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I just read through the latest issue of the Garrett, McAuley report and I thought there were a few interesting tidbits to pass on to you.

Regarding the Length of an Exam and the Size of the Lender:

“For our clients who’ve had CFPB exams, they represent the 12 examiners who’ve typically been on site, the 12 weeks they typically have stayed, and how long it takes before they get the Report of Exam. One of our clients was closing less than $50 million a month and had 10 examiners onsite for 11 weeks. ”

Yikes, that is at $50 million a month. They must live at Bank of America!

They will talk to your employees:

“As you know, the CFPB interviews key employees during an exam, and they do so without senior managers in the room. Our clients who’ve had the CFPB exam have had their underwriters and loan officers interviewed, and obviously, the senior officers.”

So make sure they understand your policies and the regulations they are responsible for.

Pricing Exceptions Need to be Tracked, but Tracked Properly!

“Anyway, we asked a client about exception tracking on a recent CFPB Readiness Review and were told that yes, they tracked all this stuff. The problem is that they kept the notes in the file! That’s not only not good enough; it’s not good, period. Have a separate file that’s easily accessed showing all the details of all exceptions granted and exceptions denied. Have it all in one file, or better yet, one summary report. The CFPB wants to know if you’re granting them to one class of people and not another, and very, very few of our clients are prepared to handle this question. ”

Remember, it is not about the exception. It is about how exceptions are applied that matter in Fair Lending! Track your exceptions in your pricing engine when they can be easily recalled and compared versus just the LOS. After all, it has to do with pricing so isn’t that the logical place?

Tammy Butler, Master CMB

Author Tammy Butler, Master CMB

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