March 15, 2016 IndiSoft LLC, established in 2005, develops, licenses and supports a wide range of SaaS services for the financial services industry, including RxOffice® Legal, RxOffice® Mortgage Insurer and RxOffice® Reporting Portal. It has offices in both the U.S. and abroad. The company's website is https://www.indisoft.us/.
MBA NEWSLINK: What were some challenges in making your services TRID-compliant?
PRAMOD KARACHUR: Complying with TRID from a technology perspective was challenging because of the different kinds of clients we service, including lenders and servicers, etc. In order to implement the rule correctly, our staff had to understand TRID and consider the business and financial risks associated with the rule from each stakeholder perspective. Then they provided that interpretation to our coders who then updated our platform. The challenge was being able to interpret the rule correctly for multiple segments of the market that we serve. We believe we have effectively done just that.
NEWSLINK: A lot of the focus on TRID has been on the front end of the loan, but what about new TRID challenges facing mortgage servicers?
KARACHUR: The areas that most affect servicers include the escrow account and the transfer of loans. Under the new rule, in a closed-end, consumer credit transaction that is secured by a first lien on a property, the escrow account will be cancelled. This means that servicers have to provide alternatives for the homeowner including continuing to manage the escrow account.
For a mortgage transfer notice, TRID requires the servicer to maintain disclosure of the creditor's intention for at least five year and the servicer is expected to also provide any disclosure upon request from the Consumer Financial Protection Bureau. These changes might not sound so demanding but anytime there is a change in the regulation associated with any activity, the cost of servicing increases. Servicers then have to determine where and how they are going to cover the cost of the increase, which is a growing issue today and could affect how the industry looks at portfolio acquisition in the future.
NEWSLINK: Looming on the horizon are new changes to the Home Mortgage Disclosure Act. How is IndiSoft preparing for those new rules?
KARACHUR: Lenders and servicers alike are required to collect HMDA data and provide the data to Federal Financial Institutions Examination Council. The question becomes: does the data collected meet the HMDA requirement? Our technology allows lenders to compare the loan data with Loan Application Register data that can be imported. Lenders are able to compare the two sets of data and immediately make corrections if necessary. The remediation process is very quick and cost effective.
NEWSLINK: Given the number of high-profile security breaches in recent months, how is IndiSoft working to protect its systems and its clients?
KARACHUR: IndiSoft's first priority is providing the latest technology available, especially when it comes to security. That is paramount. We have taken steps to avoid any possible breach by installing a threat manager that can detect any malicious attacks and immediately block the IP. Some of our other efforts to thwart these attacks include using redundant firewalls, switches, etc., which have effectively proven to control these threats.
NEWSLINK: Besides HMDA, what are some other key issues you are anticipating in the coming months?
KARACHUR: Implementation of TRID is still a very big challenge. Even though the CFPB has said that the companies would not be penalized, the House has passed a bill which would protect these companies from any lawsuits as long as they are working in good faith. This bill, H.R.3192, has a steep uphill battle as it has to pass the Senate before reaching the President's desk. With this being an election year, the chances of the bill passing the Senate are remote.