Issue #77: Don’t Sleep on Fair Lending Compliance…

Right now, most of us are focused on capturing share in a purchase market, soaking up any last refinance transactions available out there and otherwise preparing for change on the sales front. So it may have slipped by unnoticed this week that the GAO has reprimanded the CFPB for gutting its Fair Lending enforcement office two years ago and essentially, cutting back on its Fair Lending enforcement. Thankfully, our friends at Housing Wire did not miss this, and the story is worth the read (Subscription Required).

So what does this mean for us? Maybe not much at the moment. And perhaps it will amount to little more than a slap on the wrist with minimal repercussion. Then again, this isn’t the only indicator out there that the current administration will be making Fair Lending a major priority, either.

If I knew that my compliance plan was perhaps a little dusty, and if I had an inkling, for example, that some of my consumer-facing employees had, perhaps, cut a few corners or gone rogue in their dealings with consumers, this might be a wake-up call. It’s never a good idea to sleep on Fair Lending compliance.

As I’ve mentioned in the past, our Mortgage Sentinel service works with lenders to actively monitor front line employees like loan officers or call center representatives charged with assessing the needs of consumer prospects and routing them to the appropriate product. Our role is that of a secret shopper, assuming the persona of potential borrowers of various profiles and measuring the response of the lender’s front line. Some of the things we’ve heard, and shared, with our client executives have made their jaws drop.

The point is that if you have a robust training program to ensure your front lines are adhering to Fair Lending—good start. But training only goes so far. Mortgage Sentinel is just one of several ways to stay on top of what your team is actually saying to consumers. So maybe the GAO’s action will end up meaning nothing to your operation after all. And yet…is that a gamble any of us really wants to take? From what we’re seeing, the lending leaders are already in motion to tighten their compliance game. Are you?

Got an idea for Deeper Thoughts or LLL?  Email me at  jpaolino@lssoftwaresolutions.com.