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New State Limited Scope Electronic Examinations Increase Usage of Auditing Technology for Mortgage Regulation

- Statistics released today show a five-fold increase in the use of compliance technology for enforcement and a wider adoption of electronic data to streamline exams -

Chicago, IL - October 9, 2011 - ComplianceEase®, the nation's leading provider of mortgage compliance and risk management solutions, announced today at the Mortgage Bankers Association's 98th Annual Convention & Expo a significant increase in audits using its flagship software - ComplianceAnalyzer® - in state Limited Scope Electronic (LSE) examinations, a mortgage regulation initiative created by the Multistate Mortgage Committee (MMC), comprised of state regulator members of the Conference of State Bank Supervisors (CSBS) and the American Association of Residential Mortgage Regulators (AARMR). With the recent completion of the 15th Limited Scope Electronic Examination, more than 150,000 ComplianceAnalyzer audits have been performed by state regulators in 2011 so far, a five-fold increase in the number of audits performed by regulators during the same period in 2010.

According to the Limited Scope Electronic Examination Procedures published by MMC, the initiative is, "a simultaneous limited scope examination of twenty five Multistate Mortgage Entities (MMEs) using the ComplianceEase suite of software." The procedures explain that examiners receive electronic data for loans from licensees and audit the loans with the software, without the immediate need for costly on-site examinations. So far, twenty-seven states have collaborated in the examination process, which is enhanced through the e-Exam platform powered by ComplianceEase. By improving examination workflow, ComplianceEase enables the LSE examination to accommodate auditing 100% of each MME's mortgage loan portfolio for compliance violations. The electronic examination (e-Exam™) initiative's move to 100% audit coverage has contributed to the increased usage of ComplianceAnalyzer for conducting regulatory examinations in 2011.

Don Lampe, leader of the Financial Services Regulatory and Compliance Team at Dykema Gossett PLLC in Charlotte, North Carolina, added, "The establishment of the Multistate Mortgage Committee has led to unprecedented cooperation among state regulators. Their adoption of technology means that the scope of examinations is being increased to cover more loans and more tests. The mortgage industry needs to be aware that regulators are moving towards using technology to audit every loan in lenders' portfolios. Many of our clients have implemented automated compliance tools and are prepared for the 'new way' of technology-driven examinations. Of course, all regulated mortgage lenders would be wise to consider adoption of the origination-based automated compliance tools, especially considering that compliance deficiencies can be iterative across loan volume."

The LSE examination process overview published by MMC further outlines the requirement of licensees to provide loan information to examiners in an electronic data format. Licensees can prepare the required loan data submissions in the Licensee Examination File™ (LEF) data format by using LEF export capabilities already built in to many mortgage industry software systems or by preparing files with virtually any commercially or freely-available spreadsheet software. Licensees then must upload the LEF file to the RegulatorConnect.org portal. Alternatively, instead of exporting and formatting a separate LEF file with required loan submissions, licensees who use ComplianceAnalyzer to audit their loans can opt to use that software's RegulatorDirect?? feature to send loans directly to regulators.

Burton Embry, vice president - compliance at Primary Residential Mortgage, Inc., commented on the process, "Primary Residential has been using ComplianceAnalyzer in production for many years. In every electronic examination that has required us to submit loan-level data, RegulatorDirect has provided us with a simple and straightforward process to comply and to deliver the necessary information. It has made preparing for examinations much easier and quicker."

Since the beginning of 2010, ComplianceEase customers have used RegulatorDirect to submit close to 60,000 loans directly to regulators for e-Exams. Using RegulatorDirect enables licensees to easily check compliance audit results in ComplianceAnalyzer® before sending loans to regulators. With the advent of the Limited Scope Electronic Examination it is more important than ever for mortgage lenders to ensure that 100% of their loans are compliant with federal and state requirements, from high-cost to state consumer credit regulations. According to the published LSE Examination procedures, if a licensee's response to the examination is adequate and there are nominal violations uncovered, the licensee may not have to face a full examination in the near term. Ensuring that loans are clear of violations ahead of an examination can save a licensee the time and monetary cost associated with more extensive examinations. As a result, lenders are increasing their use of the up-front automated audits to prepare in advance for the new examinations.

"The e-Exam process was different than the traditional paper-based exams," said Bob Shanklin, senior vice president of NewDay Financial, LLC, "While there is ultimately a review of the paper files, knowing that we audited our loans through ComplianceEase's software gave us much assurance that we have demonstrated not only self-regulation but also a proactive effort to ensure that we follow the appropriate rules and laws as a responsible lender."

About ComplianceEase®

ComplianceEase, a division of LogicEase Solutions Inc., headquartered in the San Francisco Bay Area, is a leading provider of risk management solutions to the financial services industry. ComplianceEase's patented platform includes ComplianceAnalyzer® - the mortgage industry's most adopted automated compliance solution. ComplianceEase combines industry and regulatory compliance expertise with innovative technology to power beginning-to-end solutions in a fraction of the time and for a fraction of the cost of traditional approaches, while providing high levels of accuracy and integrity. ComplianceEase's significant and growing client base includes four of the top five mortgage lenders in the nation, financial institutions, service providers, law firms, and regulators. ComplianceEase's automated compliance solutions have been adopted as e-Exam tools by state banking and mortgage regulators, through the Conference of State Bank Supervisors. For more information about ComplianceEase, www.ComplianceEase.com.

Press Contact

Michael Chan
ComplianceEase
202-238-0378
m.chan@complianceease.com

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