Decoding Compliance

TheMReport — News and strategies for the evolving mortgage marketplace.

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cover story W hile compliance has always been a cornerstone of housing finance, the influence of the Dodd-Frank Act and the Consumer Financial Protection Bureau (CFPB) has redefined the marketplace, forcing lenders to conserve resources while trying to find a cost-effective balance between following the rules and serving consumers. But despite the complex impact of the regulatory revolution, the industry has responded with better, brighter strategies for risk management. Seeking to promote more efficient methods for mitigating risk and enhancing compliance, mortgage banking leaders have launched innumerable innovations to streamline and simplify operations. And while evolving legislation continues to loom large for lenders, the industry is maintaining its forward march thanks to game-changing tools and team-building initiatives. Compliance as Culture Strategic Innovation: A "culture of compliance" that focuses on regulatory and risk mitigation education for executive leaders and team members, combined with consumer-facing platforms for better borrower integration in the mortgage process. Successful Application: After adopting its so-called culture of compliance, Tennessee-based Churchill Mortgage surpassed $1 billion in loans for the first time in 2012. By creating an approach that includes a blend of technology and personnel, Churchill's loan origination and other systems confirm or highlight discrepancies that need review before the loan process continues. One system might miss an item, but any oversight will be detected in a subsequent system, says Liliana Nigrelli, VP of compliance. "Most of it comes down to making sure you have excellent checks and balances," says Matt Clarke, the company's COO and CFO. "The second thing we are doing is that we are working on having all of our loan officers and processors take the national licensing exam." Clarke also says that Churchill employees will put in a little additional effort to ensure they are adhering to compliance and other company standards because of the lender's working atmosphere. "I know it sounds trite," Clarke says. "But we really have a family atmosphere here. Everyone works together." That also means the employees work diligently with Churchill's learning management system, which helps them understand the nuances of compliance and other aspects of the mortgage business. Prospective borrowers see the lender's culture of compliance firsthand when seeking a loan. The lender partnered with Mortgage Coach, of Irvine, California, and its EDGE video and web presentation technology to walk prospective borrowers through various loan options, informing them of the payments, loan duration, fees, and other aspects of different loan options so that each borrower can make the choice that is right for his or her financial situation. "This is a real game-changer," Clarke says. "This provides all of the detail that you need to make an informed decision. It has layer upon layer of information. It is a very interactive tool." The M Report | 23

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