Mortgage Compliance Issues
- Mortgage companies can be punished for lack of compliance.keys with houseplan and dollar sign image by patrimonio designs from Fotolia.com
Mortgage loan officers, brokers and bankers all are subject to scrutiny from state and federal governments. Abiding by state and federal lending regulations is called compliance. While the majority of lenders and brokers in the United States are believed to be abiding corporate citizens who remain in compliance, there are problems inherent in lending compliance. - Lending regulations come from state and federal governments. These laws change on a fairly frequent basis, and it is the job of the internal company auditor to stay abreast of any changes. One of the compliance issues that trips up lenders is documentation. Mortgage applications, deeds of trust, customer information and applications that were denied all must be retained for a certain period of time. These laws vary by state. However, if a company fails to retain documents for the appropriate period of time, the company could face stiff penalties.
- All mortgage companies must carry lending licenses. This is a federal regulation, but the granting of these licenses and the enforcement of the law is carried out by state government. In general, mortgage licenses need to be renewed at least once every seven years. This number can vary by state. Mortgage companies can get busy, and without a process in place, a branch manager can overlook the renewal of a mortgage license. A lender making loans without a license is a serious breach of compliance.
- The biggest issue in compliance is sales practice. Mortgage officers are salespeople. They solicit mortgage business from current customers if they work for a bank, former customers, affiliate customers and new customers. The solicitation usually is carried out over the phone or face to face. When pitching mortgage programs, there are strict regulations that brokers and loan officers must follow.
