New rules and updates to current regulations in the mortgage industry are being rolled-out at an astonishing rate. During the last few months alone, regulators have crafted revisions to a number of the regulations that have been a part of the mortgage industry for years. As a result, lenders are forced to quickly change policies and procedures within their organization to comply with these changes.
With many of the implementation deadlines for these new and updated regulations quickly approaching, the question is, “Are You Prepared?” Have you made the appropriate changes to your processes and procedures to correctly handle these changes? Have you been able to implement technology that allows you to better respond to impending changes and ones that have not rolled out yet?
One such change is a modification to Regulation B (ECOA), which takes effect on January 18th, 2014. The regulation is §1002.14 Rules on providing Appraisals and other valuations reads in part: “A creditor shall provide copies of each such appraisal or other written valuation promptly upon completion, or three business days prior to the consummation of the transaction (for closed-end credit) or account opening (for open-end credit) whichever is earlier.”
In addition, the regulation states that applicant may waive the timing requirement to receive the valuation prior to closing as long as the waiver is received at least 3 business days prior to closing. In any case, a copy of the valuation must be received prior to or at closing or within 30 days after the creditor determines that consummation will not occur.
The regulation goes on to say: “The copies required by § 1002.14(a)(1) may be provided to the applicant in electronic form, subject to compliance with the consumer consent and other applicable provisions of the Electronic Signatures in Global and National Commerce Act (ESIGN Act) (15 U.S.C. 7001 et. seq.).”
ESIGN requirements specifically state that applicant must affirmatively consent to receiving their documents electronically. It also states that prior to receiving this consent that the lender must provide the consumer a clear and conspicuous statement informing them of:
>> Right to have documents made available in paper form
>> Right to withdraw consent and any conditions, consequences or fees in the event of withdrawal
>> Whether the consent applies to a particular transaction or to an entire category of electronic records
>> Procedures for withdrawing consent
>> Instructions on how to request paper copy and whether any fee will be charged
>> Any Hardware and/or Software requirements necessary
If a consumer consents electronically, it must be done in a manner that reasonably demonstrates that the consumer is able to access the information in the electronic form that will be presented. The lender must also assure that once presented, the consumer has the ability to retain a copy for their own records.
In addition to Regulation B (ECOA), a host of other changes have taken place over the past few years that have put pressure on lenders’ ability to quickly change and adapt to regulatory requirements and current market conditions.
For instance, Regulation Z changes added very significant new timing and delivery issues for early truth-in-lending disclosures, which are required for all closed-end mortgage loans. In essence, lenders are required to provide truth-in-lending disclosures (early/ initial disclosures) within three business days after receiving a mortgage loan application and before any fees are collected from the consumer, other than a reasonable credit check fee.
The rules also impose a waiting period of seven business days between the early disclosure and closing date. Additionally, lenders must provide revised disclosures, including a revised annual percentage rate if the existing interest rate significantly changes between the time the early disclosure is provided and the closing date.
As lenders continue to scramble to address these requirements and a flood of other regulations, it is important to look to technology solutions that can not only address these immediate needs, but also how they can be applied to future requirements and market opportunities. Lenders are quickly realizing that electronic delivery solutions can be very effective in meeting specific, new regulatory requirements.
As lenders look to effectively respond to these current market conditions, what should they being looking for in an electronic delivery solution? Here are the Top 7 things a lender should demand in an electronic delivery solution.
>> A solution that compliantly addresses new regulatory requirements.
>> A solution that can be easily deployed.
>> A solution that delivers document tracking and verification.
>> A solution with enhanced security and encryption.
>> A solution that provides ease of use for recipients.
>> A solution that provides increased loan profitability.
>> A solution that has a proven track record in the mortgage industry.
1. A solution that compliantly addresses new regulatory requirements.
Lenders looking for the ability to effectively respond to the flood of new regulatory requirements must work with an electronic delivery provider that has in-depth knowledge and experience in the mortgage industry. For the solution to effectively meet the new regulations, the provider must have a proven track record within the mortgage marketplace.
2. A Solution that can be easily deployed.
In today’s fast pace and constantly changing mortgage market, lenders need solutions that can quickly and easily be deployed while enhancing compliance. Dynamic electronic delivery solutions can provide the flexibility and compliance that today’s lending environment demands.
3. A Solution that delivers document tracking and verification.
To meet regulatory requirements lenders must be able to track and verify delivery of critical lending documents at all stages of the lending process. Having on-screen delivery confirmation ensures that all of the lenders’ transactions are completely traceable for audit purposes. Automatic email notifications can be sent to anyone, indicating the lenders documents were successfully transmitted. Industry leading document delivery solutions provide lenders with online history available in real time.
4. A Solution with enhanced security and encryption.
Your solution provider must employ state-of-the-art encryption technologies to ensure your institution’s privacy and security. The provider should also undergo an annual SOC 2 audit that is completed by an independent accounting firm.
5. A Solution that provides security and ease of use for recipients.
The provider needs to have the experience of successfully registering tens of thousands of users worldwide. Your provider should deliver a single user name and password, so that your recipients can receive documents from all parties of the transaction without having to remember multiple passwords. In addition, the solution should be able to be used to transmit lock box reports, board meeting notes, payroll data and other confidential materials such as wills and trusts.
6. A Solution that provides increased loan profitability.
Your electronic delivery solution should eliminate the time and expense of traditional overnight delivery. Documents may be sent to multiple recipients simultaneously. Last minute changes to your documents should be able to be made within seconds, and your revised documents should be able to be re-submitted and made available to the recipients at no additional charge. Your solution should not charge for redraws.
7. A Solution that has a proven track record in mortgage industry
Your electronic delivery solution provider must have in-depth mortgage industry experience if you are going to fully leverage it in today’s lending environment. The provider must also provide world-class support, one that is proactive in deliver new solutions before the regulatory deadlines.
When you or your recipients have questions, your provider needs to have the answers. They should have industry established procedures in place, and be able to effectively respond to any potential issues you may have. They need to be able available when you have questions. This includes extensive Customer Support availability, seven days per week, every day of the year (major holidays excepted).
RemoteDocs from Data-Vision, Inc. enables you to deliver documents to anyone, anywhere, anytime using a secure, internet based document delivery system. RemoteDocs allows documents to be easily sent within seconds and protects sensitive information with leading-edge security and encryption technologies. Immediate document delivery means on time closings and real bottom line results for your business! RemoteDocs delivers critical lending information where and when you need it, through the power of the internet. Point, Click, Delivered. It’s just that simple.
About The Author
Randy Schmidt is President of Data-Vision, Inc. and is responsible for overall operation and strategic planning for the company. Randy became involved in the IT side of mortgage banking almost 30 years ago and has been involved in numerous projects on both the origination and servicing side of the business. In 1993, Randy co-founded Data-Vision, Inc., in Mishawaka, Indiana as a Web design company. He then combined his previous mortgage experience with Internet knowledge to bring the speed, power and availability of the internet to the Mortgage industry. He can be reached at firstname.lastname@example.org