When it comes to making sure financial data is safe and meets compliance regulations, understanding the different regulatory bodies that affect the mortgage industry is a vital first step. Here are just a few to consider.
CFPB
The Consumer Financial Protection Bureau is a U.S. government agency dedicated to making sure you are treated fairly by banks, lenders, and other financial institutions.
This agency’s Code of Federal Regulations (CFR) contains the official text of agency regulations and is updated annually. There are a number of regulations concerning the mortgage industry ranging from the Equal Credit Opportunity Act, to Mortgage Advertising, to the Privacy of Consumer Financial Information. These are just a few of the many regulations that may require archival record-keeping to prove compliance.
Regulation B: Equal Credit Opportunity Act
The purpose of this part is to promote the availability of credit to all creditworthy applicants without regard to race, color, religion, national origin, sex, marital status, or age (provided the applicant has the capacity to contract); to the fact that all or part of the applicant's income derives from a public assistance program; or to the fact that the applicant has in good faith exercised any right under the Consumer Credit Protection Act. The regulation prohibits creditor practices that discriminate on the basis of any of these factors. The regulation also requires creditors to notify applicants of action taken on their applications; to report credit history in the names of both spouses on an account; to retain records of credit applications; to collect information about the applicant's race and other personal characteristics in applications for certain dwelling-related loans; and, to provide applicants with copies of appraisal reports used in connection with credit transactions.
Preservation of records: Creditors should retain account and application records for a minimum of 25 months. A creditor shall retain the information beyond 25 months if the creditor has actual notice that it is under investigation or is subject to an enforcement proceeding for an alleged violation of the Act or this part, by the Attorney General of the United States or by an enforcement agency charged with monitoring that creditor's compliance with the Act.
Regulation N: Mortgage Acts and Practices-Advertising
It is a violation of this part for any person to make any material misrepresentation, expressly or by implication, in any commercial communication, regarding any term of any mortgage credit product.
Preservation of Records: Any person subject to this part shall keep, for a period of twenty-four months from the last date the person made or disseminated the applicable commercial communication regarding any term of any mortgage credit product, the following evidence of compliance with this part:
(1) Copies of all materially different commercial communications as well as sales scripts, training materials, and marketing materials, regarding any term of any mortgage credit product, that the person made or disseminated during the relevant time period;
(2) Documents describing or evidencing all mortgage credit products available to consumers during the time period in which the person made or disseminated each commercial communication regarding any term of any mortgage credit product, including but not limited to the names and terms of each such mortgage credit product available to consumers; and
(3) Documents describing or evidencing all additional products or services (such as credit insurance or credit disability insurance) that are or may be offered or provided with the mortgage credit products available to consumers during the time period in which the person made or disseminated each commercial communication regarding any term of any mortgage credit product, including but not limited to the names and terms of each such additional product or service available to consumers.
Regulation P: Privacy of Consumer Financial Information
This regulation governs the treatment of nonpublic personal information about consumers and requires a financial institution to provide notice to customers about its privacy policies and practices.
Annual Notices and Opt-Outs: You must provide a clear and conspicuous notice to customers that accurately reflects your privacy policies and practices not less than annually during the continuation of the customer relationship. You must also provide adequate notice that the consumer can opt out of the disclosure of nonpublic personal information to a nonaffiliated third party.
Other Compliance Challenges for the Mortgage Industry
Truth in Advertising
The agencies seek to spur compliance with the Mortgage Acts and Practices Advertising Rule, which prohibits material misrepresentations in advertising or any other commercial communication regarding consumer mortgages (similar to Regulation N in the CFR). The FTC and the CFPB share enforcement authority over non-bank mortgage advertisers such as mortgage lenders, brokers, servicers, and advertising agencies. Should there be an audit, the FTC would request to review mortgage ads from a wide variety of media including websites, Facebook, direct mail, and newspapers. Mortgage advertisers that violate the Rule may be required to pay civil penalties.
Conclusion
Proving regulatory compliance requires meticulous record keeping, including records of a company’s website and social media. Even if you follow each regulation carefully, without an immutable archive and corresponding audit trail, there is no way to confirm it to regulating bodies.
With this much at stake, it’s clear why financial institutions, such as mortgage companies, who must comply with CFPB and other regulations regarding enterprise data and communications retention should have an Enterprise Information Archiving solution.
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