As the mortgage industry enters the budget season, organizations are faced with the crucial task of allocating resources strategically to ensure sustainable growth and mitigate potential risks. This period is not just about balancing numbers but also about aligning financial planning with the industry’s evolving challenges. One of the most significant areas that demands attention in the budgeting process is compliance. With the ever-changing regulatory landscape, ensuring that sufficient funds are allocated to compliance can protect a company from costly penalties and reputational damage.
Compliance is often seen as a non-revenue-generating aspect of the business, leading some to underestimate its importance during budget planning. However, the reality is that underfunding compliance can expose an organization to significant risks. Regulatory requirements continue to evolve, and failing to stay ahead of these changes can result in non-compliance, which can have severe financial implications. From increased scrutiny by regulators to the potential for legal action, the costs of non-compliance far outweigh the expenses of maintaining a robust compliance program.
Allocating funds to areas like compliance should be viewed as an investment in the company’s future stability. By dedicating adequate resources to this critical area, mortgage companies can not only avoid the pitfalls of regulatory breaches but also enhance their operational resilience. A well-funded compliance strategy allows for better risk management, improved internal processes, and a stronger foundation for navigating the complexities of the mortgage industry. As budget season unfolds, it’s essential for decision-makers to prioritize compliance to safeguard their organization’s long-term success.
Update From FNMA Lender Letter
On August 13th, the CFPB has released an advisory opinion and a research report focusing on the predatory nature of contract-for-deed home financing, where sellers retain the deed until buyers complete payments. These contracts disproportionately target low-income, immigrant, Black, Hispanic, and religious communities, often leading buyers into unlivable conditions, high costs, and the risk of losing their homes.
The CFPB reaffirms that these contracts fall under federal mortgage protections, requiring sellers to assess borrowers' ability to repay, provide clear and accurate disclosures, and limit harmful practices like balloon payments. This action is part of a broader effort by the CFPB to eliminate exclusionary and predatory lending practices, ensuring that vulnerable communities are protected and that homeownership remains a viable and fair opportunity for all.For more details, you can access the CFPB research report and the CFPB advisory opinion.
Are You Ready For Subservicing? and How To Find The Right Fit
Choosing between internal servicing and outsourcing is a crucial decision for lenders, one that can significantly shape the direction of their business. Most lenders prioritize growing their loan originations to boost revenue. However, as their portfolio expands, the question between servicing loans internally or outsourcing becomes more important. The decision requires thoughtful consideration of a lender’s current operations and future goals.
Lenders must first define why they might choose to service internally or outsource this function. Key factors to consider include improving borrower service, supporting growth plans, technology investments, having the proper infrastructure, and understanding cost impacts.
At MQMR, we love celebrating National Dog Day! This year, our team members from all across the country shared photos of their furry family members on Slack, bringing smiles to everyone’s faces. It was a great way to connect, bond, and spread some joy as we celebrated the pets that bring so much happiness into our lives.