In today’s financial climate, it is becoming more evident by utilizing bundled services from a single provider lenders will be able to serve clients more effectively, profitably and will emerge as industry leaders.
Why should you bundle services? First of all, one vendor equals fewer headaches. It standardizes operations and saves time. You don’t have to call, e-mail and wait for responses from multiple vendors. Secondly, it builds a stronger relationship. This makes for a more positive overall experience. Lastly, it helps you to stay in compliance. Compliance is always a top priority. Bundling services minimizes the risk of being out of compliance by having all your paperwork from one single source. Your chosen vendor should be constantly providing compliance information for your records.
Buying a home can be one of the most stressful adventures a consumer can embark upon. From choosing the home, negotiating the price, obtaining a mortgage loan, to securing ownership, there are many pitfalls that can derail the plan.
Consumers often mistakenly believe that it is clean sailing after the mortgage loan process has been started. If the credit score it good, they are good to go, right? Wrong. Credit education can help streamline the loan process. The more that the consumer knows on the front end, the easier the process will be.
When looking for a Credit Reporting Agency (CRA), there are a few things that you need to know. The Federal Fair Credit Reporting Act (FCRA) regulates the operation of consumer reporting agencies, and also affects you as a user of information. It regulates how a consumer’s information may be used, and restricts who has access to this sensitive information. In order to be in compliance, one needs to have a thorough understanding of the FCRA.
One must also know their state laws as certain states have passed restrictions in addition to the FCRA. Make sure to be familiar with any additional laws in your state, and follow these rules carefully to maintain full FCRA compliance.
There are negative actions that can be taken even after the mortgage loan has been applied for that can decrease or annihilate the chances of getting that loan closed. The Fannie Mae Loan Quality Initiative (LQI) is meant to keep the amount of loan buy-back low by verifying the quality of a purchaser before it closes. Debt monitoring allows loan officers to monitor their borrowers during the “Quiet” period between when the loan application is made and when it closes. The borrower is monitored on a daily basis and if there is a change in their credit history, the loan officer is notified within 24 hours.
Accessing the tradeline changes by pulling a soft pull credit report is another method of satisfying the Fannie Mae LQI. Soft pulls—as they are known in the industry because they do not have an impact on a person’s credit score—instantly accesses any credit history changes between origination and closing.
Automated appraisal platforms
Don't risk the stiff penalties being imposed for non-compliance. Automated appraisal ordering platforms are a great way to maintain compliance for Uniform Collateral Data Portal (UCDP) and the Dodd-Frank Act. Look for a vendor that allows you to use your own appraisal vendors and allows you to maintain control of the process. The best product will be one that maintains appraiser rotation with total transparency, logs all communication between the lender and appraiser, and allows the appraisal to be uploaded straight to the UCDP. A certificate of compliance or some other form of written documentation should be provided with every appraisal that is generated through the system.
Look for an automated appraisal platform that lets you choose if you want to override service areas for all of the appraisers in your panel, or only certain appraisers. You have the option to have a “mixed” panel: A panel where you have specified service areas for certain appraisers, but kept the appraiser-entered service areas for others.
When you have controlled the service areas and qualifications of appraisers in your panel, the areas that you have entered will override the appraiser’s settings in the appraiser profile. This will give you more control over your order processes to make sure the appraiser with the right expertise gets the order.
Regulators and secondary market investors are requiring originators to validate more of the borrower and property data using independent third-party sources to help combat this trend. With the changing regulations loan officers must be constantly aware of growing fraud trends.
Approximately 60 percent of mortgage fraud includes ID discrepancies. It is a good idea to implement an automated investigation of the borrower’s identity into your best practices. Utilize a system that instantly searches millions of databases and validates the person’s name is actually connected to the Social Security Number, address, phone number, date of birth, etc. This will allow a lender to easily catch and circumvent high-risk identity mortgage fraud in close to nine out of 10 instances.
Tax return verifications are a great way to combat income fraud. Look for an easy to order platform, from which you can order directly. Your vendor should review the documents before submitting to ensure that the IRS does not reject the order. The IRS will still charge you a processing fee, even if they reject the order.
Social Security verifications prove that the person across the desk from you really is who they say that they are. Easy-to-read reports add that extra layer of protection to make sure that you have covered all your bases.
Mortgage verifications will verify mortgage payments, payment history and the name of the creditor. Employment verification checks dates of employment, salary and the position held. Verification of deposit will verify funds in a checking or savings account and the current balance.
Over the last several years, FEMA has made 83,000-plus flood map panel changes affecting 92 percent of the U.S. population. This means millions of properties may have a flood status change. According to the FDIC Annual report for 2011, 80 percent of the fines issued by the FDIC in 2011 were flood related. The Biggert-Waters Flood Insurance Reform and Modernization Act passed in June 29, 2012 included an increase for penalties against lenders from $350 to $2,000 for each flood violation and eliminated the annual cap on flood violation fines. Ease your compliance worries by signing up with a vendor that has the dedicated staff and funds.
Make sure that your vendor is partnered with a reputable flood certification vendor. Flood Certification has improved greatly with regards to technology. Vendors no longer are pulling actual maps to locate specific properties. Everything has been digitized, so information can be gained within seconds. Ninety-five percent of flood certifications can come back within just a few seconds. Your flood certification portfolio should have the latest flood data throughout the entire life of the loan and will also make sure you receive any revised flood certifications within 60 days of the new maps becoming effective so you can take the appropriate next steps as quickly as possible.
With new regulations being implemented daily, there are more requirements than ever to get a loan approved. Bundled services are the way of the future. They reduce turnaround time, improve productivity, improve the bottom line and keep you in compliance. By utilizing bundled services from a single provider, Lenders can set themselves apart in a highly competitive market.
Johnna Leeds is vice president of compliance for Data Facts Inc. She has been with Data Facts since 1996. She is a member of National Association of Professional Background Screeners (NAPBS), and currently serves on the NAPBS Best Practices Group, Litigation Avoidance, Criminal Records Reporting Practices and Breach Prevention committees. She may be reached by phone at (901) 685-7599 or e-mail [email protected]