2022 Could Be Quite a Year on the Compliance Front — and Not Just at the Federal Level

 

By all accounts, mortgage lenders will do well to mind their Ps and Qs when it comes to compliance in the coming months and years. Things don’t always move quickly when it comes to enforcement actions, but if you’ve ever experienced an audit from a regulatory agent, you’ll know that they don’t just review your records, data and actions from the day they arrive on site forward! So although we’re hearing a lot more about who’s being confirmed and what the state and federal agencies will be targeting when it comes to oversight and enforcement than actual enforcement actions, trust us when we say we will be hearing about them very soon.

Of course, this increased scrutiny on everything from servicing to Fair Lending is arriving at the same time as lending production costs go up and origination volume stabilizes or, in some cases, even begins to recede. That’s a natural occurrence. The volume of 2020 was delightful, but unsustainable. It’s amazing that some markets are still enjoying quite a bit of refinance volume as we enter the 4th quarter. But whether it slows down today, next month or in the first quarter of 2022 in your market, it remains the fact that any mortgage lending market, including refinancing, is not infinite when it comes to demand.

Right now, a lot of our mortgage lender clients are asking us, as a leading service provider, to help them out and serve as an additional resource on the compliance front. As a settlement services provider, we may not be able to help our clients on every, single regulatory or legal matter. But the fact that we’re actively operating nationwide, and that we operate on a state-by-state level when it comes to many forms of compliance, means that we can be an extra set of eyes and ears from state to state, not to mention at the federal level.

For our mid-sized, growing or understaffed lenders trying to stave off shrinking margins by running lean, that’s a real benefit. It’s a battle to stay on top of each and every state’s legislature, Department of Insurance or other lawmaker. On top of that, the pandemic has left public coffers depleted at the state, county and even municipal levels.  So we’re seeing a lot of activity to refill those coffers—often at the expense of mortgage lenders and closing companies. It’s very easy to raise a recording fee without a massive public outcry.

Most of our lending contacts are shoring up their compliance programs right now. Even the very biggest global banks cringe at the thought of a major violation introducing an ugly cost to not only the P&L, but to the brand as well. This especially as we’ll all have to fight a little harder for market share in a new market. That’s why our lender clients are leaning on us a little more to help them keep an eye on regulatory developments and enforcement trends, especially at the state and local levels.