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Here we will share articles of interest. All members are encouraged to post their own articles, share and comment on others.

  • October 26, 2016 1:46 PM | Anonymous

      About Us | Services | EmployersJob Seekers | Contact Us

    October 26, 2016
    Will new HMDA rule uncover steering issues that you might resolve NOW?
    So we'll deal with the new HMDA changes when they come, not before, right? Right! But be careful that the HMDA changes don't uncover existing fair lending concerns currently hidden from regulatory scrutiny ... concerns that we'd be better off identifying and correcting beforehand. 

    What am I talking about? Well an example is with steering and HELOCs/HELs vs. cash out refis.

    Steering Allegations: Violations of Existing Fair Lending Rules
    So historically there have been allegations of discrimination in who gets a HELOC as opposed to a full cash-out refinance. This comes in if minority applicants are more likely (than non-minority applicants) to receive a cash out refinance in cases where a HELOC or HEL was a more affordable and sensible option than a completely new loan. For example, if you have a good rate on a first mortgage already and want a modest amount of cash for vehicle repair or home renovation.

    So a problem would exist where, statistically, an African American customer of Bank ABC is more likely to be upsold on a full refinance (than a non-minority applicant) when a cheaper, quicker, HELOC would have been a better option for the particular circumstances. 

    Significance of HMDA Changes
    So the scenario described above already violates the existing fair lending rules in place, if the regulator happened to notice them. That last part is the key. Currently, HMDA data doesn't give regulators any information on HELOCs and very little data on pricing. The importance of the new HMDA changes is that HELOCs are now reportable and we have to report a full suite of pricing information (and no longer on HPMLs only).  This is a huge change in terms of what regulators can do at their computer desk before they ever even come on-site to dig through physical files. They'll be able to see a potentially discriminatory HELOC v. Mortgage trend with the click of a button, rather than having to dig through hundreds of physical loan files to try and gather that information. 

    So while the fair lending rules are the same, the simple fact that we have to report data on HELOCs for the first time will open doors that have remained unopened previously. 

    the fair lending rule is the same today as it will be post-HMDA changes, as of Spring 2019 the regulators will have an incredible amount of more abiility to identify and then dig into these issues.  There are several reasons for that, but most importantly here is the simple fact that we have to report data on HELOCs for the first time. 

    Note that the steering described above would also be problematic under the TILA anti-steering rule in 12 CFR 1026.36. 



    Bonus! Takeaways from Richard Cordray's MBA speech. 
    An interesting person to see speak in person. Walked onto the stage, read his speech, and walked off. No questions, no jokes, no fanfare. Came across as humble but hardened. Certainly looked exhausted. 

    Here are some things I picked up from listening to him:
    • CFPB will continue "good faith efforts" enforcement with TRID
    • Most lenders appear to have had favorable examination results with TRID
    • Companies have fared less well in the areas of servicing compliance and redlining.  
    • Fair lending appears top-of-mind for CFPB with Director commenting that "communities of color" have been slower to rebound from industry collapse
    • While stressing fair-minded approach and empathy for regulatory change, also showed some spine with strong, direct comments such as to point out that (I'm paraphrasing here), 'no industry whose irresponsible practices crippled the world economy could expect to escape without additional regulations in the aftermath.'
    • CFPB believes that new regulations will benefit responsible lenders as much as it will benefit consumers
    • CFPB "respectfully disagrees" with PHH Ruling and stated that the decision is not final. Which very well may be true.  From his comments, it does not appear they're modifying their practices with respect to RESPA interpretations. 

    Overall pretty interesting, I thought.  Read the full transcript of his remarks here.


    In Other News
    • Lot's of news this week, including Wells Fargo employees guzzling hand sanitizer
    • Of course we had the very sad, thought-provoking news that 51 year old David Stevens has cancer
    • Hey speaking of HMDA, how are we ever going to comply with the new collection requirements? Well the first start is understanding the new 1003, found here on Fannie's website, including the dynamic portions of the form (meaning you can't simply print off one application on physical paper to learn) and especially the addendums
    • I know we've all been working with the CFPB's guidance on vendor management, Bulletin 2012-03, but watch out for a brand new CFPB update on this issue - should be publicly available today. 

                                                      ________________

    Was a pleasure for me to attend the MBA's national conference in Boston. One of the events that caught my attention was the presentation by twin astronaut brothers Mark and Scott Kelly. Read about them here. They spoke about compartmentalizing - focusing on those things that they can control and ignoring other distractions.  Now, whether you're trying to connect a spaceship despite hanging onto the side of the ship at 17,500 miles per hour for the first time, or trying to run a successful mortgage banking shop while predicting economic trends and implementing regulatory reform, their point was to focus on those things you can control and be successful in those areas. 

                                                      _________________

    "When you look at this round ball, and everybody's down there, it doesn't seem all that big. You get a really good appreciation for the fact that this planet is an island, floating in the blackness of space. We really don't want to mess it up." 

    ~ Mark Kelly
    ____________

    Thanks so much for reading our weekly newsletters.  We're not always going to be perfect, but because we always do our best and try not to overpromise, we hope that we're always going to be trustworthy.  Your calls and e-mails are very helpful - please keep contributing.

      **These are our opinions. We're not authorized, or willing, to express those 
          of others.**  

     

    This article was prepared by Ben Giumarra with the support of other experts at SCA. Ben is a specialist in lending and regulatory compliance.

    SCA has consultants like Ben available to provide as-needed consulting support and advisory services. Specialties include risk management, quality control, system implementations and conversions, secondary markets, financial analysis, and other areas related to mortgage banking. 

    Hourly, retainer, and project-based options available. 

    Quick Links

  • October 24, 2016 1:49 PM | Anonymous



    Click HERE to view the MaineHousing September 2016 Newsletter
  • October 19, 2016 1:45 PM | Anonymous

      About Us | Services | EmployersJob Seekers | Contact Us

    October 19, 2016
    How long do you have (per regulation) to respond to mortgage borrowers? 
    Responding to mortgage borrowers is always good customer service but sometimes it is also required by regulation. This is especially true post-closing with the servicing department.

    Getting sidetracked ... 
    During origination, keeping a borrower informed is a key driver of customer satisfaction. To back that up you can point to the JD Power Mortgage Origination results. You can also point to common sense. Example - I bought a pair of shoes online recently. I got an e-mail confirming payment. Another e-mail explaining that it might take 1-2 days to ship. Another when it shipped. And a final e-mail telling me that it had been delivered. That's 4 e-mails in 5 days for a pair of shoes! Yet some lenders struggle to provide regular updates to a borrower regarding a mortgage loan that may take several weeks or more to close? Seems crazy to me. 

    Back to today's topic ... 
    Aaanyway. Back to today's topic. Responding to mortgage borrowers is also important post-closing (in servicing). 


    Story Behind the Regulations
    Look at what happened in 2008 (this from the perspective of the people who wrote the regulations) to understand the rules:

    The housing industry collapsed and quiet servicing/collection departments were quickly flooded with borrowers who wanted help paying their mortgages. What are my options? What should I do? Can I tell you what's happening and see if you can help me?  So a servicing staff with a 500:1 loan:employee ratio, which operated fine before, suddenly was drastically understaffed. Many departments couldn't hire enough people fast enough.

    So calls didn't get answered. People had difficulty getting good advice. They weren't informed of loss mitigation options that were actually available. They spent an hour on Monday telling their story to Tracy from loan servicing only to call back on Tuesday and have to start over again with Jim-- getting nowhere. 

    And so then they wrote the Dodd-Frank Act. And then the CFPB wrote new servicing regulations to help borrowers in similar situations. Some of these rules put new requirements for responding to borrowers, let's go through them:

    Payoff Information
    Federal regulations, as of 2014, now require servicers to respond to a written request for payoff statement within a "reasonable time" but no later than seven business days. TILA 1026.36(c). 

    But! Don't be tricked. Massachusetts regulations go one step further and require a response within five days. 209 CMR 18.21.

    So when you receive such a written request, you'll need to provide an accurate statement of the total outstanding balance required to pay off the loan, and you'll need to do it quickly!

    Error Resolution & Information Requests
    Here's another relatively new set of timing requirements (not completely new, but expands on pre-existing Qualified Written Request requirements):

    When a servicer receives a written letter asking either (a) to fix an error or (b) provide information about the loan, the servicer must follow these timing requirements:

    Notice of Error
    • 5 days to send written acknowledgement of consumer's notice
    • 30 days to correct the error or determine that no error occurred and send written notification
    Request for Information (other than payoff, see above)
    • 5 days to send written acknowledgement of consumer's notice
    • 10 days to respond with requested information if the consumer asked for the identify  of and/or contact information of the current owner/assignee of the mortgage loan
    • 30 days to provide any other type of information requested (or determine it is unavailable and provide written explanation). 

    BONUS NOTES

    1. Process Quickly to Save Paperwork
    If you can respond to the borrower within 5 days (whether fixing an error or providing information), you can skip the 5-day acknowledgment. This is a small incentive to process these requests quickly. 

    2. Extension Available
    Also, you can extend the time from 30 to 45 days if you send a different written notice within 30 days that tells the consumer you need more time to respond, including the reasons why. 

    3. Deal with "Kitchen Sink" Requests
    Sometimes you'll get a letter from a disgruntled consumer that has decided to work with some out-of-state financial assistance company. That means you'll receive a long-winded letter reciting every possible regulation applicable and alleging violations of everything. This letter won't be adjusted to the particular loan and is just a fishing expedition

    Be careful ignoring a request like this. But also be careful not to let your team get bogged down with it. 

     A servicer does not need to respond to an "improper" request for information, which includes a request that:

    • Is duplicative
    • Requests confidential, proprietary, or privileged information
    • Ask for irrelevant information
    • Is overbroad or unduly burdensome
    • Is untimely 
    A similar test applies for the Notice of Error requirements. 

    (There are detailed definitions of all of these, if you're going to ignore one of them, just be careful to follow the rules.) 


    In Other News
    • Know any beginner or novice secondary market department personnel? SCA is running a training for Mass. Bankers Assoc. on Secondary Market Basics.  I'm trying to attach the brochure here with more details- if that doesn't work e-mail me at BenGiumarra@scapartnering.com or Ben Craigie at BCraigie@massbankers.org for more information. The training is from 9:00 to 3:00 on October 25 in Marlborough and we'll work hard to have some fun. 
    • You know the CFPB is coming for payday lenders. Didn't mean too much to me and maybe not you. That's why I was surprised to find this counterattack so interesting. This is a research paper explaining why the payday industry is good for consumers and why the CFPB's efforts in this area are bad. Did you know the CFPB rule will put 15,000 payday lenders out of business? That it will reduce their revenue by 75%?
    • I don't tell Dad Jokes very often. But when I do, he laughs ...



    Seems crazy to me that the mortgage industry is "going grey," when the only thing I've ever experienced is selfless support from industry veterans. I can't imagine other industry newcomers wouldn't find a similar welcome wagon. Whenever I reach out for advice, I do so with trepidation, worried about taking time from someone's busy schedule. But to my surprise I've almost always found people willing to drop everything to help. Whether I'm calling to ask if mortgage is really spelled with a "t", or whether I want to understand why construction loans are packaged in separate phases, or why you would use different indexes with ARM loans, it seems someone more experience than me enjoys sharing that advice. Maybe at some point this will change, but I think I'm going to have many years ahead of feeling helplessly indebted to a great number of people. How can everyone be so busy but also so willing to help you with something completely unrelated to themselves?

                                                      _________________

    "I've had tons of odd jobs, but I think that I would probably be a fireman because you get to see the results of your job. You get there and there is a house on fire. You leave and there's not a fire anymore."

    ~ Luke Perry
    ____________

    Thanks so much for reading our weekly newsletters.  We're not always going to be perfect, but because we always do our best and try not to overpromise, we hope that we're always going to be trustworthy.  Your calls and e-mails are very helpful - please keep contributing.

      **These are our opinions. We're not authorized, or willing, to express those 
          of others.**  

     

    This article was prepared by Ben Giumarra with the support of other experts at SCA. Ben is a specialist in lending and regulatory compliance.

    SCA has consultants like Ben available to provide as-needed consulting support and advisory services. Specialties include risk management, quality control, system implementations and conversions, secondary markets, financial analysis, and other areas related to mortgage banking. 

    Hourly, retainer, and project-based options available. 

    Quick Links

  • October 12, 2016 1:44 PM | Anonymous

      About Us | Services | EmployersJob Seekers | Contact Us

    October 12, 2016
    Time to Review Compliance Decisions for Efficiency (and maximize any exemptions available)?
    Mortgage lenders mostly survived these past several years of regulatory overhaul. Survival was the first challenge. So congrats!

    New Challenge
    But the challenge now is to operate effectively and efficiently, with strong customer service, and do all those other things that we should be doing. This goes beyond mere compliance. 

    To do this, I think many lenders are ripe to to revisit some of the decisions made with survival-only in mind. To be fair, survival over this period has required quick decisions with imperfect information. The regulations changed again and again, systems vendors tweaked technological tools until midnight of the last hour, and business managers struggled to understand how to correctly revise department processes and structure. As a result, any institution that survived probably made some decisions that were over-conservative, unnecessarily affecting customer service and/or efficiency.

    So let's set to work revisiting processes, policies, etc. with an eye towards this new challenge. Why now? Well, we have better interpretations on regulations, more information from all sorts of parties, and more time than before. 

    Specific Example: Small Creditor QM
    So you don't think this is just theoretical nonsense, let's look at one specific issue. Let's look at the regulatory exemption for Small Creditors regarding the Ability-to-Repay/Qualified Mortgage Rule implemented in 2014 under the Truth-in-Lending Act.
     
    Many institutions have disregarded this exemption. Now, armed with better information and more time, those institutions should look to maximize this exemption (if available) to improve efficiency and customer service.
     
    Obviously you understand the ATR/QM Rule, but just a basic reminder. Imagine a traffic law that required drivers to travel at a "reasonable" speed, with stiff penalties for exceeding that limit. What might be considered reasonable is highly subjective- it's hard to know when you're safe. Imagine also the law protects drivers that travel at 43 miles per hour or slower, guaranteeing that such a speed will be considered "reasonable." Well that's how the ATR/QM Rule works.  You don't need the protection of QM, but you sure want it!
     
    With the ATR rule prohibiting any mortgage loan that the borrower cannot reasonably afford, several different categories of QM provide a clear safe zone from violations of this vague standard. The regular QM category requires both adherence to a maximum debt-to-income ratio of 43% and a rigorous set of underwriting standards found in so-called appendix Q. But there is another QM category available to smaller lenders only that requires neither; it is much easier to satisfy. Avoiding appendix Q frees underwriters to use common sense underwriting, resulting in more effective and efficient loan decisions, better customer service, and maybe even a few more loans. Avoiding the 43% cap also helps.
     
    So why aren't all Small Creditors using this exemption to the fullest? Why would a Small Creditor ever self-impose Regular QM requirements on portfolio loans? Why are so many institutions originating so-called "non-qualified mortgages" and assuming the additional regulatory and civil liability risks associated with them instead of following Small Creditor standards?
     
    Years ago when lenders "survived" the ATR/QM Rule, I think the decision to "play it safe" by avoiding the Small Creditor exemption was reasonable given the need to make quick decisions with imperfect information. But on closer look, in an effort to go beyond mere survival and start to thrive again, this is the type of decision we need to rethink to survive this next challenge.
     
     
    P.S. Note that the original ATR/QM Rule was changed so more institutions will qualify as Small Creditors. The current limits are $2.06 billion and 2,000 first lien mortgages originated per year (but only sold loans count, portfolio loans are not included in the 2,000 count). The original rule limited originations to 500.


       
    In Other News
    • How do you underwrite AirBNB homes? Will you include that as income? D you still classify it as a residential dwelling? As analyzed in this article, some lenders may look very negatively upon this, making it hard to refinance. Of course there's also the question of whether the borrower is actually reporting any such income, but note the IRS doesn't require you to report AirBNB income if you rent it out less than 15 days per year, see here.
    • Did you see the CFPB LendUp enforcement action?
    • The mtg industry is buzzing over yesterday's PHH v CFPB ruling.  What do you think? Still processing it, but not sure I see how big an impact this will have. And as far as the judge's political support (because this is not the Supreme Court), keep in mind he was Ken Star's assistant on the Clinton indictment. 
      • Did the Court find the CFPB unconstitutional? Yes. They basically said the CFPB director has too much power. BUT, that didn't make as much of a difference as you might think - it just means that now the President will be able to fire the Director more easily (currently he's very much independent from the President). I wouldn't be doing my job if I didn't share something from this highly interesting case, so try this on for size:

    "The independent agencies collectively constitute, in effect, a headless fourth branch of the U.S. Government. They exercise enormous power over the economic and social life of 5 the United States. Because of their massive power and the absence of Presidential supervision and direction, independent agencies pose a significant threat to individual liberty and to the constitutional system of separation of powers and checks and balances."


     


     


     

    In honor of Wells Fargo making the rest of us look TERRIBLE, I thought I could share some portions of the 2013 District Court Mass. case Hennings v. Wells Fargo

    This case involved a stated income mortgage loan. The borrower alleged that Wells Fargo (actually a bank it purchased) underwrote the loan by ignoring his many business expenses. Had they considered these costs, he argued his true DTI was 94.5%. He also argued that he had never received a GFE or TIL. Ultimately, Wells Fargo won on a technicality (that I don't believe is important to discuss), with the court having this to say:

    And so, Wells Fargo wins on a technicality. The Court never addresses the merits of this case and expresses no opinion thereon. Still, it is appropriate to point out that, were Henning to prove his case on the merits, the conduct of Wells Fargo would be shown to be nothing short of outrageous. On the other hand, perhaps if Wells Fargo addressed the merits, its conduct would be vindicated by fair-minded American jurors. A quick visit to Wells Fargo's website confirms that it vigorously promotes itself as consumer friendly, Loans and Programs, page within Home Lending ... a far cry from the hard-nosed win-at-any-cost stance it has adopted here.
     
    The technical (and now obsolete) preemption defense upon which Wells Fargo relies is an affirmative defense which can be waived... The disconnect between Wells Fargo's publicly advertised face and its actual litigation conduct here could not be more extreme. These facts lead this Court to inquire whether Wells Fargo wishes to address Henning's claims on the merits. After all, it may be that Wells Fargo has done nothing wrong.


                                                      _________________

    "You've done something I've never seen in 10 years: You have united this committee -- and not in a good way."

    ~ Senator Jon Tester said to Wells Fargo CEO in reference to the Senate Banking Committee  
    ____________

    Thanks so much for reading our weekly newsletters.  We're not always going to be perfect, but because we always do our best and try not to overpromise, we hope that we're always going to be trustworthy.  Your calls and e-mails are very helpful - please keep contributing.

      **These are our opinions. We're not authorized, or willing, to express those 
          of others.**  

     

    This article was prepared by Ben Giumarra with the support of other experts at SCA. Ben is a specialist in lending and regulatory compliance.

    SCA has consultants like Ben available to provide as-needed consulting support and advisory services. Specialties include risk management, quality control, system implementations and conversions, secondary markets, financial analysis, and other areas related to mortgage banking. 

    Hourly, retainer, and project-based options available. 

    Quick Links

  • October 05, 2016 1:41 PM | Anonymous
      About Us | Services | EmployersJob Seekers | Contact Us

    October 5, 2016
    Are you delaying closing unnecessarily? (Define "product" change for TRID compliance)
    TRID requires a new 3-day waiting period when the loan product is changed(note also when APR changes).  But what do they mean by "product"? Let's discuss what it means and (more importantly), what it does not mean - as we suspect lenders may be delaying closing in some cases where they don't need to.


    Loan Scenario
    You deliver a Closing Disclosure to a mortgage borrower on Monday, with plans to close on Friday. The product is a 30-year fixed rate loan through a state housing agency. On Wednesday, something changes with the loan (maybe the borrower no longer qualifies with this investor, of maybe the borrower wants to change to an ARM). Underwriting approves the change and you disclose a revised Closing Disclosure on Thursday. Can we close on Friday or is a new 3-day waiting period required?

    Answer
    The simple rule is this: If the "product" on page 1 of the Closing Disclosure is changed, then that qualifies as changing the "product" for purposes of determining whether a new 3-day waiting period is required. And if there is no product change if that portion of the CD doesn't need to change. The rule for how to disclose this on page 1 is the same as the test for whether a new waiting period occurs.
     
    See the picture:





    Examples:

    Does NOTcount as changing the "product" (no 3-day waiting period required):
    • Change from FHA to conventional
    • Change from conventional to state housing agency
    • Increase loan term from 20 to 30 years
    • Change from home equity to refinance (i.e. decided to payoff existing lien)
    • Switch from no cash out refinance to cash out refinance
     
    DOES count as changing the product:
    • Change from fixed to an ARM
    • Change from 3/1 Adjustable Rate to 5/1 Adjustable Rate
    • Change from 5/3 to 5/1

    And that's all folks!


    **For those going extremely deep into these rules, note that the CFPB's website "e-regulations" contains a typo that muddies the water on this issue. Check the Federal Register or other official source to verify that the information cited in this newsletter is correct.**


      
    In Other News
    • Want to dig into the hottest regulatory issues with a group of other risk officers? Sign up here for the MBA's Risk Manager's Forum or drop me an e-mail. Our second session is tomorrow. 
    • Maybe some relief from Fair Credit Reporting lawsuit concerns? The US Supreme Court issued a decision in Robins v Spokeo, with Anthony Sharett explaining that, "In practical terms, the Supreme Court decision means that a consumer cannot sue companies, including mortgage lenders and servicers, under the FCRA for mere technical violations of the law." 
    • SCA excited to have three new employees starting next week: Lance McGrath in systems consulting and Julie Thibodeau and Cheryl Kennedy in Quality Control.

    Trying to drive change at your organization? Have an idea that things could be done better? How about this advice from "For Your Improvement" by Michael Lombardo and Robert Eichinger:

    Focusing on the negative? Bring a solution if you can. Nobody likes a critic. Everybody appreciates a problem solver. Give people ways to improve; don't just dump and leave. Tell others what you think would be better -- paint a different outcome. 



                                                      _________________

    "Indecision is the thief of opportunity."

    ~ Jim Rohn, 20th century business philosopher 
    ____________




    Thanks so much for reading our weekly newsletters.  We're not always going to be perfect, but because we always do our best and try not to overpromise, we hope that we're always going to be trustworthy.  Your calls and e-mails are very helpful - please keep contributing.

      **These are our opinions. We're not authorized, or willing, to express those 
          of others.**  

     

    This article was prepared by Ben Giumarra with the support of other experts at SCA. Ben is a specialist in lending and regulatory compliance.

    SCA has consultants like Ben available to provide as-needed consulting support and advisory services. Specialties include risk management, quality control, system implementations and conversions, secondary markets, financial analysis, and other areas related to mortgage banking. 

    Hourly, retainer, and project-based options available. 

    Quick Links

  • October 01, 2016 11:47 AM | Anonymous
      About Us | Services | EmployersJob Seekers | Contact Us

    October 1, 2016

    The Benefits of a Robust Reporting Library

    (Special Technology Edition) 

    SCA's systems expert Paul Bates will be authoring a monthly newsletter to help lenders keep their systems in compliance with current regulations.
    The Navigation System for Today's Successful Lender
    (and why reports can make you grumble)

    I spend a lot of time talking to lenders about technology. One of the things that I find interesting is that when the subject of reporting comes up, the two things we hear the most are grumbles and Excel. Grumbles because they don't like the standard reports their Loan Origination System (LOS) provides, and Excel because that's how they create reports.

    Canned (aka standard) reports aren't good enough
    Every system comes with standard, or "canned" reports. These were designed to be used by any lender. But they were not designed for you. Every operation does basically the same thing, and has the same general reporting needs: pipeline; new applications; closed loans; exception; and administration. Every lender, though, does things a little differently than their competitors. Your reports should measure the way you do business. The system vendor designs the standard reports for every user - a compromise by design. This disconnect is the root cause of the grumbling. When I was a lender and had to use a standard report, I grumbled too.
     
    What makes a good custom report?
    The reports in a robust reporting library possess key characteristics: they are designed for their particular audience; transform data into actionable information; contain only the required data and no more; and are visually appealing.
     
    Different team members have different responsibilities, and reports should be tailored to their needs. The library will have specific versions of the same report, and be designed for a specific audience. Let's use the pipeline report for example. The report for Board/Senior Management will have summary information, and also include a graphical presentation. It is a big picture view. The Department Manager report will have more detail, and slice the information by either production area and/or user. There should also be specific reports for underwriters, processors, and closers. As a general rule of thumb, the level of detail presented increases as you work your way down the organizational structure
     
    Reports are meant to transform data into information, but a well-designed report transforms data into actionable information. They should identify potential risks, or potential opportunities. Let's stay with the pipeline example. If key performance metrics, such as average age of loans in a particular status, or average time it takes a user to perform a defined function, management will be able to act to changes in the environment instead of react. Data sorting is also a good example. If the line user's report is sorted by loan purpose and then by days in process, they can use this to know which files to prioritize. I believe a well-designed, robust reporting library can be more efficient than many of the workflow tools for many lenders.
     
    Well-designed reports contain the information needed, but no more. When creating your library, think about what information is required to effectively act. If the audience only uses a particular piece of information presented on occasion, it is taking up valuable real estate. Presenting only the required information is also key when auditors or regulators are the audience (yes, they should have their own set in the library).
     
    Keeping presented information to the required minimum also enhances visual appeal. Design your reports to be visually appealing - not just for the Board/Senior Management audience. Something as simple as making sure all the fields line up across the page makes for less eyestrain. Line users spend a lot of their day looking at computer screens and documents, and easier readability increases use.
     
    Excel is great - but doesn't replace good reporting
    Don't get me wrong - I love Excel. Excel is good at many things, and I use it daily. It does not shine as a report creation tool. Many systems generate a report with Excel as the output, and that is a must-have feature for many reasons. If you are using Excel to create your reports, you are spending significantly too much time on manual data entry, and creating data error risks.
     
    Most LOS platforms have a couple of levels of reporting. Standard reports come directly out of the system, and in many cases are not customizable. Enhanced reporting capabilities are an additional option, provided through a 'data warehouse' model, where LOS data is pushed to a separate database, usually located within the organization. Some vendors provide enhanced reporting as a standard feature. If they do, take full advantage. If they do not, I strongly recommend talking to your vendor about their reporting options. The benefits far outweigh the costs.
     
    The data warehouse provides the source for designing the robust library, and much more. Reports will be designed using either a vendor-supplied or common 3rd party report writer. The data warehouse model also allows you to combine data from multiple sources. Think of combining production and servicing data. This can be done in Excel, but you are back to a time-consuming process with data entry risks.
     
    In Conclusion
    Designing and implementing a robust reporting library is a significant project, but is key to staying competitive. Transforming data into actionable information allows you to see where you have been, where you are, and where you are going as a successful mortgage lender.
     
    Please feel free to reach out. I can be reached at pbates@scapartnering.com
     
    Coming next month: MISMO XML - the language of lending, and what's in it for me.
      
                                             _________________

    "Just because something doesn't do what you planned it to do doesn't mean it's useless."
    (Thomas Edison)

    ______________

     
    Thanks so much for reading our weekly newsletters.  We're not always going to be perfect, but because we always do our best and try not to overpromise, we hope that we're always going to be trustworthy.  Your calls and e-mails are very helpful - please keep contributing.

     

     

    This article was prepared by Paul Bates with the support of other experts at SCA. Paul is a specialist in mortgage lending systems.

     

    SCA has consultants available to provide as-needed consulting support and advisory services. Specialties include risk management, quality control, system implementations and conversions, secondary markets, financial analysis, and other areas related to mortgage banking

     

    Hourly, retainer, and project-based options available


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