One of the most prominent auto finance news stories of the year is the U.S. House and Senate vote to repeal the CFPB decree on auto-loan financing. The repeal takes pressure off indirect lenders for the moment, but regulations are already complex at the federal level and even more challenging with variations in state requirements. Rarely does a week goes by in auto finance news without mention of the continued importance of regulations and efforts made by lenders to comply.
Impact of Regulations
How will regulatory compliance shape loan processing in the near term, and how should lenders respond? First, lenders should stay focused on regulatory compliance as part of the business strategy. Second, adopt the means to quickly implement regulatory changes. Third, be able to demonstrate compliance in the unfortunate event you are audited.
Continue to Prioritize Compliance
Lenders need to monitor and assess the regulatory changes that directly impact lending operations. With the expectation of continued regulatory changes, some predictable, others uncertain, the very technologies transforming loan processing can, fortunately, also help lenders meet compliance objectives.
Easily Implement Regulatory Changes
To implement federal and state regulations, lenders need software solutions that are cloud-based and configurable by business users. Unlike a legacy lending system, a cloud-based system is quickly implemented and easily updated. This lets lenders use the latest functions and capabilities provided by the software vendor. Often those improvements are driven by requests from the user community.
A modern configurable lending system lets business users make modifications themselves to meet the latest compliance requirements. There’s no need to depend upon programming or technical expertise. Lenders save time and money. Authorized business users quickly make changes to their lending practices and processes to achieve and maintain compliance with changing regulations.
A configurable lending system addresses one additional regulatory need — the ability to demonstrate compliance in the event of an audit. By keeping records of configuration changes a lender can easily demonstrate the specific actions they’ve taken to comply with specific regulations. Whenever a modification is made, the business user, date and time, and specific configuration change are recorded. This detailed information is available in a report format for review by auditors. Reports can also be generated to show how individual applications were processed according to the configurations in effect at that time. These reports provide further evidence of compliance with regulatory requirements.
Focus on Compliance
Based on auto finance news in 2018, there’s reason to believe compliance will remain a newsworthy topic. Lenders should maintain focus on the changing and evolving regulations enforced by numerous federal and state bodies.
To efficiently and effectively accommodate any regulatory changes, lenders need to employ software solutions that make it easy to make process modifications in keeping with current regulatory requirements. A configurable, cloud-based lending solution is the best means to accomplish this goal. It is easily implemented and frequently updated with capabilities to help lenders achieve, maintain, and demonstrate compliance.
defi SOLUTIONS understands the needs of auto lenders and has developed a fully configurable, quickly deployed, cloud-based loan origination system. It is designed to help lenders easily make modifications to lending processes to conform to current regulations.1 - Reader Likes This Post