Rohin Tagra of Azimuth GRC: 4 Reasons Mortgage Lenders & Servicers Need Automated Full-Population Compliance Testing

Rohin Tagra is the founder and CEO of Azimuth GRC, a compliance automation pioneer that provides daily automated tests of an entire portfolio to determine compliance with all applicable laws and regulations.

Rohin Tagra

According to a recent study from Deloitte, the cost and complexity of compliance has risen over the last decade, with more rules expected ahead.

Meanwhile, the cost of non-compliance is rising. Regulatory expectations have increased, and new rules continue to be released, placing a heavy burden on compliance teams to keep pace, or else face consent orders and multi-million-dollar fines.

The good news is that there’s a solution.

A New Approach to Compliance Management

As compliance costs skyrocket while regulatory expectations increase and compliance teams shrink, financial institutions must transform their compliance management efforts and move towards automated full-population testing.

Here’s why.

  1. Greater accuracy, increased coverage, and lower costs.

With full-population automated compliance testing, institutions are reducing the cost of maintaining regulatory compliance while also expanding coverage, ensuring they are protected without breaking the bank.

With automation, lenders and services can speed processes, increase productivity and eliminate costly human errors. In a recent McKinsey survey, two-thirds of organizations cite each of these benefits, while financial services firms also report significant cost savings.

Automation increases your coverage of regulations and population tested. Instead of looking at a sample, institutions can be confident in their entire portfolio across a broader inventory of regulations.

For instance, consider a portfolio of one million loans. To get a 95% confidence interval with a 5% error rate, you would only need to test 383 loans. That means you have 999,617 unknowns that could leave you open to risk.

Full-population testing eliminates the potential for unknown compliance violations and empowers financial institutions to address issues quickly.

  • Regulator ready, always.

With sample-based compliance testing, lenders and services are taking a gamble. Using the same example of a portfolio with one million loans, you’re auditing a few hundred transactions while ignoring the vast majority.

What happens when that sample isn’t a true representation of your portfolio? Or worse, what happens if your sample is different from the regulator’s? As financial institutions continue to prioritize the customer experience, what happens if you have problems you’re unaware of?

Consider how often this happens in elections. Polls may show a candidate ahead by four points, only to lose the election by a landslide. Clearly, the sample was not representative of the total voters.

Full-population eliminates surprises and allows institutions to demonstrate to regulators a strong commitment to compliance efforts. Lenders and servicers can have confidence that they are always regulator ready.

  • Ensure a fair and equitable experience for ALL customers.

By replacing sample-based manual testing with full-population automated compliance testing, financial institutions can test entire portfolios in just minutes to determine if it is compliant with all laws and regulations.

As a result, institutions can prevent both regulatory and customer issues through early detection and remediation, providing a fair and equitable experience for all customers.

Otherwise, institutions run the risk of severely hurting customers. Imagine an active-duty service member going into foreclosure simply because the entire population wasn’t tested.

This also offers institutions a competitive edge. With automated full-population testing, lenders can be assured their lending operations are free of bias and avoid regulatory enforcement actions and reputational damage.

  • It’s inevitable.

Up until recently, full-population testing hasn’t been possible. Mortgage companies and other institutions were forced to manually test portfolios. The technology simply didn’t exist.

Today, it does. Whether you embrace innovation now, or wait for it to become a standard, full-population compliance testing is inevitable.

As the regulatory environment continues to evolve, with more changes likely ahead, financial institutions must move away from error-prone, sample-based manual processes and towards automated full-population testing.

Automation can reduce regulatory risk and lower costs – critical for staying ahead.

Today’s institutions are under greater pressure to adhere to safer and better servicing practices, and full-population testing can ensure that. As this becomes the standard of care, will you innovate, or will you be left behind?

(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; or Michael Tucker, editorial manager, at