CRA   HMDA   

4 Ways To Overcome Fair Lending Obsolescence

Regulatory exams and intense scrutiny present challenges for lenders as they work to properly execute fair lending compliance. Regulators' intense focus, the difficulty of effectively collecting and analyzing the right data in a timely manner, and unclear standards make fair lending compliance burdensome and complicated.

To minimize burden and mitigate risks, lenders accumulate a variety of fair lending risk analytics tools and services while compliance-related tasks are performed across a wide staff. Juggling multiple fair lending tools, though, means vendors and consultants haven’t really simplified the process and comprehensive consulting services that report on fair lending risk takes months to complete. This reduces time to enact changes before the CFPB, FDIC, FED or OCC issues and serves notices.

Plus: legacy tools that were once compliant are maintained by companies whose primary expertise is in software, not compliance. A lack of understanding of the complex and evolving fair lending regulation results in functionality that can’t keep up.

We outlined 4 fair lending solutions to consider when it comes to compliance software management.

1. Implement dynamic redlining analysis

A hot topic since the CFPB announced that it is the primary focus of fair lending investigations, redlining monitoring should be efficient, precise, and easy to understand.

Find a solution developed by compliance experts to automate the process so your team can spend time analyzing results rather than assembling numbers and cleansing data.

2. Start with compliance expertise

Make sure your fair lending solution is maintained by a team steeped in regulatory compliance knowledge that is actively contributed to by regulators and industry experts.

This provides the best of both worlds: the expertise of a team with decades of experience and the speed of a dynamic fair lending solution.

3. Use a SaaS-based distribution model

Look for Software-as-a-Service solutions (SaaS), not downloaded software. Here’s the difference:

  • Consistent & Timely Updates. HMDA and CRA peer data should be uploaded immediately following public release. New functionality can be rolled-out overnight to ensure you have the latest data and capabilities to make informed compliance decisions.
  • Highly Secure Infrastructure. With an ever-increasing bar for third-party risk management, look for a solution which reflects investment in higher standards for information security, control, and resilient infrastructure in which your procurement and technical teams can have confidence.
  • Maintenance. SaaS architecture means all the functions and software are maintained for you. This means there’s no need to download and install new patches to a local machine, saving time and money on your part. All updates are applied by the provider automatically and are live almost instantaneously.
  • Protection Against Data Loss. Backups of your most important compliance data are maintained so that a single server malfunction or other issue doesn’t destroy your data. This minimizes the risk of complete data loss from natural disasters, server hacks, and other events outside of a lender’s control.

4. Obtain unrestricted usage for lenders

If you pay a per-seat charge for your software, you might choose to save money by restricting users.

Look for a solution that provides unlimited seats, multiple simultaneous users and collaboration, and access to internal and external counsel to look at findings in the same platform.

This means you won’t hesitate to give access to the team member who needs it, and no matter how many users you give access to, your subscription costs will remain the same.

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