Last week I had the privilege of delivering a lending compliance training to one of our fabulous clients. The training focused on fair lending and the various origination regulations in place today. As I was going through it I realized that for the first time in a long time, I wasn’t presenting a game changing regulation. That allowed my presentation to focus more on the fundamentals. Now I know there are a handful of changes that we are about a year away from, but even with those it doesn’t feel like we are prepping for a “dooms day” reg like TRID.
That means now is the perfect time to take a step back and inhale a little bit of that fresh air. Now is the time for you and your credit union to get back to the basics. It is a time where you can reassess the structure and processes you have in place. We have been spending so much time keeping up with the joneses that we sometimes forget about taking care of the nuts and bolts that keep us running.
The recent addition of the Supervisory Highlights from the CFPB is a perfect example of why you may need to hit the refresh button. As I presented on ATR/QM I covered the section on third party documentation. I went over the requirements, reminding the group that they should not use general studies and statistical data when evaluating income. I got a couple “who would be crazy enough to do that” looks, to which I responded “Oh, but it happens.” The previously mentioned Supervisory Highlights noted in the mortgage origination section, that examiners were finding that a handful of institutions were not following this part of the ATR rule. They in fact were using statistical data when evaluating income, and not third party documents that were specific to the member, which is one of the basic components of the rule.
So yes, it does happen. Something that can be so straightforward, can somehow become lost in the shuffle.
I haven’t used a football analogy in a while, so why not use one here. It is similar to all these teams today that are going to these spread, run-and-gun, air-it-out offenses in order to keep up with their counterparts. They think they need to because that is what you have to do in order to stay competitive. But when you really look at it, the teams that continue to have success are the ones that stick to the basics. The only difference is, they are creative with how they execute. The blocking schemes and route patterns are the same, they just find creative ways of executing those schemes. The playbook and practice plan emphasize those basics, and are used as tools to ingrain those essentials. That way when you make a slight adjustment here or there, you don’t lose out on the core of the scheme. It keeps it consistent and allows you to execute efficiently.
So go ahead and open the windows a bit to let that fresh air in. Take this moment to recharge, refresh, and get back to the basics.
As we look toward 2017, we here at PolicyWorks are looking for ways we can help better serve the credit union community. One of the ways we are exploring is offering periodic webinars at a reasonable price on different compliance topics. We would appreciate your feedback in regard to topics you would like to see covered.
