I consider the term Compliance Management System
to be a proxy for the term mortgage risk management
. Our firm was founded on the premise that such risk management was the best way to ensure a financial institution's safety and soundness with respect to mortgage banking. At the time, there was only the term "risk management", a catch-all term that was overly broad. So I coined the term "mortgage risk management" to bring mortgage compliance into greater focus, expertise, and application.
Over the years, the prudential regulators and state banking departments have included much guidance in preparedness for their mortgage banking examinations. And now the CFPB has further elaborated the crucial and central importance of managing risk and examination readiness.
As recently as July 2012, I published a magazine article about The Rules of Operational Risk
, in order to bring into strong relief the practical matters and unique circumstances of mortgage risk management.
The CFPB's conception of a well-conceived CMS is certainly consistent with the foundational features of mortgage risk management.
Both the CFPB and mortgage risk management require effective internal controls and oversight, training, internal monitoring, consumer complaint response, independent testing and audit, third-party service provider oversight, recordkeeping, product development and business acquisition, and marketing practices.
Mortgage risk management and the CMS both expect the development, maintenance, and integration of mortgage compliance practices across a financial institution's framework and applied to its entire loan product and service lifecycle.
As the CFPB states: