What Is OFAC? What To Do When you Get An OFAC Hit

Written By: Stacey Sprain,
Certified Ambassador Loan Processor (CALP)

I recently ran across my first OFAC hit and thought I would share my experience in hopes it may educate others who have not experienced an OFAC hit yet in their careers.

First, let me start by explaining what “OFAC” stands for and what it means. OFAC is the abbreviation for Office of Foreign Assets Control. It is the specific branch of the United States Department of the Treasury that administers and enforces economic and trade sanctions based on US foreign policy and national security goals against targeted foreign countries and regimes, terrorists, international narcotics traffickers, those engaged in activities related to the proliferation of weapons of mass destruction, and other threats to the national security, foreign policy or economy of the United States. (Whew! Try saying that three times fast!) But seriously, sounds a bit scary doesn’t it? Well if you find the mission statement intimidating; try taking a look at the length of the lists available at the OFAC website! Yikes! Suddenly I am not feeling as safe as I had been before I journeyed to the website!

OFAC searches are a requirement of Section 326 of the United States Patriot Act which states that, among other things, in addition to verifying every borrower’s identity we must determine whether the customer appears on any list of suspected terrorists or terrorist organizations. In most if not all cases, your credit bureau is likely running the borrower data through OFAC listings and rendering a determination with the credit report. If your company utilizes any third party compliance or quality control related software, you may also receive OFAC checks and alerts there as well. Bottom line is the importance of paying attention to the messages. If you don’t read them on every single file, an OFAC hit can skate right under your nose and won’t become a problem until the underwriter or closer finds it. By then generally it’s late in the process and you’ll anger all parties involved requesting additional documentation from the borrower in order to hopefully determine that the OFAC hit is not the same person as your borrower.

So what should you do if you DO get an OFAC alert on the credit report or other resource that may be used in the required OFAC search process? First, never assume that the hit is golden. You always need to assume that your borrower is “innocent until proven guilty” when it comes to an OFAC hit because there can be a lot of false positives. The Treasury Department provides a helpful guide that tells you exactly how to go about evaluating the OFAC information. I followed these steps personally and was able to eventually rule out that I had a 100% accurate match.
You can access these steps in entirely at http://www.treas.gov/offices/enforcement/ofac/regulations/faccr.pdf.

1. Is the “hit” or “match” listed on the credit re port against OFAC’s SDN list or
targeted countries, or is it “hitting” for some other rea son (i.e., Control List or
PEP, CIA, Non-Cooperative Countries and Territories, Canadian Consolidated
List (OSFI), World Bank Debarred Parties, Blocked Officials File, or government
official of a designated country), or can you tell what the hit is?

• If the name is hit ting against OFAC’s SDN list or targeted countries, continue to Step 2 below.

• If it is hitting for some other reason, you should contact the “keeper” of
which ever other list the match is hitting against. For questions about:

1) The Denied Persons List and the Entities List, please contact the Bureau of Industry and Security at the U.S. Department of Commerce at
202-482-4811,

(2) The FBI’s Most Wanted List or any other FBI-issued watch list, please see the Federal Bureau of Investigation’s website at www.fbi.gov/con tact/fo/fo.htm,

(3) The Debarred Parties List, please contact the Office of Defense Trade Controls at the U.S. Department of State, 202-663-2700,

(4) The Bank Secrecy Act and the USA PATRIOT Act, please contact the Financial Crimes Enforcement Network (FinCEN) at 1-800-949-2732.

If you are unsure whom to contact, please contact the provider of the interdict software that told you there was a hit. (example-your credit provider).

2. Now that you have established that the hit is against OFAC’s SDN list or targeted countries, you must evaluate the quality of the hit. Compare the name of the individual whose credit is being checked with the name on the SDN list. Is the name on the SDN list a vessel or a company rather than an individual (or vice-versa)? Is the name on the SDN list a male’s name whereas your credit applicant is a female?

• If yes to either question, you do not have a valid match.*

• If no, please continue to Step 3 below.

3. How much of the SDN’s name is matching against the name on your credit application? Is just one of two or more names matching (i.e., just the last name or just the first name)?

• If yes, you do not have a valid match.*

• If no, please continue to Step 4 be low.

4. Compare the complete SDN entry with all of the in formation you have on the
matching name on your credit application. An SDN en try of ten will have, for example, a full name, address, nationality, passport, tax ID or cedula number, place of birth, date of birth, former names and aliases. Are you missing a lot of this information for the name on your credit application?

• If yes, go back and get more information and then com pare your complete
in formation against the SDN entry.

• If no, please continue to Step 5 below.

5. Are there a number of similarities or exact matches?

• If yes, please call the hot line at 1-800-540-6322.

• If no, you do not have a valid match.*

If you are able to exclude your borrower based on file documentation or knowledge, be sure to clearly document the file and make sure that you communicate your research to the underwriter with your loan submission and maintain the explanations and documentation in the file in case of future audit.

If you have the need to request additional documentation from your borrower in order to exclude the borrower from the OFAC hit. You may wish to provide your borrower with or direct your borrower to the following informative consumer brochure explaining more about OFAC: http://www.treas.gov/offices/enforcement/ofac/regulations/cons.pdf

If you have reason to know or believe that allowing this person to do business in
the United States would violate any of the Regulations, you should call the hotline and explain this knowledge or belief.

Lastly, I feel it’s important to communicate the potential fines and penalties for violating the regulations that require institutions to conduct and review OFAC lists for potential matches. I warn you, these are hefty which is why it’s so important that you get yourself into the habit of watching for the OFAC information on each and every loan file. The fines for violations can be substantial. Depending on the program, criminal penalties can include fines ranging from $50,000 to $10,000,000 and imprisonment ranging from 10 to 30 years for willful violations. Depending on the program, civil penalties range from $250,000 or twice the amount of each underlying transaction to $1,075,000 for each violation

About the Writer. As one of NAMP's volunteer writers, Stacey Sprain is currently a NAMP member in good standing and is a NAMP Certified Ambassador Loan Processor (CALP). If you would like to become a volunteer writer for NAMP, please email us at: blog@mortgageprocessor.org.

SOURCE: Published by NAMP Publishing Group, a division of the National Association of Mortgage Processors (http://www.MortgageProcessor.org)

Interview Preparation and Planning Tips Part Four: The Training Plan

Written By: Stacey Sprain,
Certified Ambassador Loan Processor (CALP)

After you’ve created a written job description for the position you wish to fill and finish creating a script for interview processes along with standard questions and topics to discuss, you will want to plan ahead by creating a standard training plan. The training plan needs to include standard on-boarding procedures for the new employee along with some sort of tracking so you are able to keep track of training progress.

Some things to consider when creating a training plan and on-boarding process:

•What kinds of material might be most useful immediately to a new person in your company?
•What kinds of things would a new person need to have immediate access to in order to perform the job functions stated within the job description?
•Can you plan out an agenda for the first few days or week of the new hire’s employment and stick with the plan?
•What other persons might be able to assist with the training and oversight processes for an interim period while the new employee is learning?
•Would input and opinions from existing employees be helpful to you in creating a standard written training plan for that position?
•What can you fairly expect the new person to learn and be able to accomplish in the first few days and weeks of employment?
•Can you create a plan that phases in the overall job responsibilities keeping an end goal date as a target date for the new employee to be operating fully in the position?

I feel that it’s important to share your ideas and be willing to ask for and gather opinions from others in your office so that you are aware of how they might see such a training plan. What kinds of things were they not trained on initially that they feel would be most important or helpful to a new hire? What types of suggestions and input can the existing team offer? How can you involve others in the new hire training so that you create a trusting and comfortable atmosphere for the new person?

The major key to creating a training plan is to make sure that it is realistic out of the gate. Be realistic on what you can fairly and reasonably expect from the new person while he/she is getting acclimated to a new job with a new employer. You don’t want to overwhelm the new person with ridiculous unachievable expectations yet at the same time, you don’t want the person to be overly bored in the beginning either.

I like to think back to the training experiences I have had over my 18 years in the business and pull some of the positive training experiences into my own plan and keep in mind those negative experiences I had where the training was less than stellar. I honestly believe that the impression you make on a new employee within their first day of work is one that stays with them and will ultimately determine if you made the right hiring choice. The more organized the on-boarding process is for new employees; the more likely they are to start with a positive perspective and to stay positive in the organization.

Be sure to refer specifically to the written job description when creating the training plan. It’s important to cover each component of the description. Create small goals within your plan and provide a tracking chart to the new person so he/she can hold you accountable for their training progress. That way you will be less likely to forget important areas of the training you promised to them. Also, be sure to schedule follow up meetings to simply check in and follow up with the new person. It’s important to make the new person feel welcome and appreciated right from the start. If you commit to occasional follow up, you can also learn of areas where the plan falls short or may need to be tweaked.

Make sure that your written training plan remains a work in progress and use the feedback you receive from your new people to help you continue to improve and perfect your plan.

A few additional items to consider if the new hire is an originator, processor or underwriter:

•If they are to be dealing with and working with particular lender guidelines, does that lender offer any training that would be beneficial to the new person? If not, can you provide some sort of overview of the important things the new person needs to know about each lender they’ll be responsible for working with?

•Can you provide the new employee with a specific list of contacts on day one so that they know exactly who to contact for questions in distinct categories?

As the old saying goes, “you never get a second chance to make a first impression.” That statement certainly holds true when training a brand new employee. Make the most of pre-planning so that the entire process is in writing and therefore runs smoothly for both you and the new hire!

About the Writer. As one of NAMP's volunteer writers, Stacey Sprain is currently a NAMP member in good standing and is a NAMP Certified Ambassador Loan Processor (CALP). If you would like to become a volunteer writer for NAMP, please email us at: blog@mortgageprocessor.org.

SOURCE: Published by NAMP Publishing Group, a division of the National Association of Mortgage Processors (http://www.MortgageProcessor.org)

Interview Preparation and Planning Tips Part Three: Underwriter Interview Questions

Written By: Stacey Sprain,
Certified Ambassador Loan Processor (CALP)

If you’ve been following along with this series, you know that last week I provided some things to consider when creating an organized interview process. I also shared my personal list of processor interview questions. This week, I would like to share my underwriter interview questions with you. If you are looking for underwriting assistance, feel free to pick and choose from my list of questions to create your own customized list of standard underwriter interview questions.

The more questions you ask, the more thorough the information you will obtain to evaluate the candidates and make the best hiring decisions for your department. Be sure to ask a line of questions that will allow you to determine if the interviewee’s background and experience will be the right fit for your needs. Never hire in a hurry based on fast decisions because those tend to be decisions you end up regretting no matter how desperate the need for help!

GENERAL QUESTIONS TO GATHER BACKGROUND & EXPERIENCE INFO

How did you hear about/what do you know about our company?

How long have you been underwriting?

What brought you to underwriting- Can you explain/summarize your career path to date?

What types of loan files have you most recently underwritten?
•Conventional?
•FHA?
•VA?
•USDA?
•State-Specific?

Would you say that the majority of your experience has been underwriting to a single lender’s guidelines or are you used to dealing with multiple lender’s guidelines?

•What lender guidelines are you most familiar underwriting to?
•Has the majority of your experience been underwriting for retail or wholesale lending environment(s)?

What range/area have you typically underwritten for to date?
•Are you used to underwriting for multiple states, sometimes far outside your home range?
•Are there a particular list of states you are most familiar with underwriting?
•How do track such state and region-specific property issues and topics?
•How would you enter a situation where you might receive a file to underwrite for a state you have never underwritten for?

Are you used to keeping track of multiple websites, logins, passwords used for daily underwriting duties?

Has your underwriting experience included daily or weekly file quotas regarding a specific number of files you have been expected to underwrite on a regular basis?
•Can you explain a bit about any quotas/volume expectations you’ve experienced to date?
•Have you felt the expectations were fair or have you run into concerns/issues?

Describe the hours of your typical work week:

Are you available to work extra hours in the evenings or on weekends if/when needed?

Do you feel you are organized when it comes to multi-tasking and balancing a high-pressure workload?

How do you prioritize your daily workload/How do you keep track of things you need to do?

Explain your current system of workflow- walk me through a file from start to finish:

How do you deal with poorly processed submissions received in underwriting?

Do you have any problem launching complaints and/or communicating in regards to poor file quality or what you feel may be training needs for particular processors?

How do you deal with conflicts as you run across them in underwriting?

What types of questions or other needs do you commonly rely on support personnel to assist you with?

What do you find are your biggest challenges in regards to underwriting?

What do you feel are your greatest strengths?

What is do you enjoy most about underwriting loan files?

What is your least favorite part of underwriting loan files?

CONVENTIONAL-SPECIFIC QUESTIONING

If applicable, when did you last underwrite a conventional file?

Do you have experience underwriting high-balance conforming loan files?

•If so, when did you last underwrite a high-balance file?
•If so, are you completely comfortable underwriting high balance loan files?

Do you have experience underwriting non-conforming/jumbo loan files?

•If so, when did you last underwrite a jumbo file?
•If so, is/was there a maximum amount you are/were authorized to underwrite?
•If so, what types of overlays applied for jumbo underwriting?
•Are you completely comfortable underwriting jumbo loan files?

Are you comfortable navigating and utilizing Fannie Mae and Freddie Mac websites and selling guides?

Do you know where to find and utilize the DU and Loan Prospector User Guides?

How well do you feel you know Fannie and Freddie AUS systems?
Have you dealt with DO/DU or LP and with mainly investor-specific custom DU/LP AUS?

How do you stay current on important Fannie/Freddie updates and changes?

How many well-processed conventional loans do you feel are fair to expect be underwritten on a daily basis based on your underwriting experience to date?

FHA-SPECIFIC QUESTIONING

Are you currently authorized to underwrite FHA loans?
•If so, how long have you been underwriting FHAs?
•If so, when did you underwrite your last FHA loan?
•If so, what is your CHUMS id?
•Have you underwritten FHA purchase?
•Have you underwritten FHA newly constructed properties?
oAre you familiar with/comfortable with new construction less than 1yr requirements?
•Have you reviewed and underwritten non-HUD approved condos for spot loan approval?
oAre you familiar with/comfortable with spot loan reviews and approval decisions?
•Have you reviewed and underwritten manufactured housing for FHA?

How many well-processed FHA loans do you feel are fair to expect be underwritten on a daily basis based on your underwriting experience to date?

VA-SPECIFIC QUESTIONING

Are you currently authorized to underwrite VA loans?
•If so, how long have you been underwriting VAs?
•If so, when did you underwrite your last VA loan?
•If so, what is your SARS id?
•Have you underwritten VA purchases?
•Have you underwritten VA cash out refinances?
•Have you underwritten VA IRRRL?
•Have you underwritten VA newly constructed properties?
oAre you familiar with/comfortable with new construction less than 1yr requirements?
•Have you underwritten manufactured homes for VA?

How many well-processed VA loans do you feel are fair to expect be underwritten on a daily basis based on your underwriting experience to date?

COMPUTER/TECHNICAL-RELATED QUESTIONING

How would you rate your computer skills on a scale of 1 to 5 with 5 being highest?
What weaknesses do you feel you possess regarding computer skills?
•Have you ever used Outlook for email correspondence?
oAre you comfortable relying on and utilizing email for regular correspondence and communications?
•Have you ever utilized dual monitor screens?
oIf so, are you comfortable using two monitors in your daily workflow?
•Are you comfortable navigating and utilizing the internet and web on a regular basis?
•Do you know how to set up and utilize favorites?
•Do you feel you are a good “investigator” when it comes to hunting down the answers to particular questions that come up on occasion?

How do you prefer to communicate with processors during the underwriting of their loan file? Email? Phone?

MISCELLANEOUS QUESTIONING
How comfortable are you with documentation standards and requirements regarding automated underwriting via DO/DU and LP?

•Do you refer to the DU and LP user guides on a regular basis?
•Have you ever read the guides cover to cover?

How confident are you with reviewing file documents such as bank statements?
Paystubs? Appraisals? Tax returns for self-employed income calculations? Tax returns for investment property income/losses?

How confident do you feel with reviewing and making hard decisions on appraisals?
•Are you experienced with utilizing outside systems to assist with validating collateral values? If so, what systems do you utilize and/or are you familiar with?

How confident are you in making crucial decisions while still recognizing when something is outside of your authority or comfort level?

Do you/have you relied on reports to track your underwriting pipeline? Do you have experience pulling reports regularly to determine if files have aged past expiration and this need to be cancelled, withdrawn or denied?

FRAUD/MISREPRESENTATION QUESTIONING

Have you encountered fraud/misrepresentation in any file(s) you were responsible for underwriting?
•If so, explain how you handled the situation and the outcome:

What kinds of things have you found are the most influential indicators of potential fraud/misrepresentation?

Are you familiar with the top 5 or so most commonly fraudulent states in the country- do you know which states are included in the list?

Can you explain what types of fraud training and education you’ve experienced to date?
•When was your most recently attended fraud training/education session?
•Did you find it informative/useful?
•What if anything did you learn?

Can you explain what types of things in a file might lead you to seek out further information to rule out a suspicion of potential misrep/fraud?

Has your experience to date included the use of any additional fraud detection tools or software? If so, please explain:

CHALLENGE QUESTIONS

Within the office, how do you feel that the rest of the staff view you and your role?
•If we were to talk to others who work around you, what do you think they would say about you?

What was your reason for leaving each of your past employers?

•Which did you like best and why?
•Which did you dislike most and why?

Explain what makes you different and/or more valuable than other persons I may interview?

Why should I consider hiring you to fill this role in the underwriting department?
•What might you be able to offer that we may not find in other candidates for this position?
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I recommend ending the interview with a statement such as the following which will lead you into your review of the written job description you prepared following the advice of article number one of this series:

“Thank you, I appreciate all the information you’ve given today. It will be very helpful in the decision-making process. Now let me explain to you exactly what I am looking for in this role and what YOUR responsibilities would be…”

I also suggest including some verbiage opportunities such as the following based on your conversation thus far with the candidate:

“This is an area where I suspect you may struggle, experience challenges/weaknesses that we can work on”

“This is where I feel confident you will shine”

“This is/these are the next steps in this process”

“You can expect a call or email from myself or someone else by _________.”

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Be sure to record thorough notes regarding how the candidate answered your lines of questioning and be sure to include comments on the applicant’s appearance and personality during the interview. These things will help you specifically remember the candidate in the future if you should have a stack of resumes and interviews to conduct before making the hiring decision(s).

Next week we’ll talk about formatting an orientation and training plan for the new hire(s).

About the Writer. As one of NAMP's volunteer writers, Stacey Sprain is currently a NAMP member in good standing and is a NAMP Certified Ambassador Loan Processor (CALP). If you would like to become a volunteer writer for NAMP, please email us at: blog@mortgageprocessor.org.

SOURCE: Published by NAMP Publishing Group, a division of the National Association of Mortgage Processors (http://www.MortgageProcessor.org)