Survey Shows Mortgage Lenders Feeling More Confident Heading Into 2017


Mortgage lenders have fewer concerns about regulatory compliance compared with one year ago, and technology is a big part of the reason why, according to the results of a survey recently conducted by Wolters Kluwer, a provider of document management, compliance and risk management solutions.

The firm’s annual Regulatory and Risk Management Indicator survey of U.S. banks and credit unions shows that concerns over regulatory compliance and risk management have abated somewhat for the first time in four years, when the survey first commenced.

Specifically, organizations have less concern regarding their ability to track regulatory changes, comply with regulatory requirements and report on compliance to regulators.

This is likely due to the fact that more lenders now have compliance technology and compliance management systems in place to safeguard against regulatory actions. It’s also partly due to timing: Many lenders have now successfully dealt with the Consumer Financial Protection Bureau’s (CFPB) TILA-RESPA Integrated Disclosures (TRID) rule – at least in terms of getting it implemented – and most seem to have a high level of confidence that they can handle the upcoming expanded reporting requirements under the Home Mortgage Disclosure Act (HMDA).

“After years of steady increases, the diminution in anxiety levels this year is most encouraging, suggesting that banks and credit unions feel they are more effectively managing their risk and regulatory requirements despite a regulatory climate that has not eased,” says Timothy R. Burniston, executive vice president of U.S. Advisory Services and Regulatory Relations, in a statement. “While the survey doesn’t measure why concerns have leveled off, a strong possibility is that respondents have been arming themselves with better tools, resources and programs to help navigate through the wide range of complex challenges they face.”

About 66% of respondents say they are concerned over their organizations’ ability to maintain compliance with changing regulations – down from 73% in 2015.

About 64% say they are concerned about demonstrating compliance to regulators – down from 71% in 2015.

About 63% say they are concerned about keeping track of changing regulations – down from 72%.

About 52% say they have anxiety about managing risk across all lines of business – down from 58%.

In other findings, there was about a 5% increase in organizations that report having “an integrated or strategic risk management program” compared with last year.

In addition, a majority of respondents – 78% – cite confidence in the ability of their organizations “to manage a regulatory change, such as TRID, HMDA or URLA.”

A nearly equal percentage of respondents – 77% – say they are “confident” in their organizations’ compliance management systems.

“While these are notable, positive changes from past results, we need to interpret these findings within the larger context of overall concerns expressed by respondents in managing regulatory and risk challenges facing their organization,” Burniston says, “especially given a regulatory environment in which the number of new regulations jumped 14 percent from 2015 and a supervisory enforcement climate where the amount of fines and penalties imposed increased 56 percent.”

To further illustrate this point, overall concern levels regarding new HMDA data collection requirements have dropped from 73% two years ago to 59% today, likely due to the fact that the content of the revised HMDA regulation has been released by the CFPB since that time.

But concern about implementing the new rules still elicits a relatively high level of angst. About 64% of respondents say they still have worries over accurately capturing new HMDA data fields – unchanged from 2015. About 45% of respondents cite staff training as “a major concern,” which is a 6% increase compared with last year.

Although 72% of respondents confirmed that their chief compliance officers have the ear of executive leadership, reporting directly to either the president/CEO or board of directors, 33% cited inadequate staffing, another 26% cited manual processes, and 21% cited competing priorities as major obstacles to effectively implementing their compliance programs.

In addition, 70% of respondents say cybersecurity is among the top risks anticipated in the coming 12 months, followed by regulatory change management (38%), and in a tie for third, fair lending and third-party risk (both 34%).

Regarding fair lending examinations, 41% perceived “modest to significant increases in regulator scrutiny,” whereas 29% felt regulatory scrutiny was the same as in 2015.

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