Mortgage

Do You Have the Staff to Comply With Regulatory Requirements for Mortgage Operations

Regulators expect companies to have an independent audit function commensurate with their size and the complexity of services offered in order to comply with various regulatory requirements for mortgage operations.

It’s not always practical for companies to have a wholly in-house audit function. Many use third-party providers to meet their responsibilities for regulators and/or GSEs.

But how do you develop and implement an effective function over your mortgage operations?

While there are several off-the-shelf audit templates available for core financial services areas, you would be hard-pressed to find a template that address the regulatory requirements of mortgage operations, mortgage servicing, and the various mortgage business models.

Originating and/or servicing mortgages is a heavily regulated industry, and the various requirements of all the agencies, federal laws, state specific requirements, and other regulations (i.e. RESPA, TRID, ECOA, UDAAP, etc.) add to the complexities of an internal audit function over mortgage operations.

Organizations must ask themselves if they have the resources and expertise to handle this function internally, or if it makes more sense to outsource.

Consider factors such as the size of your mortgage operations, growth strategies, ability to find qualified audit employees, and more.

Embracing the internal audit function as part of normal course of business ultimately reduces risks within an organization, but only when management is willing to invest in it and support its importance. 

Additionally, an effective internal audit function requires knowledge, skills, and experience, as well as have specific expertise in mortgage operations. These skills allow internal audit to identify not only gaps in control, but inefficiencies in processes and make value-add recommendations while still remaining independent. Without qualified internal audit personnel, an organization will never fully benefit from the value internal audit may provide, nor will it be able to fully mitigate the operational and regulatory risks inherent in the post-crisis mortgage origination and servicing environment. 

If you have questions about evaluating your internal audit function, contact us. Our team can help you plan for and implement an effective internal audit function as required by the GSEs.