ComplianceEase Launches RESPA Auditor™ in Response to Mortgage Industry’s Continuing Disclosure

May 16, 2011 - PRLog -- ComplianceEase®, the nation’s leading provider of mortgage compliance and risk management solutions, announced today at the Mortgage Bankers Association’s Legal Issues and Regulatory Compliance Conference the launch of version 2.0 of the company’s automated Real Estate Settlement Procedures Act (RESPA) disclosure compliance solution – RESPA Auditor™. Since the launch of the initial version of RESPA Auditor, it has identified HUD-1 fee disclosure issues on almost 20% of audited loans, enabling lenders to save an average of $1,000 in reimbursements on each of those loans. Although, in today’s lower-margin lending environment, these types of errors can cut significantly into lenders’ profits, lenders can prevent losses by using the right technology. With the mortgage industry clearly still struggling to place adequate controls on disclosures during origination, ComplianceEase has enhanced RESPA Auditor to enable lenders to implement complete end-to-end controls for their RESPA disclosure processes, from the initial GFE at application to the HUD-1 at closing.

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” policies that govern when fees on disclosures are allowed to change. Audit reports can continuously test fees on multiple revisions of GFE disclosures to ensure that disclosed fees only change when allowed by the lender’s policies. Meanwhile, the system maintains a complete audit trail of who documented the “changed circumstances” and enables online collaboration throughout the origination process. Before closing, lenders can check which GFE is binding and confirm that their HUD-1 will be within allowable tolerances.

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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About ComplianceEase®
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-end solutions in a fraction of the time and for a fraction of the cost of traditional approaches, while providing high levels of accuracy and integrity. ComplianceEase's significant and growing client base includes four of the top five mortgage lenders in the nation, financial institutions, service providers, law firms, and regulators. For more information visit ComplianceEase.com or call 1.866.212.Ease.