While digital lending, robust decisioning and cross-sell functionality are all atop most financial institutions’ list of priorities when evaluating loan origination systems that could properly fit with their goals, processes and strategies, regulatory compliance still finds its way into the mix – and rightfully so.
As regulatory pressures continue to mount, financial institutions need technology they can count on to help them meet compliance requirements and efficiently handle regulatory audits. Regardless of the system you choose in the end, here are three best practices your solution should satisfy that will ease the burden of regulatory compliance:
- Tracking for system configuration changes: All configuration changes made within the loan origination system need to be tracked. The user ID, date, and timestamp for each change should be recorded. In addition to configuration changes, any and all changes to a loan or deposit application should be maintained in a central, easy-to-find location. While this functionality should exist for all configurable changes, it especially applies to any modification to the decision strategies and loan/credit limit assignments.
- Flagging applications not processed within the appropriate legal window: Loan/credit applications have legal limits for the duration of time by which a decision must be provided to the applicant. While many institutions typically provide a response well before this limit, you’ll want to be sure that your loan origination system will flag any applications that are coming close to exceeding these limits. Consider a loan origination system that not only offers the flexibility to set limits on the length of time an applicant can remain in a work list, but also allows for automatic escalation of these applications into a review queue. This can help ensure that all applications are being decisioned in a timely manner. That way, you are not only staying compliant, but are also exceeding your applicant’s expectations.
- Tracking correspondence: It is common for a lender to request certain documentation from an applicant to verify income or an address. The loan origination system should be able to maintain or easily access copies of this correspondence along with the loan/credit application to support final decisions made and serve as proof for audits. Likewise, once a final decision is rendered, the loan origination system must be able to keep track of adverse action or welcome letters sent. Required disclosures, provided to the applicant at certain points in the process, also should be automatically generated and easily accessed.
Compliance concerns were a high priority for Coastal Credit Union before it partnered with MeridianLink for our LoansPQ and XpressAccounts systems, which operate on one platform for advanced efficiency and convenience. Crystal Robinson, Service and Delivery Manager for Consumer Lending at Coastal Credit Union, said the technology paired with MeridianLink’s subject matter expertise made a big difference.
“We definitely would not have gotten through the recent HMDA changes without the subject matter expert for the home equity module,” she said. “She was dedicated to helping us resolve the issues and provided outstanding follow up.”
Since partnering with MeridianLink and implementing the LoansPQ and XpressAcounts platform, consumer loan volumes have jumped 78 percent from $900 million to $1.6 billion. Annual loan volume has increased 36.5 percent within an initial two-year period from 20,800 to 28,400 loans and 53.8 percent overall to 32,000 loans each year.
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Photo Credit: John Brighenti