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| In the mortgage industry, compliance is a day in, day out task that like everything else is affected by business conditions. This is particularly true in a year like 2020 that tested business continuity plans, affected staffing, and redirected much of our attention away from managing the normal ebbs and flows of business to juggling the latest hot potato. (Many are also busy trying to prevent their kids from walking in front of their webcam during work related video calls.) Amid all of this, it is likely that many without ample automation or a strong partner have struggled, and right along with that challenged their compliance diligence. Rest assured, regulators still expect financial institutions to be compliant, particularly when it comes to TRID guidelines, as well as HMDA and MERS® annual reporting requirements. If your organization needs a little help to relieve the pressure, LoanLogics can provide tools and services to keep you on track. HMDA The year 2020 brought some relief to lenders reporting under the Home Mortgage Disclosure Act (HMDA). That relief came in the form of postponing quarterly reporting and a final CFPB ruling that raised the threshold for closed-end mortgages. (1, 2) While this alleviated pressure for some lenders, HMDA reporting remains an annual requirement for many. HMDA has often been one of many mortgage processes void of automation. Audits performed by document stare and compare with manual data entry, or the singular use of LOS data have even translated into error-ridden reporting, big fines, and bad press. To ease the burden, lenders should consider an automate first strategy around data collection from loan files and HMDA reviews. By doing this they will report with greater confidence in their data and can also free resources to analyze the data and interpret the story it tells to improve operations and reporting. Systems like LoanLogics IDEA™ document processing and our LoanHD® HMDA Audit Tool verify and validate HMDA data and guide auditors through an exception-based workflow that automates more than 90% of the review. From there lenders can easily create and submit their Loan Activity Report (LAR) to the CFPB with just 1-click. TRID The CFPB’s attention on TRID has not waned nor should lenders. Just this week they released a statement about the effectiveness of the regulation, stating evidence that showed it helped consumers understand mortgage forms and fees. The report also noted that the rule resulted in high implementation costs for companies and possibly increases to their ongoing costs. (3) The bulk of these costs might be attributed to auditors managing TRID reviews between multiple systems, using spreadsheets to compare fees and manual processes to compare document versions. In other words, a lot of work. One strategy to overcoming this is to leverage automation wherever possible. LoanLogics clients can perform upwards of 18 compliance reviews per person per day. This is attainable because of a tightknit integration between ComplianceEase® and our highly automated, rules-driven LoanHD TRID workflow. First, data from disclosure documents is extracted through IDEA document processing and auto populated, not hand-keyed, into LoanHD. The data can then be evaluated as LoanFacts™ and corrections made, dramatically reducing chances for data errors that might cause downstream issues. From there, through a single user interface, auditors can compare disclosures and evaluate any fee inconsistencies. Any conditions identified can then be cleared right in the system before submission to CompianceEase to complete the analysis. The final report generated by ComplianceEase is then accessible through the same user interface to complete the compliance review. Another benefit of automation and a well-integrated system is the ability to have centralized reporting where all the results can roll up into a single database and be analyzed through a series of customizable reports. Root cause of defects, trends and areas of responsibility can all be easily evaluated as needed with the push of a button. Additionally, action plan reporting available in loan quality management systems like LoanHD can track your defect rate before and after training programs or policy changes are implemented. It also provides evidence to regulators of proactive remediation efforts for TRID defects. MERS When it comes to MERS® compliance we often hear many organizations feel they receive a point-in-time audit and not a consultative review that helps them improve processes. LoanLogics’ Independent Third-Party Annual Review Service is led by a 20+ year MERS expert who helped write the initial MERS procedures manual. Our service is built around a high touch relationship that works with you throughout the year to mitigate risk. Waiting until the end of the year does not allow time for a comprehensive assessment or time to set a remediation plan in place, which jeopardizes a servicers compliance position. Part of LoanLogics comprehensive review plan for MERS compliance includes a four-step process to assess procedures, perform testing, discuss findings, and remediate issues. In uncertain times, it’s even more imperative to have well established plans in place to help the company avoid exposure to non-compliance. When it comes to annual MERS reviews, a trusted partner will not only advise their clients on areas of risk but provide solid actionable recommendations for steps to build a solid foundation. Servicer’s looking for this type of support can find it with LoanLogics. |
Finish 2020 with a strong compliance focus. LoanLogics document processing and loan quality management technology can help make HMDA and TRID compliance more accurate and efficient, while our Independent Third-Party Performance Monitoring and Annual Review Service for MERS reporting can reduce risk by ensuring effective processes and procedures are in place, as well as assess how well you are performing against the guidelines.
Don’t struggle with your 2020 mortgage compliance objectives any further. Request a product introduction with us today.
- https://www.housingwire.com/articles/cfpb-releases-lenders-from-quarterly-hmda-reporting/
- https://files.consumerfinance.gov/f/documents/cfpb_hmda_executive-summary_2020-04.pdf
- https://mortgageorb.com/42728-2
