More and more information from those who have had a CFPB exam is bubbling up to help those of you who have not faced a CFPB exam, prepare for one. I have heard over and over again that lenders think they are too small to get an exam. Let me share with you that even the small lenders are receiving examination notices. We are not being told the methodology for who hits the exam radar screen, but we do know it is not based on your size.
There are so many areas to focus on, that sometimes an obvious area gets overlooked, and that is your web presence. Prior to an exam, CFPB will Google your company and your loan officers to see what is out there. They are searching for marketing compliance and UDAAP (Unfair, Deceptive or Abusive Acts or Practices) violations. Do you know if you have a random originator who is posting on Facebook “Call me today, rates dropped to 3.5%”? Do you have policy and protocol built around social media? Many lenders have been blindsided with information about their web site, loan originator websites and social media posts. Your company will be held responsible for all of it. So, what can you do to provide a compliance management system over this area of your business?
- Google your company. What pops up? What is said? Are there any marketing violations? Do you have all of the required disclaimers and content protocol?
- Google your loan originators, as this is the number one area of UDAAP and marketing compliance violations. Do they have their own sites that you don’t manage? Do you know the content on those sites? If you allow them to have their own sites, do you have any policies and protocol built around that? Have they subscribed to loan originator website services or marketing services, which are developed by other companies? If so, how do you manage that content and what is being sent to a client. If you allow that at your company, then you will need to add those website and marketing services companies to your “Vendor Management Program”. The service companies that provide your loan officer websites or marketing services will require you to scrutinize their policies and procedures, due diligence, and privacy policies as closely as you monitor your title companies and appraisers. Many companies are making the decision to have loan originator pages branch off of their main webpage so that content can be managed.
- Look at all of the social media pages tied to your company. What is being posted? Do you have a detailed record of every posting? What is the policy around what can and cannot be posted? In the exam process you will be expected to document what has been posted. For some they are printing out the website showing the posts daily, for others, they are keeping a log of information posted. Certainly one approach is more cautious than the other.
I know that no one likes “big brother” looking over them, but the reality is that many of your peers are facing this issue with the CFPB, and they are not having a good time with it. When their loan originators are forced to change the way that they do business, you’ll often hear “that stinks” or “that is stupid” or other expletives. While many may agree with them, it doesn’t change the reality. Exams are costing many lenders 3 months of time and over a million dollars on average, in staff, legal and consulting fees. The more you prepare, the faster things will go and the less money it will cost you. My goal is to show you the “hot spots” that will cause you the problems in the first place, and ones that we as mortgage bankers are not used to addressing.
As always, I welcome your comments and any suggestions you have for others!