure compliance and superior customer service.In 2009, SPS agreed to participate in the Obama Administrations Making Home Affordable program. Participation in this program means complete compliance with guidelines set forth by the US Treasury Department for loan modification, short sale and deed in lieu of foreclosure plans. MHA-C is the group that performs audits, on-site and off-site, to ensure all program guidelines are followed and proper servicing for the loan. These findings are published in a public, quarterly report card. SPS has consistently achieved the highest ratings; three stars in all seven categories. On-siteAs previously mentioned SPS is headquartered in Salt Lake City, Utah and has an additional office in Jacksonville, Florida. The Salt Lake office consists of five separate buildings. Employees refer to each building by the first portion of the address. 3815 houses the Executive Offices, Corporate Legal, Escrow, Accounting, Analytics, IT-Networking and Corporate Human Resources. 3839 houses IT-Development, Foreclosure and Real Estate Owned. 3902 houses all of the customer contact groups for the Salt Lake site. 92 houses, a sister company to SPS, Resident Real Estate Review (RRR), Cashiering, and Mail. The last building is storage warehouse for physical loan files. The Jacksonville office is located in a business plaza; it is referred to as JAX and houses the Customer Service, Customer Advocacy and Payoffs/Reconveyance departments. Each building has its own unique environment and design layout.Every building proudly displays an SPS mission statement poster, signed by the employees. There are also posters with customer examples throughout each building. These serve as a reminder of who SPS’s customers are and how employee decisions affect the homeowner and the investor. MethodologyTo compile information for this report I conducted one-on-one interviews with Tim O’Brien, Jeff Graham and several other members of the SPS staff. I also toured four out of five of the buildings that make up the Salt Lake site. SPS also has a website- ConclusionAfter researching Select Portfolio Servicing, it is my opinion that SPS offers challenging and rewarding career opportunities. The company is dedicated to their customers and investors. With the mortgage industry in such turmoil, it is refreshing to see a company committed to compliance. ResourcesJ. Graham. Personal communication, September 6, 2012T. O’Brien, personal communication, September 10, 2012 ................
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