ATLANTA—Headhunters are looking for any experienced, competent compliance person to help lenders deal with the new regulatory and business environment, an executive with Wolters Kluwer Financial Services said in an interview during the Mortgage Bankers Association’s annual convention here.
This is because the changes are putting an incredible compliance burden on the individual lender, said Edward Kramer, executive vice president, regulatory programs.
He has been in the mortgage business on both sides of the regulatory line since the early 1970s and there have been no changes as dramatic as the ones being brought about by the Dodd-Frank bill. Risk retention, he declared, has lenders “on the edge of their seats.”
The industry has to prepare itself for the changes, but there is still so much uncertainty.
Yet, Kramer continued, there are a lot of areas where there is certainty, such as the risk retention rules. This will change the way loans are written.
Lenders have to “adapt or die” and the convention is full of attendees “who don’t want to die.”
And he noted he hadn’t even gotten around to discussing possible changes in the Home Mortgage Disclosure Act and the Community Reinvestment Act.
Wolters Kluwer is looking to give mortgage lenders tools for regulatory compliance as well as the ability to take advantage of changes in the rules.
It is not just about compliance with the regulations that federal and state governments have for the industry, but it is also about compliance with the lender’s own workflow policies and procedures, explained Jason Marx, vice president and general manager, mortgage.
Dan Sanden, senior product manager, integrated solutions, observed the workflow process at a number of lenders and at some the compliance procedures was merely putting a tick mark on the document.
One of the reasons why the robo-signing problem is happening is because the process in the upfront part was not done properly.
He has talked with some quality control departments where the errors are in the double-digit percentages. In addition, 75% of lenders today are still using paper files, he learned.
Making the process virtual, Sanden said, is a higher priority than working on e-signatures. He was surprised that during the process files can get temporarily lost.
Another big pain point is collaboration between originator, processor and underwriter during the origination process.
To help lenders in this area, Wolters Kluwer limited released its OneFile solution in August, after completing the alpha testing phase with four lenders.
Now it is in the beta phase, which will let the company tweak it even further, said Marx. The product is not a closed system, he explained, adding it will work with any loan origination system or point-of-sale system.
Sanden said the compliance audit trail has not been robust, and the company’s customers are asking for it, so Wolters Kluwer built it into the product.
The upshot of all the changes with Dodd-Frank, said Kramer, is that the industry could see fewer people having access to credit. But, he continued, maybe that isn’t so bad.
