The new compliance paradigm: How business intelligence and big data are changing the mortgage landscape In partnership with Chris Edgington Sr. Industry Solutions Marketing Manager, Kofax, Inc. David K. Moffat President & CEO, Mortgage TrueView Dimitri Seneca Snowden Senior Systems Engineer and Visual Strategist, Altosoft Moderator: Richard Bitner President, HousingWire 2

Today’s Regulatory Environment 3

Compliance Costs Around the U.S. 4

Focus and Priority on Regulatory Compliance 5 Source: CDW

Forced out of Business – Smaller Banks Unable to Comply 6  Basel III capital rules could cause more banks to unload servicing rights  Institutions that rely on mortgage banking could be forced to seek partnerships with more diversified institutions  Some independent mortgage bankers are "too small to comply“  Get bigger, hire attorneys, get guidance on compliance issues In the News: Thursday, February 13, 2014

Small Banks’ Disappearing Act 7 Number of Banks with $100 Million or Less in Assets

From Siloed to Shared and Collaborative 8

Best Practices for Regulatory Compliance  Invest In Technology That Multitasks  Apply Analytics to Paint a Clearer Picture  Make Compliance a Business Priority  Extend Controls from Back Office to Front Line 9

4 Pillars of Mortgage Automation 10

Kofax Mortgage Automation Platform 11

Presented by David K. Moffat President The Case for Intelligent Governance in the Mortgage Industry 12

 Mortgage Industry Drivers  Demonstration  HMDAnalytics - Case Study - Research Project 13

 Strategic Drivers –Regulators are embracing Business Intelligence –Risk Management Matrix –Transparency  Tactical Drivers –Know more about your data than your regulator(s) –Know how regulators are using your data –Return on Investment Business Intelligence (ROI BI) Business Intelligence Drivers 14

15 1 See 1 Strategic Drivers: Business Intelligence and Regulators 15

See Image retrieved March 21, 2014 Strategic Drivers: Business Intelligence and Regulators 1 16

Strategic Drivers: Risk Management Matrix 17 FailPass Fail

Strategic Drivers: Transparency 18

Tactical Drivers: Know Your Data  Completeness  Quality  Content  Context 19

Tactical Drivers: How Regulators Use Your Data  Absolute Benchmarking –Adverse Outliers  Relative Benchmarking –Adverse Trends 20

 Executives respond to benchmarking:  Benefits: 1.Current-state Assessment. A rigorous baseline of cost, quality and cycle time, external and internal comparisons of cost and performance, and the identification of meaningful gaps enables fact-based, defensible understanding of the function's cost and effectiveness. 2.Basis for Change. An effective benchmarking initiative enables an organization to more easily identify and prioritize opportunities which, in turn, results in more informed and relevant improvement targets and a stronger overall business case for the transformation effort. 3.Basis for Continuous Improvement. Benchmarking supports a culture of managing by metrics and by enabling periodic measurement against the initial baseline. 4.Standardization. A standard set of terms and definitions for key aspects of a company's business processes enables the enterprise to share the same level of information about the state of the enterprise's operations. About Benchmarking 21

Tactical Drivers: Return on Investment Business Intelligence  Drive Revenue  Control Operating Expenses  Control Regulatory Compliance Costs  Reduce Fines and Penalties 22

Compliance Attribute Traditional Compliance Paradigm Intelligent Compliance Paradigm Quantitative Metrics  Did I do something I shouldn’t have?  Am I doing something I should?  Qualitative Metrics  Were the specified process performed?  Was the specified order followed?  Established/Static Rule Set  SEC, FINRA, etc.  Internal Revenue Code  Developing/Dynamic Rule Sets  Dodd-Frank  CFPB  Entity/Enterprise Risk Management  Absolute performance  Market Risk Management  Relative performance  Passive  Event Driven (i.e., What/When )  Active  Enterprise Driven (i.e., Who/Why)  Integration  Return on Investment  Risk measurement  Process Improvement  About Mortgage TrueView 23

24 Questions? A recording of this presentation will be available on HousingWire.com/webinars