In keeping with the demands of the times, mortgage lenders have experimented massively with telecommuting over the past year. Of course, employees in some positions may have worked remotely before, but in many cases this has not been available to underwriters, processors and loan officers in all states, or under charter or licensing regimes … until now.
The move towards a wider, remote workforce is also a natural progression in the current competitive marketplace, as lenders seek to keep costs down and grapple with declining margins. The case for telecommuting in mortgage lending is compelling, including that teleworking will increase macroeconomic stability and diversity. It is also a culture that many workers have adapted to and end up preferring.
Beyond the current pandemic and price pressures, the growing demand for full and teleworking, driven by the potential for future pandemics and the need for geographic diversification to better ensure business continuity and service delivery, is also prompting lenders to examine both the mechanisms and the regulatory environment surrounding teleworking.
Where will lenders open a store?
In order for widespread teleworking to be possible, some rules need to be changed. However, it is important to remember the environment in which these rules were originally implemented to avoid repeating history. Some of the first legislation on depositories, industrial loans, and consumer lending was adopted in response to the events leading up to the Great Depression of the early 20th century, when the main challenge was to have a regulated and viable permanent business that instills confidence and trust.
At the time, one of the obvious solutions to demonstrate the stability and resilience of a regulated organization was to present a showcase that would inspire consumer confidence and be available to the public. The surplus of this persists today as many regulators require mortgage lenders to maintain physical office space open and staffed for most of the week from 9:00 am to 5:00 pm.
This regulatory story raises the first challenge with telecommuting — without a regulated storefront, how can consumers ensure that they are meeting with someone who represents the regulated organization?
In addition, lenders will need to ensure that their loan officers follow the company’s guidelines and procedures when meeting with consumers, which calls into question the oversight aspect. Perhaps password-protected and encrypted virtual video conferencing rooms that the lender can record and monitor for compliance could be part of a long-term solution.
How will lenders control employees?
Speaking of oversight, a remote work environment raises questions about overseeing employees at all levels to ensure regulatory compliance and process compliance. Despite the physical location of their employees, lenders are still responsible for confirming that their employees are performing as required.
Employee supervision also extends to the training and recruitment of new employees. Remote work opens up a world of possibilities. How will lenders train and hire new out-of-state employees?
In addition, once these new hires are hired, they will need to become familiar with and hopefully integrate into the culture of the company. Some lenders may need to change their culture and / or operations to better serve the remote workforce. Not all jobs involve customer interactions that can be recorded and tracked, as has been the case with phone calls for decades.
How will lenders protect consumer data?
Some regulatory and operational issues will be less of a problem as the industry has already begun to address them, such as the protection of non-public information (NPI). Since the early days of telecommuting in 2020, lenders have had to coordinate their work outside the office while protecting borrower information, but they’ve already made great strides in this area by adopting high-tech, paperless multi-factor authentication virtual desktops and other security controls. …
While the need for these protections will not change in a persistent remote work environment, current NPI and data security policies can be adapted to further simplify remote work operations.
How is the mortgage industry adapting?
Technology has enabled the mortgage industry to automate and speed up transactions without sacrificing personalization. Concerns about the decrease in personal interaction caused by teleworking are understandable, but easy to overcome.
First, technology has allowed a new definition of face-to-face. Second, if most of our society is not only happy with technology, but also prefers remote transactions, the transition to a predominantly remote workforce is intuitive.
While the mortgage industry may be ready for ongoing telecommuting operations, this is not a change that can happen overnight. The statutes and regulations will need to be adapted and possibly completely rewritten. These are changes that will not be easy because consumer trust is paramount to our industry.
As these changes are made, lenders should be ready to answer questions to ensure they comply with the new rules and prioritize the interests of their borrowers, and be willing to adapt or stay out of the way.
Colgate Selden is Managing Director and Chief Compliance Officer at the company Promontory MortgagePath… He can be contacted at email@example.com.