Mortgage Software Solutions Blog

Justin Kirsch

Recent Posts by Justin Kirsch:

Cloud Storage Reduces IT Costs and Improves Scalability for Mortgage Companies


Mobile phone in hand

Those of you who've worked in the mortgage industry for the last two decades know how much has changed in just the last five years. Technologies have evolved quickly to provide more ways to accomplish tasks, including superior organization. Despite this, you've perhaps balked on finding ways to reduce your IT costs. Doing things the same way is perhaps hard to break after being in business for over 20 years.

Don't become complacent, because many IT solutions are affordable and necessary.  Security should be paramount when storing client information.  Today's software is being written to comply with the latest regulatory requirements and not all of it is expensive either.

With a rise in cloud and mobile technologies, you can do so much more while paying less. The same goes with scalability.

Using Automation to Improve Client Communication

When you look at the biggest challenges facing mortgage organizations like yours, client communication is at the top of the list. In a time when you likely have to compete with other lending agencies a short distance away, you need to keep your clients loyal.

The way forward is to use automation to gain efficiency. The older methods of reaching your clients only by phone can frequently lead to delays. Consider other communication methods, texting for example may be the best way to shorten the business cycle.    

Automating your communication will allow you to reach your clients faster and provide the ability to personalize content for more sucessful lead generation. Through affordable mobile technology and automation, you can send information at key times to your existing or prospective clients. Doing so educates them on their mortgage options.

Using the Cloud for Data Storage and Retrieval

We noted a while ago that cloud security is the future of all mortgage companies. After saying this over two years ago, it's a fact now, and a must to prepare for the unexpected.

Considering on-site servers can easily become hacked, you need to upgrade to the cloud to keep yourself compliant with client data. While cloud pricing varies depending on needs, it still reduces cost because you're eliminating maintenance on your own servers.

During disasters, you're also preparing yourself for business continuity. You can access anything in the cloud 24/7 as long as you have an Internet connection. When a disaster strikes, you can retrieve all client information immediately to keep your lending business on its feet.

The Use of Mobile Apps to Simplify the Lending Process

Many home buyers want to simplify how they obtain a mortgage without all the protracted steps. Creating a mobile app to make the process easier helps remove complex steps otherwise increasing your operating costs.

An app gives your clients more control over the time it takes to get a loan and the terms they want. Despite apps requiring design time, they'll pay off long-term thanks by increasing business and gaining your customers' trust.

Transparency is an important aspect to lending today. Allowing this through mobile technology is essential, as long as you have quality IT management in place.

Scaling Your Mortgage Company

To keep up with demands, you can do a lot of practical things to scale your mortgage business. If you're short on clients, Zillow reminds using CRM software can often help connect better with potential customers. Also redesigning your website and starting a blog can get home buyers more interested.

During times when you just need to find room to expand data, the cloud can scale quickly for you. This eliminates having to depend on other risky storage methods. When you want to scale due to unexpected growth, you can do so with the cloud, plus still have room for further growth down the road.

At Access Business Technologies, we provide game-changing technologies and tools to help your mortgage business reduce costs while still growing. Our MortgageWorkspace product allows you to scale quickly and securely by putting your business into the cloud. It offers efficient ways to keep your data compliant using intuitive dashboards and admin tools. Learn more about how MortageWorkspace can make the mortgage process easier for your employees and customers by scheduling a call with us. 

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Topics: Compliance Cloud Mortgage Servicing Cloud Computing MortgageWorkSpace cloud storage

Leverage Your Cloud Software for a More Efficient Workflow

 

Mortgage-WorkSpace-cloud-solutions.jpg

Making the most of your mortgage software for an efficient workflow is an admirable goal. However, it’s not enough to have this goal; you have to know how to make it come to fruition. Read on to discover different ways to do this. But first, it’s important to understand the role of your software.

Mortgage Software

Your software should improve the borrower's experience when applying for a mortgage. It should also improve the efficacy of the your company’s internal operations.

Softwareor any tool you use—is not an added benefit to the mortgage process, however, if it adds unnecessary steps to the employee's workload and slows down the workflow.

We need it to meet the needs of lenders, including the demands imposed by the Consumer Financial Protection Board's regulatory schemes. When it is successful, mortgage software plays to the your company’s strengths. It fills in gaps where there would typically be deficiencies. And, perhaps most difficult of all, it predicts regulatory requirements.

Understanding Your Organizational Workflow

Learning how mortgage software can improve your workflow and how to select the right product requires an intense evaluation of the two processes that make up the workflow.

  • internal operations
  • borrower experience

Internal Operations

Each mortgage application has the same basic stages (although additional requirements may attach for specific loans). Organizations need to understand, by evaluating and analyzing the processes, how they operate in each of the stages described below:

  • pre-qualification
  • application
  • verification
  • processing
  • underwriting
  • closing

Managers probably have their own ideas of how their companies may improve the various stages. After all, it is not always a one-size-fits-all solution. It is important to evaluate these stages not only in terms of legacy processes but also in terms of how they might improve through the use of cloud technology.

The analysis of a workflow provides an opportunity to review compliance efforts and see where automation or cloud technology can help improve compliance. An added benfefit is that it may even save time and money.

A prime example is the three-day disclosure rule. A tool that automatically sends disclosure information within the three-day disclosure window may eliminate human errors (inconsistencies) and speed up the process at the same time. Cloud software applications may save time by verifying data provided by borrowers against aggregate databases.

Your analysis will show where you have bottlenecks, inefficiencies, and duplication of effort. When you look at the workflow priorities together with the organization's strategic goals, the type of software that works best for the organization will become apparent.

The Borrower's Experience

The digital mortgage is coming to the industry. For a business that has relied on face-to-face communication with borrowers and a significant paper trail, it may seem a difficult transition. There are, however, many ways that technology can improve the borrower experience. In fact, borrowers may move easier in that direction than lenders.

On-demand services in other consumer areas has led borrowers to expect faster service from elsewhere in their lives, including what is typically considered the largest purchase of a person’s life - home buying. The process will never match push-button, instant satisfaction like other consumer service areas, because of the compliance aspect. Technology, however, can help in two ways.

  • Transparency through on-line dashboards, mobile applications, and other self-serve features
  • Access to loan data through digitally managed and delivered documents, and a holistic view of their data helps borrowers feel they have a better handle on their loans

MortgageWorkSpace®

This powerful cloud-based portal from Access Business Technologies provides your teams the freedom from the paper chase that they want, but with the control they need over internal workflow and compliance processes. With Mortgage WorkSpace offers your company the abilities to manage documentation, software applications, devices and security all from within the portal. Additionally, it includes Office 365 Mortgage, giving you the advantages of Office 365 but built specifically for the mortgage industry.

To learn more about how cloud-based solutions can make your mortgage company more efficient, please contact us.



 

Topics: MortgageWorkSpace

Why You Shouldn't Ignore Security Updates for Your Devices

Security Updates are Important for DevicesDid you know that 98% of cyber attacks can be stopped simply by keeping your devices up-to-date?  Our lives seem to be moving faster as we advance our technologies. Sometimes, we don’t like to even stop for the most minor of tasks. For instance - that notification about the need to update your mobile device that you find a little annoying. And then you do what most people do - ignore it. You know it’s inevitable and has to be done, but you just keep swiping to delay it because now just isn’t a good time. Don’t let that one-day delay turn into an eternity or you might be in for an unpleasant surprise.

Furthermore, these updates aren’t exclusive to your smartphones. Your tablets, laptops, desktops, browsers, and even certain types of software need to be updated at regular intervals. Let's explore why you should keep everything up to date, on your iPhones and beyond.

With all Apple products, there are security vulnerability updates across the spectrum of its products. Even if your devices are running fine now, don’t ignore these. Additionally, remember to update you iTunes on your Windows desktop and laptop computers.

Did you know that there is a feature on most of today's computers that will automatically keep your their software up to date? If you run a Windows-based machine, it's as easy as going to Start>Control Panel>Automatic Updating. If you operate a Mac computer, you can go to the "Apple Menu" and select "Software Update." Under the "Schedule" tab, make sure to click "Check for Updates" and "Download Updates Automatically."  Or better yet there are tools that make it easy to keep ALL your employee devices up-to-date easily.

Why is keeping up to date such a big deal? Software manufacturers are endlessly fixing bugs, updating drivers for new devices, and making improvements on the software that you use every day. Updating your system will improve the reliability, security, and speed of your computer or handheld device.

As we mentioned above, the most important reason to keep your devices updated is security. There are vulnerabilities in almost all software systems; it’s not a matter of if, but when, someone will figure these out. Did you know that companies, such as Google and Apple, actually have employees whose jobs are to hack into their own operating system? Their objective each day is to discover and address their own system weaknesses before cyber criminals do.

Sometimes an update will indicate what it will fix or improve a function. Usability and add-ons are often included, but they aren’t the most important reason to update your devices. So just because they don’t always come with cool or exciting “improvements and bug fixes” you still need to set to make it a regular habit to update sooner than later. The idea is to make your operating systems or software difficult or impossible to be hacked into, which in turn might make your personal information vulnerable to cyber thieves.

And while we are on the subject of staying up to date with technology, make sure that your antivirus is consistently up-to-date.

Mac users, you may not need to worry about antivirus software as much as Microsoft users. This is because only 10 percent of all computers are Macs, making Macs an unlikely target for viruses, as there aren't as many out there.

Microsoft users, you need to be strong in your antivirus game. Like your computers, most antivirus software has an option for automatic updates.

If you’ve never experienced a catastrophic device failure or data breach, consider yourself lucky. However, know that the statistics for cyber criminals are only growing:

The best way to protect your company’s data across multiple devices--work or personal--is with the DeviceGuardian™ tool from Access Business Technologies.  DeviceGuardian is specifically designed for the kinds of updates needed in the Mortgage Industry.This automated powerful product allows mortgage company employees to use their own personal devices for work while keeping company data secure and compliant with the Consumer Financial Protection Bureau. It works easily on all existing and new devices, and is just one more surefire way ABT can manage all security updates so your mortgage company is protected from pervasive and ongoing cyber threats.
Topics: Access Business Technologies

Trump Administration’s Long- and Short-term Impacts on Housing Market

 

Trump Administration’s Long- and Short-term Impacts on Housing Market

The Long- and Short-term Impacts of Trump’s Housing Market Policies

Each time a new administration comes into office--whether the same political party or not--there will always be changes. Political leaders are not elected because they support the status quo, but generally because they want to shake things up. Their policy changes can often shift an entire economic sector, such as the housing market. President Trump’s new policies are already changing the borrowing and lending of mortgage funds.

As with political processes and policymaking in any country, some people will benefit and some will lose. There will never exist a one-size-fits-all policy. Here is what U.S. residents can expect going forward with Trump administration's changes/policies regarding housing.

Upholding the FHA's Annual Mortgage Insurance Premium

Lowering the mortgage insurance premiums is part of what Obama had been focusing on toward the end of his administration. Some low-income citizens, looking to purchase a home, were hoping to benefit from the enactment of that policy. However, the Trump administration has decided to suspend the mortgage premium fee reduction. What does this mean?

Short-term impact

  • When the Obama administration announced its plan to decrease the annual mortgage rate in early January, many lower-income individuals signed up, which caused a spike in FHA applications. With the premiums no longer being offered at a lower rate, many of these requests will either be withdrawn or rejected.
  • There will be fewer new FHA order applications as well as fewer FHA refinance applications.
  • The fee reduction, for FHA-backed loans, would have cut 0.25 percentage points of the total amount borrowed. Savings for Americans with a $100,00 mortgage would have been about $250, and for a $200,000 mortgage it would have equated to about $500 in savings each year. With the suspension of this fee cut, new homeowners will have to find other ways to save.

Long-term impact

  • The overall cost of owning a home will increase.
  • After a pullback of the housing market rates during Obama’s presidential terms, mortgage rates are expected to rise.
  • Affordability for low- to mid-income individuals and couples will decrease over time as the housing costs rise alongside housing demand.
  • Suspension of the rate cut of the FHA is indefinite, which may eventually help the FHA due to higher premiums and higher demand for housing.

Controlling the Consumer Financial Protection Bureau (CFPB)

Reformation of Wall Street practices is part of the reason the Consumer Financial Protection Bureau was created. The aspect of independence of this agency begs many ongoing questions. With the CFPB under the control of the new administration, its agenda will be determined by the decisions of current policy makers.

Short-term impact

  • Currently, there are claims that the body is unconstitutional. Even so, the president exercises control over the agency. The CFPB will not be used in the same way it was during the Obama administration, and as such, it may not act as an independent regulatory body.

Long-term impact

  • The issue of legality of the CFPB remains a court case at the moment, even as Trump's administration exercises power to control the housing sector through this body.
Home ownership has long been a part of the American Dream. While some critics believe Trump’s changes to housing will only make this dream more challenging for some, there are others who believe this cut will benefit taxpayers in the long run, especially if the country experiences another housing market crash as it did in 2008. Trump’s order to suspend the fee reduction will not affect current mortgage holders from making their existing payments, but it might prevent some people from taking the leap into home ownership. It’s important to note that even with a new administration and different policies put in place, there are other factors that affect the markets. For housing, this will always be tied strongly to supply and demand, home interest rates, and inflation.
Topics: FHA Trump Administration Housing Market Mortgage Lending

3 Tools to Avoid Compliance Risks with Data and Electronic Documents

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Picture this. Your company has decided to provide end-to-end mortgage services for a new client. To make document sharing easier, you activate a remote login account so that they can have access to consumer reports. Hackers gain access on the client's end, steal the remote login credentials, and grab sensitive information. Unfortunately, this is not a hypothetical situation.

This happened to a mortgage lender back in 2008. 2008? That was 9 years ago, yet the FTC still uses this case as one of their prime examples of a security lesson taught the hard way. This company didn't protect vital data, and the FTC is strictly auditing them until the year 2028!

This is what can happen when your mortgage company creates compliance risks with data and electronic documents. It's a lot cheaper, we'd say, to invest in better data security than to lose the goodwill of your customers and have to defend yourself legally and face other consequences connected with a data breach.

Here's what you need for maximum security and full compliance.

Office 365 Mortgage™

With Office 365 Mortgage™, you are using all of the productivity features that Office 365 offers. Plus, it's configured to work right alongside your mortgage software for maximum security. How does it keep data safe?

  • One Password, One Portal - Users have secure, single-sign-on access, which helps combat issues that revolve around password reuse and other weaknesses. When you hire someone, there is only one account and password to set up, and when someone leaves, you only have one account and one password to delete.

  • Rest Easy With Built-In Security - Microsoft gives you three layers of security and also guards your business email with industry-leading anti-spam and anti-malware defense.

  • Prevent Data Theft - Security is a priority at Microsoft data centers, but simply deploying Office 365 straight out of the box cannot single-handedly keep your data safe. Mortgage businesses need additional layers of protection. This is why we step in and use complex configurations and custom-written software to make Office 365 Mortgage™ exceed banking standards.

MortgageExchange®

Mortgage companies typically rely on human intervention to determine inconsistencies in their paperwork. Two or three different people will either enter the data into a system to cross-check against each other for inconsistencies; or, businesses will use OCR systems to automatically recognize text and numbers. Both of these methods require a certain amount of human intervention to audit inconsistencies, perform exception processing, and control data quality.

MortgageExchange® eliminates the need to re-key data between origination, servicing, core systems, and accounting. In this way, you seamlessly connect people, processes, partners, and information across dissimilar systems, while eradicating data re-entry, costly errors, and security issues at the same time.

Errors in documents can be as simple as a name misspelled or a wrong number in an address, or as serious as incorrect loan amounts or missing pages. All of these errors cause delays in closing, and incorrect loan amounts can have major consequences for the downstream systems processing the loan.

DocumentGuardian

DocumentGuardian is a comprehensive document management system designed specifically for the mortgage industry. It is a cloud-based email service that provides secured encryption and transfer of files, pictures, and documents.

It starts by providing the borrower with a secure and easy way to send their NPI (Non-Public Information) documents without registering or creating a password. Compliance auditors recommend this type of security because, unlike box-type file sharing apps, it stores your documents in our secure data center only; not on individual computers and mobile devices.

Unfortunately, mortgage companies and financial institutions are still extremely vulnerable. With threats growing bigger every day, it is now more critical than ever for businesses to develop an information security plan and make sure that their vendors and other third-parties are covered too.

The non-profit Online Trust Alliance (OTA) warns that the "cyber landscape has changed dramatically just over the past 12 months," with organizations both large and small being the victims of attacks. Housingwire Magazine reports that numerous mortgage companies are now increasing security because of these significant incidents:

  • Thieves walked away with $80 million in 2016 during a cyber attack at the Federal Reserve.
  • 2017 started out with London-based Lloyds Banking Group experiencing a two-day-long distributed denial of service (DDoS) attack.

Employee breaches are also happening. In 2016, a jury awarded Mount Olympus Mortgage Company (MOMC) more than $25 million for their claims against Guaranteed Rate, another mortgage lender. These claims alleged that Guaranteed Rate, along with former employees of MOMC, illegally transferred hundreds of loan files from MOMC's internal systems to Guaranteed Rate's.

In today’s digital world, it is more important than ever to protect vital information and documents from these cyber thieves—both internally and externally—and to stay compliant with industry regulations that are becoming more stringent in response. Please contact us today at Access Business Technologies to learn more.
Topics: Compliance data management for mortgage companies data security

Working Together: ABT's Partnerships in the Mortgage Industry

partnerships-in-the-mortgage-industry.jpgNo business can exist in a vacuum. The success of any business relies on the cooperation of dedicated professionals, both within and without. Today we're going to look at some of ABT's partnerships in the mortgage industry and the ways in which those partnerships have helped make ABT, and the mortgage industry at large, better.

1. BNTouch

As the makers of True Mortgage CRM, BNTouch provides mortgage lenders around the globe with the customer service tools to respond swiftly and accurately to urgent needs. Here at ABT, we have, for years, enjoyed a mutually beneficial partnership between our sales team and theirs.

2. Calyx Software

Calyx specializes in creating custom software solutions for mortgage companies, designed to see lenders through the entire lending process. Our partnership with Calyx began well over a decade ago, in 2002, when Calyx discovered they needed a better, more reliable hosting partner. Upon visiting our data center and speaking to us at length, Calyx decided to turn to ABT for their online presence, and they have stayed with us ever since.

3. Cimarron Software

Another top-notch CRM, Cimarron Mortgage Manager gives mortgage providers a low-cost, total customer service solution. For many years, our sales teams have enjoyed our ongoing partnership with Cimarron.

4. ComplianceEase

ComplianceEase offers information and apps to train mortgage professionals, check loans for compliance, and create extensive reports on current and potential loans. We are proud to partner with ComplianceEase by creating and supporting a joint MortgageExchange project to feed their Compliance engine.

5. DocMagic and Docutech

The mortgage process requires a lot of paperwork, and these two partners offer solutions to get the correct paperwork for the job. Through the course of these two partnerships, we have helped establish a connection between the origination platform and the document platform, and between new loans and the paperwork needed to complete them.

6. Ellie Mae

One of the mainstays of the mortgage industry in the United States, Ellie Mae likely requires no introduction, processing approximately a quarter of all U.S. mortgages via their proprietary applications. For many years, we have been the proud hosting provider for Ellie Mae's core Encompass compliance security application, for both its server and its client software.

7. D+H

Another provider of end-to-end mortgage services, D+H specializes in the financial side of financing. Our partnership with D+H will center on their use of software dedicated to streamlining payments and related services. In particular, we have for years worked with Interlinq loan service software and with Ultradata software for credit unions, both recent software acquisitions by D+H.

8. Microsoft

Another partner that likely requires no introduction, Microsoft is a staple of the business world, providing network infrastructure options and support around the globe. We have maintained a Gold Partnership with Microsoft for many years now, as well as a Cloud Services Partnership. As a Microsoft partner, we have access to the technology and professionals that are key to driving the future of IT service within the mortgage industry and beyond.

9. Cenlar and Dovenmuehle

Often working behind the scenes of the loan process, lending service providers form the backbone that hold the industry together with expertise and professionalism. We are proud to work closely with service providers like Cenlar and Dovenmuehle to get mortgage providers the assistance they need throughout the lending process.

10. Byte Software

Loan origination security compliance is a challenge for all mortgage providers. Loan origination software solutions, like those provided by Byte, give lenders the streamlined security of getting the correct paperwork completed in-line with existing government regulations. In our relationship with loan origination platforms like Byte, we help to exchange ideas, solutions, and support crucial to the mortgage industry as a whole.

No man is an island, and neither is any business. This list of business partners is far from complete, but it does give a general idea of the work we do and the people who help us get it done.

Are you a player in the mortgage industry looking for a new business partner? Do you have questions about how ABT can help you? Contact us today to learn more about our offerings and how we might work together to better serve mortgage professionals.

Learn More

Topics: ABT partnerships

Understanding HUD in the Mortgage Industry

Understanding-HUD-in-the-mortgage-industry .jpgThe Office of Housing and Urban Development (HUD) oversees the Federal Housing Administration, the largest mortgage insurer in the world. Because HUD plays such a major part in today's mortgage markets, it is important that loan officers are familiar with HUD in the mortgage industry.

The information below gives you a picture of what you need to know about HUD, starting with a bit of historical background and then moving on to HUD's influence in the mortgage market today.

The History of HUD

HUD traces its earliest beginnings to the Housing and Home Finance Agency created under the Reorganization Act of 1945. This agency consolidated several agencies under its umbrella: the Federal Housing Administration (FHA), the Public Housing Administration, the Home Loan Bank Board, the Federal National Mortgage Association (Fannie Mae), the Community Facilities Administration, the Urban Renewal Administration, and the Federal Flood Indemnity Administration.

The agency then became the Office of Housing and Urban Development in 1965 when President Lyndon B. Johnson established it as a cabinet position under his "Great Society" program.

HUD's Impact on Americans

We can't talk about HUD's impact without talking about FHA—HUD’s mortgage insurance arm—and FHA's impact on America's home ownership trajectory.

FHA came into existence earlier than HUD, in 1934, and in the decades since its inception, it has helped millions of Americans afford homes. After World War II, FHA helped returning soldiers buy homes. In the 1950s, 60s, and 70s, FHA supported building apartments for elderly, disabled, and low-income Americans. During the recession in the 1980s, FHA helped individuals obtain financing when mortgage insurers pulled out of business in the oil states.

In 1934, only 10% of Americans owned their own homes, but by the third quarter of 2001, 68.1% of Americans owned their own homes. That's almost a 60% increase in less than 70 years.

HUD's Mission and Focus

HUD's stated mission is to support communities and individuals by doing the following:

  • Helping to build and preserve healthy neighborhoods and communities
  • Expanding home ownership, supporting affordable rental housing, and improving healthcare opportunities
  • Steadying disorderly credit markets
  • Operating in a fiscally responsible manner with public accountability
  • Valuing customers, staff, and partners

In addition to these initiatives, HUD specializes in three key loan areas:

  • Single family homes
  • Multi-family homes
  • Healthcare facilities

Single Family Housing

Harking back to its mission to expand home ownership, HUD provides mortgage insurance that allows individuals, who might not otherwise meet private mortgage underwriting standards, to build new or buy existing single family homes. These homes include traditional single family homes, condominiums, manufactured homes, and rehabilitated housing units.

HUD also provides mortgage insurance for reverse mortgages that credit elderly homeowners with the equity they have built up in their homes. The reverse mortgage market blends HUD's housing mission with the healthcare focus, since reverse mortgages often allow the elderly to age-in-place at home.

Multi-Family Homes

HUD provides mortgage insurance to HUD-approved lenders who want to build, rehabilitate, buy, or refinance multi-family housing developments. This program fulfills the mission statement that HUD will help build and support healthy communities. Keeping multi-family housing developments in good condition and financially stable helps retain the developments as a safe place to live.

Healthcare Programs

As the population grows larger and grayer, HUD's mortgage insurance program focuses more on healthcare programs and caring for our elderly population. HUD's mortgage insurance program facilitates loans to buy, rehabilitate, build, or refinance hospitals and residential care facilities.

Community Grants

HUD provides several grant opportunities for community, educational, housing, and faith-based organizations to apply for funds to help satisfy the needs of their constituent groups.

HUD's Influence in the Housing Market

HUD's influence doesn’t stop at providing mortgage insurance to buyers or development grants to nonprofit organizations. The agency has a counseling program that supports a network of Housing Counseling Agencies (HCA) all across the nation.

HUD trains the HCAs to help buyers find the right home and/or rental unit by empowering individuals to make the right choices for themselves and their financial situation. HCAs provide counseling to the public on buying a home, foreclosure, renting, defaults, and credit issues.

HUD's Regulatory Programs

As the overseer to the largest mortgage insurer in the world, HUD regulates the mortgage industry. The Offices of Risk Management and Regulatory Affairs has three sections that help buyers and homeowners by regulating best practices in real estate transactions.

First, the Office of Risk Management leads FHA in measuring and managing risk in the single family, multi-family, and healthcare areas within the HUD mission and vision. Second, the Office of Evaluation provides valuations of FHA mortgage insurance portfolios. These portfolios include single family homes, senior programs for aging-in-place, apartments, nursing homes, assisted living facilities, and hospitals. Third, the Office of Manufactured Homes sets standards for consumer protection related to mobile home units.

ABT’s Cloud Technology Makes Mortgage Compliance Easy

Maintaining compliance for mortgage companies and keeping up with the changes in regulations can be an ongoing challenge. MortgageWorkSpace®, a cloud-based platform developed just for mortgage professionals, can help you meet security and compliance standards on any device, anywhere, all from one cloud interface.

MortgageWorkSpace® makes mortgage administration faster, easier, and more secure for your entire business. To learn more about our cloud-based software tools, please contact us.

Learn More

Topics: mortgage industry HUD

Understanding the 4506-T Borrower Income Verification

Borrower-Income-Verification.jpgFor mortgage companies, nothing is more important than verifying that a prospective buyer has the income to repay the loan. The IRS is probably the best source to verify income, and the agency has a form that mortgagors can file with the IRS to solicit income verification.

Here are five tips we’ve put together on the use of IRS Form 4506-T Borrower Income Verification.

Fannie Mae (FNMA) and Freddie Mac Guidelines

The mortgage giants issued guidelines that require lenders to use the 4506-T Borrower Income Verification form. You will see by the effective dates below that these rules have been in effect for some time.

Fannie Mae requires lenders to obtain the form both at application and at closing for all loan applications received after September 1, 2009. Lenders must use the forms to verify borrower-provided income documentation, which the lender relies on during the underwriting process. While the lender does not have to furnish the form to FNMA before closing, FNMA does require the forms as part of the post-closing quality control process.

Freddie Mac, on the other hand, requires all lenders who rely on borrower income during the underwriting process to obtain the 4506-T form on the application date and the Note date. The guidelines were effective for applications on and after February 1, 2010.

What is the Desktop Underwriter (DU)

Fannie Mae has developed what it calls its "Day 1 Certainty" representation-and-warranty relief program. This program allows lenders to obtain three types of reports. These include:

  • Employment and income verification
  • Form 4506-T transcript reports
  • Asset reports

Vendors who want Fannie Mae to include them on the list of verification report vendors must provide the above three reports.

As of January 20, 2017, Fannie Mae has increased to 30 the number of vendors on its list of third-party companies approved as income verification vendors.

Blocks to Third-party 4506-T Requests

By mid-2015, it was clear that something was amiss with lender requests for 4506-T transcripts from the IRS. Due to internal policy changes, the IRS returned some 4506-T requests with the following rejection code notation: "Limitations."

Limitations: This code indicates red flags on the borrower's information. The flags may result from inaccuracies in the borrower's income, tax documentation, or the Social Security number used to qualify for the loan. Freddie Mac tells lenders to take these red flags as seriously as you would any fraud indicator. The "limitations" note is the IRS's way of combating fraud and keeping personal information secure from unauthorized access.

Other ways to comply: For borrowers qualifying on W-2 income only, not all financial institutions require a full IRS transcript, as long as they have confirmation of the W-2 income. (Note: Some financial institutions require the "limitations" notice retained in the file.) In other instances, a copy of the full 2014 filing must accompany the loan file.

Even if the IRS won't disclose the tax transcript to the lender, the borrower always has the right to request a copy of his transcript from the IRS, which will send the information to the individual. The individual must show proof that the transcript came from the IRS when he delivers the verifying information to his lender.

Retaining Copies of IRS Documents

Whether you obtain copies of the actual Form 1040s or transcripts of the filings, the information received from the IRS must remain as a permanent document in the quality control file.

How DocumentGuardian™ Can Help

With all the requirements for retaining mortgage applications and the verification documents required for government-backed mortgages, it's easy for mortgage loan officers to feel overwhelmed.

DocumentGuardian can help you organize and keep your business documents safe, making document management easier and more secure than ever before. Your client sends sensitive information to you through the DocumentGuardian system, which then stores your borrower's personal financial documents in a secure data center, not on desktop computers or mobile devices.

In addition, MortgageExchange helps you move documents between mortgage storage software so your staff never has to re-key information into another system. That means fewer staff hours on repetitive work and fewer errors.

If you have any questions about our suite of mortgage services, please contact us.

Get DocumentGuardian FREE

Topics: DocumentGuardian borrower income verification

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

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