Executive Conversations is a HousingWire web series that profiles powerful people in the financial industry, highlighting the operations and the people that make this sector tick. In the latest installment, we sit down with Jonathan Johnson, compliance officer at International Document Services (IDS), to discuss how lenders are faring under increased regulation.
We’re looking at just about a year before the combined TILA-RESPA rules take effect. What solutions is IDS offering its clients in the face of these new regulations?
IDS is a key component to any lender’s implementation of the new combined disclosure rule. We’re developing the forms from scratch to match the criteria of the new law, and we’ll be performing many of the calculations required by the new documents with our propriety software system. IDS is making major updates to the software itself to rearrange the user interface so it will have the look and feel of the new documents in order to facilitate data entry. And we’re going one step further, implementing the ability to retrieve new types of data files — like the MISMO 3.3 —so that we can receive data entry from any partner’s loan origination system without any problem.
What other things have you done internally to get ready for these changes?
We’ve taken the new disclosure rule by the horns so we can be fully prepared. We recognize how much this rule is going to affect our system and we’ve dedicated four of our compliance officers to reading and interpreting the 1,800-page rule, developing comprehensive implementation plans from a compliance perspective. We are making all the necessary changes so that we will be prepared to start testing in advance of Aug. 1.
Do you think companies are generally prepared for these changes?
I think a number of companies do recognize the importance of these changes, but this is much more than just a change in a disclosure — the CFPB is using these disclosures as a vehicle for broader changes in the industry. If a lender doesn’t have a partner like IDS — a third-party vendor on whom they can rely — to implement all the technical changes to this rule, they will struggle a great deal.
What technology innovations have you developed around the need for compliance to the rule?
IDS has always been a provider of dynamic documents so that positions us very well to create and implement a very dynamic disclosure. Dynamic documents are able to change and expand to fit the types of data entry that companies may need to do. IDS is in the position to make sure our documents fit the ever-changing needs of compliance, so our clients don’t have to have hundreds of documents in their system. Our customers can request customized documents free of charge. We are one of the few document prep companies that has developed our platform entirely in-house — we have never outsourced the development of our system or acquired a system to add functionality.
Why is an in-house team beneficial?
Because our team of more than 15 developers is constantly making sure that the system is up to date, and making changes all the time to make sure it performs optimally. To provide additional support and guidance about the documents and changes, IDS maintains a weekly blog from a compliance perspective on hot topics of TILA-RESPA. We’ll also be doing webinars on changes that surround TILA-RESPA as we get closer to the date.
When should companies start acting to be in compliance in time?
The sooner the better, obviously, so that companies can put all their policies and procedures in place and train their employees effectively on the timing requirements and how to use the system. I think some companies might be panicking, but others might not understand how big this change will be to the industry, so their ignorance is probably keeping them in a blissful state. I think the window will close if they’re not working with a great vendor by May, at the latest. The companies who have already started getting on top of the changes will have the easiest transition.