With the year 2014 upon us there are over 2000 pages of new mortgage rules that will continue to change the industry as the Consumer Financial Protection Bureau makes its presence felt. For many Mortgage Brokers critical decisions will have to be made as to education, cost of compliance and the ongoing business model. There will also be those whose intent it is to deceive and prosper but major regulation and reform has reduced those ranks significantly. While they have not been completely eradicated out of the mortgage industry they are finding it far more difficult to avoid detection and continue to commit mortgage fraud.
I have had a number of conversations with both Mortgage Brokers and Loan Officers and for many they simply are not prepared for the changes. They are at best vague about what is coming and leave it up to their wholesale investors to make sure they are in compliance. This is a philosophy that could potentially cause great harm to the mortgage broker industry. The CFPB has stated many times that they will hold Mortgage Brokers to the same standard as retail or wholesale lenders when it comes to compliance and quality control protocol. One of the past examples is how many in the mortgage broker industry have paid no attention, or simply are unaware, with respect to the Anti Money Laundering requirements that are now in place for all non-deposit entities. If a Mortgage Broker is using “warehouse lines” these issues become even more critical on a higher level. Please understand that “ignorance is no excuse” for being out of compliance. You must be educated and have all the proper compliance protocols and testing in place if you are going to prosper and grow.
One of the overwhelming issues for Mortgage Brokers is simply the cost of compliance. The larger compliance companies are frequently not within the budget range of most Mortgage Brokers and they find it difficult to overcome a sales mentality that says I am spending money without any measurable return. With this in mind Mortgage Brokers are looking for the most cost effective compliance guidance they can find.
Unfortunately most Mortgage Loan Officers are also terribly unequipped to deal with the issues of compliance with respect to their originations. The concept of a “qualified mortgage” or what is included in the “3% rule” and many other regulations is very foreign to them. They rely on their company or the wholesale investors to provide them with guidance and what they don’t understand they all too often ignore. However an entire industry is going through major regulatory changes that are going to keep coming and information is power. The more you know the more efficient you become and the more prosperous you will be day in and day out.
Mortgage Defense, Inc. provides cost efficient compliance guidance specially tailored to Mortgage Brokers and their Loan Officers with over 30 years of experience. However, regardless of the path chosen it is imperative to get educated and informed guidance for the future of your business. In the new mortgage lending world it is compliance first followed by sales, not the other way around. By following this model you will actually be more efficient and profitable in the long run without the risk of a devastating regulatory audit that could put you out of business. Give us a call for a free consultation and “Level the Playing Field” today. 704-574-0364.
Mortgage Defense, Inc