The mortgage industry should be enabled to do remote work permanently
Before COVID-19 forced companies to make operational changes on the fly, most in the mortgage finance industry considered remote work as “nice to have,” or dismissed it outright. Embracing a remote workforce wasn’t strategic to their business, and the industry was already working through historic mortgage application volumes — so when remote work became necessary, changes were made with unprecedented speed.
Some lenders were more prepared, but now that the legwork and investments in remote infrastructure are complete, we’re at a crossroads. In the interest of lenders, borrowers, and mortgage professionals, we should embrace remote lending work permanently, instead of reintroducing outdated restrictions. As the saying goes, “you can’t put the genie back in the bottle.”
One of the biggest regulatory concerns for lenders is the Secure and Fair Enforcement for Mortgage Licensing Act. Under the statute, lenders are now grappling with how long they can keep their workforce home and stay in compliance, and what a sufficient return to office plan will need to include to receive a regulator’s blessing.
Unfortunately, decisions are being complicated by a patchwork of regulation and reopening procedures that vary by state. Uncoordinated policy decisions are creating confusion and significant regulatory risk for firms that are state-regulated and employ licensed personnel, yet need to continue remote work.
Regulators deserve credit for relaxing regulations under extraordinary circumstances, and there has been discussion they could extend permissions through the end of 2021. In addition, there have been recommendations to create a uniform method for licensed individuals to continue to work from home. While this may help quiet some of the confusion, it would be better to make permission of remote work permanent.
Traditionally, mortgage staff primarily worked from an office and had little need for remote work technology. Options were limited to occasionally using a Virtual Private Network and leveraging a phone to connect with staff and customers. As the industry adapted to the pandemic, flexibility was required. Soft phones (software-based phone lines managed on a PC) became standardized, and headsets were provided for all. Web cameras are useful not just for school and happy hour, but also for customers and teams — mitigating some of the value lost from face-to-face interactions.
Moreover, remote appraisals are now permitted in many cases by Fannie Mae and Freddie Mac, wherein the appraiser conducts a desk review and works directly with the realtor of the borrower to obtain information and photos of the property. As technology improves, expect communication to continue its evolution from primarily phone-based to video-based, eventually settling into a multi-platform approach supported by voice, video, and augmented/virtual reality, providing the most personalized and effective borrower experience.
Finally, there have been significant developments including Virtual Desktop-as-a-Service. Features include real-time video camera monitoring of the employee and their workspace, while other components can identify if someone is screen scraping or taking a picture of the screen with a phone camera. These systems can even automatically turn off and disconnect the connection if outside activity is detected. As such, personal borrower information is just as safe as it otherwise would be in an office environment.
Regulators surely have questions on what a new normal with standard remote work would look like. But enabling a permanent licensing solution for remote workers will meet the needs of mortgage professionals regardless of whether a state is reopening or reclosing. We believe a digital branch or licenses created by the states could potentially increase their revenue, as many companies might be willing to expand their current footprints with a remote workforce.
Of course, there remains a need for strong compliance standards and the ability to track data to prevent fraud, misrepresentations, and privacy violations. Criteria could include restricting licensing activity to an approved home location, safeguarding and supervising activity occurring at home, and updating systems to meet specific data security provisions.
There are numerous studies that show individuals who work from home are more productive and some show efficiencies upwards of 20%. While some parts of the fulfillment process require traditional hours, much of the work can be done within the timeframes that enable a healthy work/life balance.
There will always be challenges as technology evolves, and there will always be value in certain face to face interactions. However, the demand for processors, underwriters and closers is at unprecedented levels, and enabling them to do their jobs safely and securely in a remote environment, for as long as they need, will be good for consumers — and the regulators put in place to protect them.