April, 2012

TheMReport — News and strategies for the evolving mortgage marketplace.

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DRESS CODE Interthinx's Roger Fendelman Talks Today's Compliance Concerns The regulatory climate is placing an increasingly heavy burden on lenders of all sizes, and this month, Interthinx's VP of compliance is weighing in on the strategies that originators can utilize now to adapt to the current lending landscape and prepare for the future. Bearing the Burden FENDELMAN // There is no shortage of compliance and risk management concerns in the current marketplace. Between the government's continued crackdown on lenders and servicers and new regulations from the Consumer Financial Protection Bureau (CFPB), the industry continues to face constant changes that create instability and de- mand ongoing adaptation. Specifically, lenders and originators are struggling to manage consumers' needs for simpler, more straightforward processing in an environment that requires increasingly complicated procedures and quality checks when doing business. Business- es throughout the mortgage landscape should be examining ways to handle the updates to RESPA, fee disclosure requirements, and upcoming decisions from the CFPB. Today's Troubleshooting FENDELMAN // Rooting out fraud and compliance failures before a loan is initiated is critical to lenders' quality control measures. Interthinx takes a holistic approach to providing a solid foundation for compliance through the combination of automated and manual solutions for lenders. Our pre-loan services focus on the provi- sion of real-time data exchange and documentation evaluation before a loan is made, with an emphasis on the verification and re-verification of loan data. Our products target a wide range of compliance-related issues including licensing verification, APR, disclosures, GFE disclosures, federal and state data, and GSE standards. On a broader scale, Interthinx continues to create in-depth analysis that's increasingly thorough, along with developing stronger, tighter components for processing and fraud prevention. Interthinx's manual services are constantly evolving as well because it's imperative that lenders have access to hands-on evaluation techniques. Industry data tells us that even the best lenders and originators make mistakes when making loans; and in today's lending climate, if a mistake is made on 3 to 5 percent of loan issues, that's a severe impact on profit margins. Small to Midsized Solutions FENDELMAN // There are a lot of strong providers, including Interthinx, that have developed great tools that cater to small and midsized companies. A la carte options that pair automated compliance solutions with manual review tend to produce excellent results for our clients, and they're cost effective. Smaller lenders also derive major benefits from tools that evaluate the integrity of borrower-provided in- formation and contain components for fraud checks, as well as those that help calculate risk exposure. Especially as it relates to disclosures, smaller compa- nies can't afford to have missteps that could result in buybacks, which makes the combination of automated and manual quality control so critical. Leading the Way FENDELMAN // We keep our finger on the industry at all times, and we seek out multiple points of view and diverse commentary to ensure that we're creating products that serve our customers' core needs. Specifically, Interthinx is continuing its expansion into holistic support strategies and enhancing data quality and process- ing. We serve clients large and small, and we've found that the lenders who are most well-situated are those that engage a wide range of options in terms of quality control measures. With our in-house products, Inter- thinx will be enhancing our valuation tools, bolstering our manual services, adding in components for extended fee calculations, and, once the rule is confirmed, adding a qualified-res- idential mortgage (QRM) tool to our PredProtect program. Compliance 2.0 FENDELMAN // The most significant changes that are possible in the near future stem from the final ruling on the QRM regulations, because establishing the QRM rule as it stands now would fundamentally change the way lenders do business. Additionally, originators need to prepare for possible upcom- ing regulatory decisions related to combined fee disclosures, predatory lending laws, credit standard altera- tions, and an extension to the timeline for settlement disclosures. Internally, Interthinx is going to be keeping a close eye on the CFPB's actions and enforce- ments during the year ahead. About Roger Fendelman Roger Fendelman is VP of compliance for Agoura Hills, California-based Interthinx, a leading provider of products and services that help measure, manage, and reduce risk. In his role, Fendelman is responsible for steering the company's compliance department and its PredProtect Compliance Suite of automated regulatory compliance tools. An experienced attorney, Fendelman is an established thought leader in the residential mortgage lending industry and is credited with numerous published articles and speaking engagements. Lenders and originators are struggling to manage consumers' needs for simpler, more straightforward processing in an environment that requires increasingly complicated procedures and quality checks when doing business. — Roger Fendelman, Interthinx THE M REPORT | 15

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