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Items to Add to a Real Time Fair Lending Review Checklist-Part Two!

Now that you are acquainted with a real time fair lending review, it’s time to define as part of your checklist what you may want to look for.

I also recommend that you standardize your notes in the review, so that the message of what is checked is consistent.

As a reminder, it is important to check the same things on each file to demonstrate consistency of review.

Here are some ideas to assist you in brainstorming what your checklist may contain!

•Compliance checklist questions were answered and reviewed for clarity and completeness.

•Loan is QM or Non-QM and this is acceptable per our policy.

•Loan Level Pricing Adjustments are consistent with program and risk adjustments.

•Pricing exception is noted and has been added to our tracking mechanism.

•Program seems normal for characteristics of the file. (i.e. FHA loan with 20% down, a 780 FICO and 26% DTI would seem to fit a conventional profile better, so notate why is it FHA?)

•High risk adjustments due to (list reasons) resulted in a higher rate.

•No Risk adjustments resulted in a lower rate.

•File appears out of rate range for today’s rates due to (reasons).

•Client did not receive the lowest rate or overall cost available due to an underwriting overlay listed as (fill in reason).  Confirmation was received regarding this file and the overlay.

•Random Historical Check performed on this file and it passed/failed.  If failed, why?

•Recommend a price trace.

•Volatile market resulted in time-price differential for similarly situated clients.  See specific notes.

•Random search in pricing engine resulted in same or similar results as lock in.

•Borrower needed closing cost credit so price was adjusted to reflect a higher interest rate.

•LO compensation is correct and within range of company policy.

•Seller or builder credits were considered to achieve lower interest rate despite risk adjustments. (Explain)

•Similar file characteristics of loan #() for potential match paired analysis if needed.

•File sent to Sr. Compliance Officer for review and notations.

•Final due diligence check performed prior to closing and any changes or concerns were notated.

I certainly hope that you have enjoyed this series.  Please feel free to post your recommendations in the comments sections.  I would love to add more to my list!

Tammy Butler, Master CMB

Author Tammy Butler, Master CMB

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