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


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

Compliance Commentary: A Deeper Meaning In The Forms?

*A Deeper Meaning In The Forms?*
**By Chris Appie**

***The CFPB asks for your opinion of combined GFE and TIL disclosure forms; but what does their question tell us about them? For any of you who have seen the movie The Social Network, you’ll recall that Facebook founder Mark Zukerburg was nearly thrown out of Harvard for hacking into a series of databases and posting pictures of students to a website whereby the students would click on the ‘hotter’ of the two pictures; results were to be compiled so the ‘hottest’ student at Harvard would be crowned.

****Not to be left out of the action, on May 18th the Consumer Financial Protection Bureau (CFBB) published via its website two documents and asked the public to vote for the form they consider ‘hotter.’ It’s a tough decision; one has nice circles enclosing answers to questions while the other maintains a more traditional, almost dignified look. You can vote for which form you prefer at the Bureau’s new website,, but by merely voting you may be missing the bigger point. Here’s what I mean:

****Putting aside the fact that two of the most substantive and familiar documents in a mortgage transaction are going away and being merged into a combined, all-inclusive document does the publication of these forms give us any insight into the future actions of the Bureau? I believe it does.

****Throughout the legislative fight surrounding Dodd-Frank one of the major concerns advanced by financial institutions was the ability of one agency to almost universally regulate all consumer financial products in the United States. While Republican’s in the House have introduced numerous bills to strip the Bureau of various powers (including funding) it appears that these bills are dead on arrival in the Democratic-controlled Senate; the big question has moved from whether the CFPB should have this authority to how the CFPB will exercise the authority they have been granted.  So what does the publication of these forms do to inform our understanding of the Bureau and how it will exercise its powers? Are they doing what is required by law?

****Here’s what Frank-Dodd actually requires:

****(f) COMBINED MORTGAGE LOAN DISCLOSURE.—Not later than 1 year after the designated transfer date, the Bureau shall propose for public comment rules and model disclosures that combine the disclosures required under the Truth in Lending Act and sections 4 and 5 of the Real Estate Settlement Procedures Act of 1974, into a single, integrated disclosure for mortgage loan transactions covered by those laws, unless the Bureau determines that any proposal issued by the Board of Governors and the Secretary of Housing and Urban Development carries out the same purpose.

****The law does not require the CFPB to propose a model form until July 21, 2012. On its face and based on the pace of past major changes this seems like a reasonable deadline—and  look at what actually happened—over a full month before the powers of the Bureau even exist they have not only created one model form but two distinct model forms and submitted them for comments from consumers and the industry. The CFBP is well over a year ahead of what Dodd-Frank requires.

****One need not read too much into the tea leaves here. The CFPB is already progressing quickly towards reforming consumer financial markets. In a recent Article the Treasury Department interviewed Elizabeth Warren and she had this to say about the priorities of the CFPB: “Mortgages are the other top priority because they are the single most important financial decision that most families will make. We have learned from recent history that a bad mortgage can not only destabilize an entire family, but that enough of them can destabilize the entire economy.” It’s tough to say where the CFPB will lead us but if current behavior is in any way indicative of future behavior, the industry is going to be changing—rapidly.

****Which form do you like better? What are your concerns? Have some ideas to make them better? Shoot me an email: or give me a call: 800-968-8522 ext. 230. I’ll compile the results and share with you in a future column.

Chris Appie is an attorney and Vice President of Products at Compliance Systems, Inc. (CSi). CSi is a provider of financial transaction technology and expertise serving over 1400 financial institutions across the United States. When he’s not keeping up with the CFPB he’s trying to keep his four kids under control in grocery stores and other public places. He can be reached via email at