QUESTION
Most of our employees and loan officers work remotely. Since the pandemic, this is the way it has been, and management supports remote work.
In our recent state examination, our examiner cited us for not having a written remote policy for employees and loan officers.
We drafted a policy quickly, but they were not thrilled with our expectations for loan officers, especially when they work from unlicensed locations. They thought it was too “convoluted.”
The examiner wants us to get it down to just a few requirements. That’s in addition to the requirements for all the other employees.
What are the essential expectations of a loan officer working remotely?
ANSWER
I gather by “essential,” you mean just a few requirements. With regards to loan officers, I think revising your policy to a few key expectations is possible.
Many banking departments are asking to review remote employee policies. Obviously, this interest got onto their radar during the pandemic. But it really does pre-date the pandemic by several years.
Years ago, we drafted a Remote Employee Policy. It has been revised several times due to changes in regulations and, of course, the pandemic. If you want information about it, ask for it HERE.
Originating mortgages has changed substantially from the days of paper applications and heavy reliance on brick-and-mortar locations. The advancement of technology and the Internet have made it possible for consumers to connect with mortgage personnel from virtually any location and to securely transmit information allowing for remote interaction rather than the traditional face-to-face meetings of days past.
Consequently, financial institutions were already trending toward a more mobile and remote workforce when the COVID-19 pandemic forced them to consider remote work options.
Indeed, because of COVID-19, many states temporarily allowed loan originators and other employees to work remotely from their homes or other unlicensed locations for the sake of reducing the spread of the virus. As noted below, I advise against any attempt to originate loans from “unlicensed locations.”
In response to the increasing teleworking numbers, the financial institutions and state regulators began to examine whether allowing originators and others to work from home or other unlicensed locations should become a permanent option as companies start to exit the confines of the COVID-19 pandemic.
The ability to work from home has become a salient issue for employers and regulators, and adopting policies that protect consumers is a consideration in deciding whether working from home should become a permanent option.
Banking departments expect financial institutions to set forth Best Practices when permitting employees of state-licensed residential mortgage lenders to work from unlicensed homes or other locations. However, each state banking department makes its own decision. Knowing your state’s guidelines for remote work is critical to complying with applicable statutes.
Remote Work – Four Basic Essentials
Given the reality of working remotely, I suggest four essential and compelling requirements that must be included in your policy, giving you the regulator’s point of view. Keep in mind that the list should act as a foundation upon which you may build a comprehensive plan.
One
A mortgage loan originator should not be allowed to meet consumers at the originator’s home unless the home is licensed as a branch location.
Two
There must be systems in place to ensure that data security and privacy requirements are met regardless of where the company’s personnel are working.
Three
The financial institution responsible for sponsoring the loan officer must sufficiently supervise the mortgage loan origination activities conducted from any locations, whether a licensed location, unlicensed home, or other location.
Four
Documents must be available at a licensed location in the United States so that regulators can examine the mortgage lending activities.
A final note. We have found that state agencies and businesses have been receptive to remote work. Generally, the view seems to be that loan officers and others can work at home safely and effectively if a financial institution provides systems that, among other things, protect consumer privacy and ensure regulatory compliance.
Jonathan Foxx, Ph.D., MBAChairman & Managing Director
Lenders Compliance Group
