It did not take long after the Silicon Valley Bank failure for politicians in Washington to rush to the next available microphone and lament the “loosening of bank regulations”. Instinctively the finger pointing began, and in many quarters ended up in the direction of the prior administration’s policy to generally roll back stringent business regulations and allow free market decisions to govern various industries. Chief among the complainants (no pun intended) was Sen Elizabeth Warren, who emerged out of the 2008 crisis as an architect and advocate for the Wall Street Reform Act and the creation of the vaunted Consumer Financial Protection Bureau ( CFPB), which she briefly directed. Just yesterday in DC’s The Hill publication, Sen Warren was reported as blaming the the collapse of Silicon Valley Bank on Republicans in Congress, which in 2018 helped pass a law to ease bank regulations put in place following the 2008 financial crisis. “No one should be mistaken about what unfolded over the past few days in the U.S. banking system: These recent bank failures are the direct result of leaders in Washington weakening the financial rules,” Warren is quoted as saying. According to The Hill piece, Warren, who voted against the 2018 bank deregulation bill, said that the crises would have been avoided if the banks were required to hold more liquid assets because the bill exempted banks with less than $250 billion in assets from rigorous Fed stress tests. Warren and other Democrats say the old rules could have caught the issues at SVB sooner. Given that politicians generally “never let a crisis go to waste,” many now suspect that the banking industry is about to be slammed with heightened regulatory scrutiny, tighter operational rules, more audits and exams, and larger and very public fines, penalties and consent orders. What does this mean for independent mortgage bankers (IMBs)? It means that they have to get back to the compliance mindset they were frightened into adopting between 2008 and 2018, and before the bottoming out of interest rates led everyone to believe that easy money was here to stay and that self-regulation meant hiring more loan officers. Keep those risk management officers and compliance directors close by folks, we are all in for a bumpy ride on the regulatory
Industry publications are reporting that after a period of research and review the US Treasury Department is encouraging lenders and states to pursue e-closing and e-notarization technology to make residential mortgage transactions more convenient for consumers.
The American Land Title Association (ALTA) also released a statement today indicating that its leadership recently met with Treasury officials to assist them in their evaluation of e-closing technology and its impact on consumers.
The focus of regulators has been on data integrity and security, document formatting and recordability, identity protection, and anti-fraud measures to ensure the closing process is not corrupted by users of the new technology.
Industry leaders such as DocMagic have been slowly gaining market penetration with e-closing software but the learning curve has been steep for some lenders and closing professionals. Many professionals have heard of it but few have actually conducted an e-closing or supervised an e-notarization.
There is no doubt however that e-closings and e-notarization are a big part of the future growth of the mortgage lending industry.