The CFPB recently released their enforcement manual which will change the compliance requirements for all mortgage companies. Regardless of the size of the company all mortgage brokers and bankers are expected to have a compliance plan in place.
The Consumer Financial Protection Bureau now expects mortgage companies to maintain a compliance system. It will be mandatory to retain some form of on-going compliance system to manage the company’s compliance policies and procedures and training.
In addition, there will need to be ongoing training of all lending personnel as well as ongoing review of policies and procedures. The CPFB will also review data to determine whether customer complaints are being issued and addressed, as well as seek out potential compliance concerns. A company must ensure that the infrastructure – from the job applications to exit interviews-all will have compliance components built into the policies and procedures.
In essence, the CFPB expects that if a company has a problem, they have to be able to identify and correct it through their policies, procedures and training.
The bottom line is that the CFPB, through its enforcement manual has set the standards for compliance. The CFPB’s position is not to educate but rather enforce with respect to a company establishing a sufficient compliance infrastructure.
The CFPB is focused on creating a culture where each person within the company has a responsibility toward compliance. Additionally, they are clear that the infrastructure must be independent from management so as to avoid compliance taking a back door to profitability.
The CFPB does recognize that the size of a company will have an impact on their ability to maintain a compliance staff. Companies, depending on their size may be able to outsource all or part of their compliance functions to a compliance consultant or company. Whatever the solution a company chooses, compliance must be sufficient and adequate from the CFPB’s perspective. Time and CFPB audits and violations will determine the adequacy of compliance.
Companies whose violations are brought to the attention of the CFPB will have far more to answer than simply responding to an isolated incident. Transparency is the key! It’s not just merely enough to say that you have policies, procedures and training in place…now you must prove it!
For more information on what the CFPB has in their enforcement manual click here.