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18 | Th e M Rep o RT Feature compliance management, accord- ing to a recent Deloitte Center for Banking Solutions study. A holistic approach to compliance management is needed to build compliance efficiencies. This approach requires action steps, which include the following: • Reduce duplication of activities across mortgage processes and production channels. • Integrate oversight and controls across these channels. • Maximize the use of qualified third-party service providers to move fixed costs to variable costs. • Perform cost-benefit analyses to justify expenditures. • Effectively plan for future compliance regulations. • Demonstrate compliance risks are under control. These action steps apply to all types and sizes of mortgage lenders, but we must realize that the impact of compliance is not equal across all types and sizes of mortgage lenders. Mega-banks have an advantage over community banks because they are able to leverage their scale to better absorb the compliance burden. Depository institutions have an ad- vantage over independent mortgage bankers and mortgage subsidiaries of chartered banks because they are not subject to the same SAFE Act licensing requirements. An efficient compliance manage- ment program starts with hav- ing the resources and the tools to understand the regulations, as well as knowing how to practi- cally and compliantly apply them to an institution's business process. This is where qualified compliance consultants and mortgage training companies can play a key role, es- pecially for smaller institutions that can't leverage the economies of scale that mega-banks have. When selecting a service pro- vider for compliance consulting and training services, it is ideal to have the same company perform both services. Also, be sure to exercise due diligence in your evaluation of the service provider. Ensure it has sufficient experi- ence with your type and size of financial institution and with the mortgage products and services your company offers. Make sure it can effectively identify your current business processes and has the expertise to recommend process improvements that can be achieved through the imple- mentation of new compliance regulations and the ongoing monitoring of existing rules. Training M ortgage compliance training should be delivered in a cost-effective manner. eLearning has come a long way in the past few years, and most mortgage lenders have realized the many benefits of interactive eLearning courses for their employees. However, not all eLearning compliance courses and training providers are equal. If you used a compliance consultant to help your institu- tion improve compliance process efficiencies and the consultant provides mortgage compliance training, then you should insist on compliance course content that is tied to your business process. For example, if the regulation deals with caps on fees and charges, not only should the regulation be explained, but with eLearning, the employee can practice entering data into a simulated loan origina- tion system (LOS). The simulation should be identical to what the employee would experience in a live environment. Mortgage training will not be cost-effective or deliver the desired results without adequate learning governance. The objec- tive of learning governance is to make training work bet- ter for the entire organization. In order to do this, learning must be managed as a strategic business process linked to the company's strategic objectives. Many financial institutions use a learning management system (LMS) application to aid them in the governance process. Large fi- nancial institutions generally have their own LMS, but medium and smaller companies can also take advantage of the benefits of technology through a mortgage learning service provider with a robust LMS. Policies and Procedures C omprehensive policies and procedures are required by regulators, but more importantly, managers are required to implement a compliance program for their institution and employees. Effective policies and procedures serve as a compliance road map. Policies must reflect your institution's position related to the regulations. Policies should not be a restatement of the rules, and they must be written in non-legalese language. Procedures express how the company's policies are to be carried out to ensure that effective compliance risk management controls are in place. Policies and procedures must be living documents that al- low for timely updates in an easy and orderly manner. Loan Origination Systems O ne of the emerging techniques is to embed policies and procedures with job aids into lenders' loan origination systems (LOSs). LOS business processes and data entry that are impacted by regulatory compliance can have links built into the LOS that reference the institution's policies and procedures. This gives mortgage professionals quick access to information, which helps mitigate compliance risk. Technology applications that minimize the duplication of activities across business pro- cesses and production channels are a cost-effective way to ensure adequate compliance. Information processes should enable a one- and-done intelligent movement of information between legacy systems. If a mortgage operation has one LOS for its retail lending channel and a different LOS for its third-party origination channel, it should consider merging them An efficient compliance management program starts with having the resources and the tools to understand the regulations, as well as knowing how to practically and compliantly apply them to an institution's business process. 3MReport.indd