In today’s mortgage business, Chief Technology Officers (CTOs) have their hands full. From the beginning, technologists working in the home finance industry had a tough job. First, they had to identify automation that would improve the lending process, get it implemented, and then get company personnel to adopt it.
While CTOs will likely always be focused on streamlining and improving the lending process, ensuring that the technologies implemented by their organizations improve compliance with regulatory mandates and evolving guidelines is of top concern.
Because automation, by definition, identifies common processes that are repeatable and then makes it easy to repeat them, a compliance error will propagate across the enterprise. This is a risk no lender can afford, so CTOs have become de facto compliance personnel, which has added to an already significant workload.
Naturally, any help third parties can offer the beleaguered CTO would be welcome. Document solution firms are in a unique position to offer significant compliance support. In fact, here are two ways the right doc prep partner can help CTOs with compliance.
Ensure upfront disclosures are delivered according to statutory guidelines.
The law requires that the lender issue disclosures outlining all of the terms of the loan and their cost over time, as well as an estimate of the costs involved in closing the loan on the Consumer Financial Protection Bureau’s (CFPB) Loan Estimate document. This document must be sent to the consumer within three days of the lender receiving a complete loan application.
By working closely with the right doc solution provider, the lender can get these documents dynamically generated by pulling information directly from the Loan Origination System (LOS) and sent electronically to their borrowers, where they can be electronically signed and returned. Should the borrower fail to accept them by the deadline (generally 48 hours), the doc prep firm can print the documents and mail them, providing the lender with proof of mailing and thereby ensuring complete compliance with the requirement.
Alert the lender of potential problems between the loan estimate (LE) and the closing disclosure (CD).
At least three days before closing, the lender is required under the TILA/RESPA Integrated Disclosure rule to again disclose costs to the borrower. The costs outlined on this Closing Disclosure form must match those on the LE. If they don’t, the lender may have to delay the closing.
The right doc prep vendor will have data integrity rules built into its system that will identify in advance whether there are any problems that require the lender to be notified. Unlike the lender’s LOS, the doc prep platform will not maintain records of borrower data. However, with a tight integration, the vendor’s dynamic document solution data quality tests will be valuable to the lender from a compliance perspective.
In today’s digital society, maintaining regulatory compliance during mortgage transactions is critical. While CTOs are often responsible for ensuring the technology utilized by their organizations adheres to compliance standards, the right doc prep vendor is the one that can demonstrate a commitment to deliver advanced technologies that meet and exceed regulatory mandates while also achieving the optimal customer experience and operational efficiencies.