As lenders and brokers search for solutions to ensure they are not violating new lending rules due out this week, one company is building a compliance technology to keep the industry in check.
Mortgage firm, Mortgage Grader, announced that it just received a U.S. patent on a lender compliance and testing system. The product is designed to fill in the gaps as brokers and lenders worry about meeting all applicable mortgage lending rules.
With the Consumer Financial Protection Bureau qualified mortgage rule and ability-to-repay regulation taking effect Friday, Mortgage Grader is announcing its procurement of the patent early in the week.
The innovation is said to offer financial firms "an independent, fact-based loan file reconstruction" that can verify whether lenders accurately qualified borrowers, correctly priced loan terms and provided the best credit terms available when analyzing the loan against the backdrop of the ATR and QM regulations.
The system submitted to the patent office analyzes income and debt, while pricing in the lender’s underwriting guidelines to decide whether or not a loan should be approved. The system also helps users determine what pricing levels should be used for approved loans.
"Just like a math proof, there may be no better way to demonstrate whether lenders are accurately qualifying borrowers except when the reconstructed loan file figures match exactly with the original terms that the lender provided," Mortgage Grader said in a press statement.
The Laguna Niguel, Calif.-based company also claims its compliance system can offer independent proof of compliance with all Fair Lending standards.