compliance edge dodd-frank webinar series · 2013. 5. 16. · implementing the dodd-frank rules...

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Compliance Edge Dodd-Frank Webinar Series

The Implementation Road Map


Meet the Presenters

Melanie Feliciano,

Chief Legal Officer

DocMagic, Inc.

Laurie Spira,

Chief Compliance Officer

DocMagic, Inc.

Sue Baker,

Senior Vice President

& Chief Product Officer

D+H Mortgagebot

Steve Rattray

Compliance Manager,

Real Estate Production

Compliance & Operational Risk

Wells Fargo Mortgage

Special Guests


Goal & Agenda

What is the goal?

Agenda

• So many rules, so little time

• Creating an action plan

• Advice from the front line

• Q&A


So many rules, so little time

Escrow Requirements

Loan Originator Compensation

Ability to Repay & Qualified Mortgage Standards

High-Cost Mortgage & Homeownership Counseling

Amendments

Mortgage Servicing Final Rules

Truth in Lending Act Mortgage Servicing

Disclosure and Delivery Requirements - Appraisals

Appraisals for Higher-Priced Mortgage Loans

So… how will you stay on top of it all?


The clock is ticking

Final rules: 3,377 pages and counting

Guides for small entities: another 154 pages

Bottom line - we are responsible


ConsumerFinance.Gov

www.consumerfinance.gov/regulations

http://www.consumerfinance.gov/regulations


Compliance…everyday

The effect on your business… and the consumer

is cumulative

All the rules in conjunction

Policies, procedures, and systems that take all

the rules into account

Compliance has to be automatic


Definitely not business-as-usual

Implementation is not temporary

Resources are tight

But… it’s still a project:

• Initiation

• Planning and Design

• Execution

• Monitoring

• Closing


What’s your action plan?

Initiation Phase:

• Who is going to decipher the rules?

• Identify outside resources

• Review your products and services

• Identify planning and implementation teams

• Reach out to your third party vendors

• Automate!

Planning and Design phase:

• Identify deliverables

• Lay out a plan to complete deliverables

• Assign tasks and deadlines


The Implementation Checklist

If – Over 50% of your first-lien

covered transactions in the prior

year were secured by properties in

rural or underserved areas

And – You have assets under $2

billion, and have originated no more

than 500 covered transactions in

the preceding calendar year

Then – You may comply with the

Ability to Repay rule by originating

Balloon-Payment Qualified

Mortgages

Sample : exemption grid


Dodd-Frank Applicability Analysis


Implementing the Dodd-Frank Rules

Regulatory Compliance Challenges

As a provider of a consumer direct online POS and an

LOS we have to:

• Implement appropriate changes for consumer direct

applications

• Understand the implications for multiple business

channels – wholesale, correspondent and retail

• Insure that we can support the regulation

interpretations across our entire customer base and

allow for configuration to meet those needs



Communication and collaboration are key to a successful

implementation. Our plans include:

Creating a cross-functional internal team of legal,

mortgage, and product experts

Complimenting internal resources with appropriate

outside counsel

Involving and informing our client base

Working with vendor partners to insure data integration

meets requirements

Participating in industry discussion groups



Anticipated Programming Updates

HOEPA

• Support revised coverage tests

• Delivery of Homeownership Counseling Disclosure to online

applicants at the point of sale

• Appropriate alerts to insure compliance

TILA

• Support ability to repay points and fees test

ECOA

• Track Consumer appraisal delivery in LOS

• Enhance POS consumer status module to allow for compliant

electronic appraisal delivery



What should you expect from your LOS?

Regular communication about their plans to comply with

the new requirements

Coordination with the vendors they partner with

The opportunity to provide ideas and feedback

The ability to test changes well in advance of effective

dates


How are Dodd Frank rules being implemented?

Establishment of Financial Reform Program Office

• Responsible for organizing the project across all business lines

• Ensure consistent methodology and interpretation among the various delivery

channels

• Responsible for coordinating things such as Know Before You Owe and

proposed rule comment letters

Business line project work streams

• Retail, Home Equity, Servicing, Correspondent

• Managed through channel Project Management teams

• Individual work streams for each new rule

• Project teams include representation from business, sales, legal, risk and

compliance

Project teams focusing on

• Line by line review of rules to determine business line impacts

• Developing systematic and automated solutions to evidence compliance


What can you expect from us?

Request for additional loan level data

• Comprehensive fee itemization

• Affiliate information

• Greater detail on LO compensation

• DTI calculation

More communication and webinars on Wells Fargo purchase

requirements

• Expect to see communications pick up over the summer

New forms or disclosures

• Nothing in stone, still working with industry to determine best

approach

Updates to our current Loan Submission Summary

Enhanced pre-fund file review to verify compliance


What should you be doing to prepare?

Establish project teams or working groups

• They should include individual subject matter experts from all facets of the business

• Engage legal counsel (internal or external)

• Complete your own impact assessments

Do not wait for the secondary market to provide instruction

Engage LOS and Doc vendors

Access the quality of your Underwriting

• Determine current underwriting practices that pose additional risk with FR

• Implement effective QC efforts to ensure consistency and accuracy in the UW process

• Understand Appendix Q

• Design and implement better underwriter training

Test your current compensation, fee and affiliate fee practices to see where you stand with points

and fees

• Lenders control their own destiny with points and fees

• It is within your controls

Understand who in your organization is an LO


Evidence of Compliance

DTI – show your work

• In systems

• In paper and imaged files

LO compensation

• Document, at a loan level, the compensation

attributable to the loan

• Work with vendors to automate

Fees and Affiliate fees

• Transparency and itemization required

Greater transparency for secondary market


What are some of the greatest challenges?

Defining Loan Originators in your shop

Modifying compensation plans to comply

Documenting compensation at a loan level

Accuracy of DTI

Meeting 3% points and fees

Secondary market transparency


Questions &

Answers


Upcoming Dodd-Frank Webinar

Compliance Edge Dodd-Frank Webinar Series

Ability-to-Repay Rule: June 19, 2013

compliance edge dodd-frank webinar series · 2013. 5. 16. · implementing the dodd-frank rules...

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