Fay Servicing Increases Productivity by Over 500% Without Increase in Staff with ACES Audit Technology™

COMPANY

Founded in early 2008, Chicago, Ill.-based Fay Servicing is a special servicer and originator that leverages its differentiated relationship-based platform to maximize the value of residential loan portfolios for mortgage bankers and alternative real estate investors.

CHALLENGE

Fay Servicing’s quality control team was at an impasse. The department, which was established in 2014, historically relied on a combination of manual loan selection, shared file drives, email and spreadsheets to manage its QC audits. Once the total number of monthly audits reached double digits, the team knew it was time to make a change, and adding staff was not an option.

“We were doing 10 audits a month as a team and had accumulated more than two years of data in spreadsheet format, making it extremely cumbersome to conduct historical QC audit reports.” said Savannah Prout, FVP of Quality Control at Fay Servicing. “What’s more, we were auditing 2,000 to 3,000 individual loans each month because we didn't have the benefit of knowing which sample criteria overlapped with itself.”

To address its current challenges and position Fay Servicing for future growth, the QC department needed a solution that could offer:   

  • Automated audit workflow;
  • A secure communication portal;
  • Centralized, flexible reporting; and
  • Optimized loan sampling.

SOLUTION

After evaluating several software options and even considering outsourcing its QC reviews, Fay Servicing was ultimately won over by the comprehensive nature of ARMCO’s ACES Audit Technology platform.

“ACES had everything that we needed in one place so from a cost perspective, it made sense for us to keep QC in-house,” Prout said. “One other big draw was the automated loan sampling. Our process before ACES was a nightmare, and it could take one individual an entire day to pull the sample for one audit, whereas in ACES, it's done with the click of a button. The other attractions were the reporting tool – being able to pull reports, however and whenever we want – and the communication portal. Keeping all of the back and forth on every single exception we find in one place was also a tremendous gain in integrity for our data.”


“ACES had everything we needed in one place so from a cost perspective, it made sense for us to keep QC in-house.” — Savannah Prout, FVP of Quality Control at Fay Servicing

In addition, the structure of ARMCO’s professional services and relevancy of its questionnaires provided more points of differentiation from the other solutions Fay Servicing was considering.

“Many on our list had professional services, but with ARMCO, there was a lot less need for custom build-outs because it was already constructed in ACES the way that we would have wanted it,” Prout explained. “Also, the monthly updates to the ACES Intelligent Questionnaires for servicing and for state servicing checklists was very attractive.”

RESULTS

With their selection of ACES, Fay Servicing dove headfirst into the implementation process and quickly discovered even more of the system’s features and functionality that they wanted to add to their initial system deployment.

“When you have a system like ACES with so many awesome features, you have so many more tools at your disposal to make your QC process even better, and we wanted to use them all,” said Hugo Quintana, AVP and Audit System Administrator for Fay Servicing.

REPORTING:

Another task that took Fay Servicing endless hours to complete prior to ACES was ad hoc reporting on QC trends, something Prout noted was very popular with state auditors. “Using Business Objects in ACES, we can provide every investor QC testing results for their loans within two minutes. That's something that has definitely been a plus because not only do our investors appreciate it, but senior management and our other departments can also use the report to view overall audit results and target specific employees, regulations or states within those results,” Quintana added. 

PROFESSIONAL SERVICES TEAM:

Helping Fay Servicing along this journey were ARMCO’s Client Success and Customer Support teams, lead by Executive Vice President of Operations Sharon Reichhardt. 

“The ARMCO Client Success Team gave us so much insight and information about the system that I credit them with the success we’ve had with the system,” Quintana said. “What I like about the ARMCO support team is that they are all previous ACES users. So when you call them with a question, they instinctively know what you’re trying to accomplish and can help you get to the answer quickly.” 

Other aspects Fay Servicing found helpful in the implementation process were ARMCO’s library of ready-made training materials, such as the user manuals, webinars all available in the ACES Knowledge Center. 

“During the implementation of ACES, we experienced an unfortunate transition in our project management office that left us without an internal Project Manager for several months”, said Howard Cohen, Chief Risk and Compliance Officer at Fay Servicing. “Due to the outstanding performance of the ARMCO Professional Services team, we were able to implement ACES within budget, at a higher quality than anticipated and with only a slight, self-inflicted, delay. I have implemented many systems over the last thirty years, and the ARMCO team stand out as best-in-class. The ACES solution has enabled us to increase the number of transactions we review in QA and QC by more than 500% without an increase in staff. Choosing ARMCO as our partner was a true success story for Fay Servicing”, adds Cohen. 

COMPLIANCE:

With ACES in their corner, the Fay Servicing QC team is confident that they are auditing to all of the latest state and federal requirements and regulations while maintaining audit efficiency. 

“One of the biggest challenges servicers are facing right now is staying on top of all the regulation changes going on at both the federal and state level. Now that we have ACES, we have support from a master library of ACES Intelligent Questionnaires provided by the ARMCO Compliance team,” Prout said. “ACES Intelligent Questionnaires gives us updates every month of what regulations have changed and what new regulations are coming up. 

Before ACES, Fay Servicing was limited to only 200 generic applicable questions between all 10 audits. ACES has allowed them to increase their question sets to 1,200. The ability to optimize questionnaires by using selection criteria has proven to be a huge time saver for auditors. 

Once ACES was in place, Fay Servicing’s QC team felt the impact immediately on its audit efficiency and productivity, which included:

  • Increased productivity by over 500%;
  • A 200% increase in the number of audits conducted per month with room to grow;
  • Create reports with a click of the button for investors, executives and regulators;
  • Maintain high internal compliance scores
  • Expanding sampling and loan selection criteria data points from 300 to 2,000; and
  • Increasing audit productivity without adding staff. 

In addition to leveraging ACES on the QC side of the house, Fay Servicing also chose to implement ACES in its Quality Assurance department, enabling both teams to optimize their audits and provide an additional layer of security.

“Because we also implemented ACES on the QA side we have the flexibility to quickly adapt our process to implement appropriately quality sampling of in-line activity to prevent regulatory failure.,” Quintana said. “As a result, our internal compliance scores have improved dramatically.”  


The ACES solution has enabled us to increase the number of transactions we review in QA and QC by more than 500% without an increase in staff. Choosing ARMCO as our partner was a true success story for Fay Servicing”.  Howard Cohen, Chief Risk and Compliance Officer at Fay Servicing

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