Mortgage Lenders Reporting Higher Compliance Spending

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Mortgage lenders reported a median increase of 29% in their regulatory compliance spending. This is revealed by the Mortgage Lender Sentiment Survey for the third quarter of 2014 conducted by Fannie Mae in August of this year.
The survey was completed by 214 senior executives representing 196 lenders in the United States. The goal of the survey was to understand how lenders perceive the impact of new regulations such as the Mortgage Banking booklet, the Ability to Repay/Qualified Mortgage standards and the Basel III capital requirements on their operations.

72% of the lenders reported that the new regulations has a “significant” impact on their business practices. The share of larger lenders reporting “significant” impact was 73%. The share of mid-sized lenders who experienced the same was 84%. 62% of smaller lenders reported “significant” impact.

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The share of mortgage lenders who reported an increase in the spending on compliance in 2014 compared to 2013 was 72%. While the media increase in the spending on compliance was 29%, mid-sized lenders reported a much higher increase of 50%. This was the largest rise in compliance spending across all three groups. Larger lenders experienced a median increase of 27% while for smaller lenders the median increase was 11%.

The post-closing quality control functions were the most commonly outsourced due to the increased regulations and the associated costs. The share of mortgage lenders outsourcing these functions was 47%. Mid-sized lenders were more likely to outsource their post-closing quality control, servicing and compliance and legal operations compared to the groups of larger lenders and small lenders.

For 81% of mortgage lenders, the concern over compliance risk increased in 2014 compared to 2013. Larger lenders experienced greater increase in the concern over operational risk compared to their mid-sized and small counterparts. The increase in the concern over credit risk and interest rate risk was the highest among small lenders.



Christian Calvin mortgage Christian is a contributing writer for He is a graduate from the University of Tennessee with a degree in Communications and a concentration in Broadcasting. Christian has served as vice-president for a privately-held company for more than 20 years. Additionally, he has also applied his writing and business knowledge to various websites with a focus on business and sports news . . . both of which are passions. Christian enjoys playing golf and spending time with his family and friends.


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