BLOG

Question: If a mortgage company permits its employees to work remotely (when permitted by applicable state law), is the mortgage company required to perform any type of supervision of the employee or review of the remote office location?

Answer:

Yes. When permitting an employee to work remotely in accordance with applicable state law, a mortgage company must continue to supervise the remote employee and must also ensure that the remote work location meets the requirements of applicable state and/or federal laws addressing not only remote work, but also privacy and information security standards.

Numerous state remote work statutes and guidelines require mortgage lenders/brokers to maintain written remote work policies and procedures that address supervision of employees working remote. Satisfactory supervisory activities may include, but are not limited to, regular telephone and/or video meetings with the remote employee, targeted quality control reviews of the remote employee’s work, and complaint and performance monitoring. In addition to maintaining written policies and procedures, mortgage companies should document the specific supervisory activities for each employee.

Although a best practice regardless of statutory requirements, some state remote work statutes also specifically require a mortgage company to perform at least annual inspections of branch office locations and/or remote work locations. Specifically,

• Kentucky requires mortgage loan companies and brokers to review each alternate work location (i.e. remote offices) at least annually and provide proof of the documented review to the Kentucky Department of Financial Institutions (DFI) upon request. KRS 286.8-295(g)
  
  • Kentucky published FAQs, which indicate the following in relevant part:

Does the licensee have to physically inspect each alternate work location to make certifications of documented review to the Department?

A licensee must ensure compliance with statutory requirements. Physical inspections are preferred; however, the licensee may utilize other methods to ensure that employees comply with the requirements contained in statute. The DFI will hold licensees responsible for any liability, breach, or non-compliance with regulatory requirements

What does the licensee need to prove a documented review of an alternate location?

The licensee is responsible for implementing a system to comply with the statutory requirements regarding the documented review of each alternate work location.

• Oregon requires mortgage lenders and brokers to visit each branch at least annually to review compliance with Oregon requirements. OAR 441-860-0040
• Oregon indicates the following should be considered when determining the frequency of reviews:
1. The number of loan transactions made and the nature and complexity of the loans;
2. The number of office locations transacting loans with Oregon consumers;
3. The number of affiliated persons assigned to each location;
4. The number of mortgage loan originators assigned to a location;
5. The number of mortgage loan originators assigned to the supervision of an individual supervisor; and
6. The results of previous office reviews.

States are focusing in on remote work compliance, mortgage loan originator supervision, and office reviews as part of routine compliance examinations and citing lenders/brokers for noncompliance. It is important that mortgage lenders and brokers establish satisfactory supervision plans for remote work employees, that includes – among other things – written policies and procedures, as well as ongoing reviews of branch and remote work locations.