Loan originators and other active participants in the mortgage field are required to maintain certain standards or behaviors in order to stay compliant with the laws and regulations that govern the real estate field. While processes like improved automation can make this task easier, you must still actively work toward remaining in compliance in the mortgage industry. Consider the following tips to see if you can implement any of them for yourself along the way.
What Is Mortgage Compliance?
Mortgage compliance is the term that the real estate industry in general uses to denote all of the regulatory guidance and rulings that govern how mortgages are originated and how the process proceeds. Mortgage compliance is not just a set of rules that make mortgage preparation simpler; it is a series of requirements that must be legally followed.
Tips For Achieving Compliance In The Mortgage Industry
However, adequately following compliance guidelines has the additional benefit of streamlining loan origination in general. It provides some orientation for handling unconventional borrowers or borrowers engaging in suspicious behavior as well.
Educate And Plan Ahead Of Time
One of the most critical pieces of the compliance puzzle is having a documented, consistent plan that everyone can follow. This helps to produce not only consistent work, but comprehensive work. Create a strategy that keeps in order all of the requisite procedures and responsibilities, as well as policies that may affect the mortgage process.
This will become the main point of reference for each individual’s work, and it is worth spending extra time educating those performing the work about the meaning of each of the document’s requirements and sections. Even if your firm is busy, taking the time to do so now will create a scaffold that stabilizes all work and shapes it to adhere with regulatory guidance. Each individual will have a role to play.
Understand Your Responsibilities
The Home Ownership Protection Equity Act (HOPEA) requires that lenders who are working with clients who are purchasing a high-cost home provide additional information to the buyers. Lenders must also meet additional requirements for high-cost lending.
Additionally, any mortgage company is required to offer a good faith estimate of the final amount of closing costs (legal fees, any applicable title insurance, home inspections, preparations of documents, taxes and so on) within three days of being presented with the application.
Also be sure to reexamine your state’s laws against predatory lending and include these policies in your company’s compliance plan. These are just a few of the many considerations to keep in mind as you draft a strategy for compliance that suits your specific firm.
Vet And Manage The Third Parties You Work With
Selecting and managing the third parties with whom you cooperate has a lasting impact on the quality of the work that you produce. Make sure that the companies you are working with create content or fulfill their service expectations in a compliant and effective way.
It is worth evaluating your realtors, appraisers and title companies in particular to determine whether they are firms you would like to continue to cooperate with or whether new standards and expectations must be set.
Quickly Resolve Customer Issues
Left to run unchecked, customer issues can balloon into compliance problems. This is why you should focus as early as possible on stabilizing the situation and resolving any issues that customers are facing. In addition to ensuring compliance, you also produce satisfied clients who will speak well of your firm.
Audits May Still Arise
Even with all of your thorough preparations, you may still be subjected to an audit. An audit does not necessarily mean that you have not complied with regulations; it is simply an examination of your processes to ensure that everything aligns with expectations and reports.
However, being able to provide your comprehensive compliance documentation and point to clear, public processes improves your chances of a favorable outcome and resolving the audit as quickly as possible.
A Reliable Title Company Can Make the Process Simpler
As you consider how to remain compliant in your mortgage processing and lending, be sure that the parties you are working with make your life simpler, not more difficult. A title company is one of the most critical pieces of mortgage lending, and the professionals at Mathis Title Company understand that working with lenders should be a streamlined, smooth experience for all parties involved.
We would be happy to serve as a reliable and comprehensive title company for your needs; reach out to discuss the ways in which we can help you remain compliant and keep your many real estate tasks as simple as possible.