ComplianceEase launched the initial version of RESPA Auditor in 2010 to target RESPA compliance at or after loan closing. This enabled lenders to ensure that fees disclosed on a loan’s final HUD-1 form increased only within allowable tolerances from the loan’s binding Good Faith Estimate (GFE). The industry quickly adopted the solution, auditing more then 120,000 loans over the last several months. Given the unprecedented interest in RESPA Auditor, as well as the number of disclosure issues that the solution was identifying, ComplianceEase quickly got to work on an enhanced version of the product that expanded its RESPA compliance features to cover the entire loan origination process.
Jason Roth, CMT, senior vice president of product development & engineering, explained, “After the initial version of RESPA Auditor had been in use for several months we were able to put some real numbers to the cost that disclosure issues are imposing on the industry. Our current RESPA Auditor clients, including lenders among the top 5 in the country, have identified violations that would have required more than $25 million to cure. With that much money at stake for just a few months’ worth of loans, it was clear that the industry needed a way to control their disclosure processes. That’s what RESPA Auditor 2.0 is all about.”
The new version 2.0 allows lenders to centrally manage and maintain the “changed circumstances”
New restrictions on how loan originators may be compensated for mortgage loans are further complicating RESPA compliance. The Federal Reserve Board’s loan originator compensation rules, which became effective in April of 2011, restrict the amounts and sources of fees paid to individuals who originate loans. Since RESPA rules place a “zero tolerance” on any changes to the disclosed amounts of such compensation, loan originators must get their disclosures right the first time. No matter how challenging the Fed’s rules are to comply with, the RESPA requirements make it clear that lenders have only one way to correct compensation disclosure mistakes: pay for the difference out of their own pockets.
Federal regulators won’t be the only ones paying attention to the new federal disclosure requirements. Don Lampe, partner with Womble Carlyle Sandridge & Rice, PLLC, commented, “With the memorandum of understanding signed by the Consumer Financial Protection Bureau (CFPB) and the Conference of State Bank Supervisors (CSBS) back in January, it’s clear that what we’re going to see is much more coordinated enforcement of consumer disclosure requirements at all levels. We also expect to see more changes to consumer disclosures once the CFPB gets ramped up starting in July. Without technology in place to put controls on the disclosure process, lenders and service providers will be struggling to keep up.”
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ComplianceEase, a division of LogicEase Solutions Inc., headquartered in the San Francisco Bay Area, is a leading provider of risk management solutions to the financial services industry. ComplianceEase's patented platform includes ComplianceAnalyzer - the mortgage industry's most adopted automated compliance solution. ComplianceEase combines industry and regulatory compliance expertise with innovative technology to power beginning-to-