Is There A “Compliance Problem”?Is There A “Compliance Problem”?
In these dramatic times, it's easy for a mortgage institution to say that it has adequate consumer protection compliance controls in place. It's entirely different to be able to prove it.
In fact, the mortgage industry as a whole is struggling to comply with consumer protection laws. A remarkable report published by the inspector general for the FDIC reveals that during 2005 (which was the peak year of the mortgage boom measured by number of loans originated), 83% of federally supervised banks that made loans were cited for patterns of "significant compliance violations." You can download the report from the FDIC website by clicking here or going to the FDIC website and retrieving Report No. 06-024. The percentage is presumably higher for state-licensed, non-depository lenders who were responsible for originating 52% of subprime mortgages and are subject to a much broader patchwork of state regulation.
Curiously, for all its troubles, the industry is overspending on its compliance programs. This is because its approach to managing compliance is no longer relevant. (Click here to read an article that explains why the industry’s way of handling compliance risk is ineffectual and how compliance risk management can be improved).
It is difficult to imagine a time when regulatory scrutiny has been more intense or the secondary market less accommodating. It is even more difficult to imagine that amidst significant regulatory change, consumer activism, and budgetary cost-cutting, that performance of institutions' compliance strategies will improve without fundamental change.
How effective are your institution's
existing controls? How compliant is your institution's current lending or
purchasing practices? In the coming months, what might your investors and
regulators discover and what could be the consequences? Are you relying on the
assumption that your institution is adequately protected or are you taking the
steps to ensure that it is?
It's become too costly to ignore the answers to these questions. Mavent can help you find them. Which is why since 2000, the leading financial institutions have sought our help to build, manage and maintain their automated compliance platforms. Let the experience and precision of Mavent offer you peace of mind.