High Cost Loans Analysis System
High Cost Loans Analysis System provides flexibility and speed though exception management based workflow
VisiHCLAS (High Cost Loans Analysis System) provides:
- Audit and remediation of individual loans or group of loans
- Built in and pre-configured up to date regulations and updates
- User can customize and select rules to be applied without IT’s help
- State Specific Rule customization and Report ability
- Automated batch or manual loan audit and validation
- Web based portal for reporting and managerial controls
- Automated logging and time stamping of authorized changes
Predatory lending legislative landscape is evolving and the rules keep changing. VisiHCLAS (High Cost Loans Analysis System) is designed to help you keep up with this change. The good news is that the rules don’t change without a reasonable notice and information is available from multiple resources.
Predatory lending has been described by federal agencies as involving one or more of these elements:
- Providing unaffordable loans based on the borrower’s assets, rather than on ability to pay
- Inducing a borrower to repeatedly refinance in order to charge high fees or points
- Engaging in fraud or deception to hide some of the cost features of a loan
The view from a lender’s perspective is different. A NHEMA study of over 961,000 mortgage loan applications at multiple lenders in 2004 shows that lenders priced their loans based on risk characteristics such as FICO score, lien position (1st or 2nd lien), monthly income, documentation of income, LTV and whether the loan included a prepayment penalty. In other words, the risk characteristics determine how a mortgage is to be structured. HOEPA provides relief as does Section 32 of Regulation Z. However, many other states have gone beyond the basics and enacted their own legislation. The State of Georgia is an interesting case in point. This particular law includes three important general prohibitions, which apply to all home loans, not just high cost loans:
- No prepayment penalties for home loans of $150,000 or less
- No “flipping”
- No financing of upfront, single premium insurance
It also puts limits on high cost loans and further restricts the terms of high cost home loans to protect consumers:
- No financing of upfront fees and insurance premiums
- Requires counseling for high cost home loan borrowers prior to loan closing
- No balloon payments, where the borrower owes a large lump sum at some point during the loan
- No loans with negative amortization, where the loan amount increases because the monthly payments do not cover the loan costs
- No lending without consideration of consumer’s ability to repay
Channel/Broker/Area Specific Rules
Corporate Guidelines and Interpretation Of Statutory Rules
Base/HOEPA/Section 32 and State Rules
Key Features of VisiHCLAS:
Workflow
Visionet's High Cost Loans Analysis System - VisiHCLAS is designed to provide flexibility and speed though exception management based workflow.
Loan Review Setup Facility
Visionet's High Cost Loans Analysis System provides a facility to the users for specifying one or more loan numbers to be setup for review within VisiHCLAS and the system in return pulls in the loan data and fee information from Loans Analysis System for the specified loans and sets up the loan analysis tasks in the system.
User’s Work Queue
Visionet's High Cost Loans Analysis System provides a view to each user as to the number of loans that they have setup for review and the loans that they have completed the high cost analysis. The users can filter this view through various attributes like, date range, loan number, borrower name, state of the subject property, etc.
Customizable Parameters
Rate table
This application feature allows authorized users to configure the following rates along with their application dates:
- Treasury Rate
- Federal Reserve Bank Rate
- Conventional Mortgage Rate
- Libor
State Limit configuration
This configuration feature allows authorized users to configure the state rules related limits and parameters used in the state rules for high cost loans validations, the application will also associate version numbers to each of these parameters to facilitate association with relevant version of the state rules.
State Rules
A database table stores state high cost validation rules in the Visionet designed rules format. Each rule has an associated version number and application date.
Data Validation/Correction
The users can key-in additional loan parameters and fee information that is not available in the point of sale (POS) and/or loan origination system (LOS) but is required to carry out the high cost validation.
Business Rules execution
This core feature of the application can carry out the high cost loan validation in terms of the following:
- APR Test
- Points & Fees Test
- Borrower Interest Test
Annual Percentage Rate (APR) Calculator
Visionet has integrated the APR Calculator component into the Visionet's High Cost Loans Analysis System application to facilitate calculation of the APR for a given loan. The calculated value for the APR is used by VisiHCLAS in validating the loans for high cost analysis.
Loan Scenarios
During the course of the loan analysis for high cost validations, the users need to try various combinations of fees and interest rates to find an appropriate set of loan parameters that best serve the statutory limits set by high cost loan federal and state regulations. High Cost Loans Analysis System Application allows the users to save multiple loan scenarios thereby allowing the user to run various scenarios for each loan until they select one of them to be the final disposition that will then appear in the result report.
Integration
Loan Origination System (LOS) Interface
Visionet's High Cost Loans Analysis System Application interfaces with the all major Loan Origination System (LOS). VisiHCLAS is also MISMO compliant. The application supports a sate of the art .NET architecture. The clients can access the system through web services (automatically – behind the scenes), batch (run all loans trough the system) or manually (check on loan at a time).
Loan Origination System (LOS) Update
Once a particular loan has been verified to be complying with the high cost regulations, the loan and fee data for the selected loan scenario can be updated in the Loan Origination System (LOS) and the system will not allow any further changes to that loan’s data within High Cost Loans Analysis System Application. If the users need to revalidate that loan, they will have the ability to setup another round of loan analysis within High Cost Loans Analysis System Application.
Reports and Views
Administrator / Supervisor View
VisiHCLAS (High Cost Loans Analysis System Application) provides a view to designated supervisor level users to see all the loans that are present in VisiHCLAS. This includes the list of loans for which the loans analysis is in progress and also the loans for which the analysis has already been completed. The users are able to filter this view through various attributes like, state of the subject property, date range, team members carrying out the loan analysis, loan number etc. Some of the key reports are:
Loan High Cost Validation Result
This report will be printed for each loan at the completion of the high cost loan analysis for a given loan. The exact format of the report and filter options will be documented in detail in the High Cost Loans Analysis System functional specifications document.
Loan Status Report
This report will allow the users to print a report on the loans that are present in High Cost Loans Analysis System and the users will be able to filter the results based on date range, loan analysis status (completed/in-progress), borrower name, etc.
Custom Reports
Visionet's High Cost Loans Analysis System uses an open SQL 2000 database architecture. Customer can chose to leverage any of their existing reporting tools and produce reports pertinent to their business needs. Visionet will constantly add new reports as well or by request.
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