Is the mortgage industry fully compliant when working remotely?

Regulators are keeping a watchful eye on remote workers in financial services

Is the mortgage industry fully compliant when working remotely?

Among the most profound shifts to affect the mortgage industry in recent years has been the work-from-home revolution, a sudden development following the outbreak of the COVID-19 pandemic that left many companies scrambling to put appropriate systems in place.

Remote working arrangements remain hugely prevalent across the industry even as the pandemic has receded – but are employers in the space doing enough to make sure their employees are remaining compliant while working from their home offices?

Rob Nunziata (pictured top), co-founder and chief executive officer of the ActiveComply service provider and former brokerage head, told Mortgage Professional America that ensuring a workforce was following the correct procedures outside the office remained no small task for business leaders.

“There are certain policies and procedures when you’re an employee in the office that you follow,” he said. “And how does the lender verify that they’re following those same policies and procedures when they’re working remotely?

“An example of that would be a process in the mortgage business that’s working on a file that has customers’ confidential data: their social, their bank account numbers. And what if that employee happens to be working at a Starbucks? They’ve logged in, and all of a sudden now they’re in an environment where people can easily access and review that customer’s confidential data.”

How are regulators viewing new working trends and arrangements?

Regulators may have been sluggish to keep up with the pace of the shift to remote work – but that now appears to be changing, with lenders in particular required to verify to different states and agencies that remote employees are in full compliance with policies.

Certain states, Nunziata said, have relaxed guidance requiring workers to be registered to a branch or office – but that creates a set of challenges for lenders because compliance with Federal Housing Administration (FHA) policies is still required.

“So if you’re a company, you have to have something in place,” he said, “whether it’s software or whether it’s a human to actually verify that these employees are following those policies and procedures.”

For scores of Americans, the shift to remote work has been a positive and seamless switch. Still, Nunziata said he could see “very strict guardrails” coming into play in the near future about what remote workers can and cannot do, particularly when it comes to financial services.

“What you’re going to need is to be able to show a regulator very clearly how you’re documenting – not just a written attestation, but you’re going to need to be able to provide [workers] with some type of software, prove to a regulator that my employees are in compliance with whatever different rules and regulations there are depending on the agency or the state,” he said.

Social media another compliance minefield for mortgage employers

Another growing regulatory focus is set to be social media, with that medium having dramatically usurped traditional media on the advertising front in recent years.

Mortgage professionals and companies today can reach a very specific audience through social media advertising, with loan officers having the ability to market their services to as targeted a clientele as they please through social media channels.

That growing shift towards social media, though, is also set to have regulatory consequences, according to Nunziata. “With that vertical, there are a lot of challenges to make sure it’s done compliantly,” he said.

“Say a loan officer does a point and says, ‘Hey, we just came out with a new product and it’s got a 5% rate – it’s got the lowest rate in the world for any mortgage product.’ A loan officer might think that’s great, but there’s multiple things on that ad that would be a violation of many state and federal guidelines.”

New software – including that developed by ActiveComply – can monitor and flag posts if they appear to violate guidelines or regulations, for instance where trigger terms are used or APRs are excluded from the post.

Mortgage employers should discount the importance of keeping a close eye on compliance when it comes to social media at their peril, Nunziata said.

“You can generate a ton of revenue on social media but you better have a really good compliance piece to make sure that you’re doing it correctly,” he said. “Because if you’re not compliant – you’re out of business. I don’t care how big you are.”

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