“The explosion in new regulations and compliance requirements has actually come to fruition, literally as we speak,” said Avi Naider, CEO of Aces Risk Management Corp., Fort Lauderdale, Fla.
“The industry is driving product changes.” For example, Fannie Mae and Freddie Mac have prefunding quality control requirements for lenders and firms that outsource QC need to audit and create reports of those third-party QC firms. “These are major, fairly dramatic changes that have finally come to fruition,” Naider said. Naider also noted that risk retention rules from the Dodd-Frank Act, while currently not established, will requireQC function to define a Qualified Residential Mortgage and whether that mortgage requires a lender to hold 5 percent risk or not.
“This is a living, breathing document that is going to be defined by different federal agencies,” Naider said. “As the legislation gets defined, how do you keep up with it?” Federal agencies already approved a proposed rule for comment that would implement risk retention provisions of the Dodd-Frank legislation for residential and commercial mortgage-backed securities, including an exemption from QRM requirements.
However, the Mortgage Bankers Association said QRM offers a “far too narrow door to affordable private mortgage financing.” With a 60-day comment period, the final rule could change from the proposed rule and create further compliance changes. “It is driving a narrower communication barrier between originations and quality control centers,” Naider said. “As recently as a few years ago, there were silos. There was the origination side totally driven by production volume and there was the quality control side. Many businesses did not understand quality control. Now, that’s changing pretty dramatically.”
Eric Rawlings, chief technology officer at Digital Risk, Maitland, Fla., said regulatory changes also require nimble systems because changes can occur daily, possibly hourly, and workflow needs to be configurable.“[Vendors] have to give their clients the ability to change [rules] without involving a long change cycle,” Rawlings said. “It is not efficient enough for two months IT time to plan that out and implement it. A lot of times, it has to be done overnight. BPM [business process management] or workflow processes are critical in that.”
“The explosion in new regulations and compliance requirements has actually come to fruition, literally as we speak,” said Avi Naider, CEO of Aces Risk Management Corp., Fort Lauderdale, Fla.
“The industry is driving product changes.” For example, Fannie Mae and Freddie Mac have prefunding quality control requirements for lenders and firms that outsource QC need to audit and create reports of those third-party QC firms. “These are major, fairly dramatic changes that have finally come to fruition,” Naider said. Naider also noted that risk retention rules from the Dodd-Frank Act, while currently not established, will requireQC function to define a Qualified Residential Mortgage and whether that mortgage requires a lender to hold 5 percent risk or not.
“This is a living, breathing document that is going to be defined by different federal agencies,” Naider said. “As the legislation gets defined, how do you keep up with it?” Federal agencies already approved a proposed rule for comment that would implement risk retention provisions of the Dodd-Frank legislation for residential and commercial mortgage-backed securities, including an exemption from QRM requirements.
However, the Mortgage Bankers Association said QRM offers a “far too narrow door to affordable private mortgage financing.” With a 60-day comment period, the final rule could change from the proposed rule and create further compliance changes. “It is driving a narrower communication barrier between originations and quality control centers,” Naider said. “As recently as a few years ago, there were silos. There was the origination side totally driven by production volume and there was the quality control side. Many businesses did not understand quality control. Now, that’s changing pretty dramatically.”
Eric Rawlings, chief technology officer at Digital Risk, Maitland, Fla., said regulatory changes also require nimble systems because changes can occur daily, possibly hourly, and workflow needs to be configurable.“[Vendors] have to give their clients the ability to change [rules] without involving a long change cycle,” Rawlings said. “It is not efficient enough for two months IT time to plan that out and implement it. A lot of times, it has to be done overnight. BPM [business process management] or workflow processes are critical in that.”
