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2024 Kickoff: Mortgage Compliance Roundtable Insights

We kicked off 2024 with our first mortgage compliance roundtable of the year earlier this month, where I was joined by industry professionals at leading mortgage companies to discuss best practices for ensuring compliance and consumer protection.

Topics included social media compliance, marketing monitoring for redlining, vanity team names, RESPA and co-marketing challenges, CFPB’s examinations, and lead generation.

Below is a recap of our discussion.

Marketing and social media compliance

A core theme at each of our roundtables is that the mortgage industry is increasingly prioritizing compliance on social media. We opened the discussion with any pressing or new compliance issues in this space.

Participants shared that they’re experiencing a growing emphasis on social media compliance and transparency during regulatory examinations. 

The particular point of discussion was about loan officers and NMLS ID numbers on social media. Examiners are taking a close look to ensure that loan officers have their ID number and the company ID number on any digital platform where they’re mentioning loans or their company, even if it’s on a personal account.

One attendee asked: If a loan officer has their personal NMLS number on their profile and a link to the company website, which has the company NMLS ID number, does that count?

The general consensus is that consumers shouldn’t have to click anywhere to get that information—all required information and disclosures must be present on the profile itself, not linked out elsewhere.

Need a way to automatically monitor for missing NMLS ID numbers and other required disclosures? Learn more about PerformLine’s Social Media Monitoring.

Marketing monitoring challenges for redlining

One attendee asked: For those with a distributed branch network model, how are you monitoring and comparing marketing efforts for compliance?

Specifically, the Consumer Financial Protection Bureau (CFPB) is keeping a close eye on marketing practices and is increasingly asking companies how they ensure that marketing efforts reach specific neighborhoods. 

A big talking point was the challenge of tracking marketing efforts across digital channels, like social media.

Materials like direct mailers, where you can see exactly where they’re being distributed, are much easier to document and demonstrate how efforts are targeting specific areas. But marketing efforts done digitally are much harder to prove where they’re going.

While there’s no silver bullet solution, attendees agreed that utilizing existing corporate tools for mailing and recording all marketing efforts is important to better document where marketing is distributed.

Compliance challenges of vanity team names

We shifted gears to the compliance challenges of loan officers wanting to brand themselves with vanity names and team names. It’s a hot topic every time we meet, especially in the midst of a down market. 

The compliance obligations regarding vanity team names can feel like a maze, varying wildly from state to state. Some states have strict rules regarding team names, while others are more flexible.

One participant shared that they provide guidance internally by dividing states into different levels—which ones allow complete freedom, which ones give some flexibility, and which ones don’t allow team names at all. 

The issue with these team names is that they might give the impression that the individuals themselves are the lenders, which is a big “no” for many states, particularly New York.

The other issue regarding team names that was discussed is, what’s considered a “team”? Most agreed that they require at least two people to be able to call themselves a “team,” or else there’s potential to mislead consumers. 

RESPA-related arrangements and comarketing

Next up, we talked about adapting to changes in RESPA-related arrangements and co-marketing, sparked by a major legal case last year that ended in hefty fines.

Attendees shared their companies’ strategies, which included discontinuing compensable services like sponsoring internal sales meetings to teach about products.

Instead, some have adopted measures to derisk by excluding certain expenses from valuation, leading to reduced payments for specific services. Overall, the discussion emphasized the importance of consistency, legal oversight, and comparative analysis in decision-making to ensure compliance and mitigate risks associated with managing strategic alliances and contractual agreements.

CFPB’s increased examination activity

The conversation then shifted to the uptick in regulatory examinations from the CFPB.

Attendees speculated some possible reasons behind increased regulatory scrutiny, suggesting that regulatory bodies are catching up after a period of reduced activity during the COVID-19 pandemic. 

One attendee pointed out that there also seems to be a shift towards younger and more technologically adept examiners at the CFPB, which poses new challenges for industry professionals who are accustomed to dealing with less tech-savvy regulators. 

This new wave of examiners are catching up to the industry and are much more equipped to dig into technology and find compliance issues than they might have been previously. 

Lead generation vendors targeting loan officers 

Wrapping up, we talked about the surge of vendors preying on loan officers with too-good-to-be-true offers with cheap leads, causing challenges for compliance professionals to teach loan officers how to identify these scams and stay away from them.

Loan officers are still facing a challenging market and are becoming increasingly desperate to generate business, which may be making them more susceptible to fraudulent schemes. 

One attendee also pointed out potential regulatory changes, including limitations on lead sharing and stricter consent requirements, which are likely to affect industry practices. 

It’s crucial for loan officers to obtain proper consent and exercise caution when contacting leads, especially considering the potential legal liabilities associated with violations of the TCPA.

Join the next mortgage roundtable

Throughout these chats, the consensus was clear: navigating the compliance landscape is a group effort, and sharing insights on these challenges helps us all stay ahead. No matter what the market looks like, the key is staying informed, compliant, and ready for whatever comes next.

Want to be part of the next roundtable discussion? Request your invite to be a part of the COMPLY Mortgage Compliance Community—a community dedicated to navigating the ever-evolving world of mortgage regulatory compliance.

As a member, you’ll have access to:

  • A private and monitored Slack group where you can connect and collaborate with your peers year-round
  • Invitations to our quarterly virtual roundtable events
  • Priority access to mortgage compliance content and additional events (both in-person and virtual)

Request your invite here!

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