Mortgage Compliance State Regulatory Oversite

State Regulatory Oversite and Your Future By: Annemaria Allen President The Compliance Group, Inc.

State Regulatory Overview • It’s not a matter of if you will be examined by a State Regulator…it’s a matter of when. • Prepare In Advance • Know Your State Regulations • Compliance Support Is A MUST • Have An Internal State By State Compliance Manual

State Regulatory Overview • • • •

Internal Policy And Procedures Is a MUST Privacy Controls Internal Controls Non-traditional Policy And Procedures

State Audits Past • • • • •

Infrequent Examinations Regulatory In Nature Enforcement Lower In Nature Understaffed Non-understanding Of Loan Products

State Audits Present • More Frequent Examinations • Better Trained Examiners – At Times Still Under Staffed

• Regulatory Reviews And Underwriting Reviews • Teaming Up With The Feds • Pressure To Audit More Frequently And Broaden Examinations

Why Change? • Subprime Debacle • Necessary For Better Oversite • Better Controls Over The Loop Holes Lenders And Brokers Were Falling Under • A Need For Understanding The Mortgage Loan As A Whole • Under A Lot Of Pressure And Scrutiny

State Commonalities • • • • • •

Managers Questionnaire Annual Report Numbers Match Up Policy And Procedures Review Of Loan Files Review Of Books And Records Making Sure The Consumer Is Unharmed

State Commonalities • Regulatory Oversite – Respa – TILA – ECOA (Reviewing Withdrawn And Denied Files) – State Specific Regulations

• Non-traditional Guidelines – Initial Stages

State Commonalities • Advertising Review • Office Overview – – – –

Lobby Posters Trash Shred Bins Overall Professionalism

• Other State Licenses – Expired – Issues

• Most Recent QC Reviews

State And Federal Disclosures • Know Your State Required Disclosures – Timing – Fees And Penalties For Non-Disclosure – Revocation and/or Suspension Of License

• Know Your Federal Required Disclosures – Timing – Fees And Penalties For Non-Disclosure – Revocation and/or Suspension Of License

Preparing In Advance • Always Be Prepared • Waiting Until The Last Minute Creates Stress • Fill Out The Managers Questionnaire • Have An Organized File Ready For The Examiner • Have A Private Room For The Examiner • Use Checklists

Loan Level File Reviews • Make Sure Your Files Have A Consistent Stacking Order • Never Leave Excessive Junk In The Loan File • Make It Easy For The Examiner • Know Your Internal Policies • Make Sure Staff Knows Internal Policies • Be Prepared To Provide Your Written Policies

Loan Level File Reviews • Have An Internal Compliance/QC Review • Consistency Is The Key

Internal Processes • • • •

Have Your Procedures Written Have Meetings With Staff Consistency Is Key Send Out Memos When There Are Changes • Update Your Policy And Procedures

Responding To Your Audit • Have An Exit Interview With Your Examiner(s) • Take Immediate Action During The Exam • Fix Any Problems While They Are There • Respond To The Written Part Of The Report Immediately – Make It Professional – Add Attachments

Responding To Your Audit • • • •

Ask Lots Of Questions Your Not Always Wrong Have Compliance Support Have Outside Counsel Available – Some Issues May Warrant A Legal Opinion

The End

Thank You! Now Go Make Loans!!!!