Mortgage lenders are under constant scrutiny from regulators and it is critical that your organization is not only being proactive about creating a company culture of marketing compliance, but is “audit-ready” at any time. In a recent webinar, special guest, Mitch Kider, Chairman and Managing Partner at Weiner, Brodsky, Kider PC shared how to ensure your organization avoids potential compliance pitfalls and is prepared for an audit.
Policies and Procedures
First, ensure your organization has adequate policies and procedures in place, including what your marketing can entail, what media your loan officers (LOs) and others can use, and what is and is not permissible based on federal and state laws.
Implementation of Policies and Procedures
The regulators expect that your organization has policies and procedures in place. If you’re audited, they will want to know how you’re implementing these policies and procedures.
Kider says the “very best practice” in regards to marketing compliance is that you centralize your compliance review of all marketing materials, including co-marketing, social media, web advertising, print media and all things marketing.
Your compliance department needs to be able to review and approve all marketing materials before anything goes out the door. Kider notes that companies really start to get into trouble when the compliance review of marketing materials is not held within a central system of record.
Biggest Audit Pitfalls for Lenders
So you think you’re prepared for an audit…
Kider notes there are two main areas that present the biggest potential pitfalls for lenders when it comes to dealing with an audit:
- Not being able to deliver the advertisements, marketing programs, scripts and other marketing materials on a timely basis.
- Regulators expect you can hand marketing and advertising materials they request over to them within five days, and typically sooner. Laws require that you maintain these materials and that they be easily and quickly accessible to auditors. Ensure you have your marketing materials in a centralized repository so they can be easily given to regulators.
- Kider’s “very best practice” of centralizing your compliance review of all marketing materials will support this quick turnaround to auditors.
- Not having full visibility into what every LO and branch manager is doing from a marketing and advertising perspective in the field.
- If a lender can’t control “rogue marketing” where LOs and branch managers are sending out marketing materials without compliance approval, they have a compliance management system problem. Put simply – your system has failed. Lenders must train, educate and discipline (if necessary) their LOs and branch managers because the potential liability of “rogue marketing” is “spectacular,” according to Kider.
It is not enough to have policies and procedures in place – this is expected. If your organization is audited, regulators will want to see how you are implementing these policies and procedures.
Kider’s “very best practice” to centralize the compliance review of all marketing materials will help you avoid the two major pitfalls of an audit: not being able to deliver marketing materials fast enough to auditors and not having full visibility into marketing activities happening in the field. Centralizing your compliance review of all marketing materials into a system of record for all marketing and compliance will make everything easily accessible and deliverable to auditors, proving your organization has processes in place and is implementing them.
