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Cowboy Up For a Fair Lending Defense: Step-One-Compliance Checklist!

Examiner:  Mr. Mortgage Banker, can you please tell me why this client did not receive the lowest rate offered to her on this day?

Mr. Mortgage:  Uh, well let me call the loan originator.  Oh, he is not here anymore, okay I’ll call the processor.  Oh, she is on maternity leave.  Can someone look in the LOS and tell me if you see any notes on that file.  None about rate, huh!  Well, we will pull that file, get the rate sheets from that day and review everything.  I’m sure there was a good reason.

Examiner:  Fantastic, while you’re at it, can you also pull the data together for these 350 files?  We have questions on those too.

Sound like a nightmare?  For many lenders this is a reality.  I promised you this week we would focus on data flow.  Yes, I know it is not the most exciting topic; however it is the most important item you can focus on when it comes to making an exam easier.

Today, I want to focus on the Compliance Checklist functionality of your Optimal Blue pricing engine.  It is free to use and will capture any questions that you want to have answered by the loan originator BEFORE the loan gets locked in.  Come on folks, I said FREE! That’s good, right?

•Here is how it works.  The loan originator enters the information into our system just like they have always done.  When they click “submit”, a page will pop up that asks them questions you require to lock the loan.  The questions can be “yes”, “no” and/or a comment.  If they do not give you the answer that you have set up as a rule, then they will be prompted to notate the file.

•After the loan originator has answered the question, the loan will go to the lock desk just like always.  The notations made on the file can be pulled for you at anytime in a report format, and they will also appear in your locked loan details.

I have several pages of example questions, so please reach out to me or your account manager for this helpful guide.  The goal is to get your team brainstorming, regarding the questions that you want to memorialize.

Here are some ways other lenders are using the Compliance Checklist function:

  1. Requiring explanation when the loan originator gave the client a higher rate (assuming equal price) than one of the offered programs.  This might be as simple as one lender will take the loan and another will not.  The examiner is searching for Why?
  2. Requiring written explanation when a loan is re-locked.  What changed on the file that the program or rate needed to change.  This prevents any notion of baiting and switching.
  3. Reigning in your TPO’s to get written reasons for loan selections.
  4. Ensuring that internal workflow is followed.  As an example, do you require a fully completed loan application prior to a lock in?
  5. Can the loan be locked only with this investor, or any investor?  If limited, why?

These are just a few ways the Compliance Checklist functionality is being used.  I cannot urge you enough to get this started.  Ask anyone who has been through an exam and they will tell you that notations about what happened and when are so very important; and save you an enormous amount of time.

Tomorrow, I will start diving deeper into the data fields, which when collected and organized well, will help keep you out of hot water.  Stay tuned for more exciting adventures of Data Logistics!!  Yahoo!

Tammy Butler, Master CMB

Author Tammy Butler, Master CMB

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