When it comes to compliance with rules that have been taking shape over time such as the qualified mortgage definition, appraisal regulation and Truth in Lending Act/Real Estate Settlement Procedures Act reform, vendors have some recommendations for how technology can help.
When it comes to the changing regulatory landscape, automation is playing a key role as it can tell appropriate users when to reference and act on rules as they stand at the time of action, as well as record and and measure compliance performance, said Sanjeev Dahiwadkar, CEO of
This is in contrast to the past, he said in an interview.
“When we talk compliance historically compliance has always been looked back as something after the fact,” said Dahiwadkar, noting that is no longer the case.
As an example he noted how automation can be used to qualified mortgage regulation that has been in development.
Certain loan product features determine whether a mortgage is in the protected “QM” category, and technology can provide cues and supporting material for reviews used to make such determinations as part of the workflow in such a way that “anyone looking at after the fact will know” this was done.
Technology also can stop users from making mistakes in compliance, by for example, not allowing a loan to proceed in the origination process if the right steps have not been taken, he said. Parameters for those steps can be set by whatever law firm or legal expert is responsible for a company’s compliance.
Vladimir Bien-Aime, president and CEO of Global DMS, also said in a separate interview that compliance and technology have become more interlinked for lenders and vendors as rules change.
He said this is particularly true when it comes to appraisal regulation, which has largely shaped the role of vendors is this space.
“There are so many things changing. For us it really started with the Home Value Code of Conduct going into Dodd-Frank,” he said. “We as a company have to focus on compliance, not only from a technology perspective but from an education perspective. If anything should happen we have to make sure our clients are prepared.”
To address this need, “We do things like incorporate best practices into our technology,” said the Global DMS executive. He said that the company has been working to incorporate compliance with everything from individual state appraisal rules to federal ones into technology that guides lenders’ workflow.
He cited as example of how automation can be cost-effectively applied to compliance as regulations change its use in conjunction with the addition of a requirement to ensure appraisals are delivered to borrowers, something lenders can be fined for not complying with.
By making this an email feature built into workflow that records this compliance, Bien-Aime said the company was able to automate a compliance need that might otherwise be handled at a higher cost through additional staffing.
Other examples of how technology can help with appraisal compliance can include its use in monitoring appraisers to ensure they have qualifications such as proper licensing, objectively measuring overall appraiser performance, and as a basis for interactions between parties in the process governed by rules.
“Technology can really come to the rescue,” said Closing Corp. president Paul Mass, whose company provides data and technology that has supported the need for more accurate closing cost estimates that have been tightening due to regulatory reform that levies monetary penalties for inaccuracies.
Mass said there are some hurdles to its use and to adapting to a changing regulatory landscape in general, but clear monetary incentives tend to trump these.
“It’s human nature to not want to change the way you do things. People sometimes are afraid of technology. They certainly do not always want to spend money on technology unless it’s going to save them money in the long term,” he said.
