Mortgage Industry: Take a Cue From Airport Security

On a recent flight to New York, I had a revelation about the parallels between airport safety (post 9/11) and the Mortgage Industry (post 2008).

Prior to 9/11, the security line at airports was a breeze: shoes stayed on, people walked through basic metal detectors, and you could pack a big tube of toothpaste in your carryon without setting off alarm bells.

Prior to 2008, financial institutions lacked vendor management, had easy licensing standards and loose controls.

Homeland Security and TSA now enforce strict processes and procedures that have fundamentally changed the way we travel by air, in an effort to thwart plane hijackings and terrorist plots.

In much the same way, Congress passed the SAFE Mortgage Licensing Act in 2008. It requires loan originators to pass an FBI background check, have no felony convictions during the past seven years and no felony fraud conviction at any point, such as a financial crime against a vulnerable adult.

Now, the security trend is moving toward all participants in a mortgage file going through a much more intense security check. The CFPB and other prudential regulators have brought forth strict rules around the participants’ vendors.

Ben Olsen, partner at BuckleySandler LLP and former Deputy Assistant Director for the Office of Regulations at the CFPB, recently partnered with me to produce his white paper, “You Can Achieve Vendor Management Success in a Post-TRID World.” This white paper outlines best practices to limit supply chain and counterparty risk.

TSA Pre lets people go through an extensive security check before they travel, giving them an opportunity to bypass long security lines, leave their shoes on, pass through a normal metal detector, etc. This also benefits TSA workers because it reduces the number of people they have to vet more thoroughly, making their jobs easier.

ATS Secured provides a pre-check for all parties in the mortgage industry, including third and fourth parties. With a background check plus regular updates to their status on the platform, vendors can proactively prove they are not bad actors and makes it easier for lenders and settlement agents to find them, trust them and most importantly continue to do business with them. It’s an easier way to manage everyone who “travels” through the mortgage process.

We do this by verifying the identities and legal status of all individuals and organizations, and giving them access to our online network that facilitates and streamlines the lending process—from order placement to secure communications, secure document exchange, tracking of invoices, payments and reconciliation.

Accidents and errors can lead to the same unfortunate results.

Negligence with security measures can lead to unsafe flights, just as neglecting to manage and monitor third and even fourth parties can be disastrous for lenders and investors.

It is vital for everyone in the mortgage process to trust the entities involved in every transaction, and that the product being sold to investors is fit for purchase. The right technology can mean all the difference between a crash and a safe landing.