Rhonda McGill of PerformLine: Marketing Compliance Trends for the Mortgage Industry
Rhonda McGill is Senior Director of Client Solutions with PerformLine, Morristown, N.J., respsonsible for providing regulatory and compliance solutions to clients. She has nearly 30 years of experience in the mortgage industry and with community housing organizations.
Marketing compliance is as important as ever in 2022 for mortgage lenders and servicers, and staying on top of current trends and best practices is key to getting out ahead of regulatory scrutiny.
As part of our 2022 State of Marketing Compliance Report, we surveyed mortgage compliance leaders on their organizations’ marketing compliance practices for insights into trend information on the depth of compliance programs, concerns and challenges. Here are the top trends and stats that mortgage companies should know in 2022.
Two-thirds of mortgage companies have compliance teams of 5 or less
Small compliance teams are the norm—68% of respondents said that their compliance teams have only 5 people or fewer.
It’s not uncommon to see small compliance departments, and that’s not always a bad thing, especially when the proper systems are in place for monitoring. However, many mortgage companies do not invest in their compliance teams until something goes wrong and they are left without any choice.
Many believe that it is because compliance is not seen as the revenue-generating business area, but one could also argue that the investment in compliance can prevent the loss of revenue resulting from fines and other exposures that could be prevented if compliance management is a priority.
Compliance touches every part of the mortgage lifecycle and now more than ever, it’s critical that compliance departments are well armed to protect your business as regulations are ever-changing, and failing to keep up is never an excuse for a regulator.
Bandwidth, regulatory change and comprehensive oversight are top marketing compliance challenges
An overwhelming majority (89%) of respondents said bandwidth, regulatory change, and comprehensive oversight were their top marketing compliance challenges.
The importance of marketing compliance cannot be overstated. Unfortunately, many compliance teams struggle with having enough bandwidth to keep up with both ever-changing regulations and the demands of marketing teams who are often pushed to meet strict deadlines. On top of this, most organizations are using an omni-channel approach to marketing, significantly increasing the number of assets that need review and, ultimately increasing the potential for compliance violations across channels.
The marketing review process should never be rushed since that is how mistakes occur and these mistakes can have monetary and even reputational impacts.
This is where compliance technology can really help teams who are struggling to keep up with demand. An automated solution can solve all three of these top marketing compliance challenges and allow compliance processes to be agile, efficient and scalable.
Fair lending, UDAAP and data privacy are top regulatory concerns for mortgage companies in 2022
Not surprisingly, 80% of respondents said that they’re focused on fair lending, UDAAP and data privacy and protection in 2022.
While marketers are focused on generating new business, compliance departments spend their time making sure that the business being generated is done in a manner that is compliant with the laws. Regulators have been very clear that they are focusing on consumer protection, and fair lending specifically has continued to top the list as consumer complaints have and continue to be at an all-time high.
As more companies automate processes through artificial intelligence and machine learning, they have caught the attention of regulators like the Consumer Financial Protection Bureau, who have continued to express concerns around the impact on fair lending and data protection.
Every compliance department should be aware of how technology is being used at every level of the mortgage lending process (including marketing) because even an unintentional issue could lead to large fines and long-lasting reputational damage.
The CFPB has been very vocal and public with its enforcement actions and this year is on track to be a huge year for enforcement.
Web pages, social media and calls had the most compliance violations in 2021 for mortgage companies
Aggregate data pulled from the PerformLine platform shows that the marketing channels with the highest percentage of compliance violations in 2021 were across the web (83%), in calls (52%) and on social media (25%).
While compliance departments are the eyes and ears of the company, they can’t be everywhere, which is why it is important now more than ever to have thorough monitoring systems in place to flag potential compliance violations. Simple mistakes like missing NMLS# or failing to include or state the proper disclosures could be extremely costly.
The lack of bandwidth leads to compliance teams having to pick and choose where they will focus their attention and in doing so, potential violations may be overlooked, especially for those channels where there is such a high volume of assets being created and shared every day (like loan officers’ social media profiles and vanity URLs). In most instances, these could be caught and remediated before it becomes an issue with the regulators.
(Views expressed in this article do not necessarily reflect policy of the Mortgage Bankers Association, nor do they connote an MBA endorsement of a specific company, product or service. MBA NewsLink welcomes your submissions. Inquiries can be sent to Mike Sorohan, editor, at firstname.lastname@example.org; or Michael Tucker, editorial manager, at email@example.com.)