Mortgage originators are unique in the financial sector of the economy. In many other industries, a few huge corporations dominate the market, with smaller companies and independent professionals filling in the gaps.
While there are some major players in the mortgage industry, a large share of mortgages are originated by smaller businesses as well as independent individuals. Mortgages are a key piece of the economy because of the secondary market. Ensuring that every mortgage is in full compliance is of vital importance.
It is easy for a nationwide company with thousands of employees to spend millions on a policy-management system. Making a similar investment is much more difficult for small businesses or individuals.
Governance, risk and compliance technology has finally matured and there are now policy-management systems available via a software-as-a-service model. The software isn’t purchased by users. It is simply subscribed to as a service.
Instead of making a major technology investment, mortgage originators can subscribe to the cloud solution and pay a much smaller service cost every month. That still leaves one question: What benefits does such a system provide to the organization?
Inaccessible or inconvenient
Everyone in the financial industry understands the importance of compliance. Failing at compliance is unacceptable. It can result in heavy fines, loss of reputation and business and, ultimately, reduced profits. Every organization has policies in place to ensure compliance.
The problem is that these policies too often exist only on paper. Policies are treated as if they are a mere formality, and the policies are not reflected in the actual work processes of the organization.
One major reason these policies are handled this way is that they are inaccessible or inconvenient to track. Another problem is that the policies are often outdated. A policy may have been written years ago, and may no longer be applicable or acceptable.
What policy-management systems do, in effect, is give life to policies. They accomplish this by removing all the obstacles which impede adoption into the company’s culture, and they also ensure that the policies reflect current business realities. These goals are accomplished through tools, technologies, and methodologies built within governance, risk and compliance policy-management systems.
Lifecycle of policies
Policy-management systems revolve around the lifecycle of policies. They ensure that policies are always relevant and updated. These systems begin with the first step — formation of the policies. Every policy document can be managed and shared within the system.
This means that all the relevant parties can collaborate on the same policy documents seamlessly and create policies that are acceptable and beneficial to all departments. That is just the start. Once a policy has been adopted, the next step is to ensure that it is shared with everyone.
Once a policy is available in the policy-management system, the system administrators can choose who can view it, who can edit it and who can share it. This ensures that all policies are accessible by the people who need them, but they cannot edit anything they do not have permission to edit.
An important part of this step is accessibility and convenience. The reality of policy management is that if employees actually are going to use the policies, they need to be able to access them conveniently. Going through many different pages of documents to find the relevant policy is not convenient.
Policy-management systems allow policies to be indexed and searched. If anyone wants to know what the policy is regarding a task, it takes just a few seconds to look for the policy using keywords.
Every policy has a date of expiration — some lapse in months, some in years and some in decades. When policies are created, these dates can be set within the system, and the system will alert you that a policy is nearing its end date. Management can then analyze the policy to check if it needs to be updated.
Policy-management systems have several advantages. They ensure that policies are actually being read and followed by employees. They also are a great way to ensure policies do not cause risk or compliance problems.
Regulatory changes, new standard-operating procedures and changing business realities can result in policies being outdated, which exposes the business to risk and liabilities. Small originators can ensure that their employees are following all the policies for mortgages. If any employee needs more detail, they can simply reference the system in place and get an answer in just a few clicks.
Cloud-based policy-management software also is easy to test before making a commitment. Many vendors offer free trials of the solution that give you a month to test the system within your own organization. Even if there are no free trials, the low cost and the pay-as-you-go model offered by multiple vendors ensures that you can make a small payment and test the system in-house before shifting to it completely.
Level playing field
Mortgage originators need to strictly and efficiently adhere to policies and compliance. A cloud-based technology solution is an easy way to improve efficiency.
Policy-management software is no longer complicated and expensive. The technology and the solutions have matured and are now very accessible, even for individual users.
Until a decade or so ago, it was hard for smaller organizations to compete with their bigger counterparts. The biggest organizations in the industry had access to the best technology and all the advantages that entailed.
The scenario has now changed. Regulatory and compliance technology is now easily available and allows smaller organizations to once again use agility to their advantage.