Compliance is a hot topic today, as the landscape is constantly shifting and being redefined as the mortgage and real estate industry stabilizes in the wake of the financial crisis. Understanding what these new and changing compliance requirements are can be a headache, but OnlineEd.com has a few tips that can help you be prepared in the event of a CFPB audit.
In January 2013, the CFPB finalized new requirements to the HOEPA rule, ECOA valuations rule, and the TILA high-priced mortgage appraisal rule, changes which will be effective January of next year. Over the past couple of years, many similar changes have been made and are currently enforced, and this can make compliance a nightmare to those caught unprepared.
These deadlines can seem like a daunting prospect, producing stress as many companies sprint towards the finish line. However, it can be dangerous to look at compliance deadlines as a finish line or as a summit. Many requirements, such as FinCEN’s AML compliance requirement, stipulate ongoing education and annual completion of compliance by all relevant staff. The danger of this “finish-line” view of compliance deadlines is fairly straight-forward; just because you were compliant on time once, doesn’t necessarily mean that you will be compliant 18 months later when the CFPB or state agencies come knocking with an audit. New employees, staffing changes and promotions, and changes in requirements can all impact your company’s compliance down the road.
Luckily, preparing for a potential audit doesn’t have to be hard. The CFPB is very good at publishing guides well ahead of time, such as this guide to the new HOEPA rule, to assist companies looking to get in line with their requirements. There are also services that can make the whole process a breeze if you don’t have the time or means to develop your own dedicated compliance program. Find out more about what these services can do for you here.
The key is to act preemptively, and to make sure that you have a plan in place to be covered in the future.
“Being reactive in compliance is always much more expensive and painful than being proactive,” said Michael Waldron, a partner at the law firm Ballard Spahr.
In the spirit of being proactive, here are a few best practices to help you get the ball rolling on becoming compliant:
- Stop thinking of compliance as a “one-and-done” type of situation. Make sure that you have a system in place to ensure you’ll be just as compliant in 18 months as you are today.
- Don’t procrastinate or cross your fingers and hope you don’t get an audit. The CFPB has said that they are looking to audit everyone, so don’t be caught with your head in the sand!
- Make sure that you are not only compliant, but that you can demonstrate it with thorough documentation and records-keeping, whether with an internal system or through a third party like InlineEd.
Hopefully this helps you and your company in your efforts to stay on the right side of the CFPB. Until next time, thank you for reading!
If you have questions or would like to learn more about OnlineEd®, please visit www.OnlineEd.com. If you would like information about OnlineEd’s® Compliance Management System solution developed for the mortgage industry, please visit www.InlineEd.com or telephone (866) 519-9597.
This article was published on May 8, 2013. All information contained in this posting is correct and current as of this date. Due to the fluid nature of the subject matter, regulations, requirements, laws, prices and all other information may or may not be correct in the future and if cited, should be verified before use by the user.
Joseph is a graduate of Oregon State University. When he isn’t at work, he stays busy with music and recreational sports.