Compliance Solutions Address New Rules

From an investor standpoint, analysts at Moody’s Investors Service predict changes to the Truth-in-Lending Act and Real Estate Settlement Procedures Act could potentially wreak havoc on the recovery value for mortgage pools.

Under the new guidelines, borrowers could assert rescission rights for as little as a $35 under-disclosure discrepancy for up to three years after closing, the ratings agency explained. A rescission entitles the borrower to all interest and fees previously paid and up to $2,000 in statutory damages, court costs and attorney’s fees. In addition, such a discrepancy could be used as a defense to foreclosure for the life of the loan.

Wolters Kluwer Financial Services announced the launch of its online Regulation Z Resource Center. The Minneapolis-based firm allows free access to articles and other information to keep lenders informed of regulatory changes.

Fifth Third Mortgage Co. recently announced it chose Wolters Kluwer’s SDX service to electronically deliver customer appraisals and disclosures.

Upfront Mortgage Broker Mike Sanborn said the new Good Faith Estimate does not provide the transparency the borrower needs to succinctly define what they are paying. He claims the new GFE makes it easier to hide yield spread premiums because it actually misrepresents YSPs as a credit back to the borrower. He recommends providing an additional form that details a line-item breakdown for all the costs.

To assist with disclosures in the reverse mortgage market, Spring, Texas-based RM Compass released RM Compass Version 4.0., which allows lenders to track hard copies of each disclosure, such as the GFE, with an image log and alerts to any changes that have taken place.

And to ensure compliance with title and settlement charges on the GFE, TitleVest Agency is offering a “GFE Closing Cost Guarantee.” Lenders can obtain costs by filling out a Web-based form with the transaction details. The title agency then stands committed to the itemized breakdown of title insurance and related settlement closing costs it provides, the New York-based agency said.

TSS Software Corp. claimed in a Jan. 21 announcement that its business has spiked as title insurance firms rush to comply with revised GFEs and HUD-1 forms mandated under RESPA reforms promulgated by the Department of Housing and Urban Development. The Annapolis, Md.-based technology provider maintains a HUD-1 Web site as an educational resource.

Stemming from recent changes, the Office of the Comptroller of the Currency last month released a revised edition of the Fair Lending booklet of the comptroller’s handbook. Revisions include changes related to electronically accessed application forms and disclosures added to the technical compliance checklist. Also, specific updates were made relating to the discussion of brokers, underwriters and procedures related to pricing, steering and redlining.

And to enforce compliance with the Fair Lending Act, the U.S. Department of Justice announced that it has created a new fair lending unit to investigate unfair practices against minorities, according to the Associated Press.

Pittsburgh, Penn.-based Service 1st Valuation and Settlement Services recently offered reassurance it will continue to be 100 percent compliant to the Federal Housing Administration’s Appraiser Engagement guidelines.

Meanwhile, several mortgage industry service providers have formed strategic alliances as they upgrade and modify their services to assist lenders with mortgage compliance.

MRG Document Technologies has partnered with Kroll Factual Data to provide clients with access to three of Kroll’s risk assessment services through its MIRACLE Online Compliance software. In addition, MRG has integrated its services with OpenClose’s loan origination system LenderAssist, and with ISGN’s Diamond mortgage loan origination software. And to assist credit unions with compliance, Dallas-based MRG has formed a reseller agreement with RTE Financial services.

AllRegs announced a partnership with Motivity. AllRegs said Motivity’s platform, Movation, is the perfect match for delivering AllRegs’ underwriting guideline content. Denver-based Motivity said its business management platform focuses on optimizing an entire mortgage-based operation.

And to help lenders keep up with the rigorous compliance regulations, Eagan, Minn.-based AllRegs — a MortgageDaily.com advertiser — said it offers a customizable 63-page federal compliance policy manual that outlines 12 key federal regulations.

Honolulu-based PCLender.com Inc. announced the release of a compliance requirements summary matrix that helps manage current and future regulatory changes. The free document is available for download at www.pclender.com.

PCLender.com also issued a news release that quoted comments from two customers praising its smooth rollout of the new GFE and HUD-1.