Vendors are trying to help companies address regulations, but they are finding the compliance mandate is a two-edged sword in terms of companies' spending on their services, said executives from Wipro Gallagher Solutions in a recent interview.
On one hand compliance is a “shape up or ship out,” mandate for the mortgage industry which compels some automated assistance, but in other ways it encourages manual review and can reduce the overall technology spend, said sales and marketing head Joey McDuffee, whose company is a subsidiary of Wipro Technologies, a tech firm that also engages in business process re-engineering and other related lines of work.
“What we see is the regulatory environment has been very, very volatile the last few years…and we are forced to ensure that all of our customers are compliant,” said McDuffee. “What we basically have to do is…stay on top of those things from a federal, state and local regulatory perspective, and then our compliance team, they actually take all that information, scrub it and we put it into our system in order to roll it out to our customers.”
“Our compliance officer refers to the changes as kind of the ‘regulatory compliance of the month club,' like the old CD of the month club, because it's changing so much and it's really forcing lenders to either change technologies or change processes or both in order to sustain their business,” he said. “What it's done is it's really leveled the playing field a lot for the last few years. A lot of the products they're not really differentiable…so what lenders have really had to do is focus on customer service in addition to complying with all the new regulations.”
An exception to this is in the high net worth borrower space where loans secured in part by other assets and investments, in addition to the lien, have had more traction, said McDuffee and Wipro Technologies consultant Abhinav Asthana, who noted that this is a trend more prominent outside the U.S. Also in the high net worth space, there has been renewed interest in the blanket loan product, in which multiple investor properties secure a loan.
McDuffee notes that “regulation and regulatory compliance have been really a big discontinuity for banks around the globe.
“It's not just the U.S.,” he said. “I was down in Australia last year and they were going through some of the same issues.” These include concerns such as underwater properties, said McDuffee.
In the U.S., some of the more contentious regulatory moves from the mortgage industry's perspective are those being rolled out by the government-sponsored enterprises and the Federal Housing Finance Agency, but he indicated there is some understanding that they are in a difficult position.
“I think they're between a rock and hard place but the mandate is for them to come get the industry back to normal, whatever that may be in the future,” said McDuffee, noting that the possibility of change in administration and other factors make their situation uncertain.
