E3

Resources

Compliance and regulation

4 pieces.

All writing
FIGURE 1Government lending requirements stackEach layer narrows what applies, and the narrowest layer is the least visible.Federal consumer complianceTRID · ATR/QM · HOEPA · HMDA · RESPA · Reg BAgency programme requirementsFHA · VA · USDA eligibility and documentationProduct-level logic203(k) · manual underwrite · streamline refinanceConditional requirementsapply only when two or more conditions holdstack,they do notreplaceThe bottom layer is where checklists fail: a requirement in scope only because two other conditions are both true.Which rules a file brings into scope is a function of programme, property, occupancy and borrower characteristics.

Government Lending: Where the Severity of a Defect Depends on the Quality of Your Review

FHA's defect taxonomy ties severity to what the lender knew and can show. What that means for the evidence a review has to preserve.

5 min readFIGURE 1Four distinctions that are routinely collapsedTerms that sound interchangeable and are not.A findingwhat review identifiedis notA defectconfirmed — and each framework defines it differentlyA curefixes the fileis notA remediationfixes the causeContentwhat a document saysis notTimingwhen it arrived — content-independentCheck ran, passedassurance about the requirementis notCheck never ranno assurance at allReporting findings and defects interchangeably overstates defect rates and hides rebuttal capability.Both are usually reported as “no finding”. Recording which rules were skipped is what separates them.

Mortgage Compliance and Quality Control: A Reference to the Terms

A glossary of QC and compliance terms, each tied to the framework that defines it, because the same word means different things to FHA and Fannie Mae.

7 min readFIGURE 1What the rules govern: substance on one side, sequence onthe otherA large share of findings involve correct documents delivered outside a required window.GOVERNS CONTENTGOVERNS TIMINGTILA / Reg Zcredit terms, APR, finance chargeRESPAsettlement services, escrow, referralsATR / QMverified ability to repay; points and feesHOEPAhigh-cost triggers and restrictionsHMDAreported data must match the fileTRIDLE within a period of applicationTRIDCD received before consummationReg Zintent to proceed governs fee collectionECOA / Reg Badverse action notice within a periodFCRArisk-based pricing notice timingA timing failure cannot be found by reading the document. It requires records of events and a comparison of dates.ATR/QM effective 10 January 2014; TRID effective 3 October 2015.

The Regulatory Framework Behind Modern Mortgage Lending — and the Part That Is a Timing Problem

Delivery versus receipt, and three different definitions of a business day. The timing requirements that a careful reader cannot verify without a system.

5 min readFIGURE 1Fifty sets of rules is the easy partSome state distinctions are settled. The ones that cause disputes are not.SETTLED — SAFE TO ENCODECONTESTED — A MODELLING DECISIONCommunity property9 states, universally agreedJudicial foreclosureclose to half the statesBut: several states are bothjudicial only if the homeowner requests"Requires an attorney at closing"Published lists disagree, and define it differentlyBecause it conflatespresence · deed preparation · titlecertification · customA state can satisfy one and not the othersso the count is a judgement, not a factTwo questions, both required: which reading of the requirement is correct, and which reading was applied to this file.State law moves on its own schedule, and the applicable date is usually the note or application date, not the review date.

Fifty Sets of Rules Is the Easy Part. The Categories Themselves Are Contested.

Knowing the rule differs by state is the easy part. Recording which authority applied, from which date, and who approved that reading is the hard part.

6 min read