Get Ready for CFPB’s ‘Secret Shoppers’

(Sue Woodard is President and CEO of Vantage Production, Red Bank, N.J., a sales automation and CRM technology provider. Prior, she was an award-winning mortgage originator, trainer and speaker. She can be reached at

“Don’t call us–we’ll call you” has evolved from a snarky way to dismiss someone into the latest tactic in the Consumer Finance Protection Bureau playbook…secret shopping.

Tupelo, Miss.-based BanCorpSouth decided to settle for a $10.6 million dollar fine rather than fight redlining charges stemming from the agency’s first-ever foray into secret shopping–and it’s unlikely to be its last.

The bureau’s multimillion-dollar score should be cause for alarm for the lending industry: you no longer have to worry whether your loan officers are mailing and emailing violations to regulators in the form of non-compliant marketing–the CFPB might present itself in the form of a customer and provide a perfect opportunity for them to slip up. The huge fine BanCorpSouth accepted is a chilling example of how new laws aren’t just on the books and in the distance…they’re coming to a branch near you.

Companies and MLOs encounter frustration with compliance almost daily; but there’s another way to look at the new ways we’re required to do business that can ease aggravation and assist production, rather than obstruct it. In the spirit of “not beating them” (because you can’t) and “joining them” instead, the mortgage industry should recognize the common goals they have with the agency created to monitor and police them. It’s not really a stretch.

To be successful, lenders and their mortgage loan officers operate and consider themselves to be “on the same team” as the consumers and realtors they serve. To do the best job, provide the best customer experience and earn that coveted repeat and referral business, there are four basic things that mortgage companies and their originators recognize and act on that also support the CFPB’s mission and goals:

Eligibility: Make certain the borrowers are truly capable of repaying the loan they’re getting. Qualifying for a loan goes well beyond underwriting guidelines. It’s not what a borrower can qualify for, it’s what they can truly afford.
Suitability: Make sure the loan product is right for the borrower. Short- and long-term goals must be considered when choosing the right loan length and type. Comparisons and consideration are key.
Clarity: Educate the borrowers so they understand what they’re getting into. Provide full disclosure and description of loan process and terms. Go over the process and product and answer all questions.
Consistency: Treat all borrowers equally, regardless of price range, geographic area or background. Every customer experience is significant and important, and is managed and monitored for quality regardless of loan amount or type.

The mortgage industry, borrowers and CFPB can all agree that these things are important. But based on the fines, audits and intent to step up secret-shopping efforts, it’s safe to say mortgage companies are not executing each of those four things as thoroughly or consistently as they should.

How is your company doing? Do your originators and staff have the processes and support in place to make sure these four considerations are handled in every contact with consumers from marketing throughout the transaction? Infrastructure adjustments are necessary to make sure company policy and CFPB rules can be adhered to easily.

BanCorpSouth accepted the CFPB fine, saying it had “taken a number of steps” to enhance its compliance management systems, reduce fair lending risk and increase lending in minority areas. It’s unclear what solution(s) they adopted, but the following can ease the compliance burden for originators and staff and keep management in the loop:

Streamline. For originators, condense the number of systems to they have to log into for lead management, email, schedule, marketing and pipeline management. For staff, provide standardized procedures and materials to handle all situations involving disclosure, documentation and security and make them easily accessible.

Integrate. Consumer interaction has to be measured and managed from lead follow-up all the way to close. The only way companies can thoroughly manage correspondence is to integrate CRM data with their LOS to ensure nothing falls through the cracks as prospects become borrowers and more people in your organization have contact with them. If implemented and managed at the enterprise level, companies will have layers of oversight, be able track performance and have a system in place that prevents rogue activity that can expose them to fines and other liability.

Archive. Audits don’t have to be terrifying and cumbersome. Proof of rate options/timing/offers, product comparison, fair lending and anti-steering behaviors can be accessed easily for any specific customer or timeframe in a streamlined, integrated system because activities are automatically archived.

Technology can create the infrastructure required to be compliant and it’s not meant to replace the human element–just minimize human error. Multiple marketing systems by originators and lack of standardization and tools by used staff can be devastating even if a mistake or omission is unintentional. Automation for marketing and compliance purposes can also increase efficiency and production by saving time and eliminating duplicate tasks and other busywork.

The secret shoppers are coming. And technology can make sure their experience is by-the-book.

The $10.6 million dollar fine levied against regional depository BanCorpSouth proves the CFPB is looking beyond the industry behemoths into smaller arenas to find and fine violations. Can your organization and people withstand their scrutiny? Take control of technology and infrastructure at the management level. The CFPB may come calling…do you want to leave your originators and staff to their own devices?

(Views expressed in this article do not necessarily reflect policy of the Mortgage Bankers Association, nor does it connote an endorsement of a specific company, product or service. MBA NewsLink welcomes your submissions; articles and/or Q/A inquiries should be sent to Mike Sorohan, editor, at