Author:
Partha Pratim Dutta
VP Operations of Nexval
Mortgage is among the most highly regulated sectors of BFSI, and this has often been a cause for stalled digital transformation, poor quality of service, and bloated costs. It is vital to adhere to the ever-evolving regulatory landscape, meeting the requirements laid down by government-sponsored enterprises (GSEs), investors, and government regulatory bodies.
However, with data spread across multiple systems, it is difficult to assemble, aggregate, and present the necessary evidence of compliance (EoC) in a timely manner. As regulations become more nuanced and subject to frequent change, the compliance burden on mortgage businesses intensifies – which, in turn, takes away from your ability to provide reliable, standardized, and profitable services. For these reasons, a sophisticated risk management platform is the need of the hour.
Understanding the Role of a Robust Risk Management Platform in Mortgage
Traditionally, risk management and risk minimization were relegated to being an “aftereffect” of operational decisions. Based on ongoing processes, and new, transformative changes, businesses would take the measures absolutely necessary to stay compliant. Today, however, this approach is changing, with the rise of proactive compliance that aims to get ahead and stay ahead of the regulatory curve.
Proactive compliance is enabled by a robust risk management platform that is agile in nature. It goes beyond scheduled audits and mandatory checks and balances, to provide mortgage businesses with customizable workflows. With the flexibility of customization, you can conduct regular internal audits on a variety of standards, including but not limited to CFPB, FNMA, FHA/HUD, USDA, VA, SCRA, MERS, and COVID-19 norms.
The risk management platform consolidates audit, risk, and compliance processes across the business so that you do not have to have “a finger in every pie,” as it were. From origination to mortgage servicing and data quality – the platform uses automation technology, a workflow-based architecture, scheduled processes, and real-time dashboards to streamline risk management activities.
7 Factors to Consider When Choosing a Risk Management Platform
A basic tool will help perform core must-dos such as extracting data, prior to an external audit, or storing audit formats for later use. A next-gen platform, on the other hand, will help mortgage businesses gain real value from their risk management function by:
1. Allowing users to configure workflows visually
The risk management platform you choose should include a visual workflow editor. A graphical user interface (GUI) will allow business users, governance risk & compliance (GRC) experts, and functional heads to define and update audit workflows without IT help. Reduced dependence on IT also lays the foundation for further digital transformation.
2. Automating audit assignments and queue management
A sizable audit workload is unavoidable for a mortgage business – but what you can do is simplify the process by scheduling audits in bulk, creating queues, and defining strict audit controls so that processes do not become never-ending. The platform you choose must support this by combining industry-specific risk audit technology with automation.
3. Securing data access with role-based authentication
Audit risk and compliance activities require the involvement of multiple stakeholders, internal and external partners alike. From government regulatory bodies to in-house employees, from offshoring partners to data analysts – a variety of stakeholders must access your data. The platform you choose should be able to prevent any data loss or security compromise through role-based authentication.
4. Simplify root cause analysis at the audit level
While businesses may always work towards a best-case scenario, audits may sometimes hit unpredicted roadblocks. A strong and adaptive risk management function will be able to navigate these challenges, find the root cause, iron out errors, and proceed with the audit to achieve compliance within the expected timelines. That is why the platform you choose must have a root causes analysis feature, which pins down an issue to a specific stakeholder and supports the capturing of multiple root causes per issue.
5. Empowering multiple auditors and organizational units
As is clear from points 3 and 4, risk management is a collaborative effort, which means that an organization may have multiple audits with numerous stakeholders active at any given time. For instance, an International Organization for Standardization (ISO) audit will mandatorily need several auditors assigned to a task. The platform should be able to support multiple processes and two or more auditors working concurrently.
6. Facilitating work assignment and distribution
To drive collaboration, the platform should also help you assign and distribute risk management tasks to different audit teams, managers, and external parties. Ideally, a dynamic load balancing capability should be in place, which recalibrates auditor workflows based on active queues. This feature is also essential to support distributed operations in the era of remote and hybrid work.
7. Generating actionable intelligence
Finally, the platform must provide mortgage businesses with both pre-built and custom reports. Not only does this support your immediate compliance objectives, but it also points out efficiency and precision gaps in risk management processes. The tool should also support ad-hoc querying to provide quick answers to issues that do not require a full report.
Discover Nexval’s Audit Risk and Compliance (ARC) Solution for Your Business
At Nexval, we recognize that compliance, consistency, and quality are at the heart of a successful mortgage business, one that is resilient to regulatory changes and the rise of new market dynamics.
We provide 100% customizable audit frameworks to accommodate your unique set of risks, and our purpose-built Veritiq ARC risk management platform automates audits based on 20,000+ mandates and compliance questions. With a team of 1,000+ mortgage subject matter experts and more than a decade of spearheading digital transformation projects, we help convert your risk management capability into a value generator.
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