I am sure most lenders saw the recent news that the CFPB may be penalizing Nationstar (Mr. Cooper) over possible RESPA and other regulations. We certainly feel sorry for any employees, customers or investors that were negatively impacted.
Many lenders are still using older technology that is an attempt to cobble together all in one system using various acquired technology platforms. The truth is that because some of these systems lack the necessary controls that ensure the loan is always in compliance, this kind of events may be more commonplace than realized.
Outdated uses of loan fee templates, manual user tasks and lack a normalized encrypted database are part of the problem. A strong system of record for every single loan level event is what auditors are looking for. The ability to have intelligently automated workflow processes that remove manual tasks and monitor the database for any compliance issues is what today’s lender demand. Enforcing rules to the field level at the point of tie to avoid costly mistakes helps to prevent the events that are causing expensive lender cost to cures and CFPB penalties.
Hopefully, we will see less of these in the future but if you do not have a modern system the only way the problems are solved is more people to review and catch the errors. Not what today’s lenders want to hear when production costs keep rising.