June 1, 2011

ComplianceEase, a provider of mortgage compliance and risk management solutions, announced the launch of version 2.0 of the company's automated Real Estate Settlement Procedures Act disclosure compliance solution—RESPA Auditor.

Since the launch of the initial version of RESPA Auditor, it has identified HUD-1 fee disclosure issues on almost 20% of audited loans, enabling lenders to save an average of $1,000 in reimbursements on each of those loans. Such errors can cut significantly into lenders’ profits.

With the mortgage industry clearly still struggling to place adequate controls on disclosures during origination, ComplianceEase has enhanced RESPA Auditor to enable lenders to implement complete end-to-end controls for their RESPA disclosure processes, from the initial GFE at application to the HUD-1 at closing.

ComplianceEase launched the initial version of RESPA Auditor in 2010 to target RESPA compliance at or after loan closing. This enabled lenders to ensure that fees disclosed on a loan's final HUD-1 form increased only within allowable tolerances from the loan's binding good faith estimate. Industry customers audited more then 120,000 loans over the last several months. Given the interest in RESPA Auditor, as well as the number of disclosure issues that the solution was identifying, ComplianceEase produced an enhanced version that expanded its RESPA compliance features to cover the entire loan origination process.

"After the initial version of RESPA Auditor had been in use for several months we were able to put some real numbers to the cost that disclosure issues are imposing on the industry,” Jason Roth, senior vice-president of product development & engineering, explained. “Our current RESPA Auditor clients, including lenders among the top five in the country, have identified violations that would have required more than $25 million to cure.”

The new version allows lenders to centrally manage and maintain the "changed circumstances" policies that govern when fees on disclosures are allowed to change. Audit reports can continuously test fees on multiple revisions of GFE disclosures to ensure that disclosed fees only change when allowed by the lender's policies. Meanwhile, the system maintains a complete audit trail of who documented the "changed circumstances" and enables online collaboration throughout the origination process. Before closing, lenders can check which GFE is binding and confirm that the HUD-1 will be within allowable tolerances.

Federal regulators won't be the only ones paying attention to the new federal disclosure requirements. Don Lampe, partner with Womble Carlyle Sandridge & Rice, PLLC, commented, "With the memorandum of understanding signed by the Consumer Financial Protection Bureau and the Conference of State Bank Supervisors back in January, it's clear that what we're going to see is much more coordinated enforcement of consumer disclosure requirements at all levels. We also expect to see more changes to consumer disclosures once the CFPB gets ramped up starting in July. Without technology in place to put controls on the disclosure process, lenders and service providers will be struggling to keep up."

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