E-net Offers Lenders Compliance at the Origination Source

Congress has enacted a number of consumer protection and civil rights laws directly related to the activities of financial institutions since the late 1960s. Most transactions involving consumers and financial institutions are covered by these laws. These consumer protection regulations and laws impact virtually all bank operations. E-net offer solutions and services during the origination cycle to help financial institutions remain compliant with their stringent regulatory and internal standards.

Targeted Solutions to Reduce Risk:

• Compliance Risk Management Solutions

E-net helps identify and secure critical compliance for each lenders business processes by mitigating each loan application risks to the lenders individual risk model(s) on the front end of the origination process. By so doing a lender has the means to verify each loan application with their regulatory and internal standards before accepting the loan package for verification.

• Anti-predatory/High-cost Laws

E-net ensures that new loans applications provided by dealers are compliant at the originating source prior to funding to help lenders avoid the liabilities of non-compliance during the origination process. There is simply too much at stake to risk non-compliance. Every loan in production or in a pool of closed loans must comply with all applicable anti-predatory lending laws. Lenders with diverse portfolios must contend with additional risk posed by third party originators such as auto dealers and their sales staff. Non-compliance leaves a lender liable for statutory and punitive damages plus license non-renewal. The lender can even be personally liable for civil penalties.

• Fair Lending Solutions

Understand exposure to fair lending risk and how to mitigate that risk with a continuous process review, analysis and reporting requires monitoring of each loan application with third-party loan originators for CRA, HMDA, ECOA and FHA violations. If a lender doesn’t have a comprehensive fair-lending program in place, they are risking serious consequences.

Potential pitfalls include pre-decision pricing, error correction, post-closing loan problems, funding decisions, problem dealerships and compliance monitoring. Managing these risks requires continuous review, analysis and reporting. Failure can lead to penalties, fines and irreparable damage to a lenders reputation.

• Operational Risk Management Solutions (ORM)

Operational Risk Management (ORM) is defined as the management of loss resulting from inadequate or failed processes, people, and systems or from external events.  Changes in the regulatory and control environment within the financial industry, including Basel II and Sarbanes-Oxley, are focused on moving the assessment and management of risk from the center of the institution out to the operating units and teams on the front line of business.

• E-net Integrates Lenders Risk Model Criteria at the Origination Source

The integration of each lenders risk model criteria on the front end of the loan origination and loan decision process will reduce the cost of compliance, reputational risk and potential fines. This convergence of compliance and operational risk management at the originating source will increase the effectiveness of compliance and risk management activities when implemented on an enterprise-wide scale to maximize ROI and create standardization and consistency.

• State Lending Legislation

With more than 30 states having enacted anti-predatory lending legislation, many lenders have already devoted significant time and resources to monitoring and complying with each state’s legislation. In addition to the regulatory and reputational risks associated with making high cost loans, nonperformance foreclosure or repossession concerns in the secondary market have increased lenders due diligence responsibility. Lenders and investors are now looking closely at each state’s regulatory requirements for usury and fee limits. Any overages on these limits may result in a loss in portfolio value.

Lenders are now outsourcing services with different software programs, to remain compliant with regulatory and internal standards, while reducing the escalating cost and impractical task administration associated with operational and compliance processes.

E-net’s software packages will help dealers, banks and lenders verify and comply with these new requirement.

Bill Fowler