The Hidden Costs of Erroneous Compliance

Compliance in the mortgage industry is a key part of the operational process, yet is often left as the last step. This can lead to costly fees, reduced customer service levels and lowered employee morale. According to Ari Karen, Founder and CEO of Strategic Compliance Partners, and Principal at Offit Kurman, Compliance must be brought into the process up front.

Case in point: a Lender had put an unpopular, overly restrictive policy in place. The loan officers questioned the policy but begrudgingly followed it, trying to get around it one way or another. It added time to the process and diminished the customer’s experience.

 Ari Karen was brought in for a risk assessment and determined that the policy went “further than necessary.” The erroneous compliance came at a high price – the president of the company lost credibility among his staff and was hesitant about presenting future Compliance moves. Worse yet, he opened the door to the possibility of some of the staff going “rogue,” no longer meeting with Compliance like they used to.

Says Karen, “If the decision had been correctly vetted and made with the right level of expertise, there would have been no negative affects.” Bottom line – Compliance should be involved up front, at the outset of the process.