THE COMPETITIVE ADVANTAGE OF AUTOMATION
In today’s aggressive regulatory environment, new regulations continue to emerge and business programs change frequently, creating a constantly evolving set of rules and operational processes. As a result, compliance can be a difficult burden to overcome.
The key to addressing the challenges of lending compliance is to embed compliance within business processes, removing the time-consuming step of reviewing loans for potential fair lending and compliance missteps. This enables the compliance department to manage regulatory risk while enhancing the compliance culture throughout the entire organization.
Better controls through improved technology can arm an institution with monitoring tools that provide the transparency needed to measure fair lending compliance and the automated risk management tools to deliver compliance to the business lines as a valuable strategic asset. This enhances the ability to manage risks before they become regulatory failures.
An important aspect of such a program is avoiding an interruption in the sales process. An integrated, automated, real-time fair lending review—based on proven statistical methodology and informed with specific underwriting guidelines—allows lenders to prevent potentially discriminatory decisions and pricing without slowing the lending process down.
Automating fair lending management can result in significantly faster loan processing, through both retail and wholesale channels, while at the same time avoiding gaps in the compliance process. This can save thousands—or, in some cases, millions—of dollars in potential lawsuits, fines, and lost business due to reputation damage from a high-profile misstep related to fair lending.
By Todd Cooper, Chief Product Manager, Wolters Kluwer Financial Services | PCi
NEW ON-LINE EXECUTIVE BRIEFINGS
Wolters Kluwer Financial Services is dedicated to helping you reduce risk, increase efficiencies, and ultimately grow your business. As part of that commitment, we’ve developed a new series of informative briefings that are at the forefront of technology.
Our new On-Line Executive Briefings offer you a fast, efficient way to stay informed on the latest issues—without ever leaving your chair. Better still, they’re available for free!
Visit www.WoltersKluwerFS.com/briefing to learn more and to register for a free on-line briefing, including:
- Automating the Application and Early Disclosures Process: A “Win-Win” for Originators and Borrowers
Tuesday, May 2, 2006: 10 a.m. or 2 p.m. (EST)
Wednesday, May 3, 2006: 10 a.m. or 2 p.m. (EST)
- Reducing Risk and Realizing Data Security
Tuesday, May 16, 2006: 10 a.m. or 2 p.m. (EST)
Wednesday, May 17, 2006: 10 a.m. or 2 p.m. (EST)
- Implementing a Collaborative HUD-1 Process: Benefits and Best Practices
Tuesday, May 30, 2006: 10 a.m. or 2 p.m. (EST)
Wednesday, May 31, 2006: 10 a.m. or 2 p.m. (EST)
DOCUMENT CLASSIFICATION AND STANDARDIZATION
Roger Gudobba, Senior Principal with Wolters Kluwer Financial Services, recently participated in a panel discussion at the Mortgage Bankers Association’s National Technology in Mortgage Banking Conference & Expo.
As part of the panel, Gudobba discussed the need for, the problems with, and the possible solutions to the standardization of mortgage documents.
The Bottom Line
According to the Data Warehousing Institute, data quality problems cost U.S. businesses more than $600 billion per year.
“This is very important from a regulatory compliance standpoint,” Gudobba said. “As more demands are made upon you, such as Sarbanes-Oxley, the data becomes more important.”
Overcoming the Barriers
Although it sounds like a simple concept in theory, some barriers to standardization still exist. First, there is the sheer number of documents.
“The number of distinct loan documents currently stands at 2,000,” said Gudobba. “Identifying these documents in a consistent way is a challenge.”
Advances made in the mid-1980s have also led to standardization challenges.
Things used to be simpler. “When I started in the industry, we had a lot of preprinted forms,” Gudobba said. “Around 1986 - 87, laser printers came out, and it established a printer control language that enabled custom mapping.”
From a business standpoint, the custom mapping was beneficial at first because it allowed businesses to generate company-specific documents. However, over time, documents have become so specific that many have lost the ability to interact with other documents. This loss of interaction has slowed the standardization process.
“A couple of areas proved problematic,” Gudobba said. “Some documents were multi-state vs. state-specific; some were fixed rate; others adjustable rate; Fannie Mae and Freddie Mac have 64 different forms for adjustable-rate mortgages.”
A Look at the Solutions
One solution to these problems has been the development of Document Classification Guidelines by the Mortgage Industry Standards Maintenance Organization (MISMO).
In addition to these Guidelines, SMART Docs (that is: Securable, Manageable, Archivable, Retrievable, and Transferable documents) will play an important role because they bind data, presentation, and signature(s) into a single electronic file.
“SMART Docs is the next step,” Gudobba said. “They’re keeping the intelligence of the data moving forward.”
PAT HARTFORD NAMED MISMO ALL-STAR
Patrick Hartford, a Senior Business Systems Analyst for Wolters Kluwer Financial Services | VMP® Mortgage Solutions, has been selected by the Mortgage Industry Standards Maintenance Organization (MISMO) as one of its 2006 All-Stars.
The select group of All-Stars was selected for contributing to the task of automating the mortgage industry and helping move the industry ever closer to a truly paperless process.
Pat Hartford was recognized for the critical roles he has played, including contributing to the development of the SMART Doc specification, as well as currently serving as the Vice Chair of the eMortgage Workgroup. In his role as the Vice Chair, Hartford is working towards the adoption of the SMART Doc technology.
