Weathering the Regulatory Storm

May 1, 2009, brought with it a storm of new regulations intended to reform the mortgage industry — a storm that proved challenging for lenders. One area of focus for lawmakers had to do with appraisal management. The result has been more disclosures, which cost lenders more money, take more time and add complexity to the process. Some lenders are still working to be fully compliant with the new rules. One element in the regulatory storm, known as Fannie Mae’s Home Valuation Code of Conduct, (HVCC), states that the lender shall ensure that the borrower is provided a copy of any appraisal report concerning the borrower’s subject property no less than three days prior to the closing of the loan. And already in effect in Illinois since June 1, 2008, the Illinois Public Act 095-0691 requires lenders to make appraisal reports available to borrowers within three (3) business days of the scheduled loan closing. In addition to appraisal reform, Congress introduced The Housing and Economic Recovery Act of 2008, HERA. This new collection of rules requires lenders to, among other things, enhance mortgage disclosures and Truth in Lending Act disclosures. Failure to provide these disclosures correctly and in a timely manner will result in double penalties. In fact, much of the new legislation deals with how and when lenders provide information to legislators, borrowers and other parties to the transaction. Consequently, lenders who are already moving toward paperless lending have had an easier time complying and documenting that they have done so. Lenders that can share appraisal information with borrowers electronically have seen little, if any, change in their process. Moreover, those that already use eLynx’s expedite platform became fully compliant simply by adding one rule to their normal process. When the appraisal comes in, they can now automatically send a copy to the borrowers. For a more in-depth discussion about recently enacted appraisal regulations, or to find out how eLynx will cover your institution from end to end, call us today at 800.466.5969.