Staying compliant with laws and regulations as they evolve is critical to managing loan servicing operations for financial institutions. It can be challenging to keep up with changes in this landscape and ensure processes remain compliant, which is why many companies are seeking a trusted partner who can take complete control of the process. This article will explore key regulations impacting the loan servicing industry and some best practices for keeping pace as they change.
It is essential to stay current on new and updated regulatory requirements. There are many ways to stay informed, but consistently seeking credible and reliable resources is a good starting point. Routinely monitoring regulatory agencies such as the Consumer Financial Protection Bureau (CFPB) and the Office of the Comptroller of the Currency (OCC), among others, ensures that companies stay current on policy changes that could impact how they operate. Additionally, industry events (like this past week’s NAF Non-Prime Auto Financing Conference) provide a forum for sharing knowledge and experiences. Whether through panel discussions, breakout sessions, webinars, or even simply networking at happy hours, spending time with those who live and breathe in the same world you do can unlock a lot of information and help you better anticipate future challenges that others have experienced before you.
The information you gather typically requires action; updating your internal procedures and protocols to adhere to compliance standards as they change is vital. This can involve reviewing and updating servicing agreements, training your staff, and building new systems in concurrence with these changes, which can be a lot to manage, especially if this aspect of your organization is adjacent to your primary strategic focus. This is one of the main reasons many companies turn to loan servicing providers to fully control the process.
An important facet of loan servicing compliance is keeping a well-organized book, which means maintaining accurate and complete copies of all servicing-related documents, including loan agreements and payment schedules. It is also imperative to establish clear procedures for documenting interactions with customers. Having systems in place to track payment dates, amounts, customer interactions, and other notable pieces of the customer journey is an explicit requirement. Still, companies can set themselves apart by how they go about it.
Compliance requires that a company has the proper systems and controls in place to manage its obligations. Being organized and creating guidelines reduces the risk of costly mistakes. Companies should consider implementing policies and procedures for record-keeping, such as defining a standard timeframe they retain their records or implementing an effective data management system. It is equally important to create proper channels for communication, both internally and externally, to address any issues promptly. Remaining compliant relies on strong and consistent collaboration within an organization or with customers and regulators. Creating these channels and conducting compliance audits regularly allows companies to identify and mitigate issues efficiently.
Professionals must immerse themselves in the industries in which they inhabit. The financial services space is especially unique in the potential consequences companies can face by not adhering to their compliance regulations. These standards are governed by federal law, which can be daunting if a company is not adequately equipped to keep up with them. The risk of financial and reputational consequences of falling out of compliance can turn the trajectory of a company on its head in a matter of moments, so it should remain a top priority. Building or outsourcing the proper infrastructure can create a sense of comfort and stability for companies to operate successfully and with integrity.
You don’t have to do this alone. Reach out to sales@servicingsolutions.com to learn how we can help.