Policy, Procedures, and Examinations - Part II
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Published in July 2013:
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The most common question my colleagues and I are asked by prospective clients is whether we provide the "full set" of policies and procedures for all of the mortgage acts and practices. Of course we do! But policies and procedures are only one aspect of the many risk management services my firm offers.
Nevertheless, policy statements seem to be 'first and foremost' when it comes to a client's compliance needs.
I hope you enjoy the article!
President and Managing Director
Yet we do not often get questions such as the following:
These are but a few of the many questions that a lender should be resolving.
- How can we effectuate policies and procedures?
- What policies are the most important for us to adopt?
- Although we have policy statements, how often should we update them?
- Who would be in charge of maintaining and enforcing policies?
- How do we build policy statements into a Compliance Management System (CMS)?
- Which policy statements are important to our warehouse lenders?
- Which policy statements are important to investors and Regulators?
- Which policy statements are important to our servicing affiliate and subservicers?
- How can we prove that our policies are being adequately implemented?
- What are the key components of policies and procedures?
- What vendor offers the most professionally safe policy statements?
- How do we go about building our own policies and procedures?
- How often should we train our employees on our policies?
- Is there a self-assessment checklist that we can put into our policy statements?
- What is the best way to document our implementation of procedures?
- Is there a core set of policies that we absolutely must have at all times?
- Which policies require testing and auditing, either internally or externally?
- How do we stay up to date on regulatory changes that affect our policies?
- What method is preferred to review, adopt, and update policy statements?
- Do we have a sufficient budget for maintaining policies and procedures?
- What resources should we use to draft comprehensive policy statements?
- What is the best method to retire a policy that is no longer a regulatory requisite?
- Where should we go for guidance in those areas that are not yet fully regulated?
Preparing for an Examination
Most state banking departments prioritize their administering of their licensees by the extent to which these institutions implement their own policies and procedures. On the list of such priorities are compliance with licensure regulations and specific mortgage acts and practices, such as the Real Estate Settlement Procedures Act (RESPA, Regulation X), Truth in Lending Act (TILA, Regulation Z), Loan Originator Compensation (TILA, Regulation Z), Equal Credit Opportunity Act (ECOA, Regulation B), and the other alphabet soup of federal and state guidelines.
Generally, banking departments consider themselves to be consumer advocacy agencies and, as such, they approach examinations in a threefold process
LENDERS COMPLIANCE GROUP is the first full-service, mortgage risk management firm in the United States specializing exclusively in outsourced mortgage compliance and offering a full suite of services in residential mortgage banking for banks and non-banks. We are pioneers in outsourcing solutions for residential mortgage compliance. We offer our clients real-world, practical solutions to mortgage compliance issues, with an emphasis focused on operational assessment and improvement, benchmarking methodologies, Best Practices, regulatory compliance, and mortgage risk management.
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