LoanTek Mortgage Pulse

Keeping Mortgage Professionals up to date on the issues that matter to their business.

LoanTek’s Interview with Marc Savitt, President NAIHP-What do Mortgage Professionals Need to Know about the CPFB?

In LoanTek’s April 30th interview with Marc Savitt, we discussed his experience with the Consumer Finance Protection Bureau and delved further into the subject of ‘What Mortgage Professionals Need to Know about the CFPB and Their Regulatory Requirements’. Savitt is currently the President of the National Association of Independent Housing Professionals (www.naihp.org), Past President and Legislative Chair of the National Association of Mortgage Brokers (www.NAMB.org). Marc has been an industry leader and lender for over 30 years. As President of the NAIHP, Marc has met with the CFPB 11 times and has an insider viewpoint of what is transpiring in Washington and how it will affect mortgage companies. The NAIHP is an association dedicated to acting as the Legislative voice of small business housing professionals. Few industry professionals have a better perspective on the CFPB and the upcoming regulatory challenges facing Mortgage Originators.

On the surface Marc Savitt approaches the CFPB with a positive outlook. Marc recently spent an hour with Richard Cordray, the first Director of the Consumer Financial Protection Bureau. According to Savitt, “Cordray is no regular Washington Bureaucrat”. Cordray’s previous career prepared him to lead the CFPB. Prior to Cordray’s appointment to the CFPB he served as Ohio’s Attorney General for consumer complaints. Marc was impressed by Corday’s in depth questions and understanding of the issues facing the mortgage industry. Savitt describes Cordray and his staff as “smart, engaged and willing to handle the challenges to position the CFPB for effective management of this new governmental agency”.

In Marc’s perspective, the CFPB is working to coordinate regulatory efforts with State Agencies. With the goal of the CFPB of limiting replication of policies and maximizing and coordinating the State staff efforts; a welcome and rare find in the mortgage industry’s current regulatory quagmire. Key initiatives within the CFPB are to ‘repurpose and refine’ to gain efficiency. The CFPB is working with industry professionals to assess best practices. As an example, Cordray’s staff is no stranger to the beleaguered Good Faith Estimate and the notion of creating document efficiency for the consumer. If CFPB is successful in this endeavor the consumer will have better lending information in a one page document and better decisions will be made (remember the old Good Faith Estimate?). A tireless advocate, Savitt is adding on to the work he’s done on HVCC and is now working on improving The Good Faith Estimate and the Truth in Lending. When the document has been finished, CFPB will place their revisions into the Federal Registry.

Marc Savitt continually champions a level playing field for all mortgage originators. The concept is one that provides clarity and competition in the marketplace – both to the end benefit of the consumer. In making sure Mortgage Professionals, in their respective State and Federally Chartered arenas, are treated the same for regulatory requirements, Marc asserts that Banks and Mortgage Companies should have the same licensing process and expectations. Regulation that requires all originators to keeping current on compliance issues, like those promulgated by the CFPB, further protects the consumer.

Overall, Savitt expressed that he is not concerned about any new requirements brought forth by the CFPB. As an informed veteran Marc will insure that his company will learn the new requirements and comply. Marc is not certain, however, how all mortgage professionals will fare. This is especially true given the disparity of education requirements (none) within the federally chartered institutions. As for this author’s opinion,  our industry would be in a better position, as would the overall economic health of our Country, were there more mortgage professionals like Marc Savitt. Marc is passionate about the mortgage environment, an environment that requires all originators to be informed and educated, with a better end result for the consumer.

As a final question, we asked Marc, What would you want readers to ‘take away’ from this interview?  He responded, “Stay connected”. You can learn more about the NAIHP at www.naihp.org or ‘like’ their page on Facebook at https://www.facebook.com/NAIHP .

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LoanTek Mortgage Pulse

Our guest this week, Joe Dahleen, discussed The Consumer Financial Protection Bureau (CFPB) and UDAPP.  Joe Dahleen was chosen for this interview because he is a visionary Lending Executive with over 20 years of professional experience as a mortgage banker and as a technology solutions leader. On April 18th, 2012 we caught up with Joe prior to his engagement with Fiserv – where Joe would be speaking to lending industry leaders on the regulatory changes presented by the CFPB. 

We asked Joe about the CFPB (Consumer Financial Protection Bureau) and the impact it will have on Loan Originators and lending companies; Joe simply stated, “Complacency is a thing of the past.” For the CFPB, protecting mortgage borrowers is their primary focus. To ensure this safety the CFPB is going to require stringent transparency, supervision, and accountability of the lenders that engage with the consumers of tomorrow. Among other areas of compliance the CFPB is charged with regulating unfair, deceptive or abusive acts or practices (UDAAP) among the lending community. Though these types of regulatory bodies have existed for years in the investment and insurance industries the formalization of CFPB’s mortgage policy is occurring now and implementation is planned for 2013. So what do you need to know as a Mortgage Professional?

A lender now has an affirmative responsibility to proactively protect consumers from unfair and deceptive practices. Joe Dahleen emphasized CFPB’s requirement for a UDAAP Plan. A lender must codify a UDAAP plan; this UDAAP Plan serves as a roadmap whereby lenders have a compliance mechanism in place to identify, prevent, moderate, and evaluate procedures on an ongoing basis. The purpose of the UDAAP Plan is to both prevent UDAAP violations and mitigate the results should a violation occur. Another significant requirement by UDAAP requires mortgage companies to track all consumer complaints regardless of how the complaint is communicated. This requires compliance measures on all ‘consumer facing media’ including Twitter, websites, texts, LinkedIn, and Facebook. In addition to numerous other stipulations on websites and mortgage based social media. The CFPB maintains that these web portals must have links to the public NMLS as well as the CFPB complaint portal.   

I asked Joe what a lender will need to execute the continuous monitoring of the lender’s UDAAP Plan. Joe Dahleen asserted that compliance with CFPB’s policies will require a full time dedicated individual, or board of individuals. This person(s) will be required as a point of contact for all complaints under CFPB’s umbrella and will need to work closely with the CFPB and their State and Federal regulatory bodies.  In the event of complaint, the lender’s compliance team must submit a written acknowledgement of the complaint within (5) days and a then issue a qualified written (QWR) response given within 30 days.  Joe stated there are other compliance measures required to meet the new UDAAP standards – requirements that may require compliance measures not often seen in small to medium sized mortgage companies. Unlike the Graham, Leach, and Bliley Act – which allowed for the compliance measures to be reflective of the scope and scale of the supervised entity – CFPB’s UDAAP enforcement allows for no variance. All companies, regardless of size, must have fully compliant measures in place to remain in compliance.

Finally, we asked Joe ‘Okay that’s a boat load of requirements, is there anything else?’ Joe recommended using technology that can efficiently monitor and manage all the loan officer activities from lead generation to 3rd party business. These measures include the requirement of robust reporting – reporting measures that consolidate the many silos of technology that hold important data (LOS, LMS, CRM)  will need to be implemented.

Joe is no stranger to the technical requirements of mortgage lenders. He currently serves on the Advisory Board of Zillow. Throughout Joe’s career, Joe’s specialty is social media marketing, loan file process/procedure and lender compliance. In 2009 Joe worked with Mark Thompson to create marketing strategy and website technology for individual companies. That collaboration led to the development of, www.ileadnow.com. The ‘iLEADnow’ solution allows mortgage companies to build a better brand awareness. Mark’s unique solution allows Loan Officers to have personalized pages, and optimize Social Media in a uniform manner. ‘iLEADnow’ services are designed to fill CFPB’s requirements by controlling consumer-facing content and communication through social media channels.

To learn more about CFPB and UDAAP, please visit these resources.

CFPB Press Release 4-10-12

The Factsheet on the Mortgage Service Rules under Consideration. http://files.consumerfinance.gov/f/201204_cfpb_factsheet_putting-service-back-in-mortgage-servicing.pdf

Small Business Review: Overview of the Rules: http://files.consumerfinance.gov/f/201204_cfpb_small-business-review-outline_mortgage-servicing-rulemaking.pdf

Small Business Review: Questions for Input: http://files.consumerfinance.gov/f/201204_cfpb_small-business-discussion-issues_mortgage-servicing-rulemaking.pdf

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