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Mortgage Software Solutions Blog

8 Things You Need to Know about Mortgage Compliance

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Mortgage companies have a number of federal and state regulatory matters with which to comply. At times, it may seem difficult to keep it all under control. But when it comes to mortgage compliance, what you need to know is that you don't have to go it alone. We put together a list of eight tips to help you.

TRID Disclosure Audits

TRID (TILA-RESPA Integrated Disclosure) is part of the Dodd-Frank Wall Street Reform and Consumer Protection Act. TRID requires mortgage companies to combine the Truth in Lending Act information they provide consumers when they apply for and close on a mortgage with the Real Estate Settlement Procedures Act (RESPA) information lenders now must provide borrowers at settlement.

These disclosure rules are a big challenge to the mortgage industry and they apply to most closed-end mortgages. The Consumer Financial Protection Bureau promised another rule on this issue in April 2017 that will clarify some of the points commenters raised during the open comment period.

Home Ownership Protection Equity Act (HOPEA) & State High-Cost

In 2013, Congress passed the HOPEA, which requires mortgagees to provide additional information to consumers who buy high-cost homes. The types of mortgages covered by HOPEA include purchase-money, refinance, closed-end home equity loans, and open-end credit plans. States also have rules that apply to the lending involved with high-cost homes.

State Consumer Credit & Fee Restrictions

States and municipalities often pass consumer credit laws against predatory lending. They often contain fee restrictions. They also control licensing laws and regulations with respect to lending. With so many state laws, financial institutions that operate in multiple jurisdictions sometimes find it difficult to comply with all the different rules.

RESPA GFE and HUD-1 Disclosures

RESPA revised the Good Faith Estimate (GFE) rules that mortgage companies must provide borrowers at settlement. Mortgage companies must provide a good faith estimate of the total closing costs in a real estate transaction within 3 days of receiving the loan application. Such costs include legal fees, title searches, title insurance, recording fees, notary services, pest and house inspections, document preparation, taxes, and fees for surveys.

RESPA also forbids lenders to take kick-backs on the loans or require borrowers to use a specific title company.

HUD-1 Disclosures, on the other hand, contain the actual closing costs (compared to the Good Faith Estimates), and the lender must allow the borrower to review the HUD-1 form for 24 hours before settlement.

HMDA Filings and Data Analysis

The Home Mortgage Disclosure Act (HMDA) requires mortgage companies to report to their regulators data that shows whether or not they provide credit in the geographic area where they locate their offices. The data also lets government officials target investment dollars to areas that need growth investments.

Flood Zone Determination

The Flood Insurance Reform Act of 1994 provides disincentives for property owners to live in flood-prone areas. The Act ties flood insurance premiums to the flood risk, so flood-prone areas mean higher premiums for those property owners. The law requires lenders to use flood insurance maps to identify whether the property the borrowers want to buy lies in a floodplain. If the property is in an area prone to flooding, the borrowers must buy flood insurance (which may include higher premiums) to protect their investment interest.

Due Diligence and Audits

Compliance for mortgage companies encompasses more than following the "letter of the law." The way forward for mortgage companies is to follow the same level of compliance required for banks. That means conducting due diligence, assessing risk for fraud and identity theft, assigning compliance officers, and training employees in compliance matters. It means complying with Anti-Money Laundering laws and Suspicious Activity Reports.

Mortgage companies today need to take advantage of cloud services in order to stay on top of the ever-increasing regulatory requirements. To talk more about compliance challenges and how ABT’s suite of cloud IT services can help, please contact us.

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Topics: Compliance mortgage business

ABT will be at the Experience 17 convention in Las Vegas

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Access Business Technologies will be attending the Ellie Mae Experience 17 convention in Las Vegas as a vendor and sponsor this March 6 - 8 2017.   Visit us in booth #704 to see a live mixed-reality of the new technology...Mortgage Business Intelligence. As a mortgage industry technology leader we've experienced change... the type of change that requires us to come together to share ideas and find solutions. The past several years have presented many challenges. We've risen to the occasion and as we continue focusing on our customers, efficiency and transparency, we are moving our industry #EXPERIENCE17. 

It's a new day and our industry has never been stronger. Which means there's no better time or place to forge ahead than at the industry's largest gathering of real estate finance professionals. March 6 - 8 2017 in Las Vegas at Ellie Mae's Experience 17 convention & Expo for unparalleled opportunities to network, learn and lead our industry #FORWARD

Experience 17 Convention & Expo is taking place at the Wynn Hotel. Join ABT as we exibit at the Experience 17. An entire community of Ellie Mae product experts, 3,000 Encompass users, and mortgage industry leaders will be on hand to demonstrate new innovations, discuss the latest strategies, share best practices, and provide hands-on training. The networking alone is an incredible opportunity to get problem-solving techniques, real-life insights, and practical approaches

For years, Las Vegas has enjoyed its own place in American culture. Elvis, showgirls and neon lights are just some of the pop culture icons associated with the Entertainment Capital of the World.
In recent years, Las Vegas has secured its place on the cultural map. From the highbrow to the kitschy, you can bet on the destination to deliver a well-rounded dose of art and culture.

Access Business Technologies, headquartered in Northern California, was founded in 1999 as a leading provider of hosted, on-demand software for mortgage loan origination, servicing and pipeline management. Access Business Technologies (ABT) provides access to business technologies that empower mortgage professionals to safely perform at the top of their game anytime, anywhere. ABT proactively supports, defends and manages game-changing technologies and processes that help mortgage professionals excel. We are a certified SSAE 16 Type II cloud solution provider to over 500 mortgage financial institutions.

We are partnered with nearly a dozen leading mortgage software vendors. Our partnerships with the best mortgage software in the world integrate our cloud suite of products, to empower your workforce to produce more loans safely anywhere and anytime.

Topics: ABT MortgageWorkSpace Mortgage BI

5 Ways to Become a Better Loan Officer

 Ways-to-Become-a-Better-Loan-Officer .jpgAs a passionate mortgage professional, you are constantly striving to improve your job performance and gain new, innovative knowledge about your field. This is necessary, considering the competitive nature of the mortgage industry. But what are some tactics and tips available to enable this continuous growth and development? How can you separate yourself from the pack to become a truly superior mortgage loan officer, one that excels in productivity and leaves every customer satisfied?

Read on as we delve into five tips to help you become a better loan officer.

1. Develop a Plan—and Follow It

Planning is essential to success in most endeavors, and excelling as a loan officer is no exception. The top performers in the mortgage loan origination field adhere to a specific plan and use that plan as a benchmark to measure their success (or lack thereof). The ability to be flexible and to adapt to the changing needs and wants of your customers is crucial to ensure that you are running your business, and not the other way around.

By having unique selling propositions (USP's), you don't put yourself in the position of having to sell loan terms and rates; they are standard and not some gimmick or special commodity. A final important point to note regarding a plan involves having the right relationships in place—specifically with a cadre of solid realtors who consistently refer customers to you, and with whom you enjoy a mutually beneficial business relationship.

2. Make the Credit Report a Top Priority

The odds are very good that you will get customers who come to you with questionable or outright poor credit. Regardless of the creditworthiness of the customer that is looking for a loan, you should make a point of sitting down with Mr. and Mrs. Homebuyer to review in detail their credit report.

Explain the six factors that influence a credit score: payment history, derogatory marks, credit utilization, age of credit line, total number of accounts, and inquiries. Make sure that you cover the three different credit bureaus with your customers and, perhaps most importantly, confirm that all of the information on their credit report is accurate.

3. Practice Complete Transparency Regarding Costs

Considering the different costs that are associated with any loan, it is crucial that you take the time to cover each line item with your customers. Spend the extra time it takes to ensure that there are no surprises. It will benefit you in the long run, as it will result in a happy client.

Make sure that you are current with the different loan programs that you are able to offer. The more options that you have, the better. Explore all of the different avenues available with your customers. Ensure that you are completely forthright and honest about all of the costs that will be incurred. If you can't offer the no-cost loan that they were hoping for, full disclosure is always the way to go.

4. Use Technology to Your Advantage

The mortgage loan industry (like virtually every other field) is far different than it was just a few years ago. This is primarily due to the rapid progression of technology. In this respect, you can really differentiate yourself from the competition.

Our MortgageWorkSpace® platform is a necessity for any mortgage professionals looking to set themselves apart from the crowd. From document and software application management to email compliance and Office 365 integrations, MortgageWorkSpace® is tailored exclusively for the mortgage industry and packs 15 years of industry-leading expertise into one intelligent cloud interface.

Concerned about the new FFIEC standards? With DocumentGuardian, you can rest easy and focus on the important thing—your customers' satisfaction.

5. Follow Up and Stay Connected

You've closed a deal. Don't let your satisfied customer become just another number to you. Stay in contact with your clients; advise them of changes in financial markets that could possibly have an impact on their loan. Develop a solid relationship with your happy customers. This will result in not only word of mouth referrals, but it will also allow you to be first on their list should they require your services in the future.

Questions about what ABT offers? Please don't hesitate to contact us today!

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Topics: tips

Understanding TRID and What it Means for the Mortgage Industry

TRID-and-the-mortgage-industry.jpgYou may know a bit about TRID and what it means for the mortgage industry, but how much do you really know? We've found a few things that everyone should know about it. Let's start with a few basics for better understanding TRID.

What is TRID?

TRID is an acronym for the TILA-RESPA Integrated Disclosure rule. TRID became law as part of the Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank). Sections 1098 and 1100A of Dodd-Frank required the appropriate rulemaking agency to publish revised forms and rules that require the mortgage industry to combine the disclosure information that consumers receive when they apply for and close on a mortgage under the Truth in Lending Act (TILA) with the settlement disclosures under the Real Estate Settlement Procedures Act (RESPA).

What Agency Writes the Rules for TRID?

The Consumer Financial Protection Bureau (known more familiarly as the CFPB) has rulemaking authority over TRID. On November 20, 2013, CFPB released 1,900 pages that comprised the final rule on TRID. The rule was effective for mortgage applications received on and after August 15, 2015.

There's another proposed rule due out in April 2017 that will clarify a few issues. When the CFPB's comment period on the new proposed rule closed in October 2016, they had received 1500 comments.

What Are the New Forms?

The final rule mandates two disclosure forms:

  • The Loan Estimate, which blends the RESPA Good Faith Estimate with TILA provisions
  • The Closing Disclosure, which integrates the TIL and the HUD settlement statement.

The Loan Estimate provides a summary of estimated loan terms, loan and closing costs, and disclosures. As its name implies, the Closing Disclosure provides a summary of the actual loan terms, loan and closing costs, and other disclosures.

Compliance with the TRID rules and CFPB regulations is a major challenge for the mortgage industry. The final rule applies to most closed-end mortgages but does not apply to mobile home mortgages, home equity lines of credit, reverse mortgages, or to creditors who close five or fewer loans in a year. That last is the final rule's only exception for small creditors.  

The final rule also made significant changes to RESPA and TILA, which are outside the scope of this post.

TRID's Biggest Changes

The biggest change for consumers is that, under the new rules, they will receive closing information at least 3 days before their settlement date. That change gives them more time to review and understand the financial disclosures before they go to settlement. If they do not understand something on the disclosure forms, they will have ample opportunity to ask questions before the big event.

The biggest change for the mortgage industry is that the lender now is responsible to prepare the consumer's settlement forms. In the past, the title company completed the HUD forms and gave them to the lender for review, but the responsibility for the disclosure forms was always with the title company. This change disrupts mortgage companies’ internal processes as loan officers struggle to absorb this responsibility into their procedures. The change in rules will require new deadlines for the new forms.

CFPB anticipates that new rules will make settlements run more smoothly and that fewer errors will occur.

Other Changes to the Mortgage Process

The new disclosure forms are not the only changes to the mortgage process. The final rule changes the application definition, tightens the ability to increase costs throughout the mortgage process, and adds the three-day waiting period that runs from the date the consumer receives the disclosure information up until the settlement date. If the lender modifies the disclosure information, then another three-day waiting period applies before the consumer can go to settlement.

As you can imagine, these disruptions and system modifications are expensive, and the consumer will ultimately bear the brunt of these costs.

A Final Word About Fannie Mae and Freddie Mac and HUD

It is unclear how these government entities will address TRID. If they take a conservative approach to their quality procedures, and repurchase and claims procedures, the disruption may cause a sizeable market upheaval.

At Access Business Technologies, we provide mortgage businesses with the tools they need for comprehensive document management, security compliance, and proper regulatory alignment. To learn more about our suite of cloud services, please contact us.

 

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Topics: mortgage regulations TRID

The History of the CFPB and Its Future Post-Election

History-of-the-CFPB.jpgThe Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank) authorized the consumer protection bureau known familiarly as the CFPB. The CFPB was born as a result of the financial abuses that led to the Great Recession of 2007-2008. There are early signs that the consumer protection agency is on the congressional radar for some tinkering, if not outright repeal, so this seems a good time to review the history of the CFPB and what the future holds.

What Is the CFPB and How Was it Born?

The CFPB is the acronym for the Consumer Financial Protection Bureau. The Dodd-Frank law authorized the bureau as an independent agency. However, in 2016 the federal appeals court in PHH Corp. v. Consumer Financial Protection Bureau, 15-1177, U.S. Court of Appeals, District of Columbia Circuit (Washington) determined that the law had unconstitutionally limited the President's power to remove the director, so it is now an executive-level agency.

What is the CFPB's Jurisdiction?

The CFPB has broad jurisdiction over banks, credit unions, securities firms, payday lenders, mortgage services, foreclosure relief, debt collectors, and other US financial companies. Director Cordray lists the agency's priorities as mortgages, credit cards, and student loans.

CFPB writes and enforces regulations for banks and other financial institutions, examines banks and other institutions, reports on markets, and collects and tracks consumer complaints. CFPB also works with state regulators to enforce consumer protection rules.

CFPB Accomplishments

Here are a few of the CFPB’s most prominent accomplishments:

  • In 2013, CFPB set new standards for mortgages that include verifying income, verifying ability to pay back the loan, and preventing exotic loans (such as the low teaser interest rates that bloomed as one of the abuses of the financial crisis when they reset to high rates).
  • In 2015, CFPB changed the disclosures borrowers receive to make it easier to compare mortgage terms. Critics, however, charge that the new mortgage rules accept more risk than many would like to see.

Perhaps the CFPB's most visible accomplishments have come in the enforcement area.

  • The agency's website says that it has levied $11.7 billion in penalties and forgiven debts that it scored for 27 million consumers.
  • The CFPB took on big lenders like Citibank and Bank of America for misleading consumers. CFPB forced Citibank to pay back customers $700 million in misleading add-ons and $720 million from Bank of America.
  • In September of 2016, CFPB levied fines against Wells Fargo to the amount of $100 million for the unauthorized (and illegal) opening of credit accounts, as a result of bank incentives to its employees.

Battles Still Waiting

CFPB scored high-profile victories in the mortgage arena, but there are battles on the to-do list that have not yet been waged.

  • There have been no changes yet in the abusive practices by payday lenders.
  • CFPB has also targeted arbitration clauses that make it hard for consumers to join class action suits.
  • Another area in which the agency wants to take action is limiting bank late fees, which reportedly took $32 billion from consumers in 2015.

A Glimpse Into the Future of the CFPB

Ever since its inception, there have been members of Congress who have wanted to kill the CFPB. Observers split on the outlook for the future of the agency:

  • The worst case scenario: CFPB faces a 50-50 chance of surviving (or of being destroyed).
  • The best case scenario: The agency faces a revamp.

The good news is that the CFPB probably isn't high on the list of changes the new administration wants to work on immediately. So it may take a while before Congress sets its sights on the CFPB, and when it does, it will most likely target the structure of the organization.

Still, consumers are at risk of losing some protections. Issues that Congress could meddle with include ending financial institutions reporting quarterly to CFPB, easing payday lender restrictions, easing truth-in-lending disclosure, or less oversight on pre-paid debit cards.

One thing Congress will have to consider is that the agency has a track record of helping and protecting consumers, which will make it hard politically to dismantle altogether. The high-profile Wells Fargo case was good press for the CFPB and played well with consumers.

To learn more about the Wells Fargo case, read the article entitled "Consumer Financial Protection Bureau Fines Wells Fargo $100 Million for Widespread Illegal Practice of Secretly Opening Unauthorized Accounts".

To talk more about the CFPB or how your mortgage business can more easily maintain compliance with CFPB regulations, please contact us. MortgageWorkSpace® and our suite of cloud hosted services can help protect and grow your business.

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Topics: CFPB mortgage regulations