Current Business Issues Related to Regulatory Compliance in US Mortgage Lending

Published by: TowerGroup

Published: Jul. 14, 2008 - 8 Pages

Table of Contents

Report Coverage

Background

Issue: The American Housing Rescue and Foreclosure Prevention Act of 2008

Issue: Other Reactions to the Subprime Crisis

Issue: Federal vs. State Regulation

Types of Mortgage Compliance Vendors

Comprehensive View of the Impact of Expected Regulatory Changes

Summary

Abstract

TowerGroup Take-Aways

• TowerGroup expects that the two chambers of the US Congress will compromise on their disagreements on the American Housing Rescue and Foreclosure Prevention Act of 2008, and it will become law before Congress recesses for the campaign.
• Before November's election, regulators will finalize changes to initial disclosures, expand definitions of high-cost loans, and institute an appraisal code of conduct; these changes will require lenders to improve In the absence of effective federal regulation of subprime loans, TowerGroup expects several states to pass their own laws making it difficult and unattractive for lenders to offer subprime loans.
• TowerGroup expects that lenders will soon find qualified compliance officers in short supply, giving technology providers an opportunity to offer this expertise through a knowledge process outsourcing arrangement.
• Lenders will increasingly turn to business rules management and business process management systems operating within their application stacks to ensure compliance with all regulatory requirements.

Report Coverage

This TowerGroup Research Note examines some of the important issues (both legislative and administrative) relating to possible changes in the regulations that govern residential mortgage lending in the United States. It categorizes and describes these changes, assesses the impact of each category of change, and forecasts which changes will happen. The Note also classifies the major providers of software related to mortgage compliance and reviews implications of the expected regulatory changes.

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