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RegTech: The Intersection Of Mortgage And Politics

Home ownership is a sign of stability, security, and a life milestone for many Americans. Ironically, the industry providing the keys to this essential part of the American Dream is constantly in a state of transition, dependent on the political climate. Keeping up with the changing tides emanating from Capitol Hill pulls resources away from business building, hindering many lenders from remaining competitive and providing the best service and offerings to their clients.

Initially built for automation, technology is becoming a force for compliance and competition. End-to-end solutions like Asurity Technologies’ award-winning MRGDocs, a smart loan documents processing system, and RiskExec, a web-based compliance risk analysis and reporting platform, empower lenders to proactively mitigate risk. With 100% compliant loan documents, risk analysis and reporting, state-of-the-art data infrastructure, an ecosystem of expertise from engineering to regulation, and a committed customer and technical support team. Asurity is turning compliance into a competitive advantage for lenders so they can focus on business growth.

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Our editor interviewed (left to right) Kathleen (Kathy) Mantych, Asurity’s Senior Director of Business Development and Sales for MRGDocs; Luke Wimer, Asurity’s Chief Operations Officer; and Chris Anderson, Asurity’s Senior Sales Executive for MRGDocs, about the state of the mortgage industry, regulation politics, the role of technology, and the impact of it all on the economy.

Q: How would you describe the current state of the mortgage industry?

Luke Wimer: The mortgage industry is at a turning point, but a slow one. Everyone is trying to figure out how to electronify processes, new entrants are putting emphasis on the customer experience, and regulatory action, while it has levelled off some, remains a significant factor. This is a challenge because although innovation with control is needed to survive and compete, we are in a sector with razor thin margins.

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Q: What is the biggest challenge facing the industry today?

Chris Anderson: In today’s lending environment, it is increasingly expensive and difficult to originate a loan that is 100% compliant. Over the past seven years, an influx of third-party wholesalers dealing primarily with mortgage brokerage businesses have entered the fray, providing competitive rates and positive customer experiences that some of the bigger banks have yet to perfect. On top of that, interest rates are rising, pushing lenders to consolidate in an attempt to increase share in an already tight market. And of course, regulations are constantly in a state of transition based on the political landscape, with lenders beholden to requirements from the federal, state, and investor levels.

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In response to this increasingly complex and costly scenario, savvy lenders are turning to technology to create efficiencies across the board. The greatest value we offer our clients through solutions like RiskExec and MRGDocs is peace of mind at every stage of the loan lifecycle and leading up to the compliance exams so they can focus on the business at hand, whether that’s making their customer service competitive, increasing market share, or adding new services.

Q: What trends are you noticing in compliance management?

Kathy Mantych: Compliance and technology are becoming an integrated part of the entire loan lifecycle, as opposed to just segments of that cycle. Lenders are focusing not only on automation and efficiencies, but on improving quality and cost as well.

Q: How is technology influencing the future of the mortgage industry?

Chris Anderson: Technology has been and will continue to be the driving force behind increased efficiency and better customer service. Whether it’s technology that automates previously manual processes or a platform or partner that ensures lenders are doing it right the first time, technology is enabling users and borrowers to experience a smoother process from the origination to closing.

Q: What is a major challenge facing the mortgage industry?

Kathy Mantych: One major challenge is the adoption of compliance tools and technology available to mortgage lenders and banks. It’s challenging because the regulatory environment changes constantly. From a compliance risk perspective, we need to adopt new technology in order to mitigate that risk in real time.

Another challenge is that both lenders and vendors have spent a lot of time and money implementing regulatory changes in the past few years, which has distracted them from focusing on their core business – building revenue and providing borrowers with a better customer experience.

Q: There have been a lot of regulatory rollbacks over the past year that were intended to prevent future financial crises – especially as it relates to the housing finance industry. How might that impact the housing industry over the next five years, and the overall economy?

Kathy Mantych: There have been, and always will be regulatory changes, the most significant to date being the recent impact of TRID. By continuing to monitor both sides of the lender to consumer relationship through compliance enforcement and regulatory rollbacks, we should be able to maintain a healthy balance that allows for steady growth.

Chris Anderson: I think these rollbacks can only help the industry. A number of the industry’s new regulations over the past nine years have only made it more difficult and costly to lend money. By rolling back some of the more onerous regulations, we should see consumers having more access to funds, allowing for more loans to be made to borrowers at a lower price.

Luke Wimer: Making it easier for smaller lenders to issue mortgages should have a positive economic effect, and allowing borrowers a little more judgement in loan-making while retaining risk is healthy.

Some of this boost could be offset by consumer protection concerns. For example, requiring less borrower data might lead to an uptick in fraud or less clarity on whether certain borrowers are being fairly treated. There are also indications that there will be fewer violators pursued and less of a voice for consumers. We will not see the CFPB become a “Yelp for financial services”.

We have to look at both enforcement and regulatory rollbacks together. Lenders will behave based on the rules and whether they fear punitive action by regulators. This does not mean lenders will not choose to be compliant; rather, I think their ability to comply with regulations will be reflected in the level of investment or intensity of compliance processes. It appears that federal and state regulators are still focused on consumer protection, which should prevent a complete backslide. Overall, I think banks will benefit from lower administrative costs while remaining compliant and customer-focused.

Q: How is Asurity Technologies helping mortgage professionals overcome those challenges and look to the future?

Luke Wimer: Asurity monitors, interprets, and delivers current compliance so mortgage professionals can focus on giving loans to consumers. We are making good compliance easy by helping mortgage businesses protect their consumers in an informed way.

Kathy Mantych: Our solutions look at the entire loan life cycle from beginning to end. Compliance tools like MRGDocs and RiskExec that bring together years of in-depth regulatory, legal, and technology expertise and experience create operational efficiencies from origination to servicing and beyond.

Q: What do you love about working in the mortgage industry?

Luke Wimer: Home ownership is the American dream. Fairness and consumer protection is a big part of that and an implied promise of our democratic economy and government. We are delivering on these promises every day.

Kathy Mantych: This industry operates like a large family; many of us have known each other for years as colleagues and peers. Together, mortgage lenders and technology providers are creating a positive environment for the consumer. It is exciting to be a part of that rising tide.

INSIDER PROFILE

Luke Wimer is Chief Operating Officer of Asurity Technologies. An innovative executive for more than 30 years, Luke has depth in operations, technology, finance, and product development, and has successfully scaled and transformed businesses. Prior to Asurity Technologies, Luke served as Executive Vice President of Global Operations and Chief Information Officer for MoneyGram, International; Principal at Thomas H. Lee Partners, the Boston-based private equity firm; and as a Vice President at Capital One.

INDUSTRY PREDICTIONS

Luke Wimer thinks:

1.) Boosted by deregulation, big lenders will get bigger.

2.) The big players in the industry may be slow to adopt change but they will ultimately buy technology or copy innovation and edge smaller players out.

3.) We will continue to have cycles of regulation and deregulation. Mortgage lending will remain a difficult business throughout these transitions.

INSIDER PROFILE

Chris Anderson is a Senior Sales Executive with Asurity Technologies’ smart loan document solution, MRGDocs. Over the past 24 years, Chris has worked in various strategic roles across the financial services industry, enabling efficiency and providing better products and services to consumers. Since joining Asurity in 2017, Chris has focused on exploring strategic partnerships, developing business cases for new products and marketing, and setting the strategic direction of product lines.

INDUSTRY PREDICTIONS

Chris Anderson thinks:

1.) As rates rise, borrowers on the fence will finally make a decision that they better purchase now or pay higher interest rates and therefore, higher monthly payments.

2.) Loosening regulations and adjustments to qualifying requirements will enable more and more younger people, like millennials who are saddled with student loan debt, to finally afford to buy their first home.

3.) With the reintroduction of Non-QM (Non-Qualified Mortgage) loans, more consumers with lower than minimum credit scores will again be able to purchase homes where they have not been able to previously since the great recession started in 2008.

INSIDER PROFILE

Kathleen Mantych is a Senior Director of Business Development & Sales at Asurity Technologies. Kathy has a comprehensive background spanning 30 years in complex software environments providing organizations with business growth strategies and leadership necessary to drive revenue and return on investment. She joined the MRGDocs team in 2010 and has spent the past eight years driving the company’s growth and expansion by way of indirect and direct sales channels.

INDUSTRY PREDICTIONS

Kathy Mantych thinks:

1.) The industry will continue to fast-track technology adoption for operational efficiencies.

2.) Compliance complexity will increase with White House administration policy changes.

3.) The lender and vendor community will continue to condense over the next 5 to 10 years due to the overall cost of maintaining compliance amidst new regulations.

The Cost Of Real-Time Compliance

At a recent regulatory technology conference, RegTech Enable, two telling statistics revealed the mounting cost for financial lending institutions to maintain and respond to government compliance United States Bank paid out $150 bullion in fines, settlements and penalties since 2008, and financial institutions spent $70 billion on regulatory compliance, American Bankers Association reported that 84% of banks needed to hire more staff to manage the growing influx of information and changes.

Thomson Reuters Regulatory Intelligence monitors more than 950 regulatory rulebooks worldwide published by more than 550 regulatory bodies. In 2015, it reported that daily updates for the financial industry increased by 127% from just 68 per business day in 2012 to 155 in 2014. That adds up to a total of 40,603 in 2014 alone – more than double from the previous year. These updates are not restricted to legislation and published regulations – there are numerous sources from which to gather information on what is going to actually regulate a particular lender, including rulebooks, policy papers, speeches, and enforcement actions.

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The Information Pipeline

Approximately 70 individual regulatory entities sit at the center of lending compliance. The process of sifting through their many updates and requirements is layered, starting at the top with nationwide regulations on lenders produced by agencies such as the Consumer Financial Protection Bureau (CFPB), the Office of the Comptroller of Currency (OCC), and the Federal Deposit Insurance Corporation (FDIC), to name a few.

At the state level, regulations depend on the type of loan or specialized loan product. If a given lender wants to make a loan in Ohio for example, it needs to know which regulations apply to that loan type in that state. If the loan is sold, there is an additional layer of requirements imposed by the investor entity that must be considered.

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Investor organizations, including Fannie Mae and Freddie Mac, operate by a set of corresponding guidelines called “investor requirements,” which, alone, are thousands of pages worth of compliance requirements. That is thousands of pages of compliance requirements for a single mortgage loan in addition to implementing state-specific and federal lending regulations, reviewing enforcement actions regarding compliance, and knowing the subjectivity of regulation interpretations.

Lenders conducting business in multiple states must maintain the capacity to address that entire regulatory environment, because it determines the structure of the loan, documents, required disclosures, and eventually calculations for the interest rate, APR, and payment amounts.

There are varying degrees for how a regulator might regulate a particular mortgage lender.

Enforcement actions, for example, may not be consistent nor follow standard administrative procedures, but do indirectly regulate mortgage loans and therefore must be monitored and considered as well.

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Comprehensively, the environment for making a single family mortgage loan is a complex spider web of regulation.

It Takes A Village

Within a financial lending institution, compliance management should begin with the chief executive officer who tasks the chief compliance officer or perhaps an internal auditor with regulation implementation within the business practices. With the emerging RegTech sector, there are a number of technology solutions to help manage compliance from loan document preparation to mortgage portfolio analysis. But who is keeping up with the ever-changing rules of compliance? One day you are in compliance, and the next day you could be out.

Document preparation companies should be maximizing their collective compliance knowledge, building specialized teams stacked with individuals who have decades-worth of experience and are dedicated to overseeing and implementing the many changes mandated by regulatory agencies. To keep up with the quick pace of changes in today’s complex environment and properly implement compliance in real-time, teams must engage a range of experiences and skillsets, from attorneys and compliance experts to programmers and IT experts.

But it is not enough to simply monitor the updates; they must be interpreted, evaluated, integrated, and disseminated.

For example, if the CFPB issues a new regulatory interpretation about how lending disclosures are to be made on a particular type of loan, specialists must learn of that regulation and review it with their lawyers. If the lawyers determine that the regulation changes the status quo, they must identify which lenders and loans it affects and the impact it will have. This change could potentially disrupt the lending process of a single loan or multiple loans – requiring adjustments in documentation, marketing areas, and business practices – across the entire lending business. Once the lawyers determine what the change means and who is affected, there are three paths the information can take.

The first is directly within a loan operation and document preparation platform, which might require minor quantitative adjustments to calculations or data organization. If the change affects the financial institution’s operations, such as how loans are marketed or disclosed, the institution must address it directly. If the regulatory interpretation has a broader impact on a certain loan type or loan area, a more comprehensive analysis of how the change will affect the business at large needs to be conducted.

Managing Compliance In Real-Time

Keeping current is half the battle of any lender, but mortgage executives also shoulder the other half: forecasting.

Regulatory updates released daily are by-products of greater powers at play, trickling down from decisions made by the individuals in charge of each regulatory agency. The Director of the CFPB or the Chairman of the House or Senate Financial Services Committees are dictating the changes, directly impacting that particular agency and the regulations it issues or the legislation the committees may introduce.

To ease the burden and free up more resources for monitoring what is coming down the road, or simply because there is a lack of bandwidth, organizations can rely upon their document preparation company to manage the present day concerns.

It sounds understated to say that this is a major responsibility. Lenders are not only trusting document preparation companies to stay current on all the changes, but also to interpret them, incorporate them into the document packages, and make sure there are no conflicts or inconsistencies across the layers of compliance.

Dedicated teams with many years of collective experience are best suited for the challenge of managing compliance in real-time because they have the bandwidth and depth of knowledge to respond swiftly, accurately, and reputably. The greatest responsibility of a document preparation company is to ensure that regulations are understood and adjusted on a timely basis – whether immediate or taking effect on a specific date – so that documents always remain compliant.

For mortgage executives, that is one less thing to worry about.

About The Author

Michael L. Riddle

Michael L. Riddle is the managing director of Mortgage Resources Group, LLC., responsible for the overall operations of the firm. 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.

To Solve Compliance Complexity, Look To Einstein’s Principles

In 1915, Albert Einstein proposed the general theory of relativity, where he explains gravity as a consequence, rather than a force. Anything of mass, he theorizes, has an equivalent amount of energy. And, the greater the mass, the greater the energy. E=MC2. And like Einstein’s mass-energy equation, compliance is the consequence of regulation.

Nearly twenty years later in 1934, The New Deal emerged along with the Federal Housing Administration, the 30-year mortgage loan, and a number of regulations to fuel America’s economic recovery, protect consumers, and increase home ownership among middle income brackets. The mass of the regulatory system was relatively small then, and the force necessary to counteract regulation only needed a relatively small amount of energy.

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Mortgage document preparation was a simple process thirty-plus years ago. Within 48 hours, you prepped a set of documents on an IBM Selectric typewriter, sent them to a title company with a note to close, and then shook the hands of a happy new homeowner.

In the same span of time that witnessed the typewriter’s evolution into a smartphone built for efficiency, the regulatory system grew more complex in equal opposition.

For every regulator action, there is an equal and opposite compliance solution.

The regulatory system of today is an expansive and complex environment embodied by a number of housing, finance, and regulation bureaus that dictate compliance for nearly every aspect of a loan. The mortgage industry alone supports an incredible variety of loan products and an immense amount of data, and a single document package can require nearly 60 compliance state and federal compliance checks.

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Take one mortgage document set and multiply it across the total number of mortgages produced in one state, and then again over several – or all 50 – states’ regulatory policies. The result? A very expensive mortgage origination process. It should come as no surprise that by the end of 2016, production costs per originated mortgage was at an all time high.

It’s no question that a lender’s focus to maintain a profitable origination business can be slowed by the ever-changing and ever-growing regulatory landscape. As the pressure on the industry mounts, so does the need for an equal and opposing force to effectively – and profitably – navigate it.

The financial tech (FinTech) and regulatory tech (RegTech) sectors have risen to the occasion by building Software as a Solution (SaaS) products. Over the past decade, the industry has accumulated a number of analytics tools and services while compliance-related tasks are still primarily performed across a wide staff. But, an increase in the number of tools and people to learn, implement, oversee, and manage those tools can be tricky. Banking is still people doing a job, and mistakes are a natural result.

Technology alone is not a perfect solution, either. For all the ease and accuracy technology can provide, the rate at which technology solutions are rendered outdated is exhausting. Many best-in-class tools struggle to adapt fast enough in the ever-evolving regulatory landscape when maintained by companies with a primary expertise in software and not compliance.

The exposure of a lender is twofold: out-of-date software exposes potential security risks and out-of-date regulatory systems expose potential compliance risks. Both can result in millions of dollars of recovery costs.

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For the documents space, this has taken the form of document prep programs that produce generic legal packages attuned to state regulations, but are not customized to a specific product or to a unique variability that may have specific state regulations. While there are many one-size-fits-all solutions, this can lead to challenges when it comes to maintaining compliance.

An Ecosystem of Mortgage Compliance. E=MC2.

The DIY solution to maintaining compliance would take any institution thousands of hours of research and manpower to implement policies that adhere to federal and state regulations, not including the technical know how to build a platform to manage it.

While the complexity facing the industry appears daunting, the answer exists at the intersection of regulatory, legal expertise and technical mastery: a holistic and advanced ecosystem of mortgage compliance (E=MC2). The true best-in-class solutions crossbreed software engineers with experts steeped in regulatory compliance knowledge. The result is a holistic compliance management systems (CMS) maintained on both fronts.

Effective compliance management ecosystems can and have served the financial services industry for the better, guiding institutions safely through any potential risk. Bonus: CMSs are supported – and even encouraged – by the federal government.

A well-run, wide range, and comprehensive system that includes policy, procedures, testing, controls, automation, and risk assessment lead to examiners reviewing banks more favorably. The Consumer FInancial Protection Bureau (CFPB) has been direct in saying that the more comprehensive a CMS, the more they will believe in a bank.

While still relatively new, there are integrated tech solutions built on the backbone of legal, financial, and regulatory ecosystems that produce compliant document packages on one end and proactively manage redlining and fair lending risk on the other. Compliance technology can minimize errors, automate processes, save time and resources.

With an all-inclusive approach, institutions can access an incredible number of compliance solutions including dynamic document preparation, data validation and testing with legal backing and HMDA, CRA, REMA, geocoding, and Fair Lending solutions. The right solution will improve the agility and speed of these diverse compliance platforms across an enterprise in a controlled, transparent, and organic way.

And while the industry might immediately view CMS a proactive and offensive approach, it is also a good defense. Think of it like a well-protected house: the more prepared you are for a break in, the less likely it is to happen.

For an industry that has been slow to innovate, the emergence of a sustainable, smart, and reliable compliance ecosystem fosters an incredibly pioneering environment in which to manage regulatory changes and deadlines.

These expertise-fueled compliance ecosystems can empower financial institutions to react to the ever-growing regulatory mass with equal force. The weight of the regulatory system is counteracted by the power of integrated compliance tech solutions. And by alleviating the burden of regulation, banks can focus on profitability knowing it is no longer a weight they need to carry alone.

About The Author

Michael L. Riddle

Michael L. Riddle is the managing director of Mortgage Resources Group, LLC., responsible for the overall operations of the firm. 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.

The Evolution Of Mortgage Banking Compliance

The mortgage document preparation was a simple process thirty-plus years ago. Within 48 hours, you prepared a set of documents on an IBM Selectric typewriter, sent them to a title company with a note to close, and then shook the hands of a happy new homeowner.

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In the same span of time that witnessed the typewriter’s evolution into a handheld supercomputer built for efficiency, the regulatory system in equal opposition swelled in complexity. For lenders, maintaining a profitable origination business is often hindered by the ever-changing and ever-growing regulatory landscape. Unable to keep up, lender’s tend to respond with knee-jerk reactive solutions that risk heavy fines for minor oversights.

The emerging financial tech (FinTech) and regulatory tech (RegTech) sector has produced a number of Software as a Solution (SaaS) products and tools to help compliance teams. But they too come with their share of challenges. For one, tools require people to learn, implement, oversee, and manage them, and human error is a natural result. Second, many legacy tools are maintained by companies whose primary expertise is in software, not compliance, which exposes users to potential compliance risks. On the flipside, outdated software exposes lenders to potential security risks. Both can result in millions of dollars of recovery costs.

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Unfortunately, the DIY solution to maintaining compliance would take thousands of hours of research and manpower to implement policies that adhere to federal and state regulations. The need for compliance, data, technology, and management to exist within the same ecosystem is greater than ever. The best-in-class solutions are cross-bred Compliance Management Systems (CMS) built by software engineers and maintained by a team of experts steeped in financial law and regulatory compliance knowledge.

Effective compliance management ecosystems can and have served the financial services industry for the better. They are also supported – and even encouraged – by the federal government. The more comprehensive a CMS, the more the CFPB says it will believe in a bank.

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With an all-inclusive approach, institutions can access a number of compliance solutions including dynamic document preparation, data validation and testing with legal backing and HMDA, CRA, REMA, geocoding, and Fair Lending. The right solution will improve the agility and speed of these diverse compliance solutions across an enterprise in a controlled, transparent, and organic way.

And while the industry thinks of CMS as being proactive and offensive, it is also a good defense. Think of it like a well-protected house: the more prepared you are for a break in, the less likely it is to happen.

For an industry that has been slow to innovate, the emergence of a sustainable, smart, and reliable compliance ecosystem fosters a pioneering environment in which to manage regulatory changes.

These expertise-fueled compliance ecosystems can empower financial institutions to respond agilely to the ever-growing regulatory landscape. And by alleviating the burden of regulation, banks can focus on profitability knowing it is no longer a weight they need to carry alone.

About The Author

Kathleen Mantych

Kathleen Mantych is the senior marketing director for MRG Document Technologies, a provider of legal compliance and dynamic compliant document preparation software technology to lenders nationwide. With more than 26 years experience in the mortgage industry, Mantych has held executive sales, product and alliance management positions with key mortgage technology providers. Dallas-based MRG is a document preparation practice group within the law firm of Middleberg Riddle Group putting the company in the unique position of its dynamic document content being created and tested by an in-house team of compliance attorneys. MRG owns its own legal content as well as its own calculation engine and compliance tests, ensuring accuracy for its lender customers.

MRG Responds To Significant Growth By Hiring Industry Vet

Dallas-based MRG, a mortgage banking compliance organization, provides the mortgage industry a blend of compliance, unique and tailored document preparation, and technology, products, and services, is proud to announce the hiring of Chris Anderson. Anderson will be responsible for handling the increased demand for MRG’s products and services through new client acquisition and adding value to the existing client base by delivering an extensive array of best-in-class compliance solutions.

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Anderson has more than 20 years of account growth and management experience in the financial services and software industries. A former chief business development officer at Lending QB, Anderson played a significant role in expanding LendingQB’s footprint in the mortgage industry. Most recently, he served as executive vice president of sales at ISGN, a leading provider of loan servicing and default management systems for the residential and commercial lending industries. Anderson’s previous roles include executive vice president of sales and marketing at Docutech, a provider of compliant document solutions for residential lending, and general manager and business head for WIPO Gallagher, a provider of technology and business outsourcing services for the mortgage banking and lending industries.

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For more than 35 years, MRG’s highly respected staff of compliance experts has been providing lenders with legally defensible compliance expertise. Their unparalleled compliance solutions combine years of real estate law experience, in-depth compliance insights with state-of-the-art technology to document mortgage transactions. Their solutions provide industry leading built-in compliance checks to mitigate risk and alleviate compliance guesswork.

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“Given MRG’s significant growth, we needed a mortgage technology veteran who understands the constantly changing compliance landscape and the demands of today’s lenders,” said Mike Riddle, managing director of Mortgage Resources Group, LLC. “Chris has extensive experience in helping lenders respond to changing market conditions through the use of advanced technology. I am confident that Chris will apply those skills as we proactively work with our ever-growing client base.”

“The regulatory environment for today’s mortgage lender has become exceedingly complex, lenders are looking for solutions to ease their compliance burden,” said Anderson. “MRG has extensive legal expertise and best-in-class compliance solutions to meet those challenges head on.”

The Future Of Digital Compliance

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.

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“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.”

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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.

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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.”

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 tony@progressinlending.com.

Tackling Industry Change

We are gradually morphing to a more next-generation mortgage process and some say it’s about time. Lenders are notoriously slow to embrace change. So, why are things different this time? There are so many new outside factors that are forcing lenders to evolve. To discuss how change is impacting the mortgage industry we gathered a panel of experts that includes: (left to right) Neil Fraser, Director of US Operations at Paradatec, a mortgage OCR technology; Brandon Perry, President at TTP Enterprises, a leading CRM firm; Michael L. Riddle, the Managing Director at Mortgage Resources Group, LLC.; and Paul Wetzel, EVP, Product at Mortgage Cadence. Here’s how they see the future of mortgage lending:

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Q: How have recent mortgage technology vendor M&As changed the mortgage industry?

NEIL FRASER: It is common, and often a natural progression in many industries that they start out fragmented and consolidate as they mature. The purported advantages to consolidation can include: economies of scale, more resources for research and development, and better marketing and market reach.

Paradatec monitors the M&A activity of companies that we know well. The reality of consolidation, in many cases is very different from expectations. Just like in other verticals.

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The consolidations we see appear to be aimed at allowing the larger mortgage technology providers to become one-stop shops for all things tech and to move that technology further down the food chain to smaller banks and credit unions.

But M&A is a risky approach. Some recent consolidations have led to organizational confusion, and a general loss of focus.

Ultimately they find that the organizations’ cultures have little in common, and the perceived synergies between the two companies are illusive. In fact, in some cases we have seen this mistake repeated multiple times over several short years. Generally, a great deal of marketing hype follows such consolidations. So, the goal of increased marketing reach is often realized, but is only short term. However, the reality is that the loss of focus can be devastating to both their clients and employees.

We believe these risks are common in the case where unique and significant differentiators make a particular technology company’s products and services clearly superior. For a technology vendor in this position, there are many potential disadvantages to consolidation. In the recent past we believe we have been witnessing the negative results of some of these mergers, especially in our niche of advanced OCR technology for the mortgage industry.

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Paradatec has historically made its living by licensing our sophisticated mortgage OCR solutions to some of the largest banks and lenders in the country through OEM relationships with larger partners. Our solutions traditionally were only used in very large lenders. The net effect of the consolidation of the last few years is that our current and future re-sellers are able to leverage very sophisticated OCR technology to smaller organizations that never could support such platforms themselves.

PAUL WETZEL: Leading vendors are looking to add to their product offerings and/or customer base with acquisitions. Where the reason for the acquisition is augmenting the product offering, this can frequently be a faster time to market versus building the functionality natively. Having said this, acquisitions are not always guaranteed to be successful. Considerations like cultural fit of new teams vs. the acquirer, and compatibility of technology stacks are two key considerations among many others.

MICHAEL L. RIDDLE: I think it depends on whom you talk to and which specific companies that you are referring to. In some instances, larger technology providers have acquired smaller providers for a specific technology, market niche or just to gain market share. Traditionally, these types of M&A don’t always work out because there isn’t synergy between the technology platforms, corporate cultures don’t mesh, and customer bases don’t align.

However, when the right companies merge, ones that have a shared vision for the future, corporate cultures that align, technology platforms that easily integrate, and where the sum is greater than its individual parts, there can be significant advantages for industry participants. This type of merger or acquisition has the power to disrupt an industry.

Speaking from experience, the second example is what has transpired with our new merger. MRG has formed a partnership with Asurity Technologies (Asurity) that brings together Treliant Solutions, LLC, Risk Management Solutions, Inc. (RMS) and Mortgage Resources Group, LLC (MRG) into an integrated best-in-class compliance platform.

In addition to delivering legally defensible compliance expertise, in-depth compliance insights with state-of-the-art technology to document mortgage transactions, we can now also provide HMDA, CRA, Fair Lending, and Redlining solutions. This provides our clients with a significantly more comprehensive compliance solution.

BRANDON PERRY: The mortgage technology vendor space seems to be mirroring the mortgage industry in regards to M&A activity. With the mortgage lender M&A activity, the competitive landscape with technology vendors is extremely high. Smaller boutique vendors are strategically acquired by larger well-funded looking to expand or enhance their product offerings.
The current trend is for the larger vendors to serve as one-stop shops for mortgage lenders. This is good news for the mortgage industry as it nicely sets the table for further innovation by start ups or boutique technology vendors looking to plug the holes left by the larger players.

Q: How has new regulation changed the mortgage industry?

NEIL FRASER: Regulation equates to reporting in order to attain measurement and control. As regulation has increased in this market, the need for originators and services to quickly extract meaningful content from their loan files to support such regulatory demands has increased as well.

The Paradatec solution can assist with data gathering for many regulatory events, but one that’s especially burdensome in terms of executive liability is the Fed’s Comprehensive Capital Analysis and Review (CCAR). The CCAR is an assessment of the capital adequacy of thirty-four large U.S. bank holding companies and was introduced as part of the Dodd-Frank Act. The effects of the Dodd-Frank Act in general are widespread and relatively well known. CCAR is focused on, evaluating capital adequacy even under stressful conditions. Reporting for CCAR came through the FR Y-14M forms in June 2012 which support a dictionary of around 250 data fields to be collected and presented to the Fed.

One of the early effects of CCAR 14-M reporting has been that large lenders have taken extra responsibility for the accuracy of data presented to the Fed for their loans. That includes loans originated via the correspondent channel or acquired otherwise. For Paradatec, as a specialist in automatically reading mortgage documents via Optical Character Recognition (OCR), this presented an opportunity to provide automated audit of LOS data vs actual scanned images of original paperwork in order for entities to comply.

For 2017 CFOs of CCAR entities are obliged to attest that, not only is their CCAR 14-M data is “materially correct to the best of their knowledge” but also to “the effectiveness of internal controls and include those practices necessary to provide reasonable assurance as to the accuracy of these data”. In other words “I’ve checked all my data”. This is a big task especially for banks that acquire loans they did not originate. CCAR entities are effectively now required to check all their loan paperwork vs LOS data and attest that they match. That’s a huge undertaking without sophisticated OCR technology.

MICHAEL L. RIDDLE: The regulatory environment for today’s mortgage lender has become exceedingly complex. Compliance becomes more difficult each day, as a cascade of new disclosure and lending requirements are imposed by federal, state and local regulators.

With this avalanche of regulation, it is becoming very difficult for mortgage lenders to gauge whether their internal compliance systems are functioning properly and whether the continuing cost, in both human and financial terms, of adopting and maintaining adequate regulatory controls, can be sustained in a volatile origination market.

Lenders, in order to cope with these added regulatory compliance risks, are faced with an immediate and compelling need to re-evaluate and upgrade the capacity of their internal systems to recognize and incorporate mandated regulatory changes. Static document systems and templates simply will not suffice to keep you compliant. To en- sure compliance, mortgage disclosure and documents systems need to be dynamically constructed.

At the same time, the absolute risk of non-compliance has become intolerable. Audits by regulators and investors alike are now commonplace and fines, penalties, and loan repurchase demands are escalating. As tough new regulatory standards increase the scope and absolute number of loans that must be evaluated carefully for compliance, investors have become acutely aware that several regulatory changes impose liability on the purchase of a mortgage loan for compliance errors made by its originator. It is no surprise that investors are increasingly demanding, prior to funding a loan purchase, that originators provide loan specific data in an electronic format complete enough to permit comprehensive automated compliance reviews on each loan to be purchased.

PAUL WETZEL: New regulations and GSE requirements have pushed technology providers to look for creative ways to address both the ongoing release of requirements themselves but also what kind of technology upgrades might be necessary to better accommodate the strong likelihood that this level of change will continue for years to come. While new regulations must always be accommodated as a priority, customers will not tolerate regulation support being the focal point of a technology vendor’s roadmap. Leading vendors always need to be upgrading their technology platforms and better accommodating the ongoing drumbeat of regulation is one key driver for this. The pressure of regulation is also a key driver for ongoing consolidation of mortgage technology vendors as some vendors will look to exit the market by selling their business vs. investing to upgrade their technology per the above.

BRANDON PERRY: With the heightened awareness of compliance with new regulation in the mortgage industry, many lenders have paused delivery and implementation of solutions, which drive new business. I’ve mentioned “compliance doesn’t matter” quite often in the past couple of years and it still holds true today. While compliance can’t be ignored, lenders must not fall into the trap of hypersensitivity to rules and regulations and then completely ignore the basic need to grow your business. The most successful lenders have been able to find a nice balance between regulation and business growth.

Q: How has talk of and interest in the digital mortgage changed the mortgage industry?

NEIL FRASER: In this era where smartphone and tablet usage permeates nearly all of life, it only seems logical that the purchase of a home would eventually move in that direction as well. This certainly creates a situation where the loan package can be moved electronically at no cost, rather than printed (multiple times, most likely) and physically moved between geographies. Therefore, in-transit time and cost can be reduced, which is great for the market.

At the same time, we don’t believe the digital mortgage negates the need for certain underlying technologies, including OCR. While a borrower may be able to upload PDF copies of their paystubs and bank statements, as an example, the data must still be gleaned from those documents as part of the underwriting process. Without the aid of sophisticated OCR such as that provided by Paradatec, that gleaning process remains a manual process, even though the mortgage is “digital”.

Organizations looking to embrace the ‘digital mortgage’ concept should look to not only eliminate the paper that exists in their process today, but also lean-out their business processes with the aid of technology so the per-loan processing costs can be reduced.

BRANDON PERRY: I believe much of the interest and talk of digital mortgage rose from the ashes of the constantly fluctuation regulatory environment. With the birth of compliance as a new cost center in most lenders, the pressure to absorb these new expenses must be released. I previously mentioned the importance of new business growth, but pressure can be released internally by finding ways to more efficiently process loans. Mortgage executives challenging their current processes helped pave the way to embrace technology allowing for digital mortgage.
One of the biggest challenges with digital mortgage is information security. With the ever-growing list of data breaches, cyber security will never be more important to the mortgage industry as we enter the digital mortgage world. The nature of the extremely sensitive information held by mortgage lenders makes them prime targets for cyber attacks.

PAUL WETZEL: Core concepts related to digital mortgages of course are not new but there is certainly growing interest in these topics over the past couple years and that is a very good thing for the mortgage industry. Fintech has been an underinvested segment and lenders’ interest in spending to improve digital outcomes is driving investment into mortgage technology. When executed correctly by a vendor, digital mortgage becomes a menu of options open to each lender that improve borrower experience, speed time to close and staff efficiency, and increase the transparency and security of the transaction. This will help both the lenders top line and bottom line as well as improving their standing in the industry.

MICHAEL L. RIDDLE: The first thing that comes to mind is the user experience. All the talk of the digital mortgage has changed borrower expectations. Since that now famous Super Bowl Ad that launched Rocket Mortgage and borrowers expectations, consumers demand technology that delivers a quick and simple user experience that matches the type of every day experience that they have on the Internet with the likes of Google, Apple and Amazon.

This has forced the industry to focus attention on delivering a dynamic and mobile digital experience. Many companies have invested heavily in technology and on being able to provide the types of tools consumers are look for on the front end. But what lenders must realize is the fact that to truly deliver on the digital experience the entire mortgage process needs to be streamlined not just the point of sale.

This includes compliantly documenting each and every financial transaction digitally. To be able to maintain a competitive edge in the digital age requires an understanding of data-security, technical capability, industry experience, compliance insights, legal expertise, matched with seamlessly integrated systems and robust data interfaces to actually streamline the lending process while delivering on the digital mortgage experience.

Q: Lastly, how do you see the mortgage industry and the mortgage process of the future evolving as a result of these and other big changes?

PAUL WETZEL: It’s an exciting time to be in the mortgage industry with respect to how technology can be used to dramatically improve outcomes. Lenders should be pressing their mortgage technology vendor partners for their view and strategies related to the above. Healthy vendors who plan to not just survive but thrive need to be active in the M&A space, have new a creative ways to accommodate ongoing regulation, and established but growing digital mortgage capabilities. Seismic shifts like the end of paper won’t happen overnight for the industry but they won’t happen at all leading lenders being willing to be front runners and we’re starting to see more lenders being willing to be just that.

MICHAEL L. RIDDLE: As mentioned earlier, the regulatory environment has become exceedingly complex, and I don’t see that changing anytime soon. That will continue to put pressure on lenders to comply, which will highlight the need for an advance compliance ecosystem— One that is comprehensive, can track, monitor and provide real time insights for all of a lenders compliance needs.

In addition, borrower expectations will continue to push the envelope on delivering the digital mortgage experience that today’s borrower demands. That requires the right balance of advanced technology, deep mortgage expertise, legal insights, industry integrations, with the ability to constantly evolve.

BRANDON PERRY: We’ve become a culture accustomed to instant gratification with nearly everything in our daily routine. Rather than heading to the store, how about same day delivery? We’re upset when a website has a two second delay loading. I’ve heard countless radio commercials from car dealers touting how fast they get you in and out when buying a car.   We are kidding ourselves if we believe obtaining a mortgage is the only exception. The next big competitive environment is time. I believe the time to pre-approval, approval and closing in the next few years will be fractional to the current process timeline of today.

NEIL FRASER: This industry is experiencing an evolution through the aid of technology like many others before. While the regulatory requirements will certainly control what the experience looks like for the consumer, automation within the process will continue to expand…the increasing per-loan processing costs dictate as much. Industry leaders such as Amazon and Orbitz have made the self-service model albeit in other segments, much less daunting, and the speed at which transactions can be completed has decreased significantly through this evolution. While the magnitude of the buying decision for a home is obviously much greater than that of buying an airplane ticket or a box of diapers, the consumer has become comfortable with online transactions to the point that a paper-bound process is viewed as slow and stodgy.

The process will continue to evolve, both due to competitive pressures as well as consumer-driven expectations. But, like a lot of the other ‘digital transformations’ that have occurred, we believe the mortgage market will be “both…and” situation, as in both paper and digital, rather than an exclusively digital model, at least for the foreseeable future. Until the entire consumer community is ready to embrace a digital-only approach, paper will continue to be a part of the process, and therefore vendors that automate paper reading will continue to add value.

Compliance Expertise Is In High Demand

Compliance experts are being sought out. For example, for over 35 years, Dallas-based MRG, a mortgage banking compliance organization, has provided to the mortgage industry at large a blend of compliance, document preparation and technology, products and services. To this end, MRG compliance expert Marsha Williams has been asked to share her extensive compliance expertise at the following upcoming industry events:

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Texas Association of Bank Counsel Convention – Bastrop, TX – September 20 – 22

“What’s Happening in Residential Mortgage Lending?”

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MBA Risk Management, QA & Fraud Prevention Forum – Miami, FL – September 24 – 26

“Construction Lending”:  Compliance and Risk Management”

In today’s constantly changing regulatory environment, MRG’s compliance expertise is in high demand. MRG’s team of compliance experts recognizes the business imperative of proactively monitoring and continuously analyzing regulatory changes, trends, and impending regulations that impact your business. MRG’s team of professionals is constantly on alert for changes from all federal, state, local and investor requirements to provide lenders with up-to-date compliance insights.

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As a lender, you should be focused on generating and maintaining a profitable business in this volatile market, rather than constantly worrying about the enormous and ever-changing regulatory landscape. Your burden is too great, and the risk is too high to rely solely on your internal staff to provide legally defensible compliance.

As a result lenders should turn to the experts that other leading providers and industry sources trust like MRG and others.

About The Author

Land Gorilla And MRG To Guide Industry Leaders Toward Housing Shortage Solutions

Rolling with the momentum from March’s successful Construction Lending Summit in Denver, the construction loan management company Land Gorilla has organized a new summit for another housing-starved region: the Dallas-Fort Worth Metroplex. MRG is partnering with Land Gorilla to invite thought leaders in the mortgage industry to a ONE-DAY collaborative event on Aug. 22, 2017. Lenders, contractors, Realtors, and other professionals are expected to attend, all prepared to share strategies for easing the tension in a market growing by 400 residents per day.

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In April, media reports dubbed the situation in the Dallas-Fort Worth area as a “brutal market for new home buyers,” citing a historically low inventory of homes. High housing costs—increasing 50 percent in the last five years—and scant availability mark the major Texas metropolitan area as a region where individuals and companies poised to expertly navigate the market can seize the opportunity to create more inventory and realize significant return on investment.

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While the Dallas-Fort Worth area leads the country in numeric population growth, its challenges are not unique, but reflect a trend playing out in markets across the nation.

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The summit will cover the specifics of a market primed for collaborative efforts to build more housing, the key elements for a working Construction-to-Permanent Loan program, strategies for avoiding potential legal quagmires that can plague underwriting new residential construction loans, and ideas for partnerships devoted to growing a book of business.

Industry leading speakers for this event include Shannon Faries, Director of Risk Management for Land Gorilla, Christina Jenkins, Attorney and Director of Customer Support for MRG, Joaquin Tremols, Director, Single Family Housing for the USDA, Dan McPheeters, Program Development for Fannie Mae, and Paige Shipp, Regional Director at Metrostudy.

Fellow sponsors of the Texas summit are housing and residential construction industry information provider Metrostudy, FirstBank Correspondent Lending, and residential mortgage solution provider American Financial Resources (AFR). HousingWire is the media sponsor.

The Ground Up: Construction Lending Summit is set for Tuesday, Aug. 22, from 1:30 to 4:30 p.m. at Venue Forty50 located at 4050 Belt Line Road, Addison, TX 75001. A networking reception will follow from 4:30 to 6:00 p.m.

Ticket costs range from $85 for early bird registrants to $99 for general admission while supplies last and are available at this link: https://www.landgorilla.com/ground-up

The Old Doc Prep Roadmap Is Obsolete

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As a lender, we believe your focus is, increasingly, on generating and maintaining a profitable origination business in this volatile market. Constantly worrying about the enormous and ever-changing regulatory landscape can be an unwelcome interruption. Your burden is too great, and the risk is too high, to rely solely on internal staff, or outdated doc prep, to provide legally defensible compliance in the origination process.

As regulatory pressures mount, there is an immediate and compelling need to re-evaluate and update your institution’s capacity to continuously analyze and competently implement mandated changes. This impacts your ability to produce compliant disclosures and documents for all your lending needs.

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As a lender, document preparation is always a major concern. The smallest error or omission can lead to:

>>Regulatory Fines & Damage Settlements. Failure to prepare documents in a way that aligns with both local and federal regulatory requirements can result in fines from regulators as well as class-action lawsuits from borrowers. These fines could drain millions of dollars from a lender’s cash flow.
>>Reputation Damage. The inevitable negative press that accompanies any kind of lending violation could impact the lender’s public reputation. The specific effects of such a blow to a lender’s reputation will vary from case to case but could result in lost loan origination opportunities or drive away potential business partners.
>>Restrictions on Lending Operations. Some lenders may face official restrictions on their lending operations as a result of a regulatory compliance violation.

What Should a Compliant Document Solution Roadmap Include?

The ideal solution must include compliance and legal guidance, dynamic document technology, and industry expertise, to help you navigate these challenging market conditions.

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To be more specific, the ideal compliant document solution mitigates your risk and provides you with a competitive advantage by delivering:

Total Residential Loan Program Coverage

One major problem is that most doc vendors specialize only in a few document types or in one region—forcing lenders to retain multiple vendors to cover all of their verticals & markets.

The ideal solution provides a 360º solution beginning with initial disclosure and ending with post-closing services while encompassing everything in between. With this total coverage, lenders can simplify their processes because they no longer need to seek out multiple providers.

Specialization in a Wide-Ranging Product Mix

Using a special team of lawyers with long careers in the home lending industry, the ideal solution offers expertise in numerous specialty products (or common products with unique characteristics) such as:

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>>Texas Residential Loan Documents – Texas is unique in the nation because it requires home loan closing documents to be prepared by a Texas licensed attorney. The ideal solution has a team of Texas licensed attorneys who prepare all Texas document sets more efficiently than the competition and in perfect compliance.
>>One-Time Close Construction to Perm Loan Documents – The ideal provider works with lenders to customize their one-time close documents to fit their specific construction-lending program.
>>HELOCs – Each lender configures their HELOC program differently and the ideal provider can work with any lender to customize their document solution to adhere to their unique program. Many doc prep providers are unable to customize their HELOC documents.
>>Post-Closing documents– The ideal solution provides documents for loan assumptions, loan modifications, lien releases and FHA and USDA partial claim mortgages.
>>Complex characteristics – The ideal solution specializes in the unique and complex where other vendors cannot. For example, the ideal solution can provide documents for loans where the borrowers are a double trust.

This ability to focus on specialty products that other doc prep vendors often don’t carry helps provide complete compliance for lenders in different markets and verticals, while maintaining overall disclosure and document uniformity across the lender’s entire product mix.

Built-In Compliance Checks

The ideal solution runs compliance checks of each and every closing package it produces to ensure it is in compliance with the requisite federal and state regulations. These checks include (but are not limited to):

>>TRID

>>QM

>>HOEPA

>>State Consumer Credit Laws

The ideal provider creates, manages, and integrates these checks internally—many vendors have to run these checks through an additional, outsourced product such as Mavent, Compliance Analyzer, or Pred Protect.

The ideal provider is confident enough in this internal compliance system to warrant the accuracy of its calculations, disclosures, and document packages (and to back these warranties with $10 million in E&O insurance).

Seamless Loan Origination System Integrations

The ideal solution is integrated with the majority of the largest Loan Origination Systems (LOS) on the market and can integrate with any LOS provider.

No Redraw Fees

When a loan officer orders a closing package, there’s often a need to order another closing package a little later (usually because of user error or last minute adjustments) to complete the closing. On average, a lender will order about 2.5 closing packages per closing.

Most doc prep vendors charge a fee for ordering an additional closing package. This inflates the cost of each closing and, worse yet, these redraw fees cannot be passed on to the consumer. Lenders have to eat the redraw fees of most doc prep vendors out of their own pocket.

However, the ideal provider does not charge for redraws, so lenders are only charged once for a closing. This saves expenses and removes an element of stress from the process.

Not All Document Solutions and Vendors Are Created Equal

MRG Docs is our powerful platform for the dynamic creation and seamless delivery of perfectly accurate residential mortgage documents. Our disclosure, closing document and servicing document solutions combine years of real estate law experience and in-depth regulatory insights with state-of-the-art technology to competently document mortgage transactions. Each document package is delivered with a series of built-in checks to guarantee compliance with applicable state and federal regulation.

MRG’s team of attorneys and mortgage experts recognize the business imperative of proactively monitoring and continuously analyzing regulatory changes, trends, and impending regulations that impact your business. Our team of attorneys is constantly on alert for changes from all federal, state, local, and investor requirements to provide you with up-to-date compliance from a source you can trust.

About The Author

Michael L. Riddle

Michael L. Riddle is the managing director of Mortgage Resources Group, LLC., responsible for the overall operations of the firm. 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.