Karol Villavicencio: An Unexpected Path to Compliance #TechAll-Star

For some working in mortgage lending, having two separate examinations simultaneously–one with a state regulator and one with a federal entity–wouldn’t exactly be a good day. But for Karol Villavicencio, it sparked a passion and a career in mortgage compliance.

Villavicencio, an MBA NewsLink 2024 Tech All-Star Award recipient, is now Director of RegCheck Operations and Product Management for Asurity, Washington, D.C.

An Unexpected Path to Compliance

Villavicencio got her start in the mortgage industry early–due to family working in the field–with summer jobs and the like in high school.

While it wasn’t originally her intended career path (she studied television and radio production in college), she found herself back in the industry shortly after graduation, largely at small lender shops where she had the opportunity to wear multiple hats.

It was in one of those roles where she got that eye-opening introduction to mortgage compliance via the two simultaneous examinations.

“I really enjoyed the unknown chaos of not only trying to get prepared for an examination, but to produce the materials while connecting those items to what each examiner was looking for,” Villavicencio recalled. “So in the midst of having to deal with those two examinations, I turned to my sister, and I was like: ‘I kind of want to go into mortgage compliance.’ ”

The experience also provided some inspiration–she remembers thinking, “Wouldn’t this be awesome if this data was in some kind of technology platform where you’re not relying on paper and manual checklists to do all these things?”

With that newfound enthusiasm in mind, Villavicencio ended up with a job at ComplianceEase, beginning in 2015. There, she held a number of successive roles, ultimately achieving the position of Vice President of Client and Partner Success.

ComplianceEase was acquired by SitusAMC Holdings Corp. in 2020.

Villavicencio worked with ComplianceEase co-founder and CEO Anita Kwan, who provided her with mentorship, and set her further down the path of mortgage compliance.

“[She] pushed me to keep that mindset of: How do you make things easier for a lender that may not have all the bells and whistles available to them that bigger entities do? How do we get them to breathe a little bit easier and not get so scared when examination letters come through their door?” Villavicencio recalled.

After her time at ComplianceEase, Villavicencio took her current role with Asurity in 2022. In addition to other responsibilities, she serves as the product owner from ideation to implementation for the RegCheck product, which is Asurity’s automated compliance solution.

Additionally, she serves as a subject matter expert for much of the legislation, document requirements, technologies and data standards that lenders rely on to make RegCheck work. 

One of the things she’s most proud of in that role is being able to implement updates and changes more quickly than may be possible in some legacy products.

“Having an idea today, and being able to proof and release that within a two-week sprint cycle has been very gratifying,” Villavicencio said.

“People are not waiting for it. They can see results pretty darn fast, and they can cut down their manual checklists because of something that we did to make their lives better,” she continued.

Per data provided by Asurity, Villavicencio has helped decrease integration timelines by 22%.

Additionally, she said, many new tests have been added to RegCheck under her leadership. She cited as an example the ECOA (Equal Credit Opportunity Act) Test Suite, which features tests for appraisal delivery requirements and disclosure notices around appraisal delivery.

Since Villavicencio joined the team, there have been eight new test suites added in RegCheck, with plans to continue product maturation, Asurity said.

“And something that we’ve completed recently is the support for multiple disclosures,” Villavicencio noted. “Multiple disclosures implementation gives us the ability to ingest multiple loan estimates and closing disclosures in one transaction, which allows the system to generate valuable TRID tolerance results based on that information.”

“What I was able to do is take that concept even further–because we’re not the only ones that are doing it–but what I was able to do with that is add an additional layer of analysis when it comes to change of circumstance reasons. So, giving the lender the ability to configure: ‘which reasons for which fees apply to me?’ ”

With these types of features, RegCheck can provide lenders with opportunities for more efficiency, time-saving and consistency.

“If it’s something they now have removed from a manual, Excel spreadsheet or checklist or review process into something that runs automatically for them as they order the RegCheck report, that’s less time,” she said. 

“You reduce all that kind of manual human costs, and you’re able to have a much more streamlined process and also have the confidence that it’s getting actually looked at because it’s an automatic repeated process–it doesn’t rely on a human to remember to do something,” she said. “That’s a huge benefit for lenders and for people who are reviewing or auditing mortgage compliance on loans.”

It also is important to investors, or when–as Villavicencio experienced firsthand–regulators show up at the door.

“If you’re trying to pull loans, you want to present the best pool of loans that you got, and for examiners, you want to prove that your quality control process is consistent and that you’re catching things and you’re remedying them, and they’re not continuing to happen again and again,” she said.

Taking It Industrywide

Villavicencio’s drive to improve the compliance landscape propelled her to become involved with the MISMO Regulatory Compliance Examination File Development Workgroup.

Through her work with the committee, she’s emerged as a strong advocate for lenders, servicers, vendors and regulators, who all can benefit from clear standards and guidance when it comes to compliance.

“Getting as much standardized data ultimately benefits everybody,” Villavicencio said, noting she was able to provide the specific perspective of having spent time both in the origination space and her current work with the technology and mortgage compliance side.

Currently, the mortgage compliance data set specification–via the committee’s efforts–is in the public comment period, through June 14. It is intended to standardize the exchange of information used by state and other regulators for loan portfolio review examinations.

“The MCD is an industry standard loan data file,” MISMO said in a release. “State and federal regulators will use the MCD to perform compliance testing of closed loans as part of mortgage origination compliance exams. Mortgage lenders will use the dataset to perform compliance testing of loans throughout the loan origination and post-closing processes.”

“We really value the knowledge and expertise Karol brings to MISMO’s Regulatory Compliance Examination File Development Workgroup (DWG). She is an expert on all things compliance and is always willing to bring ideas to the table as part of the group’s efforts to standardize the formats and fields of information that lenders are required to provide state regulators,” said David Coleman, President of MISMO. “This effort will alleviate pain points for both Lender and State Regulators, and we are grateful for Karol’s dedication to the initiative.”

Villavicencio believes there’s a lot more opportunity in the compliance and data space. “How do we expand? What can we test based on data, and as these MISMO schemas open up to ingest more fields, how can we go into other areas?” she said.

Looking Back

Reflecting on her career thus far, Villavicencio was quick to thank the people that have mentored and supported her throughout the years.

“Being able to work with really great people that have mentored and taught me and provided me such meaningful feedback, so then I can do more,” is one of her proudest accomplishments, Villavicencio said. “I can help out more people. I think that’s pretty cool.”