NMP - April 2017 - 87
The vast majority of originators and lenders we polled [see Figure
04] felt that increased regulation and compliance requirements have
had some impact on the time it takes to originate and close a loan,
although 21 percent of those polled questioned whether or not those
same requirements have increased the time required to fund. Most
said the increase was a matter of days but nearly 20 percent
suggested that compliance concerns had added weeks to the overall
The baseline for the time estimates was a 15-31 day timeline that
the majority of lenders said was the norm prior to 2013.
It's interesting to note that when asked for specifics about the
cause of these delays, while the majority of lenders focused on the
CFPB and other government bureaus, a not insignificant portion of
respondents focused on increased investor requirements, citing
stricter standards, QM rules and tighter underwriting.
whether they used in-house or independent contractor resources to
assist with compliance, most indicated they were using a mixture
(about 43 percent). Only six percent said they only used contractors
or external resources.
More and better technology
With 13 percent of survey respondents reporting that mid-level
managers (directors, managers, team leaders, etc.) were spending at
least half of every day dealing with compliance-related activities, the
need for better technology was abundantly clear. We wanted to
know whether lenders had added compliance automation or revised
existing systems after 2013. We also wanted to know what this had
Most lenders and originators were compelled to make some level
of investment in technology to become or remain compliant. Nearly
85 percent said they had added new technology of some kind, with
costs ranging from $5,000 to $100,000 for 54 percent of them. About
one-third of respondents reported spending more than that, ranging
up to $2 million.
Most lenders, 73 percent according to the survey, required help
from third-party technology partners to bring their new systems
online, further increasing their costs.
The complete survey report is available and tells the story of
increasing costs to originate mortgage loans tied directly to
increasing compliance demands for lenders of all sizes, selling all
products through any channel. It's a new world lenders are working
in and there is no sign that compliance will become less burdensome
in the future. While the current administration has promised to
reduce federal regulation, it's first attempts to do so with the
Affordable Care Act have been ineffective.
At the time this survey was conducted, the CFPB has not yet
implemented it's TRID rule. We did go back to our respondents with
questions about TRID's impact on their operations. For those
answers and more from this groundbreaking report, get a copy of
the full report by logging on to NMPMag.com/WFGSurvey.
The answer for three-quarters of respondents was a simple "yes."
Almost 75 percent of respondents reported adding 20 or fewer
contractors or employees to meet new compliance needs. Over 71
percent of respondents said they increased their in-house
compliance staff by 50 percent or less. However, when asked
Rick Grant is NMP special reports editor-producer for
Mortgage News Network. He may be reached by e-mail at
n National Mortgage Professional Magazine n APRIL 2017
More hands on deck
We wanted to find out what impact compliance was having on the
way lenders staff their enterprise, both with internal FTEs and
external partners [see Figure 05]. We asked whether they had added
employees since 2013, including outsource vendors, temporary
workers and contractors, who were dedicated to the interpretation
and implementation of new mortgage lending rules and regulations.
To get to the heart of regulatory compliance impact, we asked
lenders to focus on those additions who were intended to deal
specifically with requirements handed down by the CFPB, FDIC,
FHFA or other federal enforcement agencies and state regulators
affecting their businesses.
By Rick Grant