The Consumer Financial Protection Bureau's (CFPB) new integrated disclosure rules as well as new reporting requirements under the Home Mortgage Disclosure Act (HMDA) are among the top compliance concerns for lenders in 2015, according to a recent report from Wolters Kluwer Financial Services.
The new integrated disclosures – also known as the new Truth in Lending Act and Real Estate Settlement Procedures Act rules – present unprecedented changes that will impact lenders' entire mortgage operations, including business processes, technology, policies and procedures, vendor relationships, employee readiness and customer service, Wolters Kluwer says in its report. Violation of these new rules could result in significant fines and penalties, as well as in regulatory and reputational risks for lenders.
In addition, new reporting requirements under the HMDA will soon be issued, although the final scope and details, along with an implementation date, are still unknown. The addition of new data collection fields and the reporting itself will require significant work for lenders, the report finds.
The other top compliance concerns for lenders in 2015 include the increased scrutiny on mortgage servicing and subservicing operations, including the proposed expansion of the CFPB's servicing rules; heightened scrutiny around bank examinations and, in particular, the push to ensure that boards are fully involved in the oversight of compliance programs; and a general increase in enforcement actions resulting from fair lending risks.
‘We continue to encourage banks to build a thoughtful and comprehensive compliance strategy for 2015,’ says Edward Kramer, executive vice president of regulatory affairs for Wolters Kluwer Financial Services. "The old mantra of 'an ounce of prevention is worth a pound of cure' is more relevant today than ever, as noncompliance increasingly is leading to severe monetary consequences that range from fines and penalties to harsh reputational and regulatory consequences.’