Magazine Cover Story: Attaining Ironclad Compliance

*Attaining Ironclad Compliance*
**Executive Interview**

kathy-cover-story***With the onslaught of new rules and regulations, the mortgage industry is changing. This change places a huge burden on the document preparation vendors trying to keep their lenders compliant. So, we thought that we’d talk to MRG Document Technologies about what makes for a good doc prep. On the company’s website it says that MRG is “dedicated to helping mortgage lenders save time and money by providing the highest quality, most dependable, and timely document preparation and delivery services available anywhere. MRG’s MIRACLE products are Web-based electronic systems for rapid document preparation, compliance, management, and delivery. MRG’s services can be customized so that the needs of each individual lender are effectively fulfilled. MRG will help lenders improve performance and efficiency, while significantly reducing costs associated with the closing process.” So, we sat down with Kathleen Mantych of MRG Document Technologies, to see how MRG lives up to these claims and ensures that its lenders are truly compliant all at the same time. Here’s what she said:

Q: How long has MRG been providing compliant and legally enforceable documentation to the residential mortgage industry?

KATHLEEN MANTYCH: MRG Document Technologies is the mortgage document practice group within Middleberg Riddle & Gianna, among the most capable and experienced mortgage regulatory law firms in the U.S. The Document Technologies group designs, maintains and warrants as compliant, electronic disclosure and closing documents for the mortgage industry in all 50 states. Founded in 1980, MRG has hundreds of customers across the nation ranging in all sizes and supplies compliance and dynamic content to lenders and servicers alike. With more than 100 employees, MRG is dedicated to mitigating lender risk with its experienced team of compliance attorneys first and foremost, as well as efficiently deliver dynamic compliant content technology for lender-specific forms and documents, guaranteed to be in compliance with the most recent legislative and regulatory changes. Top-flight attorneys and technology leaders with extensive experience are blended into a single collaborative unit that is focused on delivering compliant solutions that represent “best practices” for legal compliance and mortgage document preparation.

Q: MRG Document Technologies is a practice group within Middleberg Riddle & Gianna; what added value does this provide to mortgage lenders? How is compliance an integral part of MRG’s document preparation?

KATHLEEN MANTYCH: The key value add for lenders is the fact that the practice group is within the law firm of Middleberg Riddle & Gianna (MRG) and legal compliance is our expertise. There are teams of attorneys and paralegals that monitor over 60 compliance sources from federal, state and local municipality to ensure 100% compliance and accuracy of the content. This is all backed by an Errors and Omissions policy that the law firm holds to rep, warrant, guarantee and defend the content, including calculations. We have a staff of compliance attorneys whose responsibility is to build and maintain lender forms and closing packages. MRG attorneys are also available to respond to state-specific or national inquiries. Our many years of compliance experience insure that each lender receives perfect documents every time.

What this means to the lender is that MRG mitigates lender risk from buy-backs or a potential CFPB audit. MRG alleviates the burden of compliance so the lender can focus on their core competency. Another benefit of our law firm is the attorney-client privilege. The information transmitted and to and sent from us to the client is privileged communication. Think of MRG as one solution—a lenders’ mortgage resource group—one company with unparalleled compliance and technology together as one cohesive offering which bring lender products more quickly, efficiently and accurately to market. Other document providers are one-dimensional and cannot provide the powerful combination of compliance and true dynamic technology together. Many rely on static, form templates and must maintain thousands of versions of documents. This antiquated method lends itself to costly mistakes and non-compliance for lenders who use them. MRG takes on the onus of compliance, maintenance and mapping so lenders can rest easy.

Our success over more than three decades has shown that an effective compliance and document preparation “collaborative unit” must provide compliance expertise and lender-specific program information along with leading-edge technology. We combine nationally recognized compliance quality, an extensive lender-specific forms library, and quick, cutting-edge technology with real performance advantages, resulting in products and services that are unparalleled in the industry.

Q: But how varied are the documents that MRG prepares for lenders?

KATHLEEN MANTYCH: MRG’s proprietary dynamic software system maintains loan programs for disclosure and closing package documents for all loan types for all states including investor-specific, state-specific documents and niche products. In addition, we also support servicing documents including demand letters, assumptions, and loan modifications. The system also accommodates and supports all types of custom documentation as well as eSign capabilities.

Q: What impact will the Consumer Financial Protection Bureau regulations have on the documents that MRG prepares?

KATHLEEN MANTYCH: The regulations being issued by the CFPB during this year will have an enormous impact on the content of application disclosures and closing documents involved in the origination of single family home loans. In addition to revising the language in and the format of the disclosures and documents, the calculations for the content of the disclosures will also change.

Q: In this constantly changing regulatory environment, why is it no longer just about the documents?

KATHLEEN MANTYCH: The key to addressing the challenges of such complex and ever-changing regulatory compliance requirements is to embed compliance within business processes and streamlined technology. This enables a lender’s compliance department to manage regulatory risk and foster a culture of compliance across the organization.

A compliant, dynamic document engine with the rules to get the right product, with the right mapping, into the right channel and deployed is the solution—one collaborative system. If a lender is doing thousands of loans in 36 states and one form must be adjusted, it can be a major undertaking. MRG offers tools and software designed to completely automate that process, paper out, go paperless, or go e-mortgage. Everyone in the lender organization gets the right compliant forms, mapping, stacking order, rules, etc. and the lender can make adjustments to the form or package at any time.

Outsourcing compliance to MRG offers the ability to consistently program and enforce business rules and policies in all facets of our compliant document packages across the board—one time programming effort with a dynamic system to alleviate risk associated with version control. We offer functionality to effectively manage compliance issues giving the lender flexibility to be the first to market with new product innovations. The ability to allow growth, improve volume without adding staff and be assured that compliance and content are being managed for the lender are paramount in this complex regulatory environment.

Q: What should lenders be looking for when choosing a document provider?

KATHLEEN MANTYCH: Document provider functions should be viewed as a collaboration of multiple parts to form one cohesive solution—all to mitigate lender risk. First and foremost is the compliance and dynamic content creation. Anyone can produce documents—a commoditization that has rippled through this industry—but the integration of state of the art dynamic technology with “living compliance” from a law firm is the more complex and defining issue.

Second, is data management from an industrial strength core processing standpoint. The days of embedding a document engine, managing the data field mapping when regulatory changes are necessary and/or managing the content selection process and advising when a form is appropriate or when to change it for the packages are fraught with potential disaster from any CFPB or audit aspect. The model should be a streamlined, integrated approach with the lender’s chosen LOS and should happen programmatically with compliance and technology as one. The data comes over to the doc provider, compliance rules are engaged, all perform loan tests are done (HOEPA, RESPA 2010, Fannie 5%, State High Cost, Higher Priced Mortgage, Initial APR and more) and accurate compliant content is produced so much to the point that the lender does not have to stare and compare or double check to make sure the content is correct – it is guaranteed.

Lastly, a “best in class” IT infrastructure to support the compliance rules and dynamic content system are a must. It must be architected for long-term industrial strength, standards based tools engineering for flexibility and adaptability in this increasingly complex regulatory environment. It must keep evolving and render pioneering efforts to stay ahead of the game and meet the demands of change with maximum speed and efficiency. This includes a complete team of experienced attorneys and staff for the compliance rules, as well as product, technology and developer experts to deploy the rules programmatically—all for lender assurances and ease of use.

Q: In your view, does doc prep need to fundamentally change in order to ensure compliance and transparency going forward? Are vendors and lenders in agreement that traditional doc prep doesn’t work anymore? And if they are, what will doc prep services look like five years from now?

KATHLEEN MANTYCH: Document preparation need not fundamentally change unless there is an understanding of what is meant by “fundamentally change.” The fundamental change that will drive compliance and transparency will be the clarification around all the regulations challenging lenders today. Again, the issue isn’t that “traditional doc prep doesn’t work anymore,” if it were, thousands of loans would not be closing monthly as they are now. Doc prep isn’t broken, it’s the hundreds of ways the documents must be programmed to be compliant that is broken. If the industry is serious about change it will be an “e” environment where compliance and dynamic technology are truly integrated into the lender’s workflow and business processes. The capability exists today. It is the adaptability of the industry that needs to catch up.

Q: Lastly, what does it mean to truly be dynamic and data centric? And how would you define the industry’s overall adoption of dynamic data-centric practices?

KATHLEEN MANTYCH: A truly “data centric” environment means all data necessary for a complete loan transaction resides in a single system of record. An industrial strength document preparation system with compliance and dynamic content technology are essential to the data centric approach. This allows the data to be combined simultaneously with compliance rules and dynamic content through the doc prep provider as a conduit for the lender in a centralized approach ensuring data and content is 100% accurate. The industry has a strong desire and goal for moving in this direction, but it is still fragmented because so many systems used in the lender’s business processes are not truly integrated.

To sum it up: CFPB, state auditors, lenders, vendors, meet a true compliance and dynamic document provider in MRG – bring it on!

INSIDER PROFILE

Kathleen Mantych is the senior marketing director for MRG Document Technologies, a provider of legal compliance and dynamic compliant document preparation software technology to lenders nationwide. With more than 25 years experience in the mortgage industry, Mantych has held executive sales, product and alliance management positions with key mortgage technology providers. Dallas-based MRG is a document practice group within a law firm putting the company in the unique position of its dynamic document content being created and tested by an in-house team of compliance attorneys. MRG owns its own legal content as well as its own calculation engines, ensuring accuracy for its lender customers.

INDUSTRY PREDICTIONS

Kathleen Mantych thinks:

As the CFPB ramps up its regulatory enforcement along with refinements to the existing regulations, lenders are going to come under an increasing burden to manage the complexity within these regulations.

To mitigate compliance process failures lenders will have to partner with outsourced solutions such as MRG to truly get compliance process risk management solutions that are integrated into their systems of record.

The continued influx of new rules, regulations and statutes are not going to stop any time in the near future and will continue to evolve and change.