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Real Time Fair Lending-Compliance Workflow:

Compliance is now part of the secondary workflow, and the secondary department is now part of the compliance workflow.

First, let me clear up a couple of myths.  The only thing you need to do in order to follow this workflow is lock a loan through your pricing engine!  The re-locks and changes will be picked up in the final review.

Second myth:  You do not need HMDA data to use this system, nor should that have any relevance to this fair lending review.  What??  I know this goes against the “old way” of doing things, but our minds are now open to a more exact way, right?  In fact, the experts who litigate on your behalf said that they would rather you look at the lock-in neutrally, meaning without HMDA data.  Why?  If they have to defend you in a case, then it is more defensible to say how could they discriminate in pricing if they didn’t know what the person was?  Makes sense to me!

Since the beginning of pricing engines, the secondary lock desk has had a queue to lock from.  Loans come in, prices are validated and loans are locked.

In today’s world, compliance has a queue as well!  As the loans are locked, they end up in your daily queue to review.  For some smaller companies, this job is done by the same person.

Throughout the day the person in charge of the compliance queue logs into Optimal Blue Advantage and looks at the newly locked loans.  The goal is to examine the data of the file, review the items your company believes should be reviewed, and notate the file as directed by policy.

Hopefully by now, you have already decided on your compliance checklist questions and what fields you want to document.  This is an important first step, because I will also show you how to use this platform during an exam.  The information you decide to archive will make exam life so much easier.

I know that many of you are experiencing “compliance fatigue” so I’ve been asked to come up with some examples of what to look for.  I will publish that information tomorrow to help you assemble your checklists.  The important thing to remember is that each file should be looked at similarly, as this establishes consistency in your methodology.

Here are the Compliance Workflow Steps:

Step One:  If you lock 50 or less loans per day, review each one.  If you lock more than 50 loans per day then write policy on what should be looked at.  For instance, you may only look at the files that fall above or below the average prices/rates for that day, as these are more likely to be flagged as anomalies in an exam.

Step Two:  Consistently review each lock and the file data based on your prepared checklist and make any notes in the system.  This includes reviewing the compliance checklist questions, pricing exception information, QM and LLPAs.

Step Three:  Write policy as to how you will randomly audit a file using the historical database.  For instance, perhaps your policy says that 1 out of every 10 files is randomly run through the historical database to check for accuracy.  Make sure you notate that file if you did a random check.

Step Four:  Program the LOS to ping your email upon a “clear to close” milestone being reached.  This will be your final opportunity before closing, to make any notations to the file. This also gives you a chance to do a data integrity check.  The CFPB gets testy if your pricing engine, LOS and HMDA do not match.

Step Five:  Repeat as needed.  The review process for a novice is about 5 minutes per file.

The Optimal Blue Advantage software can assist you with much more Fair Lending Analysis then just the daily workflow.  However, I think it is important to get comfortable with the basic workflow and historical database, followed by the exam workflow, before overwhelming everyone with the analysis workflow.  For those who want to understand more about the advanced analysis we will be holding a Webinar in March to review this.

Stay Tuned Tomorrow for examples to add to your checklist!

Tammy Butler, Master CMB

Author Tammy Butler, Master CMB

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