Mortgage lenders are scrambling to keep up with new and evolving financial regulations, and service providers are constantly developing tools to help them.
The top regulatory difference between depository banks and mortgage bankers is that all states treat each lender differently, according to Digital Risk Chief Legal Officer Debbie Hoffman.
Since each state might interpret a federal law differently, different mortgage compliance policies and procedures could be required for banks and non-banks, she said in a written statement.
No. 2 on Hoffman’s list is systemic regulatory risk posed by vendors based on the states where they operate.
“Banks are subject to both ‘trickle up’ and ‘trickle down’ examination/audits from both state and federal regulatory bodies, and thus it is critical that banks assess the existence and depth of regulatory knowledge and compliance of a mortgage company or other vendor,” she wrote.
Hoffman highlighted more stringent licensing requirements for mortgage loan originators at non-bank lenders. They are required obtain an individual license for each state they operate in. Additionally, non-bank lenders must hold an MLO license in addition to the individual originator licenses and report origination activity.
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Electronic testing that aids lenders in meeting the Consumer Financial Protection Bureau’s Qualified Mortgage standards were announced last month by Brooks Systems.
Through the BrooksWebCalcs web-based application that is embedded with high cost loan analysis, lenders can ensure that their loans are completely compliance with all federal, state and local lending regulations, the Norfolk, Va.-based company said in a May 21 news release.
Brooks Systems says that its service tests and verifies maximum 43 percent debt-to-income ratios, loan tolerance and the maximum points and fees based on loan amounts. Also tested are compliance with Fannie Mae and Freddie Mac requirements; higher priced loan regulations; and requirements for amortization, interest-only, and balloon loans.
Nearly 50 people attended CONNECT 2014 last month in Colorado Springs, Colo. The event was held for customers of SLK Global.
The biggest concerns voiced by the senior banking and financial service industry executives in attendance were compliance and increasing cost pressures. Other concerns included interest rate fluctuations, margin pressures and the need to create innovative models to service customers.
But the biggest issue by far was sweeping financial services reform enacted by the federal government over the past two years, which SLK Global Chief Executive Officer Gopal Amin said threatens the viability of banks and financial services companies.
Amin noted that potential solutions discussed at the event included ‘transformational change’ that helps executives visualize a better way of doing business and bring together the tools and resources to implement the shift.
SLK said that its SmarTrans engagement model helps to maximize business resources and improve processes while reducing costly mistakes.
Integrated disclosure requirements for the Truth in Lending Act and Real Estate Settlement Procedures Act go into effect in August 2015, and Wolters Kluwer Financial Services is helping lenders keep up with the rule’s requirements.
A new TILA-RESPA Resource Center from the Minneapolis-based company promises to help lenders become more informed about the regulation and stay current with changes.
“The introduction of this new resource center answers a call by our customers to provide them with more information and clarity around these regulations,” Wolters Kluwer General Manager of Residential Lending Art Tyszka said in the announcement. “Our compliance experts have invested thousands of hours in deep analysis of the rules, which puts us in a unique position to contribute meaningful guidance and help alleviate some of the burden faced in preparing for these changes.”
