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Establish a process that requires the timely review and update of model documentation. The process should include tracking the dates and nature of the revisions.
Perform a comprehensive review of the SF and HECM model documentation and update the specific sections with the current practices and procedures required to execute the model activities.
Develop and implement a new process to require the annual validation of the fourth quarter endorsement volume estimation method for the SF Forward model. The process should include a management review and approval control component. The process should be documented and should demonstrate that management’s estimate is based on the analysis of past experiences, current policy, and market considerations, and, if necessary, incorporate improvement recommendations.
Perform a comprehensive analysis for all cohort years and assess the impact that the use of the scheduled UPB instead of the current UPB has on the LGL. If significant based on a quantitative threshold, update the SF cash flow model to incorporate the current UPB data.
Strengthen the financial statement review controls by completing a compliance matrix to ensure all balances that are presented and disclosed reflect the most up-to-date financial accounting and reporting guidance.
Enhance the quarterly variance analysis to identify the business reasons for changes in account balances and pay specific attention to abnormal balances and activity.
Strengthen controls over the preparation of HECM-related reconciliations, reviews, and oversight by ensuring that (1) program personnel preparing such reconciliations understand how such reconciliations impact financial accounting and reporting and (2) financial personnel sufficiently understand programs and systems to determine their general ledger impact.
Establish clear lines of communication within and between divisions to ensure that all personnel become aware of issues that may impact their duties and responsibilities.
Update procedures to clearly define error thresholds that require follow-up and the communication process for elevating errors to supervisors, managers, and senior leadership.
Appropriately train and monitor new personnel to ensure that they understand and execute the procedures and controls.
