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Consumer Finance Group Document Transcript

  • 1. Consumer Finance Group Statement of qualifications 
  • 2. Table of contents Summary of qualifications and experience .....................................................................................................................1 Our clients .....................................................................................................................................................................3 Thought leadership ........................................................................................................................................................4 Conferences and events ................................................................................................................................................9 Consumer Finance Group Partners ............................................................................................................................. 11 PricewaterhouseCoopers
  • 3. Summary of qualifications regulatory matters and other areas that are critical to our clients. and experience Addressing contemporary problems with A leader among professional services firms innovative solutions PricewaterhouseCoopers has 100's of professionals In the current environment, requesting assistance from across the country dedicated to solving business industry experts allows for risks to be mitigated through problems for clients in the consumer finance sector. Our the use of focused professionals who are adept at focus is on mortgage banking and other forms of isolating issues, benchmarking practices and developing consumer credit which means we are at the forefront of innovative solutions to complex business problems. the industry working to anticipate, understand and resolve emerging issues. Our team's collective knowledge is invaluable at a time when compliance with constantly changing market Our clients consistently turn to us for help resolving dynamics is imperative, profits are under pressure, complex business issues in areas such as: Loan monitoring of risks is more difficult and gaining an edge Production, Servicing, Capital Markets, Management over the competition is more challenging than ever. In Reporting and Risk Management. More specifically, our response to these and other challenges, we are detailed subject matter knowledge and regular discussing practical yet innovative approaches to several communication with industry leaders allows us to remain current areas of focus among our clients including: at the forefront of industry issues and opportunities. Of • Strategies and approaches to manage and monitor late we have been working with our clients in the compliance with recently announced government following areas. programs (e.g. HASP, MHAP, TALF) • Developing and implementing collections, loss Default Risk Servicing Advance Collections and Loss mitigation and REO strategies Management Management Mitigation Strategy Implementation • Analyzing and providing recommendations on risk management practices in an ever-changing industry Loan Servicing Customer Shared Services and Profitability Profitability and Cost Management • Servicing profitability analysis Segmentation • Loan origination processes and controls to support Regulatory Asset Quality Management agency and FHA production including more Compliance Management & Reporting aggressive quality assurance monitoring Origination Controls • Servicing advance management Customer Retention Change Credit Risk Management Management • Enhanced production and servicing management reporting Accounting Mergers and Pricing Strategies and Auditing Acquisitions • Strategy, process and technology peer benchmarking To serve leading organizations, we have developed deep • Forecasting repurchase demand and minimizing the and meaningful knowledge in each of these areas. Our operational and accounting impact dedication to investing in our people, our industry • Due diligence and post-merger relationships and our commitment to thought leadership integration assistance provides us with the practice depth to sustain our position as the market leader. We serve clients in the • Loan pricing strategies and accounting solutions mortgage banking, credit card, home equity, student • Customer profitability and segmentation analysis loan, auto loan and manufactured housing industries. In addition to our core services, we also leverage • Project management oversight and execution specialized skills from broader PwC resources in key • Providing TDR Accounting and Loan Modification areas such as information technology, securitizations, process analysis and support PricewaterhouseCoopers Statement of Qualifications 1
  • 4. • Increasing customer retention through improving Breadth of services cross-sell opportunities and understanding customer lifetime value Our focus is on the business and compliance issues that impact our clients, as well as anticipating industry trends, • Analyzing models to forecast credit risk and sharing best and emerging practices, benchmarking enhancing effective credit risk management results, and solving complex business problems. We • Creating demand-based pricing models to maximize leverage our industry knowledge and broad experience profit per loan to provide a wide variety of services to clients: • Providing change management strategies for Controls Mergers and Acquisitions effective downsizing • Defining new products while maximizing economies • Sarbanes-Oxley • Due diligence of scale - Assessments • Acquisition - Project management • Integration A sampling of recent engagements highlights the breadth - Efficiency & effectiveness • File Review reviews • Post-merger integration of the services we provide to our clients: • Change management - Enterprise Risk • Defining a strategic vision and road map for a top 10 Management Strategy mortgage originator • Risk Assessment - Diagnostics • Process optimization • Analysis and benchmarking of default management for a top 10 servicer - Basel II - Originations - FDICIA - Underwriting • Assisting a large mortgage investor with the - G/L reconciliations - Closing implementation of a loss mitigation program including; process design, management reporting - Post closing Accounting and systems and performance analysis - Repurchases • Loan accounting systems - Default • Transformation of the Default processes for a large • FAS 157 global bank - Foreclosure • FAS133 program review - Pricing • Multiple servicer reviews on behalf of investors with a • FAS 91 - Fraud focus on default management, cost reduction • Foreclosure database - Servicing opportunities, and risk management • Key performance metrics • Loan origination systems -QC review • Repurchase process review and exposure analysis • Best practice reviews on a target financial institution • Automated underwriting systems • Customer retention and • Developing a household segmentation strategy for a cross-sell • Business requirements leading mortgage company • Credit risk management • System selection • Multiple due diligence and post acquisition Reporting and management Profit maximization integration projects • Audit and attest services • Process integration • Pricing optimization work for a top 10 • Internal audit outsourcing • Net economic value mortgage originator co-sourcing • Secondary attribution • Creating a change management strategy for a • Model validation • Activity based costing company in the midst of an M&A process • Regulatory compliance • Product configurator • Tax • Best execution assessments • Operational risk diagnostics in areas including loan • Price elasticity repurchases and default management • Price optimization • Design and testing of an advanced loan accounting solution • FAS 157/159 implementation and impacts PricewaterhouseCoopers Statement of Qualifications 2
  • 5. Our clients In addition to our US clients we also serve clients on a global basis in countries such as: Canada, United Kingdom and Australia. Our US clients include most major banks and financial services institutions, which we service in either an audit or advisory capacity. A summary of our US relationships includes: Mortgage banking and home equity lending • 9 of the top 10 residential mortgage originators • 17 of the top 20 residential mortgage originators • 10 of the top 10 residential mortgage servicers • 19 of the top 20 residential mortgage servicers Automotive finance • 7 of the top 10 Automotive Finance Companies • 11 of the top 20 Automotive Finance Companies Largest Visa & MasterCard credit card issuers • 8 of the top 10 credit card issuers • 12 of the top 20 credit card issuers Student lending • 8 of the top 10 largest educational lenders • 11 out of 20 largest educational lenders Timeshare • Relationships with 2 of the largest operators of vacation ownership resorts GSE • Relationships with the primary government sponsored agencies, guarantors and lenders PricewaterhouseCoopers Statement of Qualifications 3
  • 6. Thought leadership published three publications addressing the impact of HASP on the industry. The publications are tools we use to communicate with our clients as update to HASP are We play an important role in shaping the ideas that affect announced. the consumer finance industry. In today’s environment staying abreast of industry standards and trends is The Housing and Economic Recovery Act of 2008 crucial, and staying aware of changes in the marketplace (HERA) was signed into law and new regulations were enables us to provide the most current and applicable issued under the Home advice to our clients. Our professionals consistently Ownership and Equity Protection share insight through publications, technical whitepapers, Act (HOEPA). HERA is a and conference presentations. comprehensive legislative package that brings changes to the regulation of government Point of View sponsored entities (GSEs), Change within the Consumer Finance industry is swift modernizes the Federal Housing and with this change comes a need to understand its Administration (FHA), and impacts. Our “Point of View” authorizes a new refinance documents were launched in program for troubled mortgage 2008 to summarize emerging loans (Hope for Homeowners). It issues and identify the expected creates a series of new requirements for mortgage impact of the specified topic. lenders related to licensing, counseling and disclosures. Our Cost Elimination XBRL: Steps toward an implementation plan document describes the current This document summarizes cost challenges in the Financial hundreds of pages of legislation Services industry. and regulation and presents a point of view on what steps On February 18, 2009, mortgage executives need to President Obama unveiled the consider as they start drafting a Homeowner Affordability and Stability Plan (HASP). plan to comply with the new rules The plan is a $275 billion initiative designed to prevent and potentially take advantage of home foreclosures and help people stay in their homes the new FHA Hope for by stemming the Homeowners program. rising tide of defaults and Advancing financial reporting delinquencies, beyond today’s paper-based and providing forms is a key project for the Securities and Exchange opportunities for Commission (SEC). In working toward that goal, the SEC consumers who is proposing to mandate the use of extensible Business have been unable Reporting Language (XBRL). The language for electronic to benefit from communication is a significant milestone that will declining enhance and improve the accessibility of information mortgage rates available to investors. because of high loan-to-value In May 2008, the SEC formally submitted its proposal (LTV) ratios. The that would require all companies applying U.S. Generally plan applies only Accepted Accounting Principles (U.S. GAAP) or to mortgages on International Financial Reporting Standards (IFRS) to owner-occupied begin using XBRL within the next three years. As the primary deadline for implementation nears, it is apparent there is residences. Our a need for a greater awareness and deeper team has understanding about the costs and benefits XBRL offers. PricewaterhouseCoopers Statement of Qualifications 4
  • 7. This whitepaper expresses a point of view on what It’s time for a new strategy — one that meets the companies can do now to ensure they are prepared challenges of today's economic climate with proactive, when the proposal takes effect. innovative solutions for collections and loss mitigation. In this whitepaper we discuss steps servicers can take Successful integrations: How to transform their approach to collections and to integrate processes, loss mitigation. systems, employees, and customers in consumer Customer Segmentation finance companies Financial institutions' customer acquisition strategies are taking Reports of mergers and a one-two punch as the integrations dominate the economic turmoil shrinks both headlines as the consumer their customer base and finance industry experiences marketing budgets. This extraordinary turbulence. The changing economic outlook is current market conditions pose testing the mettle of many unprecedented challenges but also present opportunities banking industry professionals as for companies that identify attractive acquisition they seek to attract and retain candidates for integration. profitable customers and disengage with those that do not offer value under their operating model. Successful integration provides numerous benefits to shareholders, customers, and employees. But many By building long-term relationships with the most companies fail to achieve the synergies necessary to valuable customer segments, companies can win over a bring about these benefits. A well-executed integration loyal - and profitable - customer base. While each requires effective planning and ruthless prioritization. company's approach will be unique to their particular Management often faces difficult decisions, including business needs, we have identified five steps that will whether to pursue an accelerated transition at the cost of help companies achieve the characteristics of a achieving longer-term efficiencies. The staggering successful segmentation strategy. complexity of integrating two lending businesses presents a unique set of challenges especially when How Mortgage Lender, Servicer, Insurer, and integrating employees and combining different Guarantor Action Affects Mortgage Reserve, organizational cultures. Valuation, and Cash Flow Considerations Transforming Collections and Loss Mitigation Past lending practices and This whitepaper expresses a market volatility are affecting point of view on what companies mortgage industry service can do to ensure a successful providers, including lenders, integration. Today's economic investors, servicers, insurers, climate forces mortgage guarantors, in dramatic and servicers to rethink their interrelated ways. collections and loss mitigation strategies. The traditional The summary outlines what approach to collections uses these service providers are inconsistent practices and currently or should be outdated policies. It is no longer considering. effective in allowing servicers to recover debt. PricewaterhouseCoopers Statement of Qualifications 5
  • 8. Publications interests against social and environmental concerns—is commonly referred to Consumer Finance Update as sustainability. Our semi annual journal offers • Global perspectives on the greening of readers insightful articles on financial services issues affecting the mortgage, • Positioning mortgages for the green market student lending, credit card, Our semi annual journal offers • Counting carbon: The consumer’s carbon footprint readers insightful articles on • Improving customer acceptance of offset programs issues affecting the mortgage, student lending, credit card, auto • Greening the nation’s bank branches finance and retail banking • Commercial building: Is the industry doing enough? industries. The most recent issue includes: • Do your vendor partners complement your brand? • Tomorrow’s capital market environment: Private-label • PwC and sustainability services securitization when the dust settles Trends and Perspectives • Process considerations of successful integrations for consumer finance companies This semi-regular report takes a closer look at the business • Servicing loans and managing default in the new issues facing the consumer business environment finance industry and shares • Managing servicing advances in the observations on how to meet current environment those challenges. The latest issue focuses on customer • Effective servicer oversight: A strategy for lowering retention in the consumer finance credit costs industry and highlights some of • The future of consumer finance loan accounting and the traditional trends in customer economic analysis retention and provides perspectives on alternative • Rebuilding toward the future: A consumer finance approaches. view on managing risk • Impairment and fair value model risk management Customer Retention and the Mortgage Industry: 2008 • Credit card reward programs: Understanding your Executive Roundtable model risk Highlights • Warehouse lending: Moving forward PricewaterhouseCoopers’ 2008 • Looking forward to a covered bond market Executive Roundtable on Customer Retention was Update: Corporate Sustainability Edition attended by over 15 executives representing nine of the top Does your company practice mortgage lenders in the country. responsible leadership? Some of the topics covered Shareholders expect your included the retention paradigm, customer lifetime value, company to generate profits. But, and customer segmentation as a way to improve the they also want your company to success of a retention strategy. This document make a positive contribution to summarizes the highlights of the event. society while minimizing any negative effect it might have on • Becoming strategic: moving from loan retention to the environment. This approach customer retention to business—balancing economic PricewaterhouseCoopers Statement of Qualifications 6
  • 9. • Executing a retention strategy: charting the stars in might develop over the next few years. They are the customer constellation designed to highlight what some of the top tier companies are doing, providing best practices that their • Supporting processes: leveraging technology, peers might consider in managing their own risk. A leveraging loan officer involvement and the changing sampling of recent surveys includes: role of the retention group • Measuring retention efforts Quarterly Customer Retention Survey • Loan modifications and customer retention • Launched in 2001 and published quarterly • Legislation and retention • Widely acknowledged as Technical whitepapers industry leading • Nine to ten top mortgage Our whitepapers are produced to help our clients companies participate prepare for the requirements of new and proposed regulatory guidance, emerging GAAP and • Considers retention metrics, implementation strategies. ways of measurement, peer results, channel analysis Credit Card Survey • Launched in 2006 • Six of the top 20 card issuers participated in the survey. Survey covers accounting and operational practices at both banks and retailers Loan pricing practices for mortgage lenders Gaining a competitive edge in today’s market is challenging. As a result, in many cases companies have focused additional resources on becoming more “surgical” with their Surveys pricing strategies. Our experience and relationships Our inaugural loan pricing survey with our clients means that we focuses on pricing governance, are able to provide current emerging analytics, staffing, comparative information from the channel considerations and leading consumer finance geographic impacts. companies. Many of our surveys are developed to provide companies insight into peer practices and performance metrics and understand how operations and risk practices PricewaterhouseCoopers Statement of Qualifications 7
  • 10. Survey of Loan Repurchase Practices Launched in ‘04 due to high number of client inquiries on unexpected increases in loan repurchases from agencies and private investors. • Our most recent survey, completed in March 2009 covers many of the top originators. • Survey covers financial and operational aspects of repurchase process including organizational and accounting issues Survey of industry loan loss and foreclosure reserves and practices in default operations Launched in 2001 and published annually to participating peers. • Ten participants who represent over $3.3 trillion of servicing and 25 million loans • Survey covers financial and operational aspects of loan servicing and default management issues Other Surveys include: Post Closing, Repurchase, Underwriting, Non Agency Loan Valuation, Broker and Correspondent PricewaterhouseCoopers Statement of Qualifications 8
  • 11. Conferences and events "Recent Market Activity, Mortgage Market Trends & Lessons Learned in 2008” Mortgage Risk USA 2008 As knowledgeable professionals, our advice is often October 2-3, 2008, New York, NY solicited by consumer finance executives. One of our objectives in serving the consumer finance industry has "Mortgage Servicing Basics"” always been to share our detailed knowledge of the Executive Enterprises conference – Accounting Issues issues. We frequently go on the road to discuss current for the Mortgage Industry industry hot topics and participate in numerous September 15-16, 2008, Chicago, IL conferences and industry events as sponsors and/or speakers. “Current Status of the Mortgage Industry” ABA Capital Markets Forum for Corporate Recent examples of conference presentations given Trust Professionals by PwC team members include: April 13, 2008, Palm Beach Gardens, FL “Product Development Trends – From Private Label Reverse Mortgages to ‘Personalizing’ HECMs” "Loan Repurchases" and "XBRL" MBA's Accounting, Tax and Financial Analysis Reverse Mortgage Lending Conference Conference April 10–11, 2008, San Diego, CA November 11-13, 2009, Dallas, TX o “The Mortgage Industry and Emerging Markets” “Loan Modification & Government Program in the National Mortgage Servicing Conference & Expo Mortgage Industry" February 26–29, 2008, New Orleans, LA and "The Mortgage Industry Transformation Post Crisis – A Discussion on the Future State of Industry" Recent examples of round tables and other FICG Forum events include: October 20, 2009, New York, NY9 • PwC Executive Forum on Multicultural and Emerging PwC Consumer Finance Group Chaired Event Markets Lending 2009 PICPA Financial Institutions Conference • PwC Executive Round Table on Customer Retention September 14-15, Hershey, PA • PwC Consumer Finance Executive Round Table “Accounting Standards Development in the on Fraud Secondary Market” • PwC Mortgage Banking Internal Audit Roundtable MBA's National Secondary Marketing Conference & Expo April 19-22, 2009, Chicago, IL Recent examples of published articles: "Fighting Fraud in Today's Highly Volatile Environment: What Lenders Should Know" • Touhey, Martin. "Feeling the Pinch? Get Ahead of Advances." Servicing Management May 2009: 15-18 MBA's National Fraud Issues Conference 2009 March 16, 2009, Las Vegas, NV • Hernandez, Roberto. "Boosting Profitability Requires Long-Term Strategizing." Servicing Management "Top Lessons Learned for Mortgage Servicers from the June 2009: 9-12 Credit Crisis ” • Kowalak, John. "When It Comes To Costs, Don't MBA's Servicing Conference 2009 Forget the Here and Now." Servicing Management February 18, 2009, Tampa, FL October 2009: 8-11 PricewaterhouseCoopers Statement of Qualifications 9
  • 12. Visit finance for further details regarding the documents discussed in this publication. PricewaterhouseCoopers Statement of Qualifications 10
  • 13. Consumer Finance Group Partners Co-Chair – Partners Sam May 646-471-2357 Martin Hurden 703-918-3250 Group Partners Mike English 646-471-7357 Tom Kelly 312-298-4241 Alan Lee 703-918-3453 Jonathan Odom 703-918-3301 Keith Olson 617-530-7986 Peter Pollini 617-530-7408 Mike Seelig 704-344-4390 Michael Stork 612-596-6407 Brian Williamson 617-530-7528 PricewaterhouseCoopers Statement of Qualifications 11
  • 14. This document is provided by PricewaterhouseCoopers LLP for general guidance only, and does not constitute the provision of legal advice, accounting services, investment advice, written tax advice under Circular 230 or professional advice of any kind. The information provided herein should not be used as a substitute for consultation with professional tax, accounting, legal, or other competent advisers. Before making any decision or taking any action, you should consult with a professional adviser who has been provided with all pertinent facts relevant to your particular situation. PricewaterhouseCoopers LLP. All rights reserved. “PricewaterhouseCoopers” refers to PricewaterhouseCoopers LLP, a Delaware limited liability partnership, or, as the context requires, the © 2009 PricewaterhouseCoopers Statement of Qualifications PricewaterhouseCoopers global network or other member firms of the network, each of which is a separate and independent legal entity. 12