Nachamie responds “that is an appropriate risk assessment for his business.”
But social media, she continues, is where the consumers are today and is a tool brokers should utilize to generate new business.
Towards that end, for brokers who want to use social media, the Federal Financial Institutions Examination Council guidance in this area is something mortgage brokers can follow. Nachamie says this guidance is not a rule, but it has become the standard for regulated financial entities.
“Social media is a form of interactive communication in which users can generate and share content,” she notes the FFIEC definition reads.
Mortgage brokers can interact with consumers by broadly distributing information about products and do other things to improve marketing efficiency. They can even respond to consumer complaints, Nachamie says.
But those who want to use social media need to have a compliance risk management plan in place. And this program is no different than any other risk management program that mortgage brokers have to devise.
This plan must identify the risks in using social media, measure their effects, how to monitor them and how to control them.
The plan must state the strategic goals of the social media efforts, with detailed procedures for use and monitoring.
Monitoring is the key point in any risk management policy. Companies need to make sure their social media activities remain in compliance with appropriate rules and regulations and then check to make sure the monitoring program is working, she says. This includes monitoring any third-party service provider relationships, which is a key emphasis of the Consumer Financial Protection Bureau.
Employee training on the use of social media is another part of the plan, and this training needs to be documented.
The New York Department of Financial Services needs to approve websites of mortgage companies and individual originators, including the domain name. Right now, there is no similar policy for Facebook pages.
Regulators want to see upper management involved in setting policy and maintaining compliance, the same as any other risk management policy mortgage companies are required to have, she says.
Consumer harm is to be addressed in a social media risk management policy, as are legal risks, compliance risks and reputational risks. She says companies have been sued for defamation for their social media posts.
Posts must comply with fair lending, truth-in-lending and other advertising rules, the Real Estate Settlement Procedures Act, Unfair Deceptive or Abusive Acts and Practices laws and privacy laws.
Companies should control their loan officers. Loan officers are to check their company’s social media policies and procedures.
“It is all about diligence, oversight and control,” she warns.