An interesting study was referenced in the European Journal of Criminology. They asked the question, “Do people comply with the law because they fear getting caught?”. Their theory was that people abide by the law not because they fear the consequences but because they do not perceive crime as an “action alternative”. They looked at relationships between crime propensity, deterrence perception and crime involvement for a few specific types of crime (shoplifting, theft from cars, vandalism & assault). They claim that the results of their study indicate that the influence of deterrence perceptions on an individual’s crime involvement is dependent on his or her crime propensity, and that the threat of consequences was basically irrelevant for people who lacked a propensity to commit crime. I can see how this might apply in many cases, such as not worrying about getting pulled over because you are driving the speed limit.
The thought of this study left me wondering about those of us who get paid to worry about the threat of legal consequences – the compliance department. I have never met a competent compliance professional that wasn’t wound a little tight. I think that comes with the job, and makes them good at it. In many ways they bear the burden of the legal complexities that apply to the sandbox everyone is playing in. They are the people who sit down with that regulatory auditor, explaining why you didn’t send initial disclosures in a timely manner or why you re-disclosed the fees to your customer 15 times. Even when there is no explanation for a mistake, they have to respond to the findings & take the lumps that might result. As if that wasn’t enough, they have to deliver the news to executive management & explain why they didn’t catch your screw-ups.
As of today, The Mortgage Lender Implode-O-Meter has the tally at 338 mortgage company implosions beginning from 2006. I don’t know the number of jobs lost as a result, but no doubt it is substantial. Nobody wants their employer to appear on that list. This is why compliance people often wear their shoulders by their ears. The legislation we are all wading through right now is full of gotcha’s. There are multiple laws overlapping (each with a different acronym – shocking!), and so many gray areas that are not addressed, it’s nearly impossible to give quick answers to questions being asked.
It’s impossible to anticipate each and every scenario that may come up and know the impact of the 1888 page final TRID rule in all cases. The best course of action seems to be the consistent application of company policies in compliance with TRID, and full documentation & explanation of any scenarios that venture into the no-man’s-land of the gray area. If you can explain it, if it makes sense, follows the spirit of the legislation and is in the best interest of the client, then you have done due diligence. Consistency & transparency in processes are key components.
So next time you are tempted to roll your eyes at a request or directive from your compliance department, think of all the people that have suffered a job loss due to mortgage companies going out of business. Maybe that was you at one point. The hoops we are asking you to jump through are not of our making. We are just the lucky folks who get it from all sides and are doing our best to help everyone understand and implement the changes. Doing your part to actually read announcements regarding implementation at your company, and asking questions to make sure you grasp the subject matter will go a long way! A good compliance department will welcome your questions and take the time to explain the reasoning behind any new or existing policies and procedures. We realize that most people want to do things the right way, and we are truly on your side.