Tag: Compliance

Automation provides a wealth of benefit to any manual process. Just to name a few: • Speed (file reviews in under 5 minutes), • Accuracy (99% for data validation) and • Traceability (audit trail of defects). But, in the case of HMDA, lenders are often surprised to find that it brings three unique value-adds to their reporting process. Automation eliminates “check the checker.” They say old habits die hard, and we have certainly seen our fair share while implementing technology. Lenders that go from reviewing 100% of their loan files, using manual processes, are often reluctant to relinquish all their trust into a new automated workflow right out of the gate. Instead, they want to retain some existing manual reviews to ‘cross check’ the automated output. To help make believers out of the non-believers, automated HMDA technology should provide transparency to report on the data that passed examination, so compliance managers can peruse tests and avoid creating off-line spreadsheets and manual processes to double check the work. After review, this level of transparency can reveal the accuracy of the technology and give managers the confidence to focus only on the single digit error rate for defects that exists in most lenders loans. Automation can structure your internal compliance training. Even those with the best of intentions can find themselves veering off course from their intended strategy. In the case of HMDA reporting and its goal of ensuring fair access to credit, regulators want to see lenders taking action, adjusting lending practices, and monitoring compliance. In addition to flagging the data defects found in a lender’s loan files, automation can quickly cleanse and output data at a very granular level (i.e., by region, branch, loan originator) and bring patterns and trends to the surface. Equipped with this verified and validated level of detail, lenders can structure compliance trainings for their staff by either developing and tracking action plans right through their loan quality management system to minimize defects or use advanced BI tools to further identify lending opportunity adjustments. Oftentimes, standard reporting features of the loan quality management systems can provide enough detail to begin to identify trends without the need for a separate BI system. Each of these proactive steps help lenders show regulators they’re working towards continuous process improvement and fair lending standards. Automation can include multiple databases in your HMDA analysis. The mortgage industry is no stranger to mergers and acquisitions. Behind the trail of shining synergies, IT and compliance teams are always left holding a mixed bag of disparate technology with a regulatory reporting clock ticking behind them. HMDA automation not only compares loan documents (the source of truth) with the system of record, often the loan origination system, for an effective audit but it can also incorporate analysis of data residing in other databases, such as those acquired through a merger. Automation makes it possible to grab the data from these additional record archives and pull them into the audit at the onset resulting in a more complete and accurate report. As 2019 HMDA reporting deadlines approach, consider the benefits of introducing automation. Whether you need help juggling multiple systems of record, structuring compliance training programs, or eliminating existing manual processes, there’s still time to reap the additional benefits technology can enable for this calendar year of reporting.
Mortgage Loan Quality

Three Things You Didn’t Know HMDA Automation Could Do

Don Smith / August 21, 2018

Automation provides a wealth of benefit to any manual process, inlcuding speed (file reviews in under 5 minutes), accuracy (99% for data validation) and traceability (audit trail of defects), to name a few. But, in the case of HMDA, lenders are often surprised to find that it brings three unique value-adds to their reporting process. Automation can eliminate “check the…

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Compliance-Tip-elliot-salzman-chief-credit-officer
Mortgage Compliance

Nuances of Declining Income

Elliot Salzman / June 5, 2018

Often, underwriters are faced with a borrower, especially a self-employed borrower, whose income has declined year over year.  I wanted to provide a quick review regarding declining income for self-employed borrower(s) specifically for FHA loans. There are a few paths a loan can follow. When income is declining year over year, it affects how the borrower’s income is calculated as…

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mers-vandeventer-numbers-eannual-audit
Mortgage Loan Quality

April showers bring MERS flowers

Gary Vandeventer / April 27, 2018

For MERS members, April brings the notification from MERS identifying the number of your MINS on the MERS® System, when the member is named as servicer as of March 31st. Here are some of the important numbers to remember. If your organization was identified as the servicer on less than 1000 MINS as of March 31st, you are required to…

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Mortgage Compliance

Last Ditch Effort to Delay HMDA

Michael Vitali / December 19, 2017

Better late than never, I guess. The Community Home Lenders Association sent a letter to acting CFPB Director Mulvaney seeking a delay in implementation of the new HMDA data collection and reporting requirements. That’s like betting on a long shot. They believe the new requirements are an unfair burden on small independent lenders. Further, they want a safe harbor from…

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Mortgage Compliance

Do What You Say and Say What You Mean

Michael Vitali / December 13, 2017

TILA requires a lender to provide an applicant with a good faith estimate of the fees that will be charged to, or imposed on, the applicant in connection with their loan. Seems simple, if you’re gonna charge it; disclose it. There’s a little catch, the fee must be for a service that is actually provided by the lender. For example:…

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