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Data Integration Streamlines TRID Compliance

eLynx has completed an integration with Landtech Data, a provider of systems used by real estate settlement services providers.  Landtech Data is also noted for creating the first real estate settlement system for desktop computers in 1981. The integration enables lenders utilizing eLynx’s Expedite ID compliance solution to exchange property, fee and loan data electronically with the 3,000 settlement service providers in 47 states using Landtech Data’s XML Real Estate Settlement System. This bi-directional exchange of data simplifies the collaboration required for lenders to generate the Closing Disclosure mandated by the TILA-RESPA Integrated Disclosure rules (TRID).

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LandTech users can now save significant time and effort by directly accessing eLynx’s Electronic Closing Network (eCN) from their desktops, eliminating the need to sign into the system separately. They can also receive lender fee data and send back settlement agent fees to the lender from within LandTech’s production solutions, further streamlining the process.

John Ralston, director of Title Services at eLynx, explained: “Direct integration is far and away the fastest, most reliable and most accurate option for lender-settlement agent collaboration and eliminates a major obstacle lenders face in complying with TRID rules: the timely sharing of data between lenders and settlement agents.”

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Landtech Data’s Director of Sales and Marketing Benjamin Bell noted, “With this integration, settlement agents using Landtech Data’s XML Real Estate Settlement System can automate collaboration with lenders and help them meet their new obligations under the TRID regulations.”

“By seamlessly sharing the data required to comply with TRID, lenders and settlement service providers can increase accuracy as well as reduce the cycle times, potential closing delays and costs associated with consumer disclosures,” said Ralston. “It virtually eliminates the need for manual data entry and the manual exchange of data. eLynx is extending this option to the entire eLynx registry of U.S. settlement service providers through integrations with Landtech Data and other title production systems,” he said.

About The Author

[author_bio]

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.

A TRID Success Story

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We talk a lot about TRID failures, so this time I wanted to switch things up and talk about a success story. In this case LendingQB, a provider of mortgage loan origination technology solutions, recently found that the majority of their clients felt they were provided with a TRID-compliant solution by the required implementation date, with minimal impact on closing dates and cost per loan increases. “TRID was especially difficult for LOS and document preparation companies,” said Binh Dang, president of LendingQB. “We believe our success was due to our early planning and transparent testing process with clients and vendor partners.”

The TILA-RESPA Integrated Disclosure (TRID) required substantial changes to LendingQB’s loan origination system. “We knew it was going to be a massive project, so we began planning in early 2014,” said Thinh Nguyen-Khoa, vice president of engineering at LendingQB. “We set an internal deadline of June 2015 to give ourselves enough time for testing. We allocated our resources accordingly and created a development schedule that allowed us to complete the work in time.”

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LendingQB completed the development work according to schedule in June 2015 and began the testing phase. One of LendingQB’s clients, Houston-based Network Funding, approached LendingQB and offered to serve as a dedicated testing partner. With more than 40 branches nationwide and over $1.2 billion in originations, Network Funding had good reason to be proactive about testing.

“Everyone knew what a challenge it was going to be to implement TRID,” said Willie Jordan, national operations manager at Network Funding. “We realized that our LOS technology and other vendor partners were going to be crucial to our success.”

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One of Network Funding’s document providers, Docutech, was invited to participate in testing and from the beginning, all three companies established clear guidelines on how the testing process would work. “It sounds cliché, but we truly worked as a team,” said Nguyen-Khoa. “All three companies worked as a single unit with a common goal: to meet the October 3rd deadline. There wasn’t any time for pretense or finger pointing. The need for transparency was more important than any internal politicking.”

About The Author

[author_bio]

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.

Will CFPB Rules and Mobile Technology Put an End to Mortgage Originators?

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LeonardREvery disruptive technology – and the regulatory framework that surrounds it – impacts entire industries with unexpected consequences. Two recent trends in the mortgage industry are combining to create a perfect storm of unintended consequences for mortgage originators. The combination of the growth of electronic mortgage disclosures along with the standardization of pricing engines and underwriting rules due to today’s aggressive regulatory environment have some thinking that mortgage originators will soon be an endangered species.

A lending company could be forgiven for thinking, “If everything is preset and just a range of numbers, why do you need a loan officer on an agency loan?”  You just need one or two NMLS licensed people to set the rates displayed on a borrower’s online account or to quote a borrower if they insist on talking with a person about rates. Then add less expensive loan processors and customer support staff to do the document follow-up and collection.

Millennials Want Answers, and They Want Them Now

As the oldest Millennials are approaching their 30s, there is the opportunity to build a huge customer base with the largest living generation. But when they want to buy a home and apply for a loan, what will they want? Automation.

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Millennials will want to sign on to websites (or via their phone) at 1:30 in the morning after a day at work and hanging out with friends. Then they will search for their loan, upload everything financial from their Quicken, Money or Personal Financial Management app and demand an immediate answer before they give up and go on to another website and apply.

Recent published studies indicate that over 60% of online shoppers expect an answer to their question within one hour. With DU and LP free, and a credit score available 24/7, even lenders can meet this demand. Technology now exists that offers prequalification flood checks without the certification for a fraction of the flood certification price. Run these checks immediately after you get the 6 mandated pieces of data required for TRID and for 90% of your loans, you can have a rate, flood fees (or not), the title, transfer taxes, property taxes confirmed, and estimated appraisal fees based on property size and location within two minutes.

Who needs a loan officer for this group of people representing the vast majority of borrowers in the future? Lenders looking to cut costs, or trying to start a new business, can save a lot of money by only employing a couple of loan officers and relying on customer service and processors to manage most of the cut-and-dried loans.

Where will the loan officer go?

The upside for brokers is that the lower cost of doing business electronically cuts both ways. Good loan officers should or will consider opening their own businesses, relying on cloud-based technology, low overhead and personal connections to compete. Certainly new or existing vendors will jump at the opportunity to serve new customers for their software.

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In addition, most community banks and credit unions will probably maintain an origination staff to handle the non-standard loans because that type of service is how they can differentiate today competing with big banks. Loan officers will always be needed for outside-of-the-box loans and borrowers who prefer to not to embrace the technology.

Will all of these technological changes dynamically alter the mortgage industry most of us have spent decades in? Certainly. There may be areas of the industry that experience the pain of change more acutely, but change also brings opportunities. Smart loan officers should keep an eye on developments and think about how they fit in a more digital and more regulated world. Don’t be afraid of technology, but don’t be caught asleep at the wheel as the nature of our business changes.

About The Author

[author_bio]

Leonard Ryan is president of Laguna Hills, Calif.-based QuestSoft, a provider of automated compliance solutions and geocoding services to the mortgage industry. He can be reached at 800-575-4632 or leonard.ryan@questsoft.com. For more information, visit www.questsoft.com.

We Don’t All Have The TRID Blues

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Scott AlexanderSince the integrated mortgage disclosure rules went into effect last October, there has been a nearly daily deluge of horror stories in the mortgage media about lenders and real estate agents having to delay deals because they were unable to have the loans in compliance by the scheduled closing date. And many investors say they’re rejecting loans for purchase because the loans don’t comply with the new TRID rules.

I’m happy to tell you that not all of us are experiencing this pain. Either we’re operating on a different planet from the rest of the industry, or we’re doing something right. We like to think it’s the latter reason.

Rather than spending our time complaining about TRID, we view compliance with the new disclosure rules as an opportunity to better serve our customers and take market share away from our competitors. It’s working. The changes TRID brought to our industry fundamentally changed many of our basic workflows for the better and are now an important part of how we think and how we get new business.

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Less than three weeks — 17 working days to be exact – after our first purchase loan under TRID was received last year, we closed it and funded it. Since then we’ve been closing loans on time – within 30 to 45 days – as we always have.

How did we do it?

Three simple words: Training, training, training.

Be prepared

We realized early on that the changes mandated by TRID would require intensive employee training and loan origination system enhancements. We dedicated a tremendous amount of time and money towards making sure our operations were prepared, and we continue to learn and get better at it.

Our compliance manager did an outstanding job making sure everyone in our operations – from information technology to underwriting to processing to closing to the audit department – knew what was coming and was trained properly on the changes and knew exactly what they meant.

We made sure that our people were invested in making sure we got it right. We didn’t want to see delays in our closings because we wanted to maintain the momentum that we had gained over the previous two years to grow our brand and continue to serve the clients that we deal with on a daily basis. From the originator who takes the initial loan application to the post-closing department, we all have the same sales-driven focus on closing loans on time, every time.

Once we felt our operations people were ready, we then took it to our loan officers and retail branches and made sure they were properly trained.

Delayed closings are not acceptable

The first thing we had to do was dispel from the notion that we would no longer be able to close loans within the customary 30 to 45 days. Everyone in the industry, it seemed, had been led to believe that the new norm under TRID would be 60 to 90 days. That was not acceptable to us.

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Instead, we explained the process and made sure our LOs understood what was important that had to be done and to work with our operations people to continue to meet those closing dates and minimize the effect on the borrower as much as possible.

We are still closing loans within 30 to 45 days of contract. If a borrower doesn’t cooperate or we get bad weather or a weak appraisal, that might delay the closing by a few days, but for the vast majority of loans we are meeting closing within 30 to 45 days.

Taking it to the Realtors

From issues that were brought up during our training sessions and suggestions we got from our sales force, we then decided to offer training sessions to educate real estate agents in our retail markets. You’d be surprised by how many Realtors lacked the knowledge or training on TRID.

We met with real estate agents in groups as large as 65 to offer training to them on what they needed to do to make sure we could close on time.

Our training alerted them to potential problems that could delay loan closings. Now, if they know what’s going on and if they do come across a road block or a hiccup, they will understand why the problem happened and what they can do to avoid it next time. They still strive to meet the closing date, but they are now willing to tolerate a short delay because they understand why it occurred rather than being completely in the dark.

Not only did the Realtors walk away with a greater understanding of the regulations, but as a result of our training we have been able to pick up business from several agents who have referred more of their clients to our LOs because they have confidence that we know what we have to do to close on time. How we perform under TRID will be a key reason why a referral partner will choose us over another lender.

What’s left after training? Hands-on training, with “live bullets.”

Once we started to get actual loan applications that had to be settled under the new rules, we continued to train our team to make sure that any errors that were being made don’t happen in the future.

The role of technology

What role does technology play in TRID compliance? It certainly has an important role to play, but not as much as human training.

Our IT department made sure that the loan origination system we use, Encompass, was up to speed. We attended many off-site Encompass training sessions to make sure we understood how the rule changes were going to impact our LOS and how we work with it.

You certainly have to be comfortable with the technology you are using, but even more critical is making sure the data you are entering into the system is correct and compliant. You can’t rely completely on the technology without first making sure the people who are entering the data understand what they are entering so they can double-check what the LOS is telling them– and if something is in error, they can fix it. You’ve got to have the human understanding first and not rely completely on the technology to tell you that it’s right or wrong.

The issue that we’ve seen with companies that are still struggling with TRID three months later is that they didn’t invest the time and money in training their employees in how to input data into their system so it comes out with compliant results.

Loan sales? No problem

Do we still have some problems dealing with TRID? Yes. We still have some disclosure bugs to fix. We still have questions regarding mortgage insurance. We do have issues with about five percent of our loans. But from what I hear from others in the industry, they’re having trouble with 30 percent to 40 percent of their loans.

We’ve seen the reports that some big loan investors are reluctant to buy loans that have TRID defects, including a major bank buyer that reportedly has been rejecting 90 percent of mortgages being offered to it because they contain TRID errors.

We have not had any issues with getting our loans purchased by investors and aggregators. Since TRID became effective last October, we haven’t had a single loan rejected for purchase because of a TRID defect relating to an operating system error. In fact, we have not had one closed loan deemed ineligible for purchase.

I saw a great quote the other day from Ralph LoVuolo Sr., a mortgage industry coach, that perfectly summarizes what our approach to TRID has been all along.

“The issues are not the laws, rules or regulations that are imposed by the government,” he said. “The issue is proper training. Training is always the issue. When people are properly trained and work together as a team, with the client being their first priority, the system works.”

Long before anybody heard of TRID, our whole company was centered on one thing: close loans on time. TRID has certainly made that task more challenging. But having that philosophy in our DNA has certainly made the job easier for us.

About The Author

[author_bio]

Scott Alexander is the Operations Manager of Assurance Financial in Baton Rouge, Louisiana. After working with Wells Fargo for 18 years in the consumer finance, mortgage and banking divisions, Scott joined Assurance in 2010. His primary task initially was to create an internal underwriting department and to obtain full USDA, FHA, and VA underwriting authority. In addition, he worked to secure full correspondent delegated authority with national lenders. In 2012, Scott was promoted to Operations Manager and now oversees the underwriting, processing, insuring, disclosure, and closing departments for Assurance Financial.

We Are Not Through With TRID Yet

Banks are still struggling to comply with the Consumer Financial Protection Bureau’s 2015 TILA-RESPA Integrated Disclosure rule, or TRID, according to an American Bankers Association survey. The survey, conducted in February of this year, found that 25 percent of respondents have eliminated certain mortgage products because the rule does not provide enough clarity. Some of the offerings banks have eliminated include construction loans, adjustable rate mortgages, home equity loans or payment frequency options.

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More than 75 percent of survey participants said loan closings are being delayed as a result of TRID. On average, those bankers reported a delay of 8 days with responses ranging from one to 20 days. More than 90 percent said front-boarding and loan processing times have increased.

“It’s clear from this survey and our discussions with bankers that TRID compliance remains a significant concern,” said Bob Davis, ABA executive vice president, mortgage markets, financial management and public policy. “Consumers are seeing the greatest impact due to increased loan costs, fewer choices and delayed closings – and that’s not what this rule was intended to do.”

Ninety-four percent of the 548 bankers who completed the survey believe the TRID “good faith” grace period should be extended.

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“As we anticipated, our bankers are struggling to comply in part because the systems being provided by vendors are incomplete or inaccurate,” said Davis. “The causes of many of these systems problems are ambiguities in the TRID rule that require resolution.”

The survey found that 78 percent of respondents are still waiting for system updates from their vendors and 83 percent are forced to use manual workarounds. About half of survey participants said their bank will have to or have already hired additional staff to comply with the new rule.

The bankers who participated in the survey represent a diverse group of banks in both geography and asset size.

Click here for the full survey report.

About The Author

[author_bio]

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.

Going Beyond Technology To Ensure TRID Compliance

DocMagic, Inc. a provider of fully-compliant loan document preparation, compliance, eSign and eDelivery solutions, today announced the development of an extensive set of new reps and warrants for its calculations, documents and data, which provides peace of mind to lenders when it comes to compliance with the TRID rule.

The greater risk of civil liability under the new TRID disclosure requirements means lenders and investors may face liability for incorrectly completing various sections on the TRID disclosures. With DocMagic’s TRID-ready systems and now the Premium Compliance Guarantee, DocMagic has implemented a solution that mitigates lender risk of non-compliance.  With the Premium Compliance Guarantee, the Loan Estimate and Closing Disclosure are guaranteed to be accurate and complete.

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Additionally, the Premium Compliance Guarantee ensures timely electronic delivery of initial disclosures, compliance with federal and state high cost/HPML laws and accurate document selection logic resulting in compliant loan packages.   The Guarantee also ensures that all other compliance and data validation audits will trigger at the appropriate times during the loan process, providing critical warning messages to help lenders stay in compliance with applicable laws.

The offering is backed by a $5 million dollar guarantee (up to $50,000 per loan) and DocMagic customers will enjoy a 36-month claim filing period.  Beginning February 15, 2016, all new DocMagic customers will automatically receive the new premium rep and warrant offering.   Existing DocMagic customers will be given the opportunity to protect their future loan files for an additional nominal fee.

“Now more than ever, our clients need assurance that they are operating in full compliance at all times,” said Dominic Iannitti, president and CEO of DocMagic, Inc. “That is why we invested in developing and integrating the Premium Compliance Guarantee into DocMagic’s suite of products, including the TRID-based SmartCLOSE™ collaborative closing portal, for every user on every transaction.”

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Rich Horn, the former CFPB attorney who led the TRID rule making stated, “Long before the initial Aug. 1 TRID effective date, DocMagic’s industry-leading compliance, legal and technology teams proved that their systems were fully TRID compliant.  This enabled DocMagic to provide an insurance-backed guarantee on their products and services, including TRID disclosures prepared using SmartCLOSE™, which speaks volumes about the confidence they have in their solutions.”

“With the integration of the Premium Compliance Guarantee into DocMagic’s suite of services, significant lender risk is virtually eliminated,” asserted Melanie Feliciano, chief legal officer at DocMagic. “DocMagic has developed the most advanced and effective compliance solution in the industry – and we’ve backed it with a solid guarantee we are proud to offer our clients.”

About The Author

[author_bio]

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.

Our Compliance Journey

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John-ListonFor the past two years we’ve all been talking about TRID compliance. Now that the deadline has come and gone, I think it’s instructive to discuss how technology vendors handled this big challenge. In our case, when Associated Software Consultants, Inc. (ASC), the developer of the PowerLender Loan Origination System, first became aware of the looming regulatory requirements that comprise what we now know as TRID, namely the delivery of a new loan estimate and closing disclosures documents, they hatched the idea of developing a solution within the LOS itself, rather than have their clients rely on doc prep vendors. After combing through the initial regulation specs beginning in late 2012, ASC determined that there could be literally thousands of variations of the forms required to deliver the final documents. Maintaining a vast series of boilerplate docs and using line coordination to map the data was barely feasible and certainly not practical. They focused their energies on using PowerLender’s dynamic document generation capability, which employs XML mapping, to determine the correct series of documents to generate in order to fulfill the TRID requirements.

While working on development of the solution and subsequent upgrade to PowerLender, ASC wrote and distributed two comprehensive guides for their end users to aid in the preparation, implementation and testing of the PowerLender TRID solution. The first was the Setup guide, which outlined the procedures that users were required to execute ahead of the software upgrade. The second guide outlined in detail the procedures required to map the data generated in PowerLender to the forms, to be employed after the upgrade had been installed.

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Chelsea Groton Bank, a billion-dollar bank located in Groton, Connecticut, has been using PowerLender since 2003. Rachel Carlson, AVP and Retail Loan Operations Manager, is a self-described ‘technical person’ and ‘well versed’ in PowerLender’s business-rules flexibility commented on how ASC and PowerLender prepared their institution to generate the loan estimate and disclosure documents. Here’s her story:

We first began the preparation process for accepting the PowerLender TRID solution in the fall of 2014 when we began gathering information and analyzing the setup manual that ASC had prepared and distributed to PowerLender users. We then went through our own internal audit to determine the work that was needed to get our PowerLender system ready for the programming update. During this time, we consulted often with the PowerLender support team who were not only available at our convenience, but were extremely thorough with their answers and also provided clarity on issues to satisfy my ‘technical’ inquiries.

I can’t say enough about how useful the Setup guide has been, we wouldn’t have been able to do this project without it. It has been amazing.

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When the software upgrade was ready the next spring (2015), we installed it on our test environment. This is a very valuable feature of PowerLender, which allows us to simulate all of the aspects of our current configuration for use in testing without compromising our production environment. We then began mapping the required field using the mapping guide that ASC had provided. As soon as we had fields mapped, we began printing docs to see how things were coming out of the system. Our testing process continued in this manner, mainly printing and checking the docs as we made our way through our different loan programs that we offer.

In conjunction with the actual mapping and testing procedures, we have developed an in-depth training program for our staff based upon their roles. Our loan officers obviously need to be very familiar with the loan estimate and have the ability to explain it to borrowers, and all of our back office processors and underwriters will get an in-depth training as well. As for the closing disclosure, we are still determining what roles will receive the various levels of training that we have developed, while focusing on the ability to explain all the details to the borrower at the closing table. We have a group that has been creating our training program and it has been very essential in getting us ready.

We are fortunate to have been on this fast track for getting the TRID documents produced because it has allowed us to develop a thorough training program that is tailored to all the different roles we have at the bank. This has also helped tremendously to allay any fears the staff may potentially have developed over the past few months when they read or heard about potential changes to the regulations. This training has given them confidence to not only understanding the regulations, but providing confidence that they can handle them should they occur.

In talking with other colleagues who use different systems, I think we are so far ahead of them in terms of being prepared. As I said, the guides were very well put together and thought out and on the items where I had a little confusion, the PowerLender support staff was always available to help.

In implementing this change, everyone wishes we had more time. We did get a little reprieve from the CFPB, but I feel that the guides, the updates, and the rollouts of the system patches are examples of the commitment of the PowerLender people to getting their clients ready. The patches, which seemed to be issued every two weeks, were in direct response to PowerLender users who were testing the solution and reporting back to them what changes were needed and their response was phenomenal, I can’t say enough about the support we received from them.

We achieved success in part due to the commitment of our people to this project. This was a large undertaking for us because we offer a variety of products in PowerLender. Not only did we have to deal with this new regulation, which we understand is part of the territory, but we also had to maintain our lending operation as well. I cannot stress enough the efforts of our people and the PowerLender team that supports us. We strove to keep moving forward on this and when we encountered an issue, we were able to make adjustments and move on which, again, shows the dedication of everyone involved.

In terms of having a good relationship with a service provider, really any service provider, is the ability to have open, constructive communication from both sides. Having a service provider who is responsive is a huge part, as we have dealt with many who are not, but the important thing is dialogue. Every issue that I have come across, either with my end users or with setting up PowerLender, I have been able to either call or email and get a prompt response or engage in a consultation to work out the issue. As I’ve said, we have had non-responsive service providers in the past and when you encounter that, you just say ‘forget it’ and move on; however, this was not an issue with PowerLender, and we are thankful because we simply could not have just ‘moved on’ without their guidance along the process. Knowing that they were there for us lifted a burden from our shoulders.

What we hear from some of our common vendors that we share with our competition is that other lenders are saying everything from ‘yes, we’re ready and set to go’ to ‘I don’t know how this is going to get done…we’re not even close’ when they are asked if they will be ready for October 3rd. To be fair, it’s hard to gauge everyone’s true feelings because it hasn’t hit yet, so nobody really knows.

But I feel for us, having a well thought-out plan, specific setup and mapping guides, thoroughly tested software upgrades and timely updates coupled with highly interactive guidance and support makes a big difference and gives us a huge level of confidence that has made this large and complex project much more manageable.

We know we’re on the right path. We have the support of our LOS and the PowerLender people, and we’re going to get there together.

About The Author

[author_bio]

John Liston is a part owner of ASC, and directs the development of the PowerLender LOS. He joined ASC in 1979, after working as a journalist. He has been a vital part of the development and maintenance of ASC’s Loan Origination Systems for more than 35 years. John is a strong advocate of open source software and standards-based software architecture. He is ASC's primary representative to MISMO, and chairs MISMO's Business Rules Exchange Workgroup. John holds a BA in Economics from Northwestern University, and an MS in Journalism from The Ohio State University.

The Crisis Is Over

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According to the Security Management glossary, crisis management is the application of strategies designed to help an organization deal with a sudden and significant negative event.

A crisis can occur as a result of an unpredictable event or as an unforeseeable consequence of some event that had been considered a potential risk. In either case, crises almost invariably require that decisions be made quickly to limit damage to the organization. For that reason, one of the first actions in crisis management planning is to identify an individual to serve as crisis manager.

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Other crisis management best practices include:

>> Planning in detail for responses to as many potential crises as possible.

>> Establishing monitoring systems and practices to detect early warning signals of any foreseeable crisis.

>> Establishing and training a crisis management team or selecting an external crisis management firm with a proven track record in your business area.

>> Involving as many stakeholders as possible in all planning and action stages.

The field of crisis management is generally considered to have originated with Johnson & Johnson’s handling of a situation in 1982, when cyanide-laced Tylenol killed seven people in the Chicago area. The company immediately recalled all Tylenol capsules in the country and offered free product in tamper-proof packaging. As a result of the company’s swift and effective response, the effect to shareholders was minimized and the brand recovered and flourished.

I know what you’re thinking right about now: Why is he talking about crisis management? I’ve been in the mortgage industry for over 15 years now, and the reaction of lenders and vendors alike to any change continues to astonish me. In the mortgage industry any change is treated like a crisis and everybody quickly goes into crisis management mode.

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I ask myself time and time again: Why does this happen? For example, TRID is not a crisis. It is a big change, but it’s not a crisis. Long after the TRID deadline people will still need mortgages and lenders will be there to originate them. Nobody is going to die over this as was mentioned with the Tylenol crisis of the early 1980s. Everything will be just fine, trust me.

And after TRID there will be another regulation that spooks everyone. Here’s my advise: Instead of going into crisis mode, I hope the industry will choose to innovate instead. Use these new rules to genuinely improve the mortgage business.

About The Author

[author_bio]

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.

Doing The TRID Shuffle

The TRID deadline has come and went and we are all still here. We saw a mad dash on the part of mortgage lenders and technology vendors alike to comply with this new rule. They all danced around, did a little shuffle and by now everyone has found a dance partner.

It all reminded me of a prom. The technology vendors did there best to comply and stand out so they’d be picked to escort the most lenders to the dance. And in fact, lenders did make their choices.

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For example we heard that PHH Mortgage (PHH), one of the largest providers of residential mortgages in the United States, signed a multi-year license agreement to use DocMagic’s expansive set of products to help ensure compliance with the TILA-RESPA Integrated Disclosure (TRID) rule.

“We have worked closely with DocMagic for the last year to thoroughly evaluate, test and integrate their technology and compliance solutions, and we will use various components to ensure we are TRID compliant,” said Eric Sadow, chief compliance and fair lending officer. “We are confident that our use of the DocMagic technology and compliance solutions will meet our needs and the needs of our clients, regulators, investors, partners and borrowers.”

Did you get that? PHH worked on TRID for a year. Why? “Anyone working on TRID implementation will tell you that there have been many unexpected challenges,” said Gregory E. Teal, president and chief executive officer of Ernst Publishing. “We wanted to go live as early as possible so lenders can begin using the tool and testing their processes ahead of the CFPB’s deadline. I’m very proud of our team for getting everything together so quickly. The system is available now for lenders to use.”

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Ernst programs process an average of 150 million real estate transactions every year, industry-wide. Since the company was founded 26 years ago, Ernst has processed over 1 billion transactions. The firm estimates that its patented technology is in use for 90% of the nation’s new loan originations and refinance transactions.

Smart technology vendors not only helped their clients comply, but they also offered training. For example, Ellie Mae launched its Resource Center online for lenders to take advantage of the complete library of help resources.

“Our goal is to help mortgage lenders of all sizes feel prepared and confident for the RESPA-TILA Integrated Mortgage Disclosure Rule on October 3rd and beyond,” said Jonathan Corr, president and CEO of Ellie Mae. “We are able to offer comprehensive resources and training to help our customers prepare for this major change and we’re adding new resources to respond to feedback and concerns.”

“TRID rules are complex and affect all of the financial loan institutions’ – both originators and servicers – federal and state compliance tests; RxOffice allows users to ensure their processes are compliant,” added Andrew F. Campbell, counsel with Ober|Kaler. “Once the loans are run through the system, lenders or the servicers can immediately know if they are compliant or not and they can also know what they need to do to fix it so that they can be compliant.”

IndiSoft partnered with Ober|Kaler earlier this year to provide guidance and assistance to IndiSoft in enhancing two of its compliance modules, RxOffice Vendor Management Portal and RxOffice Compliance Portal, on all the current regulatory compliances.

“The industry is in a constant flux when it comes to regulations,” said Sanjeev Dahiwadkar, IndiSoft CEO and president. “Our platform and specifically our compliance modules make it easier for users and the executive management to keep up with the current compliance mix of its portfolio and help them in making right decisions. This gives them peace of mind and saves them the time, money and effort of trying to decipher complex regulations on their own.”

What’s my point in rehashing all this? My point is that this is a testament to this industry’s ability to tackle tough challenges. Now that the challenge of TRID is over I challenge lenders and vendors alike to do even more. Let’s move beyond TRID and really think about how we can improve the whole mortgage process. The CFPB hasn’t told us to do this, but why wait for them?

About The Author

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