Smooth Sailing With New Compliance Tools By Greg Holmes
MISSOURI MORTGAGE PROFESSIONAL MAGAZINE
control process, review their prefundIncreasingly stringent new regulations ing quality controls, and have written and recommendations are simply a procedures in place for how third-party fact of life for today’s mortgage profesoriginators will be approved. sionals. Whether the focus of your business is on meeting the needs of repeat customers or you are actively seeking The Desktop Underwriter now looks for discrepancies between data eleto introduce yourself to new clients, ments and elements at loan delivwhen it comes to compliance, we’re all ery in more than a dozen additionin the same boat. And right now, that al warning areas. boat is sailing in uncharted waters. This summer, mortgage professionals have been familiarizing themselves Additional challenges with the ins and outs of Fannie Mae’s Mortgage professionals also must take new Loan Quality Initiative (LQI) and into account the more stringent selling requirements that Freddie the impact it is going to Mac announced in its Aug. have on their interactions 16 bulletin which applies with applicants. Fannie to mortgages with settleMae issued these requirement dates on or after Dec. ments and recommenda1, 2010. A key provision of tions in an effort to the updates outlined in improve compliance with Bulletin 2010-19 revises its eligibility and underrequirements for inquiries writing guidelines, havon a borrower’s credit ing determined that comreport amongst others. pliance will help curb the Lenders now will be rise in loan repurchase required to look into the requests to lenders. borrower’s credit report Mortgage professionals “Mortgage profesinquiries made in the prenow are expected to take sionals need not feel vious 120 days, rather a number of additional at sea over recent than the 90 days previousverification and qualificaindustry changes as ly required. If the borrowtion steps as they work long as they have the er was granted additional with their applicants to proper tools at their credit, the lender will be reduce the risk of buydisposal.” required to obtain verifibacks. They are now digcation of the debt, and ging deeper, starting with the prospective borrower’s identifying include the debt in qualifying the borinformation, gathering more detailed rower. This revised requirement will information about the property and apply to all loans, not only manually appraisal, and scrutinizing the appli- underwritten loans. These required extra steps have the cant’s credit profile both at the time of application and again just before clos- potential to slow down applications and weigh down a time-strapped ing. Changes we are seeing include: office’s productivity unless the most A borrower’s identity now must con- up-to-date resources and a smart plan form to federal documentation require- of action are in use. Fortunately, the credit-information ments. He or she must have either a valid Social Security Number or individ- industry has also been evolving rapidly this year, introducing a variety of tools to ual taxpayer identification number. help mortgage professionals successfully A property unit number must be pro- navigate today’s compliance environvided if the property on a mortgage ment. These new technologies and application is part of a multi-unit enhanced tools enable mortgage professionals to stay compliant and, at the same development like a condominium. time, keep their profitability on track. All debts incurred by the borrower up to the mortgage closing date Detailed reports, rapid must be disclosed on the applicant’s response times final application and included in One of the most valuable tools for ensuring the loan qualification. It also is up compliance is a report that allows mortto the mortgage professional to gage professionals to easily compare a have systems and controls in place credit report that was pulled during origination to one pulled at the time of closing. to evaluate those liabilities. These reports can be delivered in just sec Mortgage professionals’ quality control onds and include such important details as process requirements have been a credit score comparison, credit score facrevised, including the timing of quality tor comparison, trade line comparison, control reviews after closings. Offices continued on page 8 now are expected to audit their quality
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