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ComplianceEase has announced that it is offering a comprehensive insurance-backed warranty program for loans that have been audited by its ComplianceAnalyzer solution. The program, AssureCert, provides a warranty for compliance defects, including the new TILA-RESPA Integrated Disclosure (TRID) and Qualified Mortgage (QM) rules, as well as federal and state consumer lending and high-cost laws and regulations. This versatile program may be used as compliance repurchase relief for secondary market transactions.
The program provides a maximum benefit of up to $50,000 per loan for a seven-year period, and is backed by an A.M. Best A-rated insurer. Under the new policy, there is no per claim minimum or deductible, and the warranty is transferable to secondary market investors or servicers.
A wide range of loan products are eligible: First and second liens; purchase, refinance and equity transactions; conventional, FHA and VA loans; and all property types. The warranty does not require minimum credit scores or place limits on loan-to-value.
AssureCert provides protection to lenders and investors for financial losses from fines, penalties, restitutions, judgments, defense costs and reasonable plaintiff's attorney fees from actions brought against the financial institution for specific regulatory compliance violations that are not reflected on the ComplianceAnalyzer report for a covered loan. AssureCert also covers lack of marketability of an affected loan in the secondary market, due to compliance defect-related repurchases from investors. ComplianceEase noted that the per-loan AssureCert fees are only a small fraction of the potential liability in the event of a defect.
AssureCert offers significantly broader coverage than traditional warranty coverage for software products, which typically only assure that the software functioned as designed, and do not guaranty the quality of the results.
For example, AssureCert will cover losses that can still occur when a regulator or court unexpectedly contradicts a widely held regulatory interpretation. Further expanding the scope of coverage beyond typical warranties, AssureCert can also be transferred to the purchaser when a loan changes hands in the secondary market.
“The new QM and TRID rules have exposed lenders and investors to civil lawsuits, as well as fines and repurchase risk,” said John Vong, president of ComplianceEase. “Our insurance-backed AssureCert warranty will offer our clients—both large and small—additional protection and peace of mind. Over time AssureCert may also come to be used in the secondary market as a credit enhancement for structure transactions. Finally, the amount and scope of the coverage further attests to the reliability of the complete suite of ComplianceEase’s solutions.”