The results of the Consumer Financial Protection Board’s
Paul Imura, the chief marketing officer, said for lenders to deal with the switch to a purchase-dominated market, they need to close loans faster. But the CFPB’s goal of protecting borrowers works against that.
Many of ISGN’s clients are finding they need to invest in compliance capabilities, but that can be a fairly costly proposition in and of itself, Imura said. At smaller or midsized lenders meeting the staffing and compliance expertise requirements could cost as much as $1 million per year.
He added compliance is the key reason why the cost to originate has increased. “It wouldn’t surprise me if the cost of compliance added 20 basis points of additional expense to the process,” Imura continued.
Among ISGN’s offerings to help lenders is a mock audit program. He said it was designed to give data analytics combined with loan origination system domain expertise to provide clients with a detailed view of their exposure.
It looks at originations along with a company’s policies, procedures and governance, to provide “a clear road map” to improve compliance, he said.
In a separate interview, Wil Armstrong, the CEO of Blueberry Systems, said he used to come to the secondary conference and talk about innovative loan products. Now the big issue is compliance.
That shift makes technology so crucial to the origination equation, he said.
On the third-party origination side, investors need to be more interested in the technology of their mortgage broker and correspondent originators. It is not just for regulatory purposes, Armstrong noted, but it is also a sound business practice.
From the mortgage broker side, the key to a successful relationship is how transparent is the data you send to your wholesaler. Armstrong’s recommendation: Make sure the data being sent to the investor are clean and transparent.
