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4 Mortgage Compliance Challenges in a Down Economy

Rhonda McGill
November 17, 2022

PerformLine recently held its final mortgage industry regulatory compliance roundtable of 2022 where we gathered industry professionals together to discuss the unique challenges that mortgage companies are facing in today’s macroeconomic environment.

I was joined by Brendan Kelleher, Associate Director of Loan Administration at the Mortgage Bankers Association to help guide the discussion.

This event identified four key compliance challenges for mortgage companies in a down economy, including lack of compliance resources, new products presenting risk, marketing compliance challenges, and keeping up with regulatory oversight. 

Lack of compliance resources and headcount

As interest rates and housing prices continue to rise and inventory remains low, an increasing number of mortgage companies are experiencing decreases in overall headcount across departments—including compliance teams.

During the roundtable, we polled attendees and asked—what are the key compliance challenge(s) that your organization is facing today?

57% of mortgage professionals said that compliance monitoring is a top challenge faced by compliance teams.

With fewer resources and bandwidth, mortgage compliance teams are struggling with a lack of visibility into where compliance risks are.

Other challenges included internal compliance risks (like staying on top of regulatory changes, audits, protocols, etc.), governance risk compliance structure, and external compliance risks (like third-party vendor management).

Compliance teams are also working through how to prioritize their work—how much is reactionary to the current macroeconomic environment, and how much of this is going to change again within the next 6 months to a year?

One attendee shared that since their compliance team focuses on everything for compliance (including marketing compliance, fair lending, etc.), it’s hard to stay on top of everything that they need and want to stay on top of. They are feeling stretched thin and are concerned that they’re not hitting everything that they should be. 

New and innovative mortgage products presenting compliance risks

In September, the Consumer Financial Protection Bureau (CFPB) put out a request for information asking for public input on ways to spur new mortgage products that help households. 

Specifically, the Bureau requested information on:

  • Targeted and streamlined refinance programs
  • Innovative refinancing products, such as automatic refinancing
  • Automatic forbearance and long-term loss mitigation assistance

As part of this, and as a result of the current market, new and innovative mortgage products are coming into play. One attendee shared:

One of the things that really is starting to worry me is all the creative loan products that everybody is starting to try and put into place and making sure we’ve got all of our bases covered with that.

Brendan affirmed and said:

I would certainly highlight that yes, staffing is a compliance concern and the result of the market contracting. But, new and innovative products are being built out there that regulators are paying attention to. All of that to say that compliance oversight doesn’t go away.

Continuing to drive marketing efforts while remaining compliant

One of the biggest challenges for mortgage marketing teams is continuing to drive marketing efforts while ensuring compliance.

As demand decreases and competition increases, loan officers are more likely to get creative in their marketing efforts in an attempt to bring in more business—but more creative marketing could lead to compliance issues if not addressed.

Another attendee shared that a specific challenge they’re working through is creating a lot of new content while simultaneously ensuring that they meet marketing compliance requirements, that content meets the loan officers’ needs in the current market, and that branch managers and executive teams are kept in the loop.

Regulatory oversight doesn’t slow down with demand

The overarching theme of this roundtable is that compliance teams are struggling to keep up with compliance with less headcount and bandwidth.

All of this being said, even as demand slows and mortgage companies are downsizing, regulatory compliance oversight does not.

Regulators are still going to be focused on how mortgage companies are ensuring compliance and consumer protection.

With lower demand, I think it opens up the possibility of even more regulatory oversight because companies are more willing to take risks to try and bring more business in, as discussed above.

A lot of companies are grappling with how to meet regulatory compliance requirements and optimize compliance programs in the midst of a down economy and teams that are downsizing.

Ease your compliance challenges with PerformLine

Several leading mortgage companies have increased their work with PerformLine this year in an effort to increase automation with two goals in mind:

  • Create significant cost savings through consolidation of systems and reduction in headcount
  • Increase compliance coverage as regulatory oversight increases and loan officers (or associated brands) market more aggressively to compete

We recognize that a down economy and having to reduce team size is always hard, but PerformLine can help your organization do more with less.

As always, we’re here to be a resource and support your organization in any way we can. If you want to learn how PerformLine can help ease your compliance challenges through automation and scalability, schedule some time to meet with the team.

Join the next mortgage industry roundtable

Our roundtables are designed to inspire discussion around the latest topics in the industry. The event will be a collaborative conversation through experience sharing and discussion around what lies ahead.

To reserve your spot—and to check out the rest of our upcoming events—click here.

author avatar
Rhonda McGill Senior Director of Client Success
Rhonda is the Senior Director of Client Success at PerformLine.

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