Mortgage compliance management is critical to the success of mortgage professionals, regulators, brokers, lenders, and regulatory attorneys. Because regulations change so often, banks in particular must be ready to adjust quickly.

To successfully manage regulatory compliance, firms should know how regulatory requirements affect business operations and adhere to industry best practices. However, it may appear challenging at times to keep everything under control, which is why we have compiled a list of five key regulations to assist you.

Organizations need to understand regulations for mortgage compliance management in order to observe them.

Key Mortgage Compliance Management Regulations

While there are many rules and frameworks that banks, and those working in areas related to mortgage compliance management, need to be aware of, there are five key regulations we recommend keeping an eye on.

1. RESPA GFE and HUD-1 Disclosures

RESPA amended the Good Faith Estimate (GFE) guidelines, which mortgage firms must submit to borrowers at settlement. Three days after receiving the loan application, mortgage providers must offer a reasonable estimate of the total closing expenses in a real estate transaction. Examples of such expenses include:

  • Legal fees
  • Title searches
  • Title insurance
  • Recording fees
  • Notary services
  • Pest and home inspections
  • Document preparation
  • Taxes
  • Survey fees

RESPA also prohibits lenders from accepting kickbacks on loans or requiring borrowers to utilize a particular title company.

HUD-1 Disclosures, on the other hand, include the actual closing expenses (as opposed to Good Faith Estimates), and the lender should provide the borrower with 24 hours to study the HUD-1 form before settlement.

2. The Home Ownership Protection Equity Act (HOPEA)

The HOPEA Act, approved by the US Congress in 2013, mandates mortgage lenders to offer more information to buyers of high-priced properties. The mortgages covered under HOPEA include:

  • Purchase money
  • Refinancing
  • Closed-end home equity loans
  • Open-end credit plans

Furthermore, states also have lending restrictions that relate to high-cost home loans.

3. Restrictions on State Consumer Credit and Fees

States and municipalities frequently enact consumer credit rules against predatory lending practices. These entities often enforce fee limitations, and they also have authority over lending licensing rules and regulations.

With several state regulations, it may be challenging for financial institutions that function in multiple jurisdictions to adhere to the varied standards.

4. Audits and Due Diligence

Compliance for mortgage lenders is more than simply obeying the “letter of the law.” The significance for mortgage businesses is to adhere to the same degree of compliance as banks do.

This level of compliance means your teams needs to do its due diligence by:

  • Analyzing the risk of identity fraud
  • Appointing compliance officers
  • Teaching staff on compliance issues
  • Adhering to anti-money laundering legislation

5. Audits of TRID Disclosure

The Dodd-Frank Wall Street Reform and Consumer Protection Act includes TRID (TILA-RESPA Integrated Disclosure). TRID mandates mortgage lenders to integrate the Truth in Lending Act information they offer customers when applying for and closing on a mortgage with the Real Estate Settlement Procedures Act (RESPA) information lenders should now disclose to borrowers at settlement.

Such disclosure standards pose significant challenges to the mortgage sector, as they pertain to most closed-end mortgages. The Consumer Financial Protection Bureau pledged another regulation on this topic in April 2017 that would explain some of the issues mentioned by respondents during the public comment period.

Regulatory compliance management software streamlines and automates many routine tasks and workflows, making it more efficient to comply with the appropriate laws, rules, and industry standards.

Predict360 for Mortgage Bankers

Predict360 combines multiple compliance tools under one platform. These risk and compliance tools can be used by mortgage lenders as a part of the platform or independently.

Scan through the table below to understand more about specific features that apply to mortgage compliance management.

Feature Category Mortgage Compliance Application
Regulatory Monitoring & AI Assistant (Kaia) Keeps teams informed of new regulations; interprets complex compliance requirements without external consultants
Compliance Testing & Monitoring Monitors loan origination, underwriting, and servicing compliance; tracks control performance against tolerance levels
Fair Lending & Risk Management Tests for ECOA and Fair Housing Act violations; identifies emerging discrimination risks before regulatory examination
Policy, Audit & Findings Management Maintains compliant policies; manages audit responses; tracks remediation of regulatory findings
Complaints & Issues Tracking Captures borrower complaints; identifies systemic compliance issues; provides audit-ready documentation
Integrated Reporting & Automation Provides real-time compliance visibility; automates remediation workflows; ensures staff maintain required certifications

Interested to know more about the Predict360 risk and compliance intelligence suite? Get in touch with us to learn more about adopting a custom solution for your organization or request a demo to get started.