The twin processes of dumping paper from document storage and automating customer transaction histories and demographics aren't just good ways to upsell consumers to a broader relationship. It's also a good way to make sure you're following lending laws.
Los Alamos National Bank is using new software that has simplified the collection of loan data and the analysis of the bank's lending performance in the institution's efforts to achieve Community Reinvestment Act (CRA) compliance. In this case, automation is smoothing over efforts to follow a law that's becoming increasingly challenging to adhere to as the loans and the communities the bank serves become more complex.
"The technology is something that you have to have," says Deborah Goodwin, compliance officer for the $1.2 billion Los Alamos, New Mexico's largest independent community bank. "You cannot run your numbers, complete your graphs and charts and pull up state information without it. I guess you could, but you wouldn't want to."
Los Alamos deployed a CRA compliance software package from Questsoft called CRA RELIEF. The product, which the bank deployed at a cost of about $1,000 per year with no contract and free online training and customer service, summarizes a financial institution's CRA data through import options and drop-down menus to guarantee the bank's compliance submissions meet all government requirements.
CRA RELIEF imports loan records, automatically provides address geocoding, maintains community development loan information, and electronically submits the compliance report. It also includes an instant geocoder, which provides address verification and census tract lookup capabilities.
Goodwin says the software helps the bank ID low-to-moderate income areas inside its footprint where CRA loans can be made. That can be a challenge as communities and demographics change rapidly. The bank originates thousands of loans, and Goodwin says it would be virtually impossible to pour though all of those loans by hand to ensure compliance to CRA and the Home Mortgage Disclosure Act (HMDA), CRA's cousin in fair lending regulations.
The software gives Los Alamos charts and graphs on a daily, weekly and monthly basis that marry the mix of loan and community data to make sure the bank is meeting its CRA requirements. The bank also uses similar technology to track HMDA compliance. The HMDA product identifies and imports mortgage records, re-verifies census tracts for accuracy, provides quality and validity error conditions and quarterly compliance updates and electronically submits all current year reports in regulator formats.
"The software helps us to see where we're making loans and if there's anyplace that we're missing," she says.
Using a lot of the tools found in CRM packages, CRA and HMDA software relies heavily on solid data management and easy use for the bank employees who are accessing the program on their computer screens. "We try to put things into nice graphics, to make it easier for people," says Leonard Ryan, president and founder of QuestSoft.
Ryan says the first challenge in CRA and HMDA compliance is correcting and storing loan data in a common manner across the enterprise, so everything that a bank needs to disclose to a government examiner is accessible and accurate. The two laws differ, Ryan says, with CRA placing more of an emphasis on analysis of a community and HMDA relying more on data regarding race and ethnicity of loans originated in the lending area.
Managing data integrity becomes important because of staff turnover, mergers and other changes that can alter the human supervision of a bank's CRA lending and compliance program.
"In the case of Los Alamos, the person has been there for awhile, but other places have higher turnover," says Ryan, "If you have an inspection over two or three years, you might have several different people on the bank's compliance staff who weren't there during the last inspection. You want the presentation to look the same for the regulator."
QuestSoft has about 1,600 customers, including Boeing Employees Credit Union, E-Loan, First Federal and Loan Association of Georgia, Coastal Mortgage Services and Community FirstBank of Charleston. QuestSoft's top rival, PCi, has clients that include 90 of the market's largest 100 banks, along with a number of community banks.
Ryan says the latest versions of HMDA and CRA technology also save costs by centralizing compliance between banking centers, because the easier use makes the product more accessible to a wider range of employees. "You have the ability to use the software in those markets where you don't have a professional compliance officer, or if you have someone who works part time," Ryan says. "Also our software is also easy to install and train on. It takes about an hour and a half to train people."
