Decoding Compliance

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cover story Clarke likes how the application makes all of the escrow, fees, and other financial information very transparent to the borrower in a much easier way to understand than a series of written documents. To further enhance Churchill's transparency with borrowers, the lender is working on developing a customer-facing portal that will enable them to track where everything is in the loan process. Flexibility for the Future Strategic Innovation: Prioritizing adaptability to ensure that solutions maintain maneuverability for ever-changing guidelines, coupled with investing in in-house legal and compliance teams. Successful Application: Minimizing data discrepancies that can occur during communications between lenders and consumers, DocuTech simplifies the documentation process with a front-end focus. Through a comprehensive strategic approach, the company ensures that all documents supplied to customers meet state and federal requirements for disclosures and other information before they are distributed to consumers. As the compliance rules continue to become more cumbersome, "it's becoming ever harder for even a decent-size lender to keep up with the regulations," says Fred Gooch, DocuTech's general counsel and VP of compliance. "One of the keys is to ensure that all of your documents are accurate." DocuTech ensures the compliance accuracy of its documents through its in-house legal and compliance team, which actively monitors federal and state regulations as well as investor guidelines. "Everything that we deliver is dynamically based on the data that we receive," Gooch adds, explaining that any changes (e.g., an increase in the APR) that exceed regulatory tolerances result in 24 | The M Report the automatic generation of new documentation. The DocuTech technology performs a data integrity check before it processes any documents. "It's important that a database be adaptable and be able to make quick changes in this type of regulatory environment," Gooch adds. DocuTech enables its customers to make those changes with its ConformX document management system. ConformX is a webbased solution that enables a user to enter the necessary information (e.g., interest rate, loan amount, etc.), with the system producing all of the necessary mortgage documents. If the user needs to In Touch with Today's Borrower Strategic Innovation: A data-driven approach to compliance that provides strong analytical assistance for lenders and servicers, paired with a risk management team that's cohesively connected to the executive branch. Successful Application: As the industry continues to work through the mountain of foreclosures of the last few years, mortgage servicers and lawyers need to make sure they can locate homeowners and provide documents to them in a timely fashion. "Even for a decentsized lender, it can be very problematic to have enough detailed compliance knowledge." —Kathalin Carvalho, ProVest make a change on one document, related changes are automatically made on all other documents. ConformX also enables the user to provide electronic disclosures to prospective borrowers. The cost savings can be significant compared with mailed documents, from $4 for a set of changed mortgage documents (e.g., if APR changes more than 0.125 basis points) to $9 for a full set of mortgage documents, according to Gooch. If the prospective borrower refuses the electronic disclosure, then the system generates paper documents. Either way, there's a complete audit trail, Gooch says. "Our small to mid-tier clients come to us for our compliance expertise. Our larger clients come to us for our efficiency," says Gooch, adding that the company serves about 350 customers. They also need to ensure there are accurate records of when and to whom documents are delivered in order to protect the servicer in the event of a foreclosure sale. In order to handle efficiently the increasing compliance demands associated with foreclosures, ProVest's proprietary system, TRACKER, notifies all parties of the homeowner's most recent address, as well as the time and location where they were served— all critical compliance factors. TRACKER is an essential component of the technology that ProVest officials credit as one of the many resources that has made the company the nation's largest provider of its kind. TRACKER notifies the appropriate parties of the homeowner's most recent address as well as the time and location where he or she was served. This not only provides the critical data that law firms need to proceed with the foreclosure process, but also gives mortgage servicers the ability to contact homeowners to facilitate loss mitigation efforts. Along with its technological commitment, Florida-based ProVest has developed a centralized compliance process to ensure that it meets national settlement standards. The firm helps its customers coordinate single point of contact efforts, ensuring that borrowers are provided the information they need to facilitate a settlement with their servicer. "Compliance is becoming harder for more large lenders and third-party service providers," says Kathalin Carvalho, the company's VP of compliance. "Even for a decent-sized lender, it can be very problematic to have enough detailed compliance knowledge." The company maintains high compliance standards by relying on a combination of automation, internal monitoring, and close relationships with companies in the industry, according to Carvalho. In an effort to provide a high level of security to its customers, ProVest has successfully obtained its SOC2 Type II certification, which requires independent thirdparty reviews and stress testing. In order to provide secure and sound services to its clients, ProVest must ensure its own compliance policies and procedures are in line with CFPB and other mortgage industry rules. ProVest has a risk compliance committee that reports directly to the board of directors on a regular basis. The committee maintains and monitors its efforts to ensure that it meets the ever-stringent mandates of the industry. In establishing its core services, it's been essential for ProVest to work closely with independent third parties, according to Carvalho. "We manage a solid network of subcontractors across the country. Our vendor management division helps ensure they abide by the intricate legal requirements for every state, as well as industry standards."

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