Staying compliant in the mortgage space in 2023

Staying compliant in the mortgage space in 2023

The mortgage space is in a rough patch. Interest rates are rising, and firms are writing fewer loans. This is likely to be the picture for the next year or two. The industry is changing and reacting to the uncertainty of the market.

Michael Rasmussen – GRC pundit and analyst – stated that mortgage companies are reshaping their internal process and employees, which predominantly means smaller teams.

While the market is shrinking, regulations and risks in compliance are just getting bigger. In line with this, enforcement actions and guidance is steadily growing.

Rasmussen said, The law or regulation itself does not have to change, but how it is enforced and monitored over time evolves. However, it is more than regulatory change as the business itself is changing.

“If that employee is not aware of the policy related to the regulation, or not trained properly, it leads to compliance failure. If that process changed, or technology, and the controls needed to comply with the regulation are not in place, then compliance fails.”

The challenge many mortgage lenders and services providers are facing is that their compliance team is short-staffed, he added. Faced with a storm of regulatory changes, updates and enforcement actions, these teams need to ensure culture, operations, processes, and behaviour of individuals is updated to remain compliant.

Coming in tandem with the high level of change and uncertainty is the increased compliance risk exposure. Rasmussen added, “While executives may be in cost-cutting mode, they cannot afford to become non-compliant. It is time for organisations to look at innovation and adjustments to make regulatory change and compliance more efficient in human capital and financial capital resources while at the same time striving for effectiveness, resilience, accountability, and agility. This might seem like a conflict, to save money and time while increasing effectiveness and agility, but technology delivers this.”

He added that technology can enable a company to automate their compliance needs. Cognitive GRC technologies that use natural language processing, machine learning, predictive analytics, and robotic process automation can deliver real-time value in efficiency. On top of this, they increase the effectiveness and agility of regulatory change management processes.

When times are tough, it is a great opportunity for companies to redefine their processes and explore how they can become more effective. Rasmussen stated that there is an opportunity for mortgage firms to rearchitect their compliance processes to keep pace with the volume of regulatory change and ensure the business operationally remains compliant within the scope of this change.

Technology can achieve this by allowing an organisation to filter through the updates and flag what matters and how it impacts mortgage business, operations, processes, policies, and behaviour.

Read the full post here.

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