Compliance Risk Management Tips for Mortgage Brokers

Editoral Staff
Compliance Risk Management Tips for Mortgage Brokers1

Compliance risk management can be a complex subject to grasp for mortgage brokers. Compliance is non-negotiable.

So, you need to do everything possible to follow the rules and regulations to stay out of trouble and keep your business running.

Many brokers tend to grow frustrated due to compliance requirements. So, here are some compliance risk management tips to help out mortgage brokers.

1. Understand What Compliance Means

You can’t be prepared for the risks involved if you don’t understand what you’re supposed to comply with.

Several new mortgage brokers might not realize (or realize it too late) that following the law by federal and state regulators doesn’t always cut it.

There’s a lot more that needs to be done. So, get ready to read up on how corporations handle their mortgage-related operations.

Joining public groups to connect with other brokers is also helpful to gain valuable tips and advice. Effective compliance risk management requires you to be proactive.

You should create a compliance program for your business and train new hires and employees to always follow compliance standards.

2. Use reliable Delivery Systems

The loan delivery systems being used also need to follow certain standards. The loan delivery system can be accompanied by a lot of risks due to increased volume.

So, take the time to research such methods and the loan delivery system meaning. You should look into automated systems to make mortgage-related dealings and team management easier and avoid compliance risks due to human error.

3. Keep an Eye on Marketing

Compliance Risk Management Tips for Mortgage Brokers1

According to the FTC, mortgage brokers have to follow certain regulations in their marketing campaigns. This includes tactics on social media, which many uses to connect with prospects.

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One such requirement is mortgage businesses having to display their active NMLS number on social media content advertising.

There are more regulations when it comes to print and other traditional advertisements. You should refer to your state guidelines to ensure your marketing campaigns comply with FTC rules. False advertising will get you in trouble.

4. Efficient Record Keeping

Ensure all required records are properly kept, including loan origination compensation, disclosures, credit transactions, and so on. There should be a clear paper trail for every completed transaction serving as evidence.

Keeping records will come in handy during regulatory exams and disputes. Look into modernizing your data management for further assistance with digitizing your processes.

5. What You’re Owed

For self-employed mortgage brokers who work on a contract basis with other firms to close mortgages, remember to go over the rules for commission-based earnings. Not being aware of compensation requirements could lead you to face certain risks, including losing your license.

6. Licensing Woes

Do not take licensing lightly. Mortgage brokers function through proper licenses. Without a license, there’s no legitimate business.

License requirements vary depending on the state the business is being run in. So, contact your local state licensing office to gain more information. Don’t forget to renew licenses via the NMLS on time to keep ahead of associated compliance risks.

Wrapping It Up

Compliance risk management requires work. And you need to put in the effort if you wish to operate as a mortgage broker successfully.

As mentioned above, you can do things to ensure the business keeps compliance risks at bay. Be aware of any updates occurring to a state’s compliance standards, and don’t hesitate to call a state compliance representative if you have any queries.

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To make things easier, opt for automation software. Also, ensure that you aren’t involved in false advertising and get your licenses renewed in a timely manner. Not complying with specific regulations can get your license revoked or result in an arrest. So, remain diligent.

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