The compliance landscape for lenders and servicers is continuously evolving, with ever-changing complexities. Regulators have stepped up efforts to protect consumers, prevent discrimination, and uphold industry standards. A heightened focus on racial equity and social justice has created new rules and requirements on Fair Lending, including what may constitute unlawful conduct. Changes in presidential administrations and state regulations have often created inconsistencies, ambiguities, and conflicting interpretations of law, rules, and policy that challenge the ability of businesses to make the right decisions.
A confluence of macroeconomic, regulatory, and industry-specific factors has shrunk the supply and affordability of housing, placing enormous strain on lenders and servicers, and further challenging their ability to reach underserved homebuyers. The growing list of federal regulators and oversight agencies who, with increased emphasis on fair lending and servicing, are actively engaged in efforts to levy fines, assess penalties, and issue consent orders, has created additional pressures. A myriad of new policies and rulemaking have impacted lenders marketing practices, credit allocation, and product offerings.
The fines and penalties imposed by regulatory agencies not only result in significant financial exposure, but they also create serious reputational risk, follow-on regulatory scrutiny, and legal costs, impeding business growth and expansion. The strain of the current environment on compliance resources is leading organizations to become reactive, rather than proactive, to problems as they arise. This produces gaps in the knowledge and experience needed to prevent or respond to legal and regulatory challenges.
As financial institution boards and CEOs are increasingly held accountable for compliance failures and deficiencies, leadership’s involvement is more important than ever. Regulators look to leadership to ensure they are engaged in establishing and maintaining appropriate compliance management systems, monitoring, written policies, risk management, change management, testing, and company culture.
“Without the right tools and services, the industry has typically reacted to compliance issues. What is required is an on-going process and review regimen to mitigate risk. Without a defined program the heightened regulatory scrutiny leads to significant exposure to financial loss, fines, penalties, limits on business growth and reputational damage. That is, until now. With the introduction of Gate House Compliance 365”
In this new, complex, and increasingly aggressive regulatory environment, the risks have become broader and deeper within financial institutions. Lenders in particular must find a way to manage their exposure effectively and efficiently, which requires a dedicated team of experts to help lenders diagnose and mitigate compliance shortfalls.