Introduction
There 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 investors
Select 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 Servicing
Select 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.
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Meet the Staff
Tim 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.
Benefits
Select Portfolio values their employees. Every employee is eligible for the following benefits:
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Health, Dental and Vision Insurance
401k with Company Contribution
Paid Time Off
8 Paid Holidays
Tuition Reimbursement
All 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.
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Culture of Compliance
It 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-site
As 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,
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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.
Methodology
To 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- www.spservicing.com
Conclusion
After 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.
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Resources
J. Graham. Personal communication, September 6, 2012
T. O’Brien, personal communication, September 10, 2012
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