Mortgage compliance can take a lot of wind out of the sails of loan officers. The requirements slow the processes as paperwork is checked and double-checked. Worrying that work is done correctly isn’t favorable for those trying to bring in new business. Little things, like missing signatures or credit reports not lining up, can create big problems. So, it’s no surprise that regulatory compliance and risk management are top concerns of mortgage LOs.
Rules are constantly being changed or added. We have seen the Consumer Financial Protection Bureau (CFPB) add and change multiple regulations in the past few years. Regulation B, RESPA, SAFE — the list of rules is tremendous for loan originators and lenders.
Much of the regulatory process comes down to paperwork — lots of it. Disclosures and estimates must be provided within specific time frames. Something as small as not mailing documentation on time can result in legal penalties, including criminal and civil fines. A loan compliance process is essential and can remove worry, provide auditable compliance information, and increase efficiency.
Mortgage compliance violations can be severe, but maintaining compliance can take extensive time away from employees performing high-value tasks, costing the company time and money. Tracking and documenting mortgage compliance is a low-value activity considered waste under lean operations theory. Anything that takes compliance off the plates of loan officers so they can focus on marketing themselves and gaining new clients or just accelerating their loan signings is precious.
End-to-end management platforms, like Capacity, remove low-value tasks that consume time and money from officer workloads through automation tailored explicitly to the entire loan process. An end-to-end cloud-based management solution follows the whole customer transaction through the loan process and beyond. Support automation platforms can connect your entire tech stack to help answer repetitive borrower and lender questions, and automate workflows.
The primary purpose of most mortgage compliance regulations centers around the documentation and documentation time frame throughout the loan process. Paperwork is a pain and often forgotten. Tracking when a letter goes out or handing a mortgage disclosure to a loan customer can be overlooked by loan officers, creating potential legal jeopardy if they can’t prove they met documentation requirements.
Processes for RESPA compliance require all documentation throughout the loan process to be handed to the customer or mailed within three days. The Mortgage Service Disclosure Statement, Special Information Booklet, and good faith settlement are included in these requirements. Loan officers must provide a HUD-1 Settlement Statement before or during closing. A Servicing Transfer Statement must be sent at least 15 days before the effective date if a loan is sold or transferred.
An end-to-end management solution removes the loan officer burden by making sure these required statements and disclosures were sent or handed out, mailed on time, and logged into the system. A platform like Capacity ensures that the correct documents have gone to the right customers. An established automated system that logs transactions is also the best proof for regulators that requirements are designed into day-to-day management and met.
Should compliance rules like RESPA requirements be modified by the CFPB when the software changes with no maintenance required from the mortgage provider? A continually updated solution keeps mortgage loan officers up to date on the ever-changing regulatory environment. Time spent training or researching mortgage compliance changes is reduced when the system can alert loan officers of immediate changes.
Meeting compliance requirements also impacts customer satisfaction and the perceived value of the loan officer. A customer receiving required disclosures and documentation on time knows professionals handle their needs and is more likely to return for future loans and recommend others.
By implementing an end-to-end platform solution while meeting mortgage compliance requirements, the burden is lifted off of LOs and support staff. Worry and triple-checking documentation are eliminated, giving mortgage loan officers back their time and peace of mind to go out and find new customers.
Few things are more valuable to mortgage loan officers than time to bring in new customers and provide fantastic communication and customer service to existing customers. Knowing that mortgage compliance requirements are met and documented by Capacity gives loan officers tremendous peace of mind.
Capacity provides everything you need to support your borrowers, sellers, and support staff in one powerful platform.