As everyone talks about the digital mortgage, executives at the Seventh Annual ENGAGE Event held in Denver, Colo, looked to broaden the conversation. They discussed the future of regulatory compliance in mortgage lending in a digital world. Here’s how they see things:
The burning question was: Will the coming digital mortgage reshape compliance? “It already has. Pre-2007 we didn’t think about compliance until after the loan was closed,” said Keith Kemph, Managing Consultant at CC Pace. CC Pace is a boutique business and technology consulting firm which has been serving the mortgage industry for 37 years. Early in Keith’s career, he was a Retail Branch Manager and later Regional Manager with Dime Banks, North American Mortgage. He went on to serve as Director at Merrill Lynch for seven years where he implemented numerous business and technology projects for the mortgage division. The last 10 years Keith has been consulting with executive management teams of mortgage vendors and mortgage bankers nationwide on strategy, process, and technology while successfully guiding organizations through change.
“We didn’t have to. Now, we have to think about compliance at every step of the loan process,” continued Kemph. “We just went through ten years of chaos as we stitched together technology tools, our loan process and navigated our way through relentless new compliance measures. In our recent survey we found that lenders have formally transitioned from extremely cautious to optimistic. They are less on defense and more on offense, able to focus on the customer experience. However, while lenders feel like they can finally breath, they need to remain somewhat cautious as they map out and implement their digital mortgage strategy.”
The landscape is becoming much clearer. “The CFPB came out with things like TRID, HMDA, etc. to really set the rules,” said Leonard Ryan, Founder and President of Laguna Hills, Calif.-based QuestSoft Corporation, a provider of automated compliance review software for the mortgage industry. Since the company’s founding in 1995, Ryan continues to oversee strategic planning and the day-to-day operations for the company including business and software development, interface partners, sales and pricing. Under Ryan’s leadership, QuestSoft has received Mortgage Technology’s Top 50 Service Provider Award since 2009 and was named a Top Workplace by The Orange County Register in both 2013 and 2014 out of over 10,000 applicants.
“So, the CFPB is telling you who should get a loan and who shouldn’t. They are setting the rules. In some ways they are reducing the industry to numbers. Now lenders have to work within those rules to differentiate themselves, and that’s where technology can play a role,“ added Ryan.
As a a result, the future of digital lending compliance will include a greater emphasis on data and bringing compliance as close to the front of the mortgage process as possible. “Digital compliance is evolving into a process that is embedded into every aspect of the mortgage loan lifecycle,” noted Michael L. Riddle, the Managing Director of Mortgage Resources Group, LLC. He guides the teams within the firm that develop and deliver “best in class” compliant disclosure and documentation systems to single family mortgage lenders throughout the country. Mr. Riddle is the Co-Founder and Managing Partner of the Middleberg Riddle Group, one of America’s preeminent mortgage banking law firms and, in that role, has spent much of his 40 plus year professional career providing advice and legal counsel concerning regulatory compliance, enforcement and litigation to clients including banks, mortgage lenders, insurers and related financial service entities.
“Compliance will be essential. Further, compliance will be a key part of digitizing every part of the future loan process,” Riddle concluded. “Compliance will also be increasingly data driven. There will be no escaping embracing a more data-centric approach to mortgage lending.”