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#1974997 - 11/07/14 12:58 AM Bank wants to offer Mortgage Loans
Princess of Power Offline
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Princess of Power
Joined: Aug 2002
Posts: 406
Napa, CA
I was just informed that my small community bank wants to start offering mortgage loans and I have been tasked with providing as much information as possible (by the 13th)so that a final decision can be made. I have not been involved with mortgage lending in over 15 years other than HELOC's so could use some guidance of what I need to be researching and aware of. What I do know is we do not have software, staff (nor do they really want to increase staff - I currently have one processor)or any experience to support this endeavor. They want to portfolio all the loans. Where do I begin ??? Thanks for any guidance or direction you can share.

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Lending Compliance
#1974999 - 11/07/14 01:56 AM Re: Bank wants to offer Mortgage Loans Princess of Power
Truffle Royale Offline

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Joined: Jul 2003
Posts: 17,346
yowza! It would be one thing if they were going to sell the loans but portfolio them all??!!! That means you need a processor, a closer, a servicing area, someone who's up on compliance that can run the whole area. And if you were lucky enough to find people to fill all those positions, you need someone who can lead you through the big RESPA changes coming next August too.

As for software, we've got a processing/servicing platform that we have used for over a dozen years. We've been toying with changing for the last two years. We've spent all that time researching and pricing and almost making a choice only to have the market drop enough to make the change financially infeasible.

Bottom line, there's no way you can start offering mortgage loans to keep in portfolio at the drop of a hat...imho.

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#1975000 - 11/07/14 02:13 AM Re: Bank wants to offer Mortgage Loans Princess of Power
Kathleen O. Blanchard Offline

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Kathleen O. Blanchard
Joined: Dec 2000
Posts: 21,277
If management wants to do this "quickly" they might be better served finding a bank (a larger bank or a bankers bank) that will do this for them (a "private label" type of proposition).

Otherwise, begin to explore origination and servicing software. You CANNOT do the documents that will be in place as of next August 1 without documentation software in my opinion..the forms are dynamic and different language is required or MUST be omitted depending upon the loan. Fees must be alphabetized, very specific abbreviations are required. It frankly is not humanly possible.

You will still need extensive training in the rules so that you understand what is going on, how to classify your bank's fees, what to turn on in the vendor software. I would recommend bringing in a third party to help get the software set up properly given the bank's lack of history with this type of lending.

You can review the CFPB booklets on the current rules and the new rules. I would start there. For the new rules, much is revealed in the preamble. You also might see if you can still purchase the prior BOL Lending Triage materials, and the ones for the Triage that just ended.

Also, I don't recommend trying to do this quickly unless you go the private label route. Even if you hire a LOT of consultants to come in, it will be quite an exercise.

If you go the private label route, the bank still needs expertise because you ultimately retain the risk, even if you can sue the processor. That just gets your money back; you still get the fines and penalties and MRAs and cease and desist orders.

Best of luck.

Kathleen O. Blanchard, CRCM "Kaybee"
HMDA/CRA Training/Consulting/Mapping
The HMDA Academy

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