Can Technology Keep Pace Mortgage Regulatory Reform?

The Compliance Technology Obstacle

While attending the Mortgage Bankers Association Regulatory Compliance Conference in Washington DC, the MBA workgroup discussion addressed the vulnerabilities mortgage bankers have with current compliance and how their hands are tied as a result of the technology providers having to catch up to their technology.  The compliance technology upgrades are beyond simple code writing.

The problems are overcoming the technology challenges as many technology vendors redesign the entire architecture of the end-user interface, data tables, data sets, data bridging, and integration.  At the same time MISMO, Mortgage Industry Standards Maintenance Organization, has its work cut out in integrating with the respective MBA workgroups in efforts to share information and the strategic picture of compliance and quality assurance.

As mortgage bankers work diligently with vendors to help facilitate the redesign and implementations of technology for compliance, the Consumer Finance Protection Bureau, CFPB continues to issue its 60-day letters of notification of its ten-week examination.   Many Depository Institutions (DI) and non-DIs will continue to receive exam notices regardless where vendors are in updating system platforms.

During a visit with the CFPB’s Examination and Enforcement staff, facilitated by the MBA, there was a discussion regarding the CFPB demonstrating sympathy in its harsh enforcement until the integration and transitions of industry technologies meet the regulatory compliance standards.  It did appear the CFPB was genuinely empathetic and may show some leniency to allow for technology integrations.

 

The Cost Factor

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As we all know costs continue to be the unpredictable factor in the nation’s regulatory upgrade.  While attending the conference, I met mortgage compliance professionals that pointed out how the support role ratio gap has closed between the production and compliance risk staffs.

Basically, quality control support staff is almost as large as production support staff in many institutions.  Small and medium Non-DIs are about to be jolted by the over burden of the CFPB’s examinations and enforcement and the resources of human capital and technology to maintain compliance in order to be operational.

I hope the CFPB will continue to listen and work with the industry to gently transition the industry into compliance as well as help in balancing the level of exams to the appropriate size of respective institutions.  Regardless, technology vendors and IT Departments have plenty of work to do in order to get us there.  This is the season for technology professionals to give us the WOW factor by demonstrating command of their space in supporting clients with upgrades to systems and platforms that keep up with the industry compliance challenges.  As for now, there appears to be clear winners and losers in these efforts which open the doors of opportunity.