According to QuestSoft’s third annual compliance survey of lenders, the Dodd-Frank Act ranks as the greatest mortgage compliance concern in 2011. The series of laws passed last year replace the Real Estate Settlement Procedures Act (RESPA) as the highest concern, which topped the list the previous two years.

The survey polled 405 lenders on their level of concern for regulatory changes affecting the mortgage industry in 2011. Seventy percent of lenders responded to the implementation of new regulations under the Dodd-Frank Act as the most significant compliance concern. Rounding out the top three identified concerns were RESPA fee tolerance rules (50 percent cited major concern) and other RESPA issues (46 percent cited major concern).

“It was no surprise to see Dodd-Frank changes as the highest ranking compliance concern among lenders, since the changes will significantly impact lenders of all sizes and the associated rules are being announced right now,” said Leonard Ryan, president of QuestSoft. “It is also interesting to see that even a year after the RESPA’s major overhaul; lenders are still concerned with how to comply with fee tolerance rules and other RESPA-related loan disclosure issues.”

Loan officer compensation, which officially became active in April, and SAFE Act changes, both tied as the fourth highest concern, with 40 percent of lenders citing these regulations as a major concern. Though loan officer compensation received fewer medium concern percentage points, it placed fourth due to more survey participants indicating they were subject to the ruling.

Surprisingly, concern for the multi-state exams that many lenders will face this year remained at the bottom of the list for the second consecutive year; with only 19 percent of respondents citing them as a major concern.

“Although multi-state exams are not required for all lenders, more than half of QuestSoft’s clients will be mandated to partake in state-level exams and be required to export exact loan information on all originated loan files to the agency conducting the exam,” Ryan said. “It does appear that lenders are continuing to place their focus on the most immediate changes based on nationally published deadlines. Unfortunately for them, many state examiners are beginning to request the data for exams and giving lenders only a few days to comply. Therefore, lenders should prepare now to adhere to these long-term compliance protocols.”

QuestSoft provides lenders with multiple software tools to handle federal, state and local lending regulations. Compliance EAGLE is an automated compliance review tool that evaluates a loan file for fulfillment with the full range of mortgage lending regulations, including RESPA, Home Mortgage Disclosure Act (HMDA), Truth in Lending Act (TILA), Community Reinvestment Act (CRA), flood determination requirements and other consumer and predatory lending laws in seconds. Other products offered include HMDA RELIEF and CRA RELIEF, which provide lenders, banks and credit unions specially designed tools to ease the collection, analysis and reporting of HMDA and CRA data.

AVAILABLE SIDEBAR TABLE:

In a survey of 405 lenders, the level of concern cited for compliance issues in 2011:
		High Concern		Medium Concern		Low Concern
Dodd/Frank Changes		70%		22%		6%
RESPA Fee Tolerances		50%		36%		11%
Other RESPA Issues		46%		39%		12%
Loan Officer Compensation Rules		40%		24%		20%
SAFE Act- Nationwide Mortgage Licensing System		40%		41%		17%
Increased Fair Lending Exam Scrutiny		36%		39%		19%
July 21, 2011 Launch of CFPB		36%		41%		16%
Increased CRA Exam Scrutiny		27%		35%		20%
State Consumer Lending Laws		25%		45%		23%
Fraud – Borrower Identity		25%		42%		31%
Risk Retention/ Qualified Mortgages		24%		42%		24%
Fraud – Income Verifications		24%		43%		30%
Fraud – Loan Flipping, Collateral		22%		39%		36%
Multi-State Exam Process (LEF)		19%		29%		24%
Totals may not add up to 100% due to rounding or responses of “Not Applicable”

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