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Q/A with Leonard Ryan of QuestSoft Corp.

MBA Staff--Mar. 19, 2014
MBA NewsLink recently talked with Leonard Ryan, founder and president of QuestSoft Corp., Laguna Hills, Calif., a provider of automated compliance review software for the mortgage industry.

Since the company’s founding in 1995, Ryan continues to oversee strategic planning and day-to-day operations for the company including business and software development, interface partners, sales and pricing. He is one of Mortgage Banking magazine’s 2014 Tech All-Stars, and has also earned Mortgage Technology’s Top 50 Service Provider Award since 2009 and was named a Top Workplace by The Orange County Register in 2013.

Prior to founding QuestSoft, Ryan was senior vice President of MixStar Inc., where he helped design and launch a lender/broker communication network in partnership with America Online. He also served as senior vice president of RAM Computer Associates in Irvine, Calif. Prior to entering the mortgage software industry, Ryan co-owned a mortgage company.

MBA NEWSLINK: The Consumer Financial Protection Bureau is considering asking lenders to provide additional Home Mortgage Disclosure Act data to determine if loans meet Qualified Mortgage stipulations. If passed, what additional information would be required to submit?

LEONARD RYAN: The American Association of Residential Mortgage Regulators and the Conference of State Bank Supervisors are also considering this for the Mortgage Call Report. It’s a little too early to tell because the states with the MCR are going to coordinate with the CFPB to help determine specifics. At minimum, I think it would include the QM type, but it’s too soon to know if there will be any expanded supporting information yet. The industry will probably see a rule issued in June for any type of final guidance, however professionals should expect QM to be included as a reportable field or fields.

NEWSLINK: How will these extra HMDA data be helpful for lenders and consumers? What are the positive and negative effects?

RYAN: For consumers, the extra HMDA data will provide additional Fair Lending checks and balances. However, some of the new data, when made publicly, could have adverse privacy effects. Consumer groups and regulators will be the ones that benefit the most from the extra data. Regulators can already collect this information and the CFPB will eventually automate its processes to collect far more than just HMDA information, and perhaps more frequently than ever before. Therefore, regulators will have a far more complete view of a lender’s or broker’s operations.

NEWSLINK: How can HMDA data, and other market data, be used to improve a lender’s operations and profitability while mitigating risk?

RYAN: When used proactively, HMDA data is actually a very useful tool. When you break lending down by communities, you can see where and how the competition is funding loans that you might make. HMDA is also a great tool for self-assessment for Fair Lending. Raw HMDA data isn’t very exciting, but when you start to compare your HMDA data with similar lenders’ HMDA data in your community, patterns start to emerge.

NEWSLINK: The onslaught of regulations and emphasis on compliance has delayed the kind of innovation the industry was once accustomed to--how can the industry remain compliant and continue to innovate?

RYAN: This is perhaps the biggest challenge technology vendors face today. The rush to comply with a slew of new regulations, and inadequate trial periods, has forced the industry to chase the proverbial carrot on a stick. The vendors who continue to innovate are the same vendors who began offering automated compliance tools prior to the 2008 financial crisis. Those vendors continue to lead the charge in simplifying compliance.

NEWSLINK: How can lenders achieve data integrity across all loans?

RYAN: It is imperative that an LOS, document system and compliance management system all share the same data seamlessly across the board, and maintain the same disclosed numbers. Consumer protection is the goal of all regulators and accurate data is the key.

NEWSLINK: The CFPB calls for transparent vendor management relationships. What are complications lenders might face if they partner with multiple vendors versus just one?

RYAN: Vendor management is another challenging area under the new regulations. Many lenders see vendors who offer multiple services within the same platform to reduce compliance errors and improve data consistency. This equates to the established larger vendors having a significant advantage; even when they charge more for their services. As fewer vendors are able to compete, offerings become stagnant.

Unfortunately, while vendor management practices make lending and consumer protection more sound, it does not lower the future price for a mortgage or contribute to innovation amongst the small- to mid-tier market. I expect significant vendor consolidation for the services that lenders feel are more of a commodity than a market advantage.

(The views expressed in this article do not necessarily reflect policy of the Mortgage Bankers Association, nor does it connote an endorsement of a specific company, product or service. MBA NewsLink welcomes your submissions; articles and/or Q/A inquiries should be sent to Mike Sorohan, editor, at