A lot is happening in the world of compliance. Mortgage rates are rising, and lender’s margins are compressing. Concurrently, chatter about the CFPB (Consumer Financial Protection Bureau) is that director Chopra has and will be more aggressive, especially related to examining issues regarding Rules (Loan Originator Compensation Rule), TILA-RESPA, Servicing, and more. Let us discuss some trends and issues anticipated in 2022.
This year, remote work continues to be a challenge and a hot topic. Many companies are operating remotely and are marketing more on the Internet through social media like LinkedIn, Facebook, and now TikTok. States have lumped social media into advertising laws, and companies are required to comply with the Truth in Lending Act, states’ Record Retention Acts, disclosure requirements, and more.
According to Michael Dunn, CMB, companies should be asking themselves these questions:
To what extent do we know what campaigns/advertisements our employees share on social media platforms? How are we retaining these records?
What are our company practices and patterns regarding online marketing?
With increased social activism, what reputation, branding, and messaging risks should we consider?
Would we want our posts on the front page of a newspaper?
Additionally, Fair Lending will continue to be a key focus at the CFPB this year. As the majority of mortgage borrowers speak a language other than English[1], expect additional attention to LEP (Limited English Proficiency) programs and potential requirements for language accessibility[2], alongside DEI (Diversity, Equity, and Inclusion) programs. How will examiners audit LEP and DEI programs? When will your company set up these programs, and once they are in place - is simply having a program in place enough to pass?
Lastly, automated processes and systems leveraging Artificial Intelligence and Machine Learning are likely to provide efficiency and scale, and improve consumers’ experiences, but the compliance perspective must not be forgotten or left behind. To the extent results from this technology produce a disparate impact, lenders are exposed to heightened Fair Lending risk. How these systems will perform and be audited by examiners is still yet to be determined.
Every passing year, having strong, reliable compliance expertise becomes more crucial. Firstline Compliance specializes in helping protect you and your company by staying in front of compliance rules and regulations and navigating the journey with you. Contact us at (831) 325-3369 or info@firstlinecompliance.com if we can help.
[1] In the 2018 -2028 period…The number of non-Hispanic white households is projected to grow by 2.8 million households and make up 23 percent of total household growth. Meanwhile, the number of Hispanic households is projected to grow by 4.5 million (accounting for 37 percent of total growth), while the number of non-Hispanic black households will grow by 1.9 million (accounting for 16 percent of growth), and Asian and all other non-Hispanic households will grow by 2.7 million, accounting for 24 percent of total household Growth. jchs.harvard.edu/sites/default/files/Harvard_JCHS_McCue_Household_Projections_Rev010319.pdf
[2] H.R. 3009 - To amend the Truth in Lending Act and the Real Estate Settlement Procedures Act of 1974 to establish language access requirements for creditors and servicers, and for other purposes. https://www.congress.gov/bill/117th-congress/house-bill/3009