ComplianceEase Adds New Home Equity Audit Functionality

ComplianceEase has updated its flagship platform—ComplianceAnalyzer—so it is now able to audit home equity lines of credit (HELOCs) for state licensing requirements in most states.

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ComplianceAnalyzer with TRID Monitor has been able to audit both closed-end and open-end mortgages for federal, state and local requirements, including TRID compliance, and for state predatory lending issues for some time. ComplianceEase has now enhanced the system to allow non-banks, banks and credit unions to audit all liens in most states in which they are licensed. Currently, the system covers more than 80 licensing types in the 42 states that account for more than 90 percent of home equity originations in the United States.

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Depending on the state license, the system can test HELOC originations for:

>> Interest rates

>> Restricted fees

>> Late fees

>> Grace periods

>> Prepayment penalties

“According to TransUnion, approximately 5.5 million HELOCs were originated in the last five years, and that number could rise to 10 million over the next five years,” said John Vong, president of ComplianceEase. “With rising home prices creating equity, one estimate says that 44 million homeowners now have more than $6 trillion in ‘tappable’ equity and could be candidates for home equity lines and loans.”

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Vong added, “Not surprisingly we are seeing a growing interest from banks and now non-banks in this category. From a compliance perspective, however, the patchwork of different state regulations for both real estate and consumer lending has presented challenges for lenders with multi-state footprints. Our new enhancements to ComplianceAnalyzer mean that lenders can now use their preferred system for first mortgage compliance to reduce exposure to potential state licensing rules for HELOCs as well.”

Compliance Auditing And Monitoring Matters

Lenders can’t forget about compliance. But technology vendors are helping. For example, Mortgage Cadence, an Accenture company, has integrated ComplianceAnalyzer, a compliance solution from ComplianceEase, with the Enterprise Lending Center (ELC), Mortgage Cadence’s proprietary loan-origination platform. The integration enables ELC users to systematically audit loans for regulatory compliance without leaving the platform.

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ELC facilitates lending for forward and reverse mortgages in retail, wholesale and correspondent lending channels and across a multitude of mortgage products, including home equity lines of credit. The integration of ComplianceAnalyzer provides a comprehensive, real-time auditing and monitoring solution within the ELC.

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“The cost to produce a loan has been on the rise, largely because of compliance demands that have given way to inefficiencies and slower speed to close for many lenders,” said Trevor Gauthier, Mortgage Cadence’s president and chief operating officer. “Mortgage Cadence is committed to providing lenders with the tools to help solve for these increased compliance demands, and our integration with ComplianceAnalyzer will do just that.”

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ComplianceAnalyzer enables lenders of all sizes to improve asset quality and value, reduce compliance risk, negotiate better execution with secondary market investors, and capture the data needed to prepare lenders for regulatory exams. The solution performs audits for federal high-cost and higher-priced loan regulations, the Secure and Fair Enforcement for Mortgage Licensing Act, state high-cost and anti-predatory regulations, and state license-based consumer lending laws and regulations, as well as compliance guidelines from secondary market investors and government-sponsored enterprises. It also performs TRID, RESPA 2010 and pre-2010 forms tests to validate California’s per diem interest calculations, a key differentiator in the market, as compliance for California originators remains a top priority to avoid penalties and fees.

“Our automated loan-level compliance technology helps lenders comply with federal and local regulations and minimize operational risks,” said John Vong, ComplianceEase’s president. “We’re pleased to partner with Mortgage Cadence to help more lenders improve loan quality, reduce risk and increase profitability.”

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PathSoftware Now Integrated With ComplianceAnalyzer From ComplianceEase

PathSoftware today announced that Path, its highly-configurable, multi-channel, cloud-based mortgage loan origination software (LOS), is now integrated with ComplianceAnalyzer with TRID Monitor from ComplianceEase, a provider of automated compliance solutions to the financial services industry.

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The seamless integration lets Path users automatically audit loans for regulatory compliance violations using ComplianceAnalyzer with TRID Monitor—without ever leaving the LOS. ComplianceAnalyzer with TRID Monitor is the most comprehensive, real-time TRID auditing solution available in the market. It can check for any changes in terms and fees throughout the origination and closing processes; audit tolerance across all disclosures and changed circumstances; and track post-consummation disclosures, including those with a cure to the borrower. In addition, ComplianceAnalyzer with TRID Monitor performs audits for Federal high cost and higher-priced loan regulations, the Secure and Fair Enforcement for Mortgage Licensing Act, state high cost and anti-predatory regulations, and state license-based consumer lending laws and regulations. It can also perform audits for compliance guidelines from secondary market investors and government-sponsored enterprises.

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Path was designed to simplify and streamline mid- to enterprise-level, multi-channel loan origination. All loan data, lock data, products, pricing, automated underwriting system findings, loan estimate and closing disclosure documents emanate and are reconciled within one system. In addition, the LOS’s configurable workflows, with role-based functionality, provide visibility into every loan at every stage—so financial institutions can ensure their business rules are followed.

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“We developed ComplianceAnalyzer with TRID Monitor to deliver in seconds comprehensive loan-level compliance reports supported by detailed regulatory and cure analyses, exception tracking and reporting,” said Dan Smith, Senior Vice President of ComplianceEase. “Our integration with Path will allow us to help more lenders improve efficiency, as well as give them greater confidence in the loans they’re originating.”

“Having the ability to automatically audit loans at every step in the origination, closing and post-closing process is vital in today’s ever-changing regulatory environment,” said Doug Mitchell, Director of Sales and Support at PathSoftware. “We’re pleased to partner with ComplianceEase to help our financial institution clients improve loan quality, reduce compliance risk, and capture the data needed to prepare for regulatory exams.”

The State Of Innovation


Over 100 mortgage executives came together to attend PROGRESS in Lending Association’s Seventh Annual Innovations Awards Event. We named the top innovations of the past twelve months. After that event, we wondered what would happen if we brought together executives from the winning companies to talk about mortgage technology innovation. Where do they see the state of innovation? And what innovation is it going to take to get our industry really going strong? To get these and other questions answered, we got the winning group together. In the end, here’s what they said:

Q: Some say innovation has to be sweeping change. Others say innovation can be incremental change. How would you define innovation?

LEONARD RYAN: I would define innovation as more of a process improvement over current methods. Sometimes major breakthroughs happen after a lot of thought on process improvement. Today when we talk about innovation, it often means computer programs and their contribution to making the mortgage process faster, more secure, less complicated or instant. Thirty years ago an innovation was printing a 1003 on a laser printer. That would hardly qualify today since that is now an everyday process. In terms of your awards, it seems the more significant the process improvements, the more likely to be recognized.

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REBECCA MAYERSON: No change in mortgage banking can be sweeping due to the layers of regulation and compliance by federal, state, GSE, and big banks. So innovation must be incremental due to the risk/reward.

TIM ANDERSON: Incremental. Because the mortgage business is a highly regulated one consisting of a multitude of participants each adding a step and receiving their cut of revenue to get from point A to Z it is a hard business to affect sweeping change. Still too many players, steps touching too many different disparate systems in the process to affect sweeping change or significant impact by itself.  Because of this I don’t see a company developing something like the iPhone coming into the mortgage space with a whole new app or mobile device that is singularly going to revolutionize this business.

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The GSE’s because of their critical role in financing and market share (aggregator) have been the ones to affect real change in this business. If you look at their Uniform Mortgage Data Program, (UMDP) it’s a phased in approach at developing systems to better evaluate critical data elements to reduce risk. They moved the traditional post-closing pre-funding QC process to pre-closing QC and leveraging their new technology and regs like TRID (with three day delivery rule) to support this trend. Also because the mortgage process has very distinct processes with siloed departments dedicated to the mortgage manufacturing process, (POS, origination, processing, underwriting, closing, secondary marketing, servicing) each re-entering the same data that introduces a lot of steps, divisions, (overhead, operational costs and risk) vendor players and participants all have to agree to change their processes and automate to affect real change and ROI in this business.

CURT TEGELER: Innovation can be both sweeping and incremental. Innovation must be persistent and a mindset. It is a necessity to remain relevant in any industry and to enhance the products and services we offer. This involves implementing new strategic ideas, creating dynamic products and improving existing services. In having an innovative approach, you are increasing the probability of success and development in your business.

CRAIG ZIELAZNY: Innovation is creating an impactful solution to a problem. The innovation process can’t be boiled down to just listening to customers, though. Only through continuous and meaningful engagement can you identify real problems and execute effective solutions. It doesn’t become an innovation until the unmet need has been overcome by an appropriate and well-executed solution. Rarely is innovation the product of an individual person experiencing an “aha” moment. Ideas are easy, execution is hard and it is what makes any idea tangible.

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RICK TRIOLA: I think we all want sweeping change that solves problems quickly and delivers on the promises technologists have made and that consumers all want, but unfortunately we don’t see that, at least not in our industry. Most innovation fails because it never gets to the end user because the innovation can’t get passed through all the gatekeepers and entrenched stakeholders.

For example, the mortgage industry had the opportunity to adopt eSignatures as soon as the Federal ESign Act was signed into law in June 2000. Instead of leapfrogging over the antiquated paper processes and skipping a generation by heading directly to digital lending, too many players decided to invest instead in scanning and faxing devices and processes. Borrowers, buyers, sellers — everyone — would have loved the opportunity to just eSign instead of papering out and couriering documents all over the place, but instead our industry took more than a decade to move in the right direction.

We wish innovation would sweep down on our industry quickly, but the extensive eco-system here combined with and entrenched and outdated status quo results in new innovators being forced to ‘stand down’ while the industry accepts incremental change.

JOHN VONG: In other industries, change and innovation can happen simultaneously and dramatically. However, because the mortgage origination process is very complex, innovation in our industry tends to be more incremental and less sweeping. Take, for example, e-mortgages. As an industry, we’ve been talking about doing e-mortgages since 2000. It’s seventeen years later and less than one percent of originations are e-mortgages. One of the key reasons for this was that there were differing and competing priorities from parties within the mortgage origination and closing ecosystem including lenders, investors, warehouse banks, county recorders, notaries, and GSEs, among others, and not everyone was on the same page about digitization. Customized closing processes throughout the country is another impediment to innovation. Finally, the average borrower gets a new mortgage or a refinance infrequently compared to other common financial transactions, so they are willing (or at least have been in the past) to put up with inefficiency and inconvenience.

Q: How would you define the state of innovation in the mortgage industry? Is it thriving or in a state of decay?

CURT TEGELER: Innovation in the mortgage industry is stronger than ever. The industry is so far behind in technology innovation that it can only advance from here. There are countless opportunities to embrace innovation and the industry is becoming more and more digital. Every phase of the mortgage process is evolving, from the consumer experience to the lender experience.

CRAIG ZIELAZNY: As is the case in all industries, there are firms which innovate and those that don’t but rather choose to follow. The firms which continually innovate maintain close ties with their clients and the market, always searching for a better way to do something or to solve a seemingly unsolvable problem. The state of a firm’s innovation status is largely a function of the culture and the value placed on listening to clients and doing the math to unearth needs which are not clearly identified by the client.

RICK TRIOLA: Despite the fact that I feel our industry moves too slowly in general, we’re actually at a very exciting place right now. While we had the technology to do end-to-end digital lending a decade ago, lenders weren’t ready and consumers weren’t pushing for it. Today, consumers are ready at the same time investors and regulators are pushing for it. Even loan officers we’re talking to are excited about doing digital.

And they want to share all of the benefits of digital with borrowers, that means closing the loan from anywhere. We know this is possible because we have now completed tens of thousands of online notarizations and cracked the code around the ‘last mile’ friction of having to appear in person.

I believe that over the next few years, we’ll see a great influx of lenders moving into fully digital lending and realizing cost and time savings at the same time they offer better experiences to consumers. In 5 years, no one will deliver a mortgage on paper.

TIM ANDERSON: I think now that we have gotten past TRID this has freed up resources and initiatives to implement some change and innovation. I give Quicken Loans a lot of credit as well because everyone now wants their version of Rocket Mortgage and push to better qualify and verify the loan quicker and faster with initiatives like FannieMae’s Day One Certainty initiative and FreddieMac’ s Loan Quality Advisor tools to streamline the process. We are also seeing a major rise in finally implementing the Digital Mortgage and eClosings to complete the eProcess and deliver not only a better consumer experience but a replicatable, repeatable automated QC process that provides electronic evidence of compliance along the way.

REBECCA MAYERSON: Innovation is at the highest level in over a decade and surging. The need to lower expenses while improving the process for the customer while still protecting risk is driving innovation at a high speed.

LEONARD RYAN: Innovation in the mortgage industry is “making a comeback.” The mortgage crisis and subsequent regulations forced vendors with traditional products to spend resources on implementing those regulations. Only new companies or entrepreneurial minds during those times seemed able to develop substantial changes in process. However, I now see the start of vendors looking to make substantial changes to the process. I believe most of those changes will result in vastly reduced lender costs.

JOHN VONG: From the perspective of a technology provider, it’s thriving. Every loan origination system and service provider is enhancing its technology or developing new solutions.

From the lender perspective, however, cyclicality trumps innovation. When the rates are low and demand is high, lenders are often too busy to focus on technology and innovation. Instead they throw bodies at the problem. When volume declines, there is often a reluctance to invest. Instead, loan production is the top priority. That’s why it takes the mortgage industry a longer time to adopt or upgrade technology than other financial services sectors.

Of course, over the last few years, the risk management and compliance areas are an exception because lenders have more of an incentive to protect their companies from regulatory scrutiny after the meltdown.

Q: Lastly, if there was one innovation that you would say the mortgage industry desperately needs to happen over the next twelve months, what would it be?

REBECCA MAYERSON: Any of the Day One certainty steps that would allow All investors beyond Fannie to accept would be great for our industry.

TIM ANDERSON: A closing collaboration system that exchanges the data between the title system of record and lenders not only for TRID or final CD but the upcoming Uniform Closing Dataset (UCD) requirement coming September 25th. Most lenders look at these as separate compliance initiatives but the proper collaboration should start at time of application with the initial Loan Estimate, automatically check for compliance tolerances anytime the data or disclosures change, conduct a final reconciliation and comparison three days prior to Closing Disclosure and keep tracking 90 days after closing of any changes. This should not only include the CD but all the closing documents and then once approved be able to do a full eClosing to ensure data and document quality, integrity and compliance.

CURT TEGELER: Digital mortgages are significant for the mortgage industry. With millennials becoming a large percentage of homebuyers, being able to complete the mortgage process online is important. Bringing the lifecycle of the process from a lead to a buyer is crucial. Essentially, Realtors should have the ability to advertise and turn leads into homebuyers and borrowers digitally. Even a hybrid approach where the front-end process becomes digitized is a step in the right direction. With procedures and an evolving industry ahead of us, the ability to be move quickly is critical to long-term success, and this is done through being digital.

CRAIG ZIELAZNY: Ball games are rarely won because of home runs… It’s the team that strings together singles and doubles that will win. Our industry is no different. Each innovation will contribute to the overall improvement of the industry and the benefits delivered to the various members. If we listen to our customers and probe for a deeper understanding, we will all become innovators and help move the industry forward.

JOHN VONG: The existing traditional origination process is not geared to cater to Millennials, who have different expectations and are more tech savvy than previous generations. They don’t want to spend ninety days to get a mortgage with a traditional loan officer. Millennials want to go to online, fill out their basic information, and get instant decisioning, as well as shop for competitive rates. Traditional lenders need to significantly rethink the customer experience they offer if they want to be relevant to this growing customer segment. Moreover, both traditional and FinTech lenders are going to have to find ways to qualify non-perfect borrowers and do so in a more digital fashion.

RICK TRIOLA: From the lender’s perspective, we desperately need technologies that will reduce their costs and increase their profits in an environment with tightening margins. At the same time, they need tools that will help them compete more effectively as rates rise, refinances disappear and competition heats up.

There has never been a better time to adopt technology that will answer these needs. In my mind, it’s going to be all about online closings, anytime from anywhere, which exactly what eClose360 offers. In fact, we just ran the numbers for a new client and found that using the eClose360 platform would add $18 million in bottom line profits over the next 12 months. That’s the kind of innovation lenders need now.

And The 2017 Winners Are …



Prominent mortgage executives gathered to see who the Executive Team of PROGRESS in Lending named the top industry innovations of the past year at the Seventh Annual Innovations Awards Event. This honor is the Good Housekeeping Seal of Approval, the Gold Seal when it comes to recognizing true industry innovation. All applications were scored on a weighted scale. We looked for the innovation’s overall industry significance, the originality of the innovation, the positive change the innovation made possible, the intangible efficiencies gained as a result of the innovation, and the hard cost and time savings that the innovation enables industry participants to achieve. In alphabetical order, the top innovations are:


ComplianceEase-2017-WinnerPROGRESS in Lending Association has named ComplianceEase a top innovation. In preparation for the TILA-RESPA Integrated Disclosure (TRID) rule, ComplianceEase spent 18 months enhancing its flagship compliance management platform, ComplianceAnalyzer. The company released the new module, called TRID Monitor, which provides the comprehensive, real-time auditing of disclosure timing, changed circumstances, and fee tolerances across all disclosures. ComplianceAnalyzer with TRID Monitor allows lenders to insert flexible TRID compliance controls into any system and can be used at any point in the lending process and across multiple origination channels. The module can also be used for pre- and post-close quality control and securitization due diligence. Depending on a lender’s workflow needs, lenders can use ComplianceAnalyzer with TRID Monitor to review the latest terms and fees on any single TRID disclosure or to monitor changes in fees and terms throughout the origination and closing processes.


DocMagic-2017-WinnerPROGRESS in Lending Association has named the work done by DocMagic a top innovation. As the mortgage industry slowly embraces the Digital Mortgage, DocMagic launched what was dubbed its “Total eClosing solution,” which enables a comprehensive, true 100% paperless eClosing that automates the entire process — from start to finish. Looking back, DocMagic was brought to the forefront of eClosing technology awareness with its participation in the CFPB’s eClosing pilot in 2014. This vendor was 1 of only 12 firms that was invited by the CFPB to participate. If the industry is going to go digital it will need vendors like DocMagic to lead the way. The Total eClose solution includes the seamless incorporation of its eSignature-enabled SMART Documents, a nationwide eNotary network, MERS eRegistry access, eWarehousing, eNotes, a secure eVault, and secure investor eDelivery — all in a single, comprehensive eClosing platform and completely TRID-compliant. There is absolutely no paper involved at any point, at any time.

Mercury Network

Mercury Network-2017 WinnerPROGRESS in Lending Association has named Mercury Network a top innovation. In March of 2016, Mercury Network launched Fee Analytics, a rich set of current data and analytics for actual appraisal fees in every county in the United States, delivered monthly. Lenders subscribe to Fee Analytics to know the most current appraisal fees paid for collateral valuations, along with details on the transactions. Since more than 800 lenders and appraisal management companies rely on Mercury Network for collateral valuation management, more than 10,000 transactions a day are passing through the system, providing rich trended data with many benefits for the industry. With Mercury Network’s Fee Analytics tool, lenders can determine where appraisal fees are rising and where they are falling, a clear indicator of supply and demand, as well as a valuable clue for hyper-local and regional lending booms that present opportunity for business expansion.

Mortgage Network

Mortgage Network-2017 WinnerPROGRESS in Lending Association has named Mortgage Network a top innovation. Mortgage Network has been creating and using its own technology for several years. But in 2016, it took things to a new level by creating an online borrower portal that allows consumers to initiate and drive the mortgage process with very little assistance from the loan officer. The portal gives borrowers the option to upload their own mortgage documents through a drag-and-drop method, virtually eliminating the need for loan officers to keep coming back to borrowers to request more information. Borrowers can also see their loan choices based on the information they provide, receive disclosures electronically, and receive an underwritten loan commitment in as little as two days. In many ways, the new borrower portal might be compared to TurboTax, the off-the-shelf software that revolutionized how Americans prepare their taxes. This portal will do the same for mortgage lending.


NotaryCam-2017 WinnerPROGRESS in Lending Association has named NotaryCam’s eClose360 a top innovation. As the industry interest in eClosings has risen, with NotaryCam’s eClose360 you no longer have to force participants into the same room, deploy a laptop and signing pad — which is essentially 12-year old technology — to close a loan when it can be done online anytime from anywhere. NotaryCam’s eClose360 is an online notary platform that allows mortgage closings to take place entirely online, removing all associated stress and the friction of having to attend closings physically. Further, Fannie Mae approved NotaryCam’s eClose360 as a provider of both a SMARTDoc and eVault solution. Specifically, this online closing solution is now on the list of software that Fannie Mae has certified and approved for use on loans it purchases from mortgage loan originators. NotaryCam’s eClose360 has legally completed tens of thousands of notarizations in all 50 states and over 65 countries.


QuestSoft-2017 WinnerPROGRESS in Lending Association has named QuestSoft a top innovation. This industry has been inundated with new rules and regulations for some time now. The key to maintaining compliance is preparation. One of the next big rules for lenders to comply with are the CFPB HMDA changes. Last October, QuestSoft sent specifications to 29 loan origination software companies, and those imports are expected to come online during the first quarter of 2017. Customers can then import live data from those LOS platforms to see gaps, interact with their systems, and internally adjust their procedures. The test version is also being provided well in advance of the CFPB’s schedule. Further, QuestSoft’s Compliance RELIEF application has been designed so that as error codes and other specifications are made available by the CFPB, this company will be able to incorporate them quickly and distribute updates to lenders seamlessly.


WebMax-2017 WinnerPROGRESS in Lending Association has named WebMax a top innovation. Last year, 5.8 million homes were purchased compared to 5.6 million in 2015 and 5.3 million in 2014. Further, seventy-seven million millennials make up about one-fourth of the U.S. population. Millennials in the U.S. wield about $1.3 trillion in annual buying power, 85% of them are using smartphones as their daily technology device, and 49% are seeking to buy their first home. Millennials are becoming a significant force in the mortgage industry. To reach these new borrowers WebMax’s MortgageWare application provided an innovative digital solution designed to make Mortgage and Real Estate easy, one that enhanced the online lending experience for both the lender and the borrower. In 2016, the solution assisted with the closing of 123,388 mortgage loans and hosted over 2,990 mortgage websites. WebMax clients are provided with a compliant, ascetically appealing, and user-friendly web solution that include key program integrations.



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Former MBA Chair Joins Compliance Vendor

ComplianceEase, a provider of automated compliance solutions to the financial services industry, announced today the appointment of David Kittle, CMB as senior vice president of Government and Industry Relations. In this role, Kittle will oversee the company’s interactions with federal and state regulators, GSEs, capital markets participants, and mortgage industry groups. Additionally, he will develop new business and sales efforts.

Kittle, a mortgage banking veteran who has demonstrated his commitment to the industry leadership roles, was elected chairman of the Mortgage Bankers Association (MBA) in 2009. Kittle has previously served on the MBA Board of Directors. He also served as chairman of MBA’s Political Action Committee (MORPAC) and was former vice chairman of MBA’s Residential Board of Governors. He was past president of the Kentucky Mortgage Bankers Association, and is a founding partner and vice chairman of The Mortgage Collaborative.

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Over the course of his successful career, Kittle has held several senior executive management positions. Most recently, he served as senior vice president, Federal Solutions for First American Mortgage Solutions where he managed company relationships and product suites with FNMA, FHLMC, FHLB’s, GNMA and HUD.

“David has a deep understanding of all aspects of the mortgage industry including origination, underwriting, risk management, and regulatory compliance. His extensive knowledge, entrepreneurial spirit, and well-deserved reputation for being a client-focused leader make him an ideal candidate to deliver effective strategy and solutions to our government and industry clients,” said John Vong, CMB, CMT, president of ComplianceEase. “We are pleased to welcome David to the ComplianceEase team.”

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Kittle added: “ComplianceEase is already the industry’s premier automated compliance provider. I’m looking forward to working with John and the team to enhance and develop new solutions that our clients need to face within the ever changing regulatory environment.”

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Combat The Regulators With Data

How do lenders defend themselves against regulators? How do lenders prove that they are in the right? They embrace data. In fact, proactive vendors like ComplianceEase are making this easier and easier. ComplianceEase is revamping its RegulatorConnect Certification Program, called RC Certify, to help technology providers and lenders prepare for the more data-intensive mortgage examinations that have emerged over the past few years and are expected to soon include TILA-RESPA Integrated Disclosure (TRID) reviews.

Introduced in 2010, the RC Certify Program helps mortgage technology companies provide Lending Examination Format (LEF) files to their lender customers. For the past six years, federal and state regulators have required lenders to submit files in LEF format, using the RegulatorConnect Portal.

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Recently, the Multi-State Mortgage Committee (MMC) of the Conference of State Bank Supervisors (CSBS) noted in an industry bulletin that “despite years of preparation and anticipated compliance, the mortgage industry has regularly failed to provide clean data in a format acceptable to the regulators’ technology platform.”

The bulletin warned: “The MMC will continue to rely heavily on this technology and will consider companies that cannot provide data that is complete, accurate, and properly formatted to be non-compliant with respect to records production.”

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In response to these concerns, ComplianceEase, which developed the LEF format and the RegulatorConnect Portal, is redesigning the RC Certify Program to create an easier, more standardized path for technology providers to update their systems to export loans in the latest LEF format.

The new process will help industry software developers at each step in the design, development, integration, and testing of LEF file exports, the company said. With dedicated personnel working on the export, ComplianceEase estimates that technology providers will be able to complete the certification process in two months or less.

“For the past three years, our industry has been focused almost exclusively on redesigning technology to accommodate new mortgage rules: first qualified mortgages, and more recently TRID,” said Jason Roth, CMT, chief technology officer at ComplianceEase. “As a consequence, LEF requirements and integrations have moved down the queue at many tech companies, which is now creating new compliance issues for lenders.

“Although regulators have indicated that they will adopt an informal ‘grace period’ and look for ‘good faith’ efforts to comply with TRID, we expect that examiners will soon be reviewing for compliance with TRID requirements, and will expect electronic data to be readily available for these more data-intensive exams. Our revamped RC Certify Program is designed to get ahead of this issue and to make file exports as easy as one click for lenders.”

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Executive Spotlight: Jason Roth of ComplianceEase

Jason-RothToday, the spotlight is on technology and our guest expert is Jason Roth, chief technology officer at ComplianceEase.

Q: TRID has been in effect for nearly two months. What impact has it had on the current operations within the industry?

Jason Roth: TRID has certainly slowed things down as lenders ease into new procedures. The Mortgage Bankers Association’s Weekly Mortgage Applications Survey ending the week of October 2, 2015 showed a 25.5 percent jump in applications—implying that lenders tried to get in as many applications as possible under the pre-TRID forms and rules.

Our own data confirms this. Looking at a sample of more than 200,000 loans audited in ComplianceAnalyzer in October, there was clearly a gradual shift in volume towards TRID loans. In the first week after TRID was effective, only around 9 percent of loans audited were originated on TRID forms. That share increased to about 30 percent for the last week of October.

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By front-loading pre-TRID applications before the effective date, lenders have been able to limit the number of TRID loans that they have to work with and iron out any issues before the pipeline becomes mainly TRID loans.

Q: What do you see as the most pressing tech challenges facing the industry?

Jason Roth: If you look at TRID and the newly finalized HMDA rule, it seems the most pressing challenges facing our industry center around capturing and retaining data.

Under TRID, lenders must have complete records of every change to every fee charged on a mortgage, along with supporting reasons for the change and subsequent re-disclosure to the borrower. This creates two challenges. First, there are new pieces of data that need to be collected and retained, many of which were not mandatory for compliance under previous TILA and RESPA disclosure requirements.

While it is possible to implement manual workarounds to store the information on spreadsheets or hard-copy documents, it only works in low-volume situations. It does not scale well and could lead to delays that impact the borrower’s experience.

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Second, the data all must be easily reportable to regulators and investors. If records are scattered throughout different systems or even stored on paper or as imaged documents, it will be very expensive to demonstrate compliance with TRID.

In addition, the new HMDA rule will require significant amounts of new data to be collected and, of course, organized in a way that is easily reportable for regulatory purposes. Moreover, to prevent unpleasant surprises, lenders will need to be performing data analysis on an ongoing basis, and not just when March comes around each year. All of these regulatory changes add up to big changes and big data.

Q: There are endless news stories on the threat to cyber security. How severe is this threat, and how is the industry responding to it?

Jason Roth: Although information security issues seem to have recently emerged as a common topic of coverage in the national news, financial services institutions have been wrestling with security and data handling issues for much longer. Since 1999, the Gramm-Leach-Bliley Act has mandated that financial institutions of all shapes and sizes safeguard customer information. In addition, investors and government agencies have long required that banks and lenders maintain security policies and procedures for the security of sensitive information; and the CFPB has made it clear that financial institutions are responsible for their own policies and procedures as well as those of their technology vendors.

In order to protect themselves from being buried by security audits, many in the industry have looked to standardization of their procedures to provide evidence of their security controls. For example, our company opted to complete an audit under AICPA’s SOC2 standard and the controls stipulated by their Information Security trust principle. We’re also members of the Shared Assessments group, a consortium that develops standardized information collection templates to maintain evidence of security controls.

Since many banks and lenders use these templates, it has been helpful for us to organize our own policies around those standards and saves a lot of time when responding to inquiries. There are also some efforts within workgroups established by the Mortgage Bankers Association to develop some agreed-upon security standards for mortgage lenders.

Q: What do you see as the major tech trends for 2016?

Jason Roth: There are many new financial services companies, armed with newer technology and fewer legacy systems, looking to “disrupt” the industry. Although they still face significant regulatory barriers to operate legally as a financial services institution in the United States, these new types of lenders will eventually start to pose a real threat to traditional lenders.

We’re seeing startups, like SoFi, build successful mortgage and student lending businesses by investing in technology that focuses on streamlining communications, improving borrower interaction and making the lending process more transparent in order to serve the millennial generation. These are things that are difficult for traditional financial services companies to do because they’re using traditional LOSs that don’t provide the borrower with visibility. Complete reinvention for traditional lenders will come incrementally over several years with several iterations of new technology.

But in the near term, the focus will be on developing innovative technology to create a superior customer experience.

TRID Is Not Over Just Yet

Don’t be mistaken, TRID is not over. In the coming weeks we’ll see TRID loans start to close and at that point we’ll truly know what the story is when it comes to how ready the industry was. Jason Roth, Chief Technology Officer at ComplianceEase, had this to say when discussing this big industry change:

“The core of it is that under RESPA, most lenders and technology systems rely on the fact that the RESPA tolerance is disclosure centric. The difference that we see is the regulation looks to justify changes to individual fees. You might think: Isn’t it the same thing? The difference that we see is that the regulation and examination look to revised estimates for specific charges so you can end up in situations where there might be one thing that causes a change in the fee and another thing that occurs to another fee or even the same fee. So, lenders have to keep up with every change without having to re-disclose after every fee change. The expectation is that there is a documented reason for every fee change, so everything has to be tracked and traced. Up until this point you have not had to track things with this level of granularity.

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“The bureau is going to care about the basics first,” Roth continued. “The bureau will be looking at this from a consumer standpoint. The bureau is going to want to know that the information is accurate and the disclosures are given at the correct time. Do the systems and procedures that you have in place result in timely and accurate disclosures? That’s what the bureau is going to be looking at initially. Early disclosure is very important to the bureau. You can’t know before you owe unless you receive a timely disclosure.”

Do technology vendors and lenders understand these nuances? “We have a fair amount of interaction with the different system. The real question is: How does the industry feel the LOS will manage fees appropriately for them,” Roth answered. “We surveyed lenders and 20% felt that their LOS is managing very little of their TRID requirements automatically. There is a lot of work that has gone into industry systems, but when it comes to having a credible compliance system, you have to ask if you have a system that will prevent you from being out of compliance electronically. Most systems can process the disclosure under the new requirements, but they may not be ready to electronically manage that so you are not relying on people keying in the right data at the right times.”

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Many saw the three-month extension as a saving grace for the industry. Much work was still needed in August. “The three-month extension was very beneficial. TRID is an experiment. Forecasting exactly what is going to happen when is very difficult. The bureau broke the mold and rearranged the functionally of how closures are going to be conducted. We have sent out info to our partners to let them know what new information they will have to capture so they can pass an audit done by our technology.”

The large providers have been working on this for a long while. However, you’re not going to get to an answer as to if they are really ready until after the deadline. System conversions take time. There are bugs that are worked out over time.

“We needed to make sure the new way of doing things would reconcile with all of the other state and federal guidelines because those rules and regulations are not going away,” concluded Roth. “We had to make sure that the new TRID regime still allowed for compliance of all the other rules and regulations. We’ve also created a standalone examination report so everything is in one place, in one report, so the regulator can see every change that happened to the loan. The emerging question over time will be if lenders have systems that are able to track the granularity of what went into every fee change.”

About The Author


TRID Education Continues

ComplianceEase will host a live, complimentary webinar titled, “Are You Ready to Pinpoint TRID Issues?” on Wednesday, September 23, 2015 from 11:00AM to 12:00PM Pacific Time. Here’s what will be discussed:

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The webinar will provide details on what to expect in the new risk environment, how to conduct a final evaluation of your technology and workflow preparations for TRID, and how the new TRID Monitor module within ComplianceAnalyzer was built to address TRID regulations and accommodate multiple workflows.

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Attendees can expect to:

  • Examine the regulatory liability under TRID, including the lenders’ responsibility for timing and accuracy of disclosures.
  • Explore best practices for risk mitigation.
  • Learn the details about post-closing corrective actions (i.e., the ‘off-ramp’).
  • Discuss key considerations in determining TRID readiness.
  • Gain an in-depth understanding of how ComplianceAnalyzer with TRID Monitor helps lenders review multiple Loan Estimates (LE) with all Closing Disclosures (CD) for accuracy, completeness, timing and fee tolerances.

Speakers will include:

  • Donald Lampe, Partner – Morrison & Foerster, LLP
  • Jason Roth, SVP Product Management – ComplianceEase
  • Lisa DeFors, Attorney – ComplianceEase

For more information or to register for the webinar, click here.