Welcome to the second day of my series of checklists, designed to help you break your Fair Lending risk assessment into smaller chunks. Today’s focus is on the execution and management of the TPO. As stated in yesterday’s article, the American Bankers Association has done a great job of defining these lists for bankers, and I am adjusting their suggestions to fit mortgage bankers.
This is probably the toughest part about the entire TPO management process. On one hand, you want to work with a broker who can send you business, because that is how you make money. On the other hand you are ultimately responsible for what they send to you, so you are going to be expected to demonstrate how you handle TPO oversight. One brings in business, and failure to demonstrate proper oversight can put you out of business!
⃝ Do you have a complaint system set up to monitor customer complaints regarding the TPO? This should include complaints from the staff of the TPO and the borrowers. What is the complaint system, how are they handled and how are complaints addressed and resolved?
⃝ When a weakness in the TPO is discovered, how is this promptly corrected?
⃝ Do you have a formal re-approval process each year? Do you perform a formal risk assessment quarterly with year-end results, and use that information to determine the re-approval?
⃝ Are the TPO Fair Lending policies available for your review? Do they have Fair Lending policies?
⃝ What type of Fair Lending training do they give to their employees? Have you reviewed that training, and have documentation that everyone receives it? Does the training cover legal as well as logistical fair lending issues?
⃝ What controls, testing and monitoring do your TPOs have in place for Fair Lending?
⃝ When you bring an issue to the TPO do they address and more importantly correct the issue? How will you monitor that? Are there any relief provisions built into the contract for violations?
⃝ How does the TPO perform their own assessment?
⃝ Are you performing fair lending assessments based on each TPO, as well as your overall business?
⃝ Have you developed fair lending standards that you expect the TPO to abide with? Think of it as your underwriting guidelines for Fair Lending!
⃝ Do you compare the Fair Lending risk before the loan closes? Or better yet, when the loan locks or before it is approved?
If you are able to set up oversight and procedures based on this checklist and the one from yesterday, you will be way ahead of the curve!