The federal government issues mortgage compliance laws to help ensure that customers are treated fairly. These laws change fairly often, as new regulations come out at least once a year. To maintain compliance with federal mortgage regulations, business continuity and reputation, it is important for all institutions that deal with mortgages to be aware of current regulations and keep up with new laws.
Current Laws
Any company that issues mortgages must focus on compliance with current laws and regulations. Mid-size and large companies have entire departments devoted to compliance practices and licensing maintenance. Smaller companies may outsource and hire a real estate attorney with expertise in mortgage law to check records and make sure they are up-to-date. Disclosures are an important part of mortgage compliance. For example, The Truth in Lending Act (TLA) requires mortgage brokers to disclose the sale or transfer of any loan to the customers who are serviced by that loan. In other words, if Loan Company A sells a loan to Loan Company B, it has 30 days to tell the debtor in writing that his loan will now be serviced by Loan Company B. All lenders should send out such disclosures immediately so that they don't run afoul of deadlines.
Fair Lending Analysis
As the economy continues to be tight and more people face foreclosure, both the public and the government is focusing hard on fair lending practices. Mortgage lenders who don't comply with current fair lending rules can be blamed for the housing crisis, and in addition owners of such companies may face criminal charges and steep penalties. For this reason, all mortgage lenders must comply with all fair lending rules. The best way to ensure compliance is to hire an expert to analyze the company's fair lending practices. The compliance expert can compare fair lending practices with legal requirements, spot weaknesses in the company's current practices and make recommendations for improvements.
Audit Practices
Internal auditors need to be up-to-date on current compliance laws so that they know what to look for. If a mortgage company uses outside analysts or auditors, they should train internal auditors in the newest practices so that internal auditors can monitor the company and make sure that it is in compliance with laws. Internal auditors should monitor federal mortgage compliance resources and attend training at least once a month on new regulations and should audit on a regular basis to ensure that the company is up-to-date with all mortgage compliance requirements.