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The Compliance Journal

The Compliance JournalRecent mortgage compliance activity

September 16, 2008



With increasing scrutiny of mortgage lenders and mortgage brokers, state legislators are ratcheting up regulations. But a host of service providers are promoting services to help mortgage companies comply with the stricter requirements.

MRG Document Technologies said today it offers initial disclosures to mortgage brokers in all 50 states. The disclosures, available online, enable digital delivery to prospective borrowers.

“During the past year, regulatory changes in states across the country have dramatically complicated the disclosure requirements for residential mortgages, especially for those originated by mortgage brokers,” MRG Group Chairman Terry King said in the statement. “Providing brokers and originators with online access to compliant disclosures is another way that MRG streamlines the documentation process for its customers.”

StoneWater Mortgage Corp. has implemented Mavent Inc.’s automated regulatory compliance, a press release yesterday said. The service will help StoneWater avoid funding loans that are not in compliance with Truth in Lending Act policies, Home Ownership and Equity Protection Act guidelines and consumer credit laws. It also ensures adherence to lender and broker licensing requirements.

“Mavent’s compliance rules are maintained by its in-house attorneys in coordination with its network of nationally recognized law firms,” the statement said. “A Mavent review replicates an audit performed by a team of the industry’s most knowledgeable legal experts, but at a fraction of the time and cost.”

Prohibited fees and usury tests are now included in Interthinx’s PredProtect Regulatory Compliance Suite, a statement Monday said. The enhancements, which cut origination costs and buyback exposure, warn users when fees on either the Good Faith Estimate or HUD-1 exceed state law fee limitations. Users are also warned when annual percentage rates or interest rates exceed usury limits.

Assurant Specialty Property and National ID Recovery announced yesterday the launch of a Red Flag ID fraud detection, notification and protection program for financial institutions and credit unions to comply with the FACTA Identity Theft Red Flag Rules by the Nov. 1 deadline. Assurant claims the offering is “the most comprehensive program available” while being priced low.

“Red Flag ID Fraud Solutions provides financial institutions the added benefit of data breach resolution services with no annual retainer fee,” Assurant said. “If a financial institution experiences a direct breach of data information, the program provides regulatory consulting, breach notifications to customers, a dedicated 800 line and call center support, and resolution and recovery service for all affected customers at the lowest cost per breached victim in the nation.”

Continental Airlines Federal Credit Union has purchased a license to utilize CompliancePal to comply with the FACT Act Identity Theft Red Flags Rule, Compliance Coach said in a press release today. The Web-based software walks users through a series of questions to determine the required risk assessment, the mapping of red flags to appropriate detection and response procedures, the written program, the training materials and the compliance status report.

eLynx said last week that its new watermarking capability for paper delivery customers simplifies and improves compliance with the Real Estate Settlement Procedures Act disclosure requirements. Documents are watermarked and image routed at the time of processing — providing an enhanced audit trail for the paper delivery channel.

“Not all consumers are ready to embrace electronic communications,” eLynx President and Chief Executive Officer Sharon Matthews said in the statement. “So we also offer an integrated paper delivery channel.”

Mortgage Bankers Association Chairman-elect David G. Kittle told the U.S. House Financial Services Committee’s Subcommittee on Oversight and Investigation that while the trade group supports improving the mortgage process and the ability of borrowers to comparison shop, it opposes proposed reforms to the Real Estate Settlement Procedures Act by the Department of Housing and Urban Development.

“HUD’s proposed RESPA reforms do not even come close to achieving simplification,” Kittle said, according to a copy of his prepared testimony. “They should be delayed and officials at HUD should work with the Federal Reserve on a joint and comprehensive effort to simplify and improve forms and disclosures.”

Kittle noted the Fed is responsible for the rules implementing the Truth in Lending Act, and conflicts between the HUD-1 closing statement and TILA documents will only confuse borrowers.

Debra Still, who testified on behalf of the National Association of Home Builders, warned RESPA changes proposed by HUD would negatively impact buyers of new homes, an announcement from that trade group said. Specifically, she was concerned about prohibiting builders from offering any incentive in exchange for a home buyer’s use of the builder’s affiliated mortgage company.

“Many home builders can document sales numbers in the hundreds that were originally scheduled to have been financed by outside lenders that failed to take place as promised and were subsequently ‘saved’ by the builder’s affiliated mortgage and title company at the eleventh hour,” Still said. “If they had used non-affiliated lenders, their mortgages would have had much less favorable terms.”

A common practice for builders is to charge buyers for title policies when the builder’s mortgage company is not used.

The American Association of Residential Mortgage Regulators awarded the 2008 Distinguished Service Award to Bill Warren, the chief compliance officer of Empire Equity Group Inc. — which does business as 1st Metropolitan Mortgage, an announcement yesterday said. Warren, who has 30 years’ experience, was recognized for many years of service to the group.

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