A solution provided by International Document Services Inc. has allowed Mortgage Network, a New England-based lender, to pare down redundant systems, which among its other benefits, helps the company to remain
Previously, Mortgage Network was entering data manually into three separate databases and using two systems for processing loan data and ensuring compliance.
Christine Terranova, Mortgage Network’s director of operations, said costs have been reduced because the company is no longer paying for a separate compliance check for each loan.
She said her company started with IDS within the past two years and the relationship has improved efficiency in the origination process.
From a compliance standpoint, Mortgage Network knows instantaneously when putting information into the system a loan might cross the threshold into being considered a higher-cost mortgage.
The system also notes any changes in the loan which might cause the good-faith estimate to be reissued.
And when it comes time for closing, the system not only notes any fee issues, but informs the company of any state fee regulations involved, Terranova said. She pointed out that in Massachusetts, the state requires certain questions to be asked of the borrower when they are doing a refinance.
Knowledge of such details on the state level might not be common for most small to midsized lenders, although Terranova added the Mortgage Network is able to have its own legal department which can research legislative updates.
Other companies, she added, may not be able to afford this and they need a partner like an IDS to help keep them informed and keep their systems current.
“You have a sense of security that you are compliant with your loan,” she said.
A compliance error can cost a company the balance on a loan it funded, and for smaller firms that could be the end. “You need to know from the very moment you issue your disclosures” if you might have a high-cost mortgage for example.
The integration allows Mortgage Network to make sure of such things such as the disclosures have been done properly and in a timely fashion, Terranova pointed out.
IDS has its own compliance department which does training with the company’s support staff, notes IDS executive vice president Mark Mackey. Everyone is trained on basic compliance questions because the focus now is so much more on the issue than it was in the past.
That is not to say that compliance was ignored, but it wasn’t at the forefront like it is now, he said, adding “with that change, we’re not just a document provider in our minds anymore; we are a provider compliance as well.”
IDS’ system has been built around making sure the documents are compliant, the data going into the system is compliant and that people understand what tests are being run and why. In the past, documents were treated as a commodity and people didn’t take the time to look at them. Instead of verifying the data which was on them, the checks took place “after the fact,” after the loan closed, Mackey said.
With the rule changes, people realize now what data is placed on the documents is locked-in. So now people are making sure the data going in is both accurate and compliant and that they are being delivered appropriately, he said. And from a regulatory standpoint, examiners are now looking at data on the docs for compliance whereas in the past they were concerned about the documents being in the loan file.
As for Mortgage Network, the move from having to work with multiple systems to a single data set has enabled them to cut down on inadvertent compliance errors from typos. “If you have a typo, it can get ugly,” Mackey said, pointing out that a single error could be costly, depending on where the mistake is made.
Compliance has to be a part of the process, because if loan officers have to think about such issues, things can get jammed up.
