Everything You Need to Know About Mortgage Compliance

Your organization, XYZ enterprise, takes their health and safety compliance policy very seriously. It specifies the safety and health protocols that employees should follow at work. Let’s say, there’s been a sudden accident—an employee fails to clean up a spillage leading to an on-the-job injury. In this case non-compliance with the health and safety policy leads to repercussions.

Let’s consider another plausible situation: your shift starts at 9:30 am and you email your supervisor at 9:25 am informing them you need a sick day. However, your employment contract explicitly mentions that all leave requests must be made at least 2 hours prior to the start of your shift. This leads to a full day’s salary deduction.

Hopefully these everyday-life examples have offered some perspective on kinds of repercussions one could face for being non-compliant. The truth is, it’s extremely important for mortgage companies to comply with federal and state regulations. The first step in successful compliance management as a mortgage lender is to educate yourself about all compliances.

Mortgage Compliance for Lenders

We have curated this comprehensive list of mortgage compliance rules as a handy guide to reference as and when you need to.

TRID Compliance

One of the most significant mortgage compliances is the TILA-RESPA Integrated Disclosure (TRID) Audits.

TILA: Truth in Lending Act

RESPA: The Real Estate Settlement Procedure

TILA guards the interest of consumers during the process of mortgage closing whereas RESPA specifies the information which you, the lender, must provide to borrowers during settlement.

TRID compliance is a part of the Dodd-Frank Wallstreet reforms and the Consumer Protection Act. It substitutes the Good Faith Estimate and HUD 1 regulations with loan estimate disclosure and closing amount disclosure.

HOPEA and State High Costs

The Hope Owner Protection Act (HOPEA) protects the rights of applicants looking to purchase high-value homes with the help of detailed information. Mortgages covered under the HOPEA acts include closed-end home equity loans, refinance and purchase money. Various states have different regulations with regards to the purchase of high-value homes.

State Consumer Credit and Fee Restrictions

Several states pass credit laws to protect homebuyers from predatory lending practices. The State Consumer Credit and Fee Restrictions control licensing and other regulations.

HMDA Filings and Data Analysis

The Home Mortgage Disclosure Act (HMDA) is a regulation which verifies whether lenders are providing credits to borrowers at the location of their offices—the data generated through this mortgage compliance helps government make informed decisions with regards to geographies where investments should be directed for growth.

As a lender you must compile and share all information related to loan applications, origination and purchased covered loans with your mortgage regulatory body. The information must contain loan application number, universal number, date, type, purpose, amount, owner occupancy status, applicant information, etc. You must also share the difference between the annual percentage rate (APR) and benchmark rate if they exceed the stipulated threshold.

Flood Zone Determination

The Flood Insurance Reform Act 1994 disincentivizes building properties in flood sensitive areas through high home insurance rates. The act makes it mandatory for homebuyers to buy flood insurance.

Due Diligence and Audits

As a mortgage business owner, you must charge a premium for all compliance related activities and due diligence, like banks. Compliance activities can include identifying and mitigating risks of mortgage frauds and identity theft. In addition, you must also comply with Anti-Money Laundering (AML) regulations.

It can be overwhelming to keep up with all mortgage compliance rules in-house. A little assistance with your compliance management can go a long way. This is where mortgage process outsourcing can fit the bill.

Outsourcing partners not only provide loan processing services, but also help you with risk assessment, compliance management and policy reviews.

HelioNext comes with extensive experience of over 15 years in mortgage processing and compliance management for lenders, brokers and small bankers. Our experts know all the latest mortgage compliance rules and regulations. We safeguard your interest as a lender and ensure that you provide the best, most compliant services to your clients.

Get started; speak to our mortgage experts today.