In a statement released by the Consumer Financial Protection Bureau last week, the agency announced that it had issued over $70 million in fines to non-bank entities, including mortgage companies, all of which have been through private settlement agreements. While the agency did not specify which particular mortgage lending practices had precipitated the fines, the announcement strikes home the point that the CFPB’s reach and influence goes beyond the larger multi-million-dollar news-worthy resolutions that get the most press. Further, this does not include the millions of dollars in fines issued by state regulators following CFPB standards and protocols.

In my experience, the hot issues the CFPB is focusing on involve marketing arrangements, improper compensation, and “unlicensed” activities. In particular, the CFPB pays attention to practices and behavioral patterns beyond the terms of mere agreements. In other words, agreements can get you in trouble but will not rescue an otherwise demonstrably improper arrangement. The CFPB heavily relies upon email communications, and horizontal audits, and in almost every case is well-prepared, having done advance homework before initiating any investigatory demand.

It is critical for lenders that have any profit-based compensation of managers, or who have non-originating supervision of branches to establish written protocols and agreements reviewed by legal counsel. Similarly, in the case of marketing arrangements, all documentation, practices and policies need to be reviewed by counsel to ensure that the structure, negotiation, implementation and maintenance of such agreements are consistent with an advertising based relationship. By the time the CFPB and/or state regulators issue investigative demands, it is usually too late—being prepared before you hear about regulatory action involving your company is essential.