There is a reason why many of us became mortgage bankers versus traditional bankers. Mortgage bankers live large, make their own rules and innovate. At least that is what I have seen over the last 30 years. However, with today’s regulatory oversight, we are forced to adjust our ways a bit to stay out of trouble and stay in business. We can blame all of that on whatever we want to, but the bottom line is that enough of our associates behaved badly, so now we are highly regulated. Many that I know have said “it’s just not fun anymore” and I suspect that this is partly true and also part of our adjustment.
So what does this mean for the mortgage bankers?
- Loan originators have to follow a lot more rules than they used to. If you have originators doing their own thing without any oversight, it may cause your company and the originator big issues. As part of your compliance management system, loan originators have to be monitored just like everyone else. They will not like it, they will threaten to leave, but everywhere they go it will be the same eventually.
- Compliance departments are now departments and not just a “person”.
- Data gathering and technology upgrades are the focus of many. Why? Because you have to fight data with data! Since most companies do not have the data they need to fight an accusation, they are left to write big checks AND eventually pay for the upgrades anyway. You are being out-gunned and you cannot afford to let that happen!
- We now have a “customer complaint process” instead of the handoff to a manager. We also collect this data to review complaint trends and formulate action plans to correct issues.
- Every move we make requires a “compliance management system” that involves, Policies/Procedures, Aggressive Training and Constant Monitoring.
- Every regulator is invited to the CFPB exam party. Now your state regulators can share info with other regulators, come to your exams and learn all about you at a different level.
- Enforcement attorneys from the CFPB, whether just training or there for other reasons, are a fact of life at exams. This means you should probably protect yourself and have your attorney there too. I can’t even imagine the cost for 8 weeks of an attorney being present.
- We have training departments that have replaced the “read the memo”.
- We have consultants and attorneys on staff, or on retainer, because we need them just about every day.
- We have a new position called a “Change Manager” who is the hub of all things changing and is responsible for making sure the left hand and the right hand are communicating to one another.
Certainly our industry is changing rapidly and some of you think for the worst, while others think for the best. I suppose as we all acclimate to this new way of doing business we will again find the “fun” that so many say is gone. Me, I’ve been having fun for 30 years and have yet to be bored one day in this industry. I guess that is why many of us have a hard time ever leaving it!
This week I’m going to focus on dataflow, workflow logistics and accumulating what you need to defend against Fair Lending or Disparate Impact claims. It will require you to take off the “this is the way we have always done it hat” and replace it with “round up the cowboys and the cowgirls and let’s get this done hat”. Stay Tuned!