Fannie Mae and Freddie Mac have begun playing for keeps when it comes to compliance, and this appears to be an upcoming challenge for many lenders.

One of the advantages of representing many lenders nationwide is the ability to notice trends and anticipate potential problems for clients before the problems reach their front steps. In recent weeks I have been contacted by multiple lenders receiving serious and adverse determinations from the GSEs pertaining to audit findings. Coincidence? Probably not.

Regardless of historical or current loan performance and a history of positive audits, lenders whose compliance management systems are viewed as lacking in regard to current GSE and/or Consumer Financial Protection Bureau requirements are facing swift and severe repercussions with little sympathy or accommodation. The message being telegraphed is consistent: lenders have been on notice to upgrade compliance and strict adherence is now expected. As such, any serious deficits in policies, procedures, and/or overall compliance management or other problematic specific findings are being interpreted as a cultural shortcoming within an organization undermining the confidence in the institution going forward.

For lenders with upcoming GSE audits, careful reevaluation of policies, procedures and systems to determine their adequacy are recommended. A fresh look from an independent consultant could also yield enormous dividends if problems are detected in advance of the real audit. At a minimum, it is clear that the current audits are being conducted in a manner that some lenders have expressed as unprecedented and it appears that the tolerance for non-compliance has diminished. For many lenders who have been through audits before, there has been a harsh and unexpected wake-up call. For any lender about to undergo a GSE audit, reevaluation, independent review and substantial attention are aspects that should not be overlooked.