By Reid Smeda, Sr.
Lending has changed forever. While lenders have always been under intense scrutiny to compliantly document each and every financial transaction executed, sweeping new rules and regulations are being introduced on the federal, state and local levels at an alarming rate. One of the unintended consequences of these new realities is the incalculable cost to the bottom line of every lender. As a result, the “all in” enterprise wide risks and costs associated with lending practices are increasing exponentially. This new reality puts tremendous downward pressure on a lender’s bottom line by focusing staff and resources on mitigating these growing risks around the documents instead of focusing on adding to the bottom line by making and delivering quality loans.
Compounding matters, lenders are exposing themselves to significant risks and expenses by attempting to respond to the changes and the related unintended consequences with the same outdated document solutions and thought processes they were using before the market shift. One of my favorite Albert Einstein quotes is, “You cannot solve a problem from the same consciousness that created it. You must learn to see the world anew.” While I am not saying that we need Einstein to solve this problem, I am saying that we cannot mitigate the problem with the same document solutions and thought processes that we used before.
How do you know if you are thinking about the problem in the old paradigm? If you or your staffs are still asking the following questions to your document provider, you are in the old paradigm.
- Can I see a list of all the documents that you support?
- How many doc templates are in your forms library? And can I see your templates to review?
- How do we set-up and maintain loan packages?
- How do you handle custom docs and what “is” a custom document in your library?
- How do you handle state specific issues? Are they custom?
- For which regulatory documentation issues are we responsible? On a Federal level? On a State level?
If these are the questions that you are asking providers so that you can compliantly document your transaction, to be candid with you, you are thinking in the old paradigm and your organization’s bottom line can suffer.