Last week, our quarterly Mortgage Industry Roundtable brought together leading industry professionals to share their experiences, discuss best practices, and talk about the biggest challenges that keep them up at night.
I had the pleasure of co-hosting the discussion with John Henson, Attorney at Troutman Amin LLP, who brought a wealth of experience in the lending and mortgage compliance.
Here’s a look at the key highlights, including UDAAP concerns, the growing complexity of social media compliance, and the uptick in state examinations and scrutiny.
Growing Concerns Around Social Media and UDAAP Compliance
A major point of focus in the discussion was the increased regulatory scrutiny for loan officers on social media, specifically around UDAAP (Unfair, Deceptive, or Abusive Acts or Practices).
John Henson explains how nearly any form of marketing could potentially be scrutinized under UDAAP, especially when it involves social media platforms.
Everything is UDAAP.
John Henson
For example, statements such as “rates as low as” can easily be flagged if they are found to be misleading, especially when fine print or disclosures don’t align with the reality of the product being advertised.
Any claims made in marketing materials must be transparent and verifiable to avoid regulatory issues and compliance risks.
Creative Marketing Tactics: Innovation or Risk?
In an effort to stand out in a competitive market, some loan officers are becoming even more creative with their marketing strategies that push the boundaries of traditional advertising.
Participants shared some examples of loan officers pushing boundaries, such as selling spreadsheets on their personal websites and engaging in affiliate marketing tactics.
While creativity in marketing is necessary, especially in the midst of a challenging market, it has to be accompanied by comprehensive compliance checks.
A quick review is not enough—companies need to dig deeper to ensure that innovative tactics don’t violate industry regulations.
Merging Personal and Professional Identities on Social Media
Another area of discussion centered on the generational divide in how professionals use social media.
Younger loan officers, who have grown up with platforms like Instagram and TikTok, are starting to merge their personal and professional identities online.
This creates a new set of challenges for compliance teams, as loan officers may not fully understand the risks associated with using personal accounts for business purposes.
John noted that for many younger professionals, their social media presence is deeply tied to their identity, making it difficult for them to separate personal and business activities.
This blending of identities creates a higher risk of compliance issues, as personal content may not be subject to the same level of scrutiny by organizations as official business communications.
Regulatory Examinations and Heightened State Activity
The conversation also covered regulatory examinations, with participants reporting varying experiences. Some lenders noted that their examinations have been consistent, while others pointed to an uptick in state-level investigations, particularly from consumer protection agencies.
John shared that even a single consumer complaint can now prompt an investigation from state regulators.
We’re seeing a lot of civil investigative demands based off of one complaint.
John Henson
This goes beyond states that are typically more aggressive, like New York, Massachusetts, and California—other states are shifting to a much more aggressive approach to compliance violations compared to even just a few years ago.
This increased attention means that lenders need to be more diligent than ever in ensuring their processes are compliant at all levels, as even small missteps can lead to costly investigations.
This also means that the likelihood of multi-state examinations will increase. Mortgage professionals will need to be prepared for heightened scrutiny and the complexities that come with coordinating compliance across multiple jurisdictions.
The NAR Settlement’s Influence on Mortgage Origination
The recent National Association of Realtors (NAR) settlement—which involves how broker commissions are structured and disclosed— has sparked more widespread changes in the industry than most anticipated, particularly in the mortgage origination process.
These changes are complicating the calculations for cash to close, with processors, underwriters, and funders now required to pay closer attention to commission payments and their effect on the borrower’s financial situation.
In the past, lenders rarely had to consider the buyer’s responsibility for paying commissions. But now, with new requirements for commission disclosures, buyers are sometimes coming up short on funds at the last minute, which impacts the entire closing process.
One participant put it simply: “It’s something we didn’t notice was missing because we weren’t expecting it to be there.”
This has led to the need for more thorough reviews during the underwriting and processing stages, as well as clearer communication with borrowers and agents to ensure all commission-related costs are accounted for.
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