This Is How You Comply With The CFPB

As you all know, I am invited to see a lot of technology. I will never rate technology because I don’t think it’s fair to rate one technology over others without seeing all the technology available on the market, which is impossible. However, when I see something innovative, I’m going to tell you about it. I saw how one LOS is tackling the CFPB disclosure changes set to hit our industry in August of next year and they have gotten it right. Here’s what I saw:

Everyone is up in arms about the new disclosures set to go into effect next year. I’ve talked to three different LOS players and they tell me that this change is up to the doc preps to handle. So, when the folks at LOS Power Lender, distributed by ASC, invited me to see how they are dealing with the changes, I was a bit shocked. Power Lender executives told me that it was their job as the LOS to make compliance real for their clients. In December of 2012 the preliminary regulation was released by the CFPB and these guys started working. They noticed over 2,000 variations in the final document to account for.

So, what did they do? They decided that they could no longer “fix” boiler point docs that come from various doc preps or use standard line and coordinate methods to match fields and documents.

As a side note, the owners of Power Lender have always been very involved in the MISMO standard because they feel very strongly about preparing their clients for the future of mortgage lending instead of being reactive to constant regulatory change. So, as a result, the company created a proprietary dynamic document engine. What does that mean you might ask? The lender selects the document that they want from within the Power Lender LOS and the LOS automatically gathers the data, pulls it into their dynamic document engine and a fully compliant document is created just like that.

It’s important to note that in developing this technology, Power Lender executives decided to use MISMO Version 3.3 standards. That’s important for two reasons: First, unlike some doc preps that I have talked to, Power Lender has chosen to embrace the latest and greatest that MISMO has to offer so their clients are not going to be saddled with an older version of the standard that is cheaper for vendors to comply with, but does not prepare lenders for the future. Second, Power Lender also made this decision because they wanted to be in line with the Fannie Mae Uniform Closing Dataset, which requires the use of MISMO Version 3.3. Fannie Mae is not mandating this yet, but with the e-closing pilot going on at the CFPB in particular, one has to imagine that a mandate may come at some point in the future. When that mandate does come all of the doc prep and LOS vendors will be forced to embrace the latest version of MISMO, but Power Lender clients will already be there.

And the kicker is that when doc preps and LOS vendors alike say that they will have their solution to deal with this new CFPB regulation ready by the end of this year or early next year, Power Lender showed me this solution and it’s working now. It will be out to its lenders by September.  The fact that an LOS, not a doc prep, is taking on this responsibility and they’re doing it in such an innovative way such that they are, as much as possible, future-proofing their clients from the issues that may be associated with future rules, mandates, etc., is really commendable and worthy of praise.

You can find out more about Power Lender online HERE.

About The Author

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Tony Garritano
Tony Garritano is chairman and founder at PROGRESS in Lending Association. As a speaker Tony has worked hard to inform executives about how technology should be a tool used to further business objectives. For over 10 years he has worked as a journalist, researcher and speaker in the mortgage technology space. Starting this association was the next step for someone like Tony, who has dedicated his career to providing mortgage executives with the information needed to make informed technology decisions. He can be reached via e-mail at tony@progressinlending.com.