With
federal
oversight
shifting
under
the
current
administration,
some
mortgage
lenders
may
feel
less
pressure
to
prioritize

compliance
and
loan
quality.
But,
according
to
industry
experts
Amanda
Phillips,
General
Counsel
and
EVP
of
Compliance
at
ACES
Quality
Management,
and
Richard
J.
Andreano,
Jr.,
Practice
Leader
of
the
Mortgage
Banking
Group
at
Ballard
Spahr
LLP,
loosening
internal
controls
now
could
have
long-term
consequences.
In
this
Q&A,
they
share
why
lenders
should
remain
vigilant
—
and
how
technology
can
support
that
effort.

HousingWire:
With
the
Consumer
Financial
Protection
Bureau
(CFPB)
facing
potential
reforms
and
federal
oversight
seemingly
in
flux,
what’s
the
risk
in
letting
compliance
efforts
slide?

Rich
Andreano:
While
the
regulatory
tone
may
be
shifting
in
Washington,
lenders
shouldn’t
assume
that
means
it’s
safe
to
take
their
foot
off
the
gas.
First,
many
federal
laws,
like
the
Truth
in
Lending
Act
(TILA)
and
Equal
Credit
Opportunity
Act
(ECOA),
allow
for
private
rights
of
action
and
extended
statutes
of
limitations.
So
even
if
the
CFPB
isn’t
aggressively
enforcing
today,
borrowers
can
still
bring
claims,
and
a
future
administration
could
look
back
years
to
scrutinize
loan
activity.

Amanda
Phillips:
That’s
why
it’s
critical
to
stay
the
course.
The
cost
of
rebuilding
a
weakened
compliance
program
far
outweighs
any
short-term
savings.
Even
during
the
last
Trump
administration
when
the
CFPB
was
seen
as
less
active,
enforcement
didn’t
disappear.
It
just
shifted.
States
stepped
up,
and
we
expect
to
see
that
again.

HW:
Speaking
of
the
states,
what
role
are
they
and
investors
playing
in
filling
potential
regulatory
gaps?

Andreano:
State
regulators
are
already
signaling
plans
to
increase
oversight.
For
example,
the
New
York
Department
of
Financial
Services
just
brought
on
a
former
CFPB
deputy
enforcement
director.
We’re
seeing
a
reversal
from
when
the
CFPB
was
first
created
and
pulled
talent
from
the
states.
Now,
it’s
the
states
hiring
federal
expertise.

Investors
are
also
paying
close
attention.
They
are
more
focused
on
technical
compliance.
That
includes
defects
that
might
affect
enforceability,
assignee
liability
or
loan
performance.
And
they
can
be
extremely
strict—even
minor
formatting
issues
in
disclosures
have
triggered
concerns.
It
is
important
to
know
the
position
that
your
investors
take
on
compliance
matters,
particularly
ones
where
there
are
differences
of
opinion
in
the
industry.

Phillips:
That
investor
scrutiny
extends
beyond
regulatory
compliance
to
guideline
issues
like
occupancy
fraud.
If
a
borrower
claims
they’ll
occupy
a
property
but
immediately
lists
it
for
rent,
that
can
affect
loan
performance.
Investors
are
watching
these
types
of
“small
c”
compliance
issues
closely
because
they
ultimately
impact
risk.

HW:
Regardless
of
what’s
happening
at
the
federal
level,
what
are
some
best
practices
for
maintaining
strong
internal
controls?

Andreano:
It
starts
with
robust
policies
and
procedures.
That
means
documenting
how
your
institution
complies
with
laws
and
regulations,
training
staff,
auditing
for
adherence
and
updating
processes
when
issues
arise.
Just
as
important
is
maintaining
thorough
records
of
each
of
those
steps.
Regulators
want
to
see
not
only
that
you’ve
taken
action,
but
also
how
you
made
decisions,
when
you
made
them
and
why.
If
there’s
no
documentation,
it’s
as
if
it
never
happened.
That
paper
trail
is
essential
to
demonstrating
your
commitment
to
compliance
and
mitigating
potential
enforcement
risk.

Phillips:
Compliance
isn’t
a
“set
it
and
forget
it”
function.
It’s
a
continuous
cycle:
monitor,
test,
identify
issues,
fix
them,
train
staff
and
start
again.
It’s
not
glamorous,
but
that
process
is
what
protects

lenders
when
scrutiny
does
come.

HW:
How
can
technology
help
lenders
manage
compliance,
especially
in
a
fast-moving
regulatory
landscape?

Andreano:
Regardless
of
how
enforcement
priorities
may
shift,
a
robust
compliance
management
system
(CMS)
remains
essential.
And
that’s
not
just
a
best
practice.
It’s
a
regulatory
expectation.
Under
the
Federal
Financial
Institutions
Examination
Council
(FFIEC)
framework,
an
effective
CMS
is
built
on
comprehensive
policies
and
procedures,
training,
monitoring
and
independent
review.
Those
elements
are
non-negotiable.
A
CMS
is
your
first
line
of
defense
against
regulatory
scrutiny,
reputational
risk
and
operational
missteps.
And
while
it’s
possible
to
implement
those
controls
manually,
it
becomes
exponentially
more
effective
and
scalable
with
the
right
technology.

Phillips:
That’s
exactly
where
tools
like
ACES
can
provide
tremendous
value.
For
instance,
our

ACES
Managed
Questionnaires
offer
a
curated
library
of
exam
readiness
checklists
and
compliance
testing
templates
aligned
with
federal
and
state
requirements.
These
are
especially
helpful
for
lenders
trying
to
keep
up
with
evolving
expectations
from
agencies,
regulators
and
investors.

Another
feature
we’ve
introduced
is

ACES
PROTECT,
a
configurable
compliance
testing
module
designed
to
automate
rule-based
audit
reviews.
It
comes
pre-loaded
with
test
plans
for
high-risk
regulations
like
TRID,
ECOA
and
TILA
and
is
updated
regularly
to
reflect
regulatory
changes.
It’s
a
way
for
lenders
to
stay
audit-ready
without
having
to
build
everything
from
scratch.
Combined
with
our
free

Compliance
NewsHub,
which
aggregates
the
latest
regulatory
developments,
these
tools
help
lenders
monitor
changes,
adapt
processes
quickly
and
ensure
nothing
falls
through
the
cracks.

Technology
doesn’t
replace
the
need
for
strong
compliance
leadership,
but
it
does
help
ensure
that
no
matter
how
the
landscape
evolves,
lenders
are
equipped
to
respond.

HW:
What
other
regulatory
issues
should
lenders
be
watching,
regardless
of
where
the
CFPB
lands?

Phillips:
Servicing
rules
are
one
area
where
we
could
see
significant
change.
The
industry
has
been
asking
for
more
streamlined
loss
mitigation
policies,
but
the
CFPB’s
proposed
rule
was
widely
viewed
as
overly
complex
and
burdensome.
There’s
bipartisan
interest
in
getting
this
right,
so
we
expect
to
see
revisions.

Andreano:
Appraisal
independence
is
another
hot
topic.

HUD
is
facing
legal
challenges
for
its
stance
on
appraisal
bias,
which
some
argue
conflicts
with
longstanding
independence
rules.
Lenders
are
being
asked
to
police
appraisers
while
also
maintaining
arms-length
separation,
which
puts
them
in
a
tough
spot.
It’s
an
area
where
regulatory
clarity
is
badly
needed.

HUD
did
take
a
step
back
in
this
area
with
Mortgagee
Letter
2025-08
that
rescinded
guidance
issued
during
the
Biden
Administration
on
appraisal
review
and
reconsideration
of
value
with

FHA
loans.
We
will
have
to
see
if
HUD
takes
additional
steps
in
this
area.

In
general,
while
some
proposed
rules
may
stall
or
disappear
under
the
current
administration,
others
could
return
in
revised
form.
Lenders
need
to
be
prepared
to
pivot
quickly
if
and
when
that
happens.

Richard
Andreano
and
Amanda
Phillips
will
be
presenting
on
May
19
and
20
at
the


ACES
ENGAGE
Conference

in
Colorado
Springs,
Colo. 

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