Call for Simplified Data Transfer for Loan Origination Software Users

State regulators are encouraging software vendors to integrate state-developed data standards with mortgage loan origination systems, said the Conference of State Bank Supervisors (CSBS) and American Association of Residential Mortgage Regulators (AARMR).

The purpose is to enhance the quality of loan review and examination processes while reducing regulatory burdens for industry.  

 “With this initiative to move toward standardized data, state mortgage regulators will be able to take the next step to significantly improve the efficiency and effectiveness of examinations,” Charlie Clark, AARMR president and director of Washington State Department of Financial Institutions, said. “It is an important step in modernizing examination work.”  

Currently, state and federal regulators use the Lending Examination Format (LEF) data standard to provide consistency and uniformity in electronic exams. Regulators use LEF data to test mortgage loans against all federal, state and municipal laws and regulations affecting consumer protection.  

The regulators’ call for adoption follows several meetings held with software vendors this year, The meetings focused on ways to better address data transfer in electronic exams and understand the challenges faced in delivering cleanly mapped data. For its next step, regulators are assisting vendors that opt to incorporate LEF data export abilities into their systems. 

State regulators are focused on ways to re-engineer non-bank supervision with the goal of more effective supervision while reducing the burden companies experience in traditional onsite reviews.  

“Regulators are encouraged by the positive response we have received from loan origination systems and document preparation vendors to enhance the functionality of data transfer, a coordinated effort that benefits lenders at the same time as it benefits all the agencies regulating the industry,” said Jeremy Windham, vice chair of Multistate Mortgage Committee at CSBS and AARMR: