Mortgage Loan Origination Software (LOS)

OpenClose Expands Functionality to Better Serve CFPB Mandates

Posted by Frank Bocchino on Fri, Feb 14, 2014


OpenClose has announced that is has implemented the functionality necessary for lenders to adhere to the Consumer Financial Protection Bureau’s (CFPB) new Qualified Mortgage (QM) and Ability-to-Replay (ATR) rules. The company’s client base is successfully processing QM loans.

OpenClose began adding numerous lines of code to its LOS well in advance of the CFPB’s QM deadline of Jan. 10, 2014. While at the point-of-sale, the loan officer takes the 1003 application, selects a product, and clicks a QM button that returns a decision if it’s a QM or non-QM loan. If it meets QM guidelines, an evaluation report and ATR certification are provided for the lenders’ records. 

Once the loan has been decisioned, it seamlessly moves through OpenClose’s LOS workflow where the loan is continuously checked in the background on a screen-by-screen basis for any changes that affect QM requirements. If a change is detected, an alert appears on the screen that the user is working on, which provides a pass/fail indicator along with messaging as to why there was a QM fail so the user can address it and proceed.

Custom business rules can be configured within the LOS to meet lenders' specific workflow preferences and easily implement any new rules the CFPB introduces. As a result, lenders are able to turn on a dime and remain QM compliant given changes to guidelines or the introduction of new rules.

“A lot of technology vendors are just jumping on the band wagon and touting QM readiness,” said Rob Pommier, SVP of business development and strategic alliances at OpenClose. “But there are lots of changes to LOS code bases that vendors must design, implement and test before being rolled out into a production environment. That’s no easy task. It took us many months of development and making alterations to our graphical user interface (GUI) in order to ensure that our end-to-end system is what I term ‘bulletproof QM ready.’”

“The work that OpenClose has done to their LOS to meet QM rules has made our jobs incredibly easy,” said OpenClose client Colleen Thingelstad, director of real estate lending at Horizon Credit Union. “We don’t need to think; the system automatically does everything for us. It has literally saved us countless hours of work, and our investors are very comfortable with accepting the system’s finding s.”

OpenClose hasprovided a number of different training activities in order to effectively prepare its clients to utilize the added QM functionality to its LOS. This was accomplished using individual hands-on training, webinars and detailed supporting documentation. All of the company’s clients are fully ready to accept, process and deliver QM loans to investors, in full accordance with CFPB rules and underwriting guidelines.

Created on 06/07/12 at 11:57:33

Topics: Compliance, OpenClose, Ability-to-Repay (ATR), qualified mortgage

Consumer Financial Protection Bureau Report Card: Part 2

Posted by Vince Furey on Mon, Aug 12, 2013

This is the second in a series of blog posts on the  Consumer Financial Protection Bureau (CFPB). It first appeared in National Mortgage News on July 2, 2013 under the title "CFPB Gets it Right… at Least 95% of it."

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Ability-to-Repay (ATR) and Qualified Mortgage (QM) Standards

  • This is one our community bank and credit union friends have been screaming about because a significant portion of their mortgage lending would not meet the QM standards thus eliminating their safe harbor protection.  Just about every community bank and credit union has a mission statement that includes something to the effect of, “To serve the lending needs of our community” or “To serve the lending needs of our members.” The initial ATR and QM Standards released effectively squashed that notion by restricting points and fees, restricting balloon loans, requiring hoards of customer information and capping DTI at 43%.  With the amended rule release, the CFPB has done a good job in relieving some of the pressure.  Under the final rule, banks and credit unions with $2 billion in assets or less that fund 500 or fewer first lien mortgages per year will benefit from exemptions to the ATR and QM Standards issued in January.  Specifically, small banks and credit unions will be permitted to continue to make balloon mortgages held on portfolio during a 2 year transition period, they will not be subject to the 43% DTI restriction on mortgages held in portfolio for at least 3 years and the can issue mortgages up to 3.5% above the average prime offer rate; an increase of 2%.  Raising the threshold defining qualified mortgages thus keeping their safe harbor litigation shield in place.
  • I know my eyes crossed when the realization set in that the ATR and QM Standards eliminated safe harbor protection for the FHFA and GSE programs being pushed to aid distressed home homeowners, improve performance of existing mortgage loans owned by the agencies and thus move the housing recovery forward.  What about HARP, Refi Plus, Relief Refinance? The good news is that the CFPB has added a provision that says a loan is a qualified mortgage if it meets the statutory limitations on product features, points and fees and is eligible for purchase, guarantee or insurance by Fannie, Freddie, FHA, VA, USDA or RHS.  Safe harbor shield preserved.  Again, kudos to the CFPB.
  • The ATR and QM Standards also placed at risk the numerous nonprofits and community based organizations and small creditors providing vital outreach and home ownership support to underserved communities and low to moderate income borrowers.  Will the various nonprofit housing groups and coalitions become a thing of the past?  What about community seconds and DPAPs.  The CFPB is on a role now, the final amendment exempts certain nonprofits and community based lenders from ATR rules.  Exempt are lenders that fund 200 or fewer loans per year and only to low to moderate income borrowers.  Also exempt are housing finance agencies and some programs designed for foreclosure prevention.

  • I will address this further in the 5% the CFPB got wrong. 

Topics: qualified mortgage, Ability-to-Repay, ATR, QM

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