MBA Premier Member Editorial: The Compliance Gap Is Growing, and Servicers Can’t Afford to Fall In

Jennifer Keys is Senior Vice President of Compliance with Covius, Glendale, Colo.

During the height of the pandemic, federal regulators led the charge on borrower protections. Now that they are stepping aside, servicers are left navigating a fractured regulatory landscape with little federal guidance.

So far in 2025, the Consumer Financial Protection Bureau has dropped several high-profile cases, including those against Capital One, Zelle and Townstone. Meanwhile, Federal Housing Finance Agency leadership has rolled back Unfair or Deceptive Acts or Practice oversight and eliminated renter protections tied to government-backed loans.

But don’t mistake the quiet for relief. State regulators, like California’s Department of Financial Protection and Innovation and New York’s Department of Financial Services, are still very much on the job. At the same time, investors and subservicing clients are tightening expectations. Contracts are stricter, and the cost of missing the mark keeps climbing.

The pressure hasn’t disappeared. It’s just coming from different directions.

Thinking It’s Deregulation? That’s the Trap.

There’s a real danger in assuming less federal enforcement means less risk.

With fragmented standards and no single playbook, servicers are now managing compliance across 50 states, various investor requirements and evolving borrower expectations. That complexity raises the odds of making costly mistakes.

And when mistakes happen, they don’t stay private. A single borrower complaint can escalate fast. Social media amplifies reputational risk, and investors are quick to question a breakdown in controls. Even if regulators aren’t leading the charge, your clients, partners and the public are still watching.

What we are seeing in the marketplace is that some servicers appear to be playing catch-up, while others are getting ahead. The difference comes down to mindset and preparation.

Servicers who weathered the pandemic best weren’t scrambling to build policies on the fly. They had frameworks in place and teams that knew how to use them. That kind of readiness didn’t just keep them out of trouble; it set them apart. Investors and regulators noticed, and that credibility still matters today. They didn’t wait for direction. They were ready.

Right now, compliance can’t be an afterthought–something that gets tacked on after making decisions. It must be part of the foundation. Everything runs tighter when built into your products, communications and tech stack from the start. Borrowers get more straightforward answers, teams waste less time and your operation can move faster, without cutting corners.

What Sets the Best Apart?

At this point, everyone’s heard the buzzwords, but the servicers who are ahead of the pack in their approach to compliance are doing three things well:

1. They bring compliance in from the start.

Not halfway through, not after something breaks, but from the beginning. Compliance is in the room early, whether it’s a platform rollout, a new process, or a contract change. That’s how they catch issues before they snowball and avoid costly rework.

2. They build systems that can flex.

You’re not dealing with one standard anymore. Substantial compliance shops are using flexible frameworks that adjust based on jurisdiction and other factors. They keep training current and their documentation centralized so teams can act quickly without sacrificing consistency.

3. They break down silos.

When compliance operates in isolation, things fall through the cracks. The best-run servicers foster tight alignment across legal, risk, tech and servicing teams. Everyone has visibility, and decisions get made faster with fewer surprises.

The growing gap between regulatory expectations and federal direction will not disappear soon, but it doesn’t have to be a liability. Servicers have a choice: they can follow the shift or lead it. Compliance leaders who act now will not only keep pace with regulation but also help define it. In a fragmented world, leadership is everything.

(Views expressed in this article do not necessarily reflect policies of the Mortgage Bankers Association, nor do they connote an MBA endorsement of a specific company, product or service. MBA NewsLink welcomes submissions from member firms. Inquiries can be sent to Editor Michael Tucker or Editorial Manager Anneliese Mahoney.)