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Mortgage Compliance News | Mortgage Compliance Newsletter | Mortgage Regulations
News about complying with mortgage laws, rules and regulations.

Mortgage Compliance Update

Recent mortgage compliance activity

Dec. 7, 2010


photo of Paula Parisot
Paula Parisot

Several resources have been made available to help mortgage firms comply with complex new regulations and legislation. The media are available in multiple formats including Webinars, audio conferences and white papers. Traditional service providers are also touting their solutions.

A study released by the Mortgage Bankers Association found the statistical analysis of discrimination and credit risk data may be flawed -- skewing the results to the point that mortgage lenders are subject to false accusations of impropriety. The trade group's Research Institute for Housing America sponsored the 56-page special report, A Review of Statistical Problems in the Measurement of Mortgage Market and Credit Risk, conducted by Professor Anthony M. Yezer of George Washington University.

Michael Fratantoni, MBA's VP of Research and Economics said mortgage lenders are committed to fair lending, paying the cost for resources that ensure compliance. Fratantoni added, "It is particularly disheartening then that lenders are often the subject of ill considered accusations regarding discrimination, accusations based upon analyses that lack statistical rigor."

Sweeping changes in the Dodd-Frank Wall Street Reform and Consumer Protection Act could put lenders at risk for non-compliance, according to LoanSifter Inc. The technology service provider said mortgage lenders are not automated efficiently enough to comply with the new regulations.

LoanSifter joined Wolters Kluwer, Compass Analytics and Del Mar DataTrac in sponsoring a four-part Webinar series on Dodd-Frank Implications. Topics to be covered include anti-steering legislation, loan officer compensations rules and hedging.

To keep up with the changes, Wolters Kluwer Financial Services updated its newest release of ComplianceOne, Version 2010.1.

Using a single-platform mortgage process could help lenders remain compliant more effectively, according to Fiserv's Best Practices Guide. The financial services technology company said lenders who use multiple loan origination platforms could be at risk of non-compliance if each stream is not up-to-date with the latest regulatory or compliance changes.

The 8-page guide explains this year's Real Estate Settlement Procedures Act updates and changes to policies and procedures for the Good Faith Estimate. Also included are form additions and revisions to the new GFE form, HUD-1, and other legal, escrow and tax reporting documentation; auditing changes; quality control processes; and training for the new RESPA rules, according to Fiserv -- a Mortgage Daily advertiser.

The guide also notes, effective Jan. 11, 2011, lenders will be required to implement and enforce the new requirements of Section 615(h) of the federal Fair Credit Reporting Act, with specific regards to providing risk-based pricing notices to borrowers. The notice informs consumers of any potentially negative information on their consumer report.

Informative Research recently published Risk Based Pricing Notice for Mortgage Lenders White Paper, which explains that while the risk-based pricing rule applies to all lenders, there is a variation on the requirement for mortgage lenders. The white paper reportedly provides specific information about what lenders are required to provide borrowers.

The Encompass Assured GFE service is now backed by a ClosingCorp compliance guarantee. The service is powered by's SmartGFE.

Hartford National Title last month launched its new GFE and HUD-1 title calculator to help lenders with increased disclosure standards. The firm said its OneSourceQuote provides users with the reissue rate calculation on refinances and exact recording fees to help ensure lenders would not be "over-disclosing" with higher than actual settlement charges on the GFE.

And to learn more about new RESPA requirements and changes to closing statement changes this year, Research and Markets has recently made the audio portion of Navigating the New Good Faith Estimate and HUD-1 available for purchase. The event, held earlier this year, can be downloaded for a fee.

Chief Economist Jay Brinkman testified last September at the Federal Reserve Board hearing, Potential Revisions to Regulation C – Implementing the Home Mortgage Disclosure Act. He said that to lessen the need for additional resources, the Fed should use the existing Mortgage Industry Standards and Maintenance Organization Inc. to determine definitions and file formats for potential data items. In addition, he said the industry should use the current uniform mortgage identification number system issued through the Mortgage Electronic Registrations Systems, Inc.

"I cannot stress enough the extent of the regulatory burden that HMDA and other reporting and compliance requirements place on the industry, Brinkman said in his testimony. "The largest shares of investments in technology today are going to reporting and compliance needs, with no direct benefit to the companies or their customers."

He said the MBA had no objection to the addition of HMDA data elements as long as it was consistent with the stated purposes of HMDA, and that the changes would not pose an unnecessary burden on lenders. He noted, however, the additional data may not be credible due to the lender's varying credit models.

Lastly, Brinkman also cautioned the Fed on what data should be made public and suggested a review of what multifamily data should be reported due to past discrepancies.

A joint letter seeking a revised implementation schedule of the Interim Final Rule issued under the Mortgage Disclosure Improvement Act was submitted to the Fed by the American Financial Services Association and the Consumer Mortgage Coalition. The organizations said that while they support the need for improved consumer mortgage disclosures, they did not believe it possible for creditors to fully comply with the new rule by its planned implementation date of Jan. 30, 2011.

The two groups cited concerns that industry technology could not be updated in time for the implementation date; that the RESPA already requires the same disclosures as the MDIA; and that some of the language needs clarification before it can be implemented. It was requested of the Fed to either approve the provisions of the GFE and HUD-1 to meet MDIA requirements, or the addition of 13 months to meet implementation guidelines.

A similar letter signed by the American Bankers Association, MBA and, again, the Consumer Mortgage Coalition, was sent to the Fed requesting that the implementation requirements be voluntary on Jan. 30, 2011.

And several associations banded together to request the integration of RESPA and Truth-in-Lending Act. Among those signing off on the request were the American Bankers Association, American Financial Services Association and the Consumer Bankers Association. The Consumer Mortgage Coalition, the Independent Community Bankers of America and MBA also were among the signors.

The Department of Housing and Urban Development recently issued a rule interpreting certain provisions of RESPA regarding the payment of fees to real estate brokers and agents by home warranty companies. HUD decided no changes were needed to the rule and that the payment of a "kickback" to a real estate broker or agent in exchange for marketing a home warranty is a violation of section 8 of RESPA, whether it is a flat fee or a per transaction fee.

Paula Parisot has been covering the mortgage industry as a reporter for since 2004.

e-mail Paula at: [email protected]

Financial Regulation News | Mortgage Regulations
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