How Technology Is Transforming Compliance in the Residential Mortgage Industry

Consumer protection regulations in the mortgage lending process have grown exponentially since the Great Recession. U.S. lenders must comply with federal mandates, regulations from 50 different states and nearly 200 different license types utilized by non-banks. Every step of the mortgage lending process requires specific disclosures, creating significant regulatory compliance risks. Fortunately, technology is quickly evolving to address the challenge.

In September 2020, SitusAMC announced the acquisition of LogicEase Solutions Inc., parent of ComplianceEase®, the maker of the leading automated compliance software for residential mortgages, ComplianceAnalyzer®. Since its founding in 2001, ComplianceEase has processed audits for over 90 million loans, supporting mortgage originators, secondary market participants, and federal and state regulators. The company’s flagship product, ComplianceAnalyzer®, complements SitusAMC’s residential technology offerings, including its systems of record for the custodial and warehouse space (emBTRUST and ProMerit); conduit and pipeline management system (RateLock); document classification and data extraction technology (Acuity); document management system (DocAcuity); and loan accounting and master servicing system (SBO.NET).

ComplianceEase founder John Vong, who joins SitusAMC as Vice Chairman of Technology, and ComplianceEase CEO Michael Jackman discuss the ways technology is transforming compliance in the residential mortgage industry, and how the integration with SitusAMC will facilitate better solutions for lenders.

Why was SitusAMC the right partner at this time? 

JV: We see a great deal of synergy between ComplianceEase and SitusAMC’s rapidly growing technology offerings to digitally transform the residential mortgage origination and servicing processes. In addition, our cultures and strategic vision are similar. While we are a leader in the originations space, ComplianceEase has a relatively small footprint in secondary market and loan servicing, and the leadership SitusAMC enjoys in that space provides opportunity for growth.  

MJ: ComplianceEase has built several dozen integrations with our clients’ loan origination software (LOS) platforms. This allows them to utilize our software without having to enter data directly into our system. SitusAMC is not a LOS provider, so our alliance not only avoids a competitive scenario that could put those strategic relationships at risk, but it brings the resources and expertise to expand our suite of solutions for clients.

Describe the shared strategic vision between the two companies and how the merger is helping to achieve it.

JV: ComplianceEase is currently a point solution, which allows clients to quickly and easily determine if a loan is compliant. Our technology serves eight of the top ten marquis residential lenders. We see our firm evolving into a comprehensive workflow solution provider, helping clients respond to the information yielded by the software, and offering specific solutions for regulatory issues and risk management. Our integration with SitusAMC will allow us to achieve that goal more quickly, which is a great benefit to our clients.

What are your most important goals out of the gate post-merger?

MJ: Servicers face the most intense regulatory scrutiny we’ve seen in years because of COVID-19 and the resulting forbearance actions. As loans move out of forbearance, the unprecedented volume of loans requiring default processing will increase the need for comprehensive regulatory scrutiny to protect borrowers. As an integral member of the SitusAMC family we will be able to merge ComplianceEase’s experience building the most widely accepted automated regulatory compliance platform for origination and secondary with SitusAMC’s servicing expertise, thereby accelerating our ability to bring an automated servicing compliance solution to the market.

How have compliance challenges evolved since the Great Recession for mortgage originators and secondary market participants?

MJ: One of the biggest challenges is compliance with the 2018 TILA RESPA Integrated Disclosure rule, or TRID. This truth in lending measure combined two complex federal regulations into one and has proven difficult for lenders to implement and comply with. Another challenge is the detail of all the state regulations, and laws related to licenses. Across the country, there are over 200 licenses under which lenders can originate loans. Each of these license types are subject to unique compliance criteria, creating a complex myriad of regulations for lenders to wade through. 

JV: The devil is in the details when it comes to regulatory compliance, and many solutions don’t provide the breadth and depth of our analysis. We have a staff of attorneys focused exclusively on legislative and regulatory changes, which we then implement into our products. As lenders take an application, originate and underwrite the loan, our behind-the-scenes compliance technology indicates whether they are 100 percent compliant at every step of the process before they close. This is why lenders trust our tools, and federal and state regulators use them to examine the institutions.

What are you most excited about going forward?

JV: I’m excited about the opportunity to combine our product family with SitusAMC’s technologies and create a holistic solution for regulatory compliance and more.

MJ: We continually learn from our customers – understanding their pain points, analyzing solutions and bringing them the automation they need as regulation complexity increases. Our partnership with SitusAMC will improve the number and quality of our solutions.

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