QUESTION
Our compliance department is being downsized. Apparently, I am one of the first to be fired–oh, excuse me, I mean downsized. Suppose I sound like I have a chip on my shoulder. In that case, I suppose I do, since this is my fourth compliance job that, through no fault of my own, is being downsized. It especially bothers me that the Chief Compliance Officer asks me, before I leave at the end of the month, to provide a list of compliance blind spots that we have encountered over the last few years.
Anyway, I have been working on the list. However, the list is only involved with our company's blind spots. How about everyone else? I want to highlight some potential blind spots that may or may not be occurring in our company, but which could happen elsewhere. Since you have many clients across the country, I wonder if you could share the types of compliance blind spots that your clients encounter.
Thank you in advance! By the way, I have read your articles for years. I will continue to subscribe wherever I go. I have my résumé out, but many companies are not hiring. So wish me well!
What are some compliance blind spots in mortgage banking?
SOLUTION
We recommend the following Compliance Tune-up®!
Compliance Management System
The Compliance Tune-up® series assesses the overall strengths and weaknesses of departments, functions, and regulatory compliance, regardless of a financial institution’s size, regulator, complexity, or risk profile.
ANSWER
I am sorry that you are being downsized or, as you put it, fired. The tendency to use terms that mask the reality of circumstances can be infuriating. To be downsized means your position is eliminated as part of your company's permanent reduction of its workforce. It usually happens to cut costs or restructure. This is a business decision, not a reflection of your performance, and can be a response to economic downturns, technological changes, mergers, or a need for greater efficiency. I wish you all the best. Wherever you go, please stay in touch!
Working with many clients provides an advantage because we can share our knowledge and experience with each client. The fact is, these days, no individual compliance department can master all the diverse issues associated with mortgage compliance. After a while, a company begins to form a rather parochial, narrow, and lopsided view of compliance challenges, as its understanding of compliance is specific to its particular experience. This model is problematic because a company faces numerous risks, and therefore, it can be blindsided by a lack of knowledge relating to compliance issues affecting other companies.
I will share some blind spots that we have come across over the years. After nearly two decades, many compliance challenges have changed. But there are some perennials. My feedback here is certainly not comprehensive. I hope it helps!
Fair Lending BLIND SPOTS
First up in blind spots is fair lending. Many compliance managers are familiar
with the basics of fair lending and rely on various types of reviews. The blind
spots become a veritable regulatory minefield if they manifest themselves. Blind
spots in areas such as prohibited practices, equal access to credit, loan
applications compliance – including advertising, inquiries, reviews, loan
disbursement, ongoing servicing, to name but a few – are areas that have
massive legal consequences. However, I think this blind spot may be boiled down
to at least these components.
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Data Analysis Limitations
· Marketing and Outreach Bias
Marketing materials may inadvertently exclude or discourage certain demographic groups, for instance, by not featuring diverse imagery or targeting underserved communities. For example, financial institutions risk bias when renting mailing lists based on criteria that skew toward specific neighborhoods.
