A new examination manual for mortgage origination firms was unveiled this week. The procedures cover the origination process from advertising to closing.
A set of mortgage origination examination procedures was released Wednesday by the Consumer Financial Protection Bureau. The procedures apply to both bank and non-bank lenders and outline the CFPB’s supervisory approach to ensure mortgage originators comply with federal laws.
The manual describes what type of information examiners will collect in the evaluation of mortgage originators’ policies and procedures. It also will also help examiners assess compliance with applicable laws and identify risks to consumers throughout the origination process. Factors to be considered include origination volume, product types and the extent of state oversight.
Key originator activities — from initial advertisements and marketing practices to closing practices — will be tracked by the examination manual.
Coordination with state and federal regulators is expected to maximize overall supervisory capability and minimize regulatory burden.
Supervision activities by the CFPB will include the collection of reports and examinations. The examination process includes pre-examination scoping and review of information, data analysis and onsite examinations as wells as regular communication with supervised entities and follow-up monitoring.
When needed, regulatory actions will be taken.
The bureau called the new procedures “a key initial step in implementing its non-bank supervision program.”
A significant portion of the mortgage market has not been subject to federal supervision until now, the CFPB said. Independent mortgage lenders, mortgage brokers and mortgage servicers were among this group as were some of the biggest subprime lenders during the buildup to the housing market collapse.
The agency noted that the new procedures are an extension of the general supervisory and examination manual released last week by the CFPB.
The regulator published its mortgage servicing examination procedures in October.
“The mortgage market cannot work well for consumers if the spotlight shines only on one part of it, while the rest is left in darkness,” said CFPB Director Richard Cordray said in a statement. “Our supervision program will illuminate the entire marketplace by making non-banks play by the same rules as the banks.”
