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The Compliance Chronicle

The Compliance ChronicleRecent mortgage compliance activity

February 16, 2009

By staff

Three compliance service providers are bragging about more than 200 new customers they collectively added last year. In other recent compliance news, one group is asking for changes to updated Regulation Z requirements while a New York firm is warning about complying with federal licensing requirements.In a letter to the Board of Governors of the Federal Reserve System, the Consumer Mortgage Coalition said that a proposal to amend Regulation Z in order to implement certain provisions of the Mortgage Disclosure Improvement Act should allow for a waiver of a mandatory waiting period for reasons that include avoiding foreclosure. The group also requested that decreases in the annual percentage rate don’t trigger a new waiting period.

Other issues outlined by the coalition were using the most recent — and not the earliest — disclosures to determine whether accuracy, consider three days from the date the disclosure was sent as the receipt date, and align Regulation Z with the Real Estate Settlement Procedures Act.

A recent bulletin issued by Lenders Compliance Group Inc. indicated that every residential originator must be either federally registered or state licensed by Aug, 1, 2009, under the Secure and Fair Enforcement for Mortgage Licensing Act of 2008. The act is Title V of the Housing and Economic Recovery Act of 2008.

States that follow model legislation already approved by the U.S. Department of Housing and Urban Development will be considered compliant with the Safe Act, according to Long Beach, N.Y.-based Lenders Compliance. Originators in non-compliant states may be subject to a licensing system implemented by HUD separately for each noncompliant state.

A new Red Flag Tool Kit for Mortgage has been released by Wolters Kluwer Financial Services, a press release last week said. The offering seeks to help mortgage lenders and brokers quickly comply with the new Red Flag Rules under the Fair and Accurate Credit Transaction Act.

One version of the tool kit is aimed at mortgage lenders, while the other targets mortgage brokers. The service includes a template set of policies that customers tailor to their own specific requirements, Wolters Kluwer said. It additionally includes Red Flag forms, checklists and employee training resources.

The Minneapolis-based service provider said the new Red Flag Rules will be enforced starting May 1.

The Texas Bankers Association has endorsed several of Wolters Kluwer’s mortgage compliance documentation solutions, Wolters Kluwer boasted in a press release last month. The trade group had already endorsed the company’s PCi compliance analytics solutions.

DocuTech Corp. recently tooted its own horn — boasting 89 new ConformX mortgage lender customers last year. Its success was attributed to compliant loan documents that are less labor-intensive that those of its competitors.

“Because of the time saved and the lower cost of the documents, ConformX has paid for itself in only a few months,” DocuTech customer and Parkside Lending Chief Executive Officer Matt Ostrander was quoted as saying in the announcement. “We’ll save $40 per loan file, which over the course of the year will equal hundreds of thousands of dollars.”

Idaho Falls, Idaho-based DocuTech also said the latest version of its ConformX generates compliant closing documents from the Internet.

ComplianceAnalyzer has been added to Mortgage Banking Systems Inc.’s ProClose Platinum, a press release last month said. The enhancement to the online document preparation system ensures compliance with federal, state and local high-cost, anti-predatory lending laws as well as TILA, HOEPA and GSE requirements. In addition, it will enable users to report directly to state regulators by the second quarter.

ComplianceEase said last week that its ComplianceAnalyzer LIFTmeets the new due diligence requirements recently announced by the three major credit rating agencies. ComplianceEase explained that the agencies will require that a competent legal staff monitor compliance due diligence on residential mortgage-backed securities that are rated.

The San Francisco-based firm — which reported that nearly 150 financial institutions and service providers became new customers last year — said it will cover losses of as much as $250,000 per loan from losses arising from fines, settlements, refunds and related costs on loan-level compliance violations.

QuestSoft also touted a new customer: HomeTrust Mortgage. The Houston-based retail lender, which operates 30 branches, has started utilizing the Compliance EAGLE platform, QuestSoft announced. The system was integrated with HomeTrust’s MORvision loan origination system.

HomeTrust executive Patricia Gustafson reportedly said that the platform enabled their quality control departments to quickly and thoroughly review all loans in various phases of production and underwriting. She also said the company was motivated because its investors use the same compliance system.

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