Large U.S. mortgage companies are taking their servicing operations off shore as one means to cope with increasing regulatory demands, according to a report by the Wall Street Journal.
They are sending servicing tasks and foreclosure processing to major tech companies in India including Tata Consultancy Services and WiPro, which, together with their counterparts there, are estimated to process $316 million in mortgage work this year.
That figure is up from half the amount completed in 2009, according to the WSJ. And, the shift comes during a time when big banks are already receiving criticism from regulators regarding their oversight of third-party vendors.
“The Indian outsourcers say they won’t be giving final approval for banks to foreclose on loans. Instead, they’ll make sure that the documents are in order so the banks can sign off,” WSJ writes.
“We never judge the cases,” Abid Ali Z Neemuchwala, vice president for business-process outsourcing services at Tata Consultancy told the WSJ.
“…What we do is make it easy for the banks to make that final decision by putting together all the information and letting them know their checklist is complete.”
One consumer advocate interviewed by the WSJ disagree, noting the problem with oversight being so far overseas.
“I think the lack of oversight so far away may be too much for these banks to handle, considering how badly they’ve handled overseeing their own staff,” Ira Rheingold, executive director of the National Association of Consumer Advocates, told the WSJ.
Written by Elizabeth Ecker