We’ve taken the FFIEC 36-page proposal and condensed it for you into just a couple of pages. And, YES, this affects you, your company and third-party providers who use social media to communicate with customers on your behalf. Read what is considered social media. Which laws you need to comply with. What the company has to do to comply and what loan officers and staff must be aware of.
I’m sure not many people in the mortgage industry know who or what the “Federal Financial Institutions Examination Council” (FFIEC) is all about.
Well, be prepared, because they are now one of the agencies “folded into” into the Consumer Finance Production Bureau group of agencies, and they want you to implement a social media quality-control plan. Not only companies as a whole, but loan officers, staff members and third-party providers.
A little history: Started in 1979, the FFIEC is an “internal federal agency” founded to create uniform standards and report forms for the federal examination of financial institutions for the
- Board of Governors of the Federal Reserve System (FRB)
- Federal Deposit Insurance Corporation (FDIC)
- National Credit Union Administration (NCUA),
- Office of the Comptroller of the Currency (OCC)
- Consumer Financial Protection Bureau (CFPB)
In the past, FFIEC had very little to do with the mortgage industry (non-bank companies), but all of that has changed since CFBP hit the scene.
In January 2013, the FFIEC has been given the task of providing “examination procedures” for SOCIAL MEDIA compliance and reporting.
So, way back when the rules were written, social media wasn’t around! However, the CFPB has given them the task of not only making sure that consumer contact, marketing and communications using this method are monitored, but that financial institutions, banks, savings and loans, and credit unions as well as non-bank entities have an internal quality control plan to make sure you comply with all the laws.
If their proposal is adopted http://www.ffiec.gov/press/pr012213.htm (here’s the link if you’d like to read the 36-page proposal), FFIEC will provide a “guide” for everyone to follow, and you will be expected to make sure that any involvement with social media communications are legal and don’t incur any “risks” to consumer or the institutions themselves. Once it is written, they will also encourage State Regulators to adopt the rules for THEIR examination process too.
What does the FFIEC consider “social media”?
Any form of interactive, online communications where you would generate or share “content.” It includes:
- Audio or video recordings
- Bulletin boards/forums
- Photo-sharing sites
- Professional networking sites
- Virtual worlds
- Social games
So, how would this affect you as a mortgage company, or as an LO or staff member?
First, let’s talk about how this would affect a mortgage company as a whole—and what company owners and managers need to know!
Companies are now using social media as a marketing tool to
- Attract business
- Communicate with consumers
- Quote interest rates or loan programs
- Offer incentives
- Get new loan applications
- Invite feedback from customers/prospects
- Elicit or present testimonials
- Respond to complaints
- Offer financial advice
Under the proposed rule, you will need a detailed “risk management” program to monitor and control the risks related to social media that may adversely affect your company/business. The dealio here is that you’ll need to know the rules and regulations—and make sure you comply when using social media. This includes the following rules and regulations.
- Truth in Lending Act/Reg Z
- Truth in Savings Act/Reg DD
- Equal Credit Opportunity Act/Reg B
- Fair Housing Act
- Real Estate Settlement & Procedures Act/Section 8
- Fair Debt Collection Practices Act
- Unfair, Deceptive or Abusive Acts or Practices/Sec 5
- Deposit/Share Insurance Disclosures
- Advertising/Share Notice of NCUA Share Insurance
- Non-deposit Investment Products
- Electronic Fund Transfer Act/Reg E
- National Automated Clearing House Association Rules
- Bank Secrecy Act
- Anti-Money Laundering Act
- Community Reinvestment Act
- Gramm-Leach-Bliley Act – Privacy Rules and Data Security Guidelines
- CANN-SPAM Act
- Children’s Online Privacy Protection Act
Some of these rules may not apply to you—but the part about managing the risk is to know each rule and make sure you comply. For example, under the Fair Housing Act, if you post something that says you have “low-income housing money available,” the rule considers that type of marketing as violating fair housing. You may want to change the terminology to “rent-subsidized money available.”
Your Social Media Quality Control plan should include the responsibilities of your compliance department, technology people, legal counsel, human resources and marketing departments (internal and external).
How this will affect Loan Originators and staff members!
Loan officers, processors, underwriters, and servicing staff must also comply. You will need to know the rules and regulations for each of the “Acts” mentioned above. If you quote an interest rate, a down payment (even “no-down-payment) or a payment using any of the social media methods mentioned, you must comply with Reg Z Truth in Lending rules, which include full disclosure of the terms of the loan.
Even if you send a private message using email or social media asking for a Credit Card number or Social Security Number and the customer gives it to you, your technology department must ensure that your site is secure and complies with the Gramm-Leachy-Bliley Privacy Rules Act!
Oh, and I recently saw a loan officer post a “contest” that if you send her a referral, your name will be entered into a drawing to win an iPad! RESPA Section 8 kickback violation!
Do you see where I’m going with this?
You must know every one of the rules that apply to you and your company and create disclosures that need to be included. You must also know the laws and what actions need to be taken when communicating using social media.
And it doesn’t stop there. Even if you (a loan officer or internal staff) post something on your personal Facebook page, if it has something to do with your mortgage business (as people perceive that you represent the company), the company must have a plan in place as to what you are or are not allowed to post on your private social media pages.
Oh, and there’s more…
Included in the Social Media Quality Control Plan, you must also consider how you/your company will handle the following:
Risks to Your Reputation – Negative publicity could arise from negative comments from the public, the press, dissatisfied customers. Even if none of the rules have been violated, you will need a plan to manage the risk of “reputation.”
Risks of Fraud and Brand Identity Security – It is suggested that you include in your plan a way to monitor your online/social media presence in case someone steals your identity, or in the case of fraudulent use, phishing, spamming or spoofing attacks.
Third-Party Monitoring – Many companies use virtual assistants or hire someone to post their blogs and content for them. Sometimes the content is created by the company and they merely post the content. Sometimes the third party creates the content for them. It’s your responsibility to ensure that third-party companies comply with the rules and regulations too.
Just to let you know, the definition of “social media” may be expanded after the rule has been finalized. There may be other “government acts” that will be included after the comment period. The proposed rule will become law. You may want to get started on it right now—with the information that I have provided here.
Written and contributed by Karen Deis of Mortgagecurrentcy.com. Provided monthly by www.mortgagecurrentcy.com - interpreting the Rules and Regulation Changes for loan officers, processors, underwriters, and owners/managers. Mortgage Talking PointsTM, charts and checklists included.