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National Mortgage Professional
Oct 19, 2008

AARMR joins growing community of regulators improving customer protection by automating mortgage examinationsMortgagePress.comComplianceEase, AARMR, ComplianceAnalyzer, David Bleicken, CSBS ComplianceEase, a provider of mortgage risk management solutions, has announced that the Board of Directors of the American Association of Residential Mortgage Regulators (AARMR) has approved the adoption of examination automation solutions for its members, selecting ComplianceAnalyzer and RegulatorConnect to power a new era of mortgage lending oversight that is more comprehensive, yet requires less time and cost from the industry. ComplianceEase's technology platform will enable state-regulated mortgage brokers, lenders, and servicers to electronically transfer loan information to regulators, reducing costly dependence on paper files. Most importantly, the examinations themselves will leverage ComplianceAnalyzer's objective compliance reviews, which are also readily available to licensees through more than 30 mortgage technology platforms. "This initiative will dramatically improve mortgage regulation with faster and more comprehensive examinations," said David Bleicken, president of AARMR. "That means better protection for both consumers and global markets. This initiative also proves that the states continue to be at the forefront of regulatory innovation. This cutting-edge loan review technology builds upon the work the states have done in building the Nationwide Mortgage Licensing System and Registry, a sophisticated, web-based platform for mortgage licensing and supervision that will enable the states to track bad actors across the country and coordinate supervisory efforts. This fall we will, for the first time, be launching coordinated, multi-state examinations of a number of the largest mortgage companies. Collectively these initiatives form a powerful regulatory program that the states will be using together to regulate the mortgage industry more effectively." Neil Milner, president and CEO of the Conference of State Bank Supervisors (CSBS), addressed the state regulators' standardized approach to reviews, saying, "CSBS, AARMR and other regulatory agencies are working together across multiple states to improve regulatory enforcement and oversight in order to ensure the safety and soundness of these state-regulated financial institutions. By leveraging the latest technology to supervise and examine financial institutions in a seamless, flexible and risk focused fashion, consumer protection can be continuously improved." Following the selection of ComplianceEase by CSBS in April of this year, the new mortgage examination technology is already in use by many state banking/mortgage regulators. The regulatory community chose to leverage technology to increase the scope of examination from traditional sampling to upwards of 100% of loan portfolios. It also enables regulators to streamline their regulatory process through standardized examinations. Current plans call for all 50 states and the District of Columbia to sign on to the new AARMR and CSBS sponsored automated examination initiative by the end of next year. The ComplianceAnalyzer system enables regulators to unify oversight in ways that were not possible with previous manual examination processes. The system provides examiners with detailed loan-level audit reports that encompass Federal, state and municipal high-cost/predatory and rate spread regulations as well as license-driven state consumer credit compliance reviews of usury and interest rate limits, late charges, prepayment penalties, and allowable fees and charges. Additional tests of consumer-facing APR and finance charge disclosures are powered by ComplianceEase' proprietary Truth-in-Lending calculation engine. Moreover, all of the systems baseline regulatory reviews are standardized across the industry, for industry participants and regulators alike. Audits can be expanded to cover other areas of compliance such as Government Sponsored Enterprise (GSE) compliance guidance, guidelines for Federal Housing Administration (FHA) insured loans, and customized regulator-specific rules and policies. The regulators'initiatives will also employ the RegulatorConnect platform, which leverages ComplianceEases existing technology integrations and partnerships within the mortgage industry to provide state-regulated institutions with an easy way to electronically transmit loan information to state regulators. John Vong, CMB, president and co-founder of ComplianceEase, commented, "These initiatives the state regulators are embarking on represent the wave of the future for regulatory supervision. The old method of combing through a handful of paper files to identify violations, patterns and trends is simply too time-consuming to deliver cost-effective examinations. Using technology and standardized reviews should reduce the amount of time examiners need to spend on a given institution. Our analytic reports can point the examiners to focus in the risky areas that they need to spend time on, enabling them to 'do more with less.' The ultimate goal is to achieve efficiency, effectiveness, uniformity and standardization of oversight while reducing the cost and burden to regulators and to the industry." AARMR and CSBS have begun educating their member regulators about the new technology-based examination initiative through "Future of Mortgage Examination" panels and educational sessions at member meetings and conferences. The use of ComplianceAnalyzer and RegulatorConnect has also been incorporated into the curriculum of the "Advanced Residential Mortgage Examination School" offered to state regulators by CSBS. For more information, visit, or
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