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LATEST THINKING


Operationalizing mortgage banking compliance

MORTGAGE ORIGINATORS IN THE US STRUGGLE
TO ENFORCE COMPLIANCE STRATEGY

"Originators face severe challenges in operationalizing the balanced compliance strategies they have developed." 

Mortgage banking executives face significant mortgage compliance risk, yet they are expert at setting mortgage compliance strategy. The problem is that mortgage originators face severe challenges in operationalizing the balanced compliance strategies they have developed. If financial services organizations target to operate more profitably, while fully compliant within regulatory and investor guidelines and achieving higher levels of customer satisfaction, this is the problem that must be solved. The solution will involve business process outsourcing, but not the piecemeal outsourcing of the past. Mortgage originators must find partners that can guarantee the perfect operationalization of their unique mortgage compliance strategies.

KEY FINDINGS

A regulatory compliance failure is often viewed as a fundamental misunderstanding of the requirements, causing banks to reformulate strategy.

A regulatory compliance failure is often viewed as a fundamental misunderstanding of the requirements, causing banks to reformulate strategy.

An investor compliance failure has been viewed as an attempt by investors to pass back risk, which leads banks to reformulate strategy.

An investor compliance failure has been viewed as an attempt by investors to pass back risk, which leads banks to reformulate strategy.

Mortgage banks are caught in an endless of cycle of rewriting compliance strategy to deal with compliance problems.

Mortgage banks are caught in an endless of cycle of rewriting compliance strategy to deal with compliance problems.

Quality assurance, while essential, deals with problems after they have occurred and does little to guard against future problems.

Quality assurance, while essential, deals with problems after they have occurred and does little to guard against future problems.

The problem banks must solve is not strategic, it's tactical. It's not about strategy; it's about execution.

The problem banks must solve is not strategic, it's tactical. It's not about strategy; it's about execution.

Outsourcing to experts who will take on compliance risk is attractive, but piecemeal outsourcing increases costs and risk instead of reducing them.

Outsourcing to experts who will take on compliance risk is attractive, but piecemeal outsourcing increases costs and risk instead of reducing them.

"The problem banks must solve is not strategic, it’s tactical. It’s not about strategy; it’s about execution."

RECOMMENDATIONS

  1. Outsource the entire process

    Stop piecemeal BPO and find a partner who can take over the entire process of loan origination from end to end.

  2. Focus on the people

    Find a partner that has expert personnel in every department to guarantee compliance throughout the origination life cycle.

  3. Focus on the process

    Find a partner with proven processes guiding their work, setting standards for its completion and checking for compliance problems in real time.

  4. Focus on the technology

    Find a partner dedicated to employing the best industry technology, with good training and a plan for keeping technology updated.

  5. Focus on the guarantee

    Find a partner that can guarantee it will operationalize the bank’s mortgage compliance strategy and who has the balance sheet to back it up.

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