Real time fair lending means that you are actively watching for any pricing disparity or steering from the time of Lock-In and then prior to the loan closing.
•The goal is to prove, through a compliance management system, that each individual client was treated fairly and equally by your company.
•The Data is organized in such a way that you can electronically access the specific data and notes needed to defend your position.
•The key to real time fair lending is having a system of checks and balances, a standardized approach and consistency of review.
•It is shared workflow between the Secondary Department and the Compliance Department.
•It is a highly efficient use of staff resources designed to add greater efficiencies in your workflow process.
•Real Time Fair Lending monitoring will substantially reduce your exam time.
I will attach the visual of the Real Time Best Practices upon completion of this series, so stay tuned!
Today, I will review the Secondary Workflow, followed by the Compliance Workflow tomorrow.
- Loan Originator requests a lock-in through the pricing engine.
- The data is input or received from the loan originator.
- The Pricing Engine asks the loan originator compliance checklist questions that your company requires, prior to allowing the loan originator to lock the loan. For instance, the favorite question in fair lending is, “Price being equal, did you give the client the lowest interest rate or lowest overall cost for their personal financial situation?” The loan originator is required to answer this question or any other question you automate. They are also required to give you a reason why, if the answer they provided is not what you are seeking. The questions and answers are archived in the loan detail in the pricing engine and can be pulled up at will. The time it takes to answer these questions is 30 seconds on average.
- The lock request with the compliance checklist questions is automatically sent into the secondary lock desk queue.
- The lock desk does a quick “double check” to make sure, that if the loan originator did say they offered the lowest rate or overall cost, the lock desk can see from their screen this is true and from there execute the lock. If the loan originator was not truthful, then policy can be built as to how to handle that situation.
- Pricing exceptions are expected to be tracked and monitored by the lender, per the CFPB guidelines. This is easily done in the pricing engine. If the loan is a pricing exception, the lock desk simply makes note of that in the notes section. This information is then made part of the file and sent to the compliance queue.
That’s it. The total process took less than 30 seconds per position. However, the time saved 18 months from now, when an examiner asks you questions about this file along with 500 others, means you no longer have to physically pull and piece the files together. Simply pull it up in your system and right in front of you is the information you need.
Stay Tuned: Tomorrow I will describe the very easy compliance workflow.