It’s All About The Data

*It’s All About The Data*
**By Reid Smeda**

***The future of successfully documenting transactions involves creating solutions that bring together content, best practices, processes, and policies that are flexible enough to meet a variety of  unique business needs, yet are compliantly strong enough to withstand the stricter requirements posed upon the mortgage industry by the CFPB and other governing bodies within the industry. Sounds daunting, right? Well, as it turns out, it doesn’t have to be.

****In order to understand how to document transactions in a less risky and more efficient way, we have to first examine why a new document solution is a necessity. As the majority of professionals in the mortgage industry are aware, there has been (and will continue to be) a rapid influx of new and changing rules and regulations, which, if not adhered to, can result in considerable financial recourse for lenders. As a result, maintaining compliance is more important than ever for financial institutions.

****In an ideal world, every lender would be able to have infinite internal resources to keep up with what seem to be infinite changes, but unfortunately, that is not the case. What is happening instead is staff members of these institutions are feeling intense pressure to remain compliant with the often overwhelming compliance burden. Many lenders attempt to maintain an extensive doc library and are forced to spend time updating thousands of individual documents on a case by case basis rather than focusing on growing the business. As a result, they often lose the competitive edge in the industry due to the inability to create custom docs quickly.

****Although it’s easy to believe the problem lies in the growing number of rules and regulations, resulting in wasted resources and a higher risk factor for financial loss, it is actually the ways in which financial institutions choose to handle these changes that stir up trouble. Rather than trying frantically to keep up individual documents per regulation update, lenders need to realize that the key lies in the data.

****Implementation of a data-driven solution offers a number of benefits to financial institutions. Resource expenditures for staff and training are greatly diminished, current and future compliance risks are managed much more effectively, and documents are produced much more quickly. These benefits are made possible by the fact that the document is able to build itself dynamically, resulting in an end product that perfectly matches the parameters of the specific transaction. This allows lending institutions to maintain a considerably smaller doc library and, since the data supplied leads the document process, all the information provided will be relevant and necessary, considerably mitigating the risk of ramifications due to compliance errors, such as litigation, buy backs, lost business opportunities, and damages to the industry reputation.

****So, based on the current and future climate of the mortgage industry, it appears as though the options are clear: risk the costly repercussions that come with outdated compliance solutions, or take a proactive approach by employing a data-driven solution that is smart enough to roll with the punches. What will you do?

Reid Smeda is the president of Compliance Systems, Inc. Reid has over 20 years of banking experience – serving in senior roles as an attorney, lender and business leader for national and international financial institutions. Compliance Systems, Inc., (CSi) is a highly respected provider of best in class “financial transaction” technology and expertise.