Two plus four may equal six, but regulators still want to know how you got the answer.
Why, you may ask?
Proving Your Mortgage Process
When Marx Sterbcow, one of the nation’s premiere RESPA attorneys, spoke at a webinar hosted by ATS Secured titled, “RESPA Section 8: Understanding Marketing and Advertising Regulation,” he referenced advertising and marketing service agreements (MSAs). But his advice applies to the entire mortgage process.
“Every fee in an MSA needs to be broken down to illustrate where the money came from.”
To avoid legal action against your mortgage business, Sterbcow stresses that each MSA must be quantified. This means every fee in an MSA needs to be broken down to illustrate where the money came from.
“As two of the former heads with HUD who ran the RESPA division once told me,” Sterbcow said, “‘If you can’t show your homework, then we have a problem with it.’”
“If you can’t show your homework, we have a problem with it.”
Quantification applies to the entire mortgage process, of course. During an audit, the CFPB and other regulators review all loan documentation, communications and processes to see if everything is above board. Skipping steps in the process or not providing all records—even minor ones—can result in a fine. Just like in math class, it’s not enough for you write down the right answer; you have to prove that the process you went through to obtain that answer is also correct.
Finding The Points of Derailment
Math teachers want to see how students come up with their answers because it shows them where students are stumbling and what they can do to help them better understand important concepts. The same holds true in the mortgage compliance world.
The CFPB wants proof of compliance to find out where homebuyers are having trouble in the loan file, to see if there is anything about your business’s processes/policies that could be made clearer or more accurate. They want to find any points of derailment, where a pattern of negative customer experiences might emerge (or have already emerged).
The CFPB wants to find points of derailment, where a pattern of negative customer experiences might emerge.
It is vital for mortgage businesses to show proof of compliance, or “work,” if they want to survive a regulatory audit and/or avoid an enforcement fine.
If your mortgage team is struggling with anything involving mortgage compliance, rules, or if you just want to ensure you are following best practice, ATS Secured can help.
Our technology automates mortgage best practices/rules, verifies identities, facilitates collaboration and transparency on official loan documents, manages third-party risk and more.
Don’t let your mortgage business get downgraded just because you didn’t prove you are using best practices. Partner with ATS Secured and show off your mortgage compliance with pride.