There’s an old management adage that says that what you monitor is what gets done. There’s a lot of truth to that. When you set up management systems that pay attention to what’s important, the people you manage tend to pay attention to the same things. Everybody wins. That same adage can be applied to compliance in our industry.
If you want things to get done the right way -- and you do if you’re steering a mortgage operation through these highly regulated waters -- then you have to monitor the things that matter and make sure they get done right. In our industry, that means testing. What should you be testing for? Anything that can get you into trouble.
When it comes to compliance, there is no easy way to prioritize the new rules because failing to meet the standard on any of them can put your company at risk of very high fines and penalties. When asked at the recent SourceMedia mortgage technology conference what mistake would cost lenders the most money, one member of a compliance panel session replied, “The first mistake they make.”
Not very helpful, but true nonetheless. So how can you test for every compliance problem? Start at the very beginning, even before the deal gets into the LOS. The new Qualified Mortgage rules give lenders a great place to start. That’s why we’ve built compliance checks into Marksman that lenders can use from the point of sale.
Earlier this month, we released a new suite of Consumer Financial Protection Bureau compliance tools that we’ve built into Mortech’s Marksman® product and pricing engine. The new tools allow loan originators to manage compliance upon intake, prior to the deal entering the loan origination system.
The new compliance checks specific to the Qualified Mortgage (QM) rule are available within Marksman now and include:
- APR/APOR rate check spread
- Applicable debt-to-income ratios
- Lender fees and points calculation
- Non-qualification due to loan risk
The tests are automatic. When a lender selects a loan product, they are immediately notified whether it passed or failed the QM test. The lender can see which portions of the deal passed or failed, and the calculations used by Marksman to make this determination. Color-coded icons appear on screen to show at a glance whether the deal meets QM requirements.
The best way to pay attention to what really matters is to build it into your software. That way it happens every time and you get it right every time. There can be no better management practice than that.