Over the last decade, many professionals have left the mortgage industry. Between the housing crash, rising rates, low inventory, forbearances and all the resulting uncertainty, some decided it’s too much to handle.
Salaries for experienced staff are extremely high, so many lenders and vendors have opted to backfill open positions with professionals that are new to the industry.
These new professionals have potential, but it’s important that they get to know the basics – especially for compliance – if they want to be successful. As such, what follows are some basic tips for the newcomers.
Compliance Basics All New Professionals Must Know
One of the most important things someone starting out in the industry should know is mortgage math. Many have never learned it because, most of the time, the computer handles it. Even those who learned it in the beginning of their career may have forgotten some basics, because of how little they use it day-to-day.
Math is a critical component to understanding and complying with several regulations, particularly TILA, RESPA and TRID.
While depending on technology is convenient and saves time, there is still a benefit to knowing how to calculate certain things manually. It not only allows one to understand how the technology works, but also affords one the skill to double check for accuracy. This makes a new professional a more knowledgeable resource for the company – and for his/her customers.
Where to Start When it Comes to Compliance
A lot of new professionals may be missing context for a lot of the regulations we have today. More experienced people were in the business before Dodd-Frank, experienced the changes as they were happening, and understand why those rules were made in the first place. Anyone relatively new to the mortgage industry doesn’t have that same background to help them understand and interpret certain regulations.
It is so important for new people to go back to these regulations and dig into why they exist and what their intentions are. When interpreting regulations, many times we must go back to the “spirit of the rule” – meaning what its intentions were when it was made. Being educated on the background of the rule is essential for understanding the spirit of the rule. Reading the preamble to published rules provides great insight on the issuing regulator’s intent and approach to a rule.
Why its Important to Know the Basics
There are so many reasons that new professionals – or even experienced ones – need to revisit the basics, but take testing one’s systems, for example. To effectively test one’s systems, one must understand the math and the regulations that one is testing against.
Simply put, one can’t determine if a function of one’s technology is working properly if one doesn’t know that function oneself.
No one can check calculations without an understanding of the math just the same as no one can determine if a system or function is compliant if they don’t understand the rule.
Ultimately, new professionals need to know that regulators hold the lender responsible for its vendors. When compliance issues arise, no one can play the blame game. It is a one’s responsibility to check one’s technology and ensure its accuracy at each step. This may seem intimidating for someone new to the industry, but something as simple as setting up a few loans and reviewing them after each technology change or upgrade can help ensure compliance.
Being a compliance pro and having the ability to test your systems makes you a valuable asset.
Arguably anyone can learn how to push loans through a platform. Having the ability to catch and correct compliance issues is something that makes one stand out – no matter how long one has been in the business.
The mortgage industry can be a lot to take in at first. There is so much to learn and adapt to. Before a new professional tries to master the complicated, they need a mastery of the basics. Let these tips lay the foundation.
Melissa Kozicki is director of compliance at Mortgage Cadence.