MBA members endorsing these “Best Practices” agree to conduct their business according to standards outlined below. These standards are meant to serve as guidelines by which our members will meet their business goals and objectives while providing fair and equitable treatment to consumers. To ensure compliance, members who adopt these best practices also agree to annual self-certifications with verification by credible independent third parties.
I. General Standards of Conduct
Members will establish internal policies and procedures designed to provide senior management with a method to assess compliance with best practices, while also providing a prompt feedback mechanism. Upon discovery, members will take appropriate and immediate actions to rectify any problems, failures to comply, or deficiencies.
Members will comply with all applicable state and federal laws and regulations, including, but not limited to:
- The Equal Credit Opportunity Act
- The Fair Housing Act
- The Fair Credit Reporting Act
- The Truth in Lending Act
- The Real Estate Settlement Procedures Act
Members will establish and support professional training on fair lending laws for all operational areas of the company. Operational areas will include origination, servicing, information technology, and internal control departmental policies and procedures, and internal control departments within the company. Training will consist of company operating policies and procedures, departmental policies and procedures, and internal/external computer system(s) training, as applicable. Additionally, members will communicate and support company training procedures and guidelines to brokers, correspondents, vendors, and other parties with whom the company conducts business.
Equitable Treatment Members shall maintain a work environment that encourages compliance with these fair lending and consumer best practices that facilitates the fair and suitable treatment of consumers. Members will establish procedures and a corrective feedback mechanism designed to identify, and, if necessary, address issues of equitable consumer treatment. Consumers will be treated fairly by each member regardless of race, color, gender, marital status, familial status, immigration status, sexual orientation, religion, disability, or national origin.
Members will encourage every employee to report to senior management violations of these best practices and/or questionable activities in accordance with company procedures. In addition, no employee will be subject to disciplinary or retaliatory action for a good faith reporting of a suspected violation of these guidelines.
II. Internal/External Review
(Quality Control, Data, Integrity, and Due Diligence)
Members will review, on a periodic basis, random samples of loan files to determine compliance with Best Practices guidelines. Additionally, members will determine (via a review process) compliance with these guidelines at each department level within the company. Members recommend the use of techniques such as “mystery shopping,” post-application customer interviews, and other appropriate measurement tools to assist in the compliance evaluation and enforcement process. Members shall support their internal review process either internally or through third parties for all origination processes.
III. Operational Standards
(Origination: Marketing, Underwriting and Closing)
Loan products shall be provided to consumers in a non-discriminatory manner. Members that adopt and apply a “risk based” loan pricing policy must assure that it does not discriminate on a prohibited basis against any consumer. Borrowers should be offered loan options commensurate with their qualifications, and such options and their costs should be clearly explained. If members offer loans with and without prepayment penalties, borrowers should be advised of both products and the benefits associated with each product – with an emphasis on financial benefit.
Advertising and Marketing
Members will create and/or review all advertising and marketing materials to assure compliance with federal, state, and local law. Advertise product mix in all areas in which business is contemplated. Clearly identify exclusions, limitations, and conditions in all advertising and marketing materials.
Members shall provide prospective borrowers during the loan application process with information and materials explaining the benefits, obligations, and risks of borrowing against one’s home. As applicable, members shall support branch/correspondent activities by providing said information and materials.
Members shall support properly sanctioned consumer counseling services programs by advising applicants of the availability of the toll-free number of counseling services in their locale.
Appraisal and Valuations
Members shall establish and implement policies and procedures regarding the appraisal or valuation of properties securing loans to the consumer. Included in such policies and procedures are provisions for appraiser approval and acceptable valuation data and data sources.
IV. Servicing Standards
(Servicing, Collections, and Loss Mitigation)
Members shall maintain reasonable and ethical payment receipt and processing practices. Provisions for handling of cash payments (bonding requirements), clearing of checks, application priority (“spread”) of payments, and the handling of unapplied monies shall be governed by the loan terms, applicable law, and by industry practices.
Members shall establish and disclose reasonable ethical debt collection practices in accordance with applicable law. Identify appropriate telephonic and written correspondence methods and timing requirements, assess collector account caseload tolerances, provide appropriate system support, and enlist vendors/services to round out the collection capability as applicable. Provide training with regard to treating delinquent borrowers in a respectful, business like manner. Monitor delinquent accounts in an effort to minimize serious defaults. Provide information for collectors to discuss alternative borrower payment resources to prevent/reduce delinquency (e.g., 401K).
Members shall establish and implement policies and procedures regarding the handling and treatment of the borrower. Provide training for personnel in the handling of borrower information requests (i.e., 1098s, escrow data, and interest rate adjustments), disputes, and complaints. Follow-up on all such activities promptly and in good faith to obtain a resolution and borrower satisfaction.
Members shall establish and implement policies and procedures regarding delinquent borrowers. Members shall provide training to all appropriate staff regarding the use of loss mitigation techniques. Member management and staff will seek to help borrowers to return to a current status. Obtain all available borrower information updates to perform file reviews and assess loss mitigation opportunities. Provide all notices to the borrower on a timely basis. Advise of third party counseling services to assist in the borrower’s default management process.
Reporting to Credit Bureaus
Members shall report favorable and unfavorable credit information on consumers to nationally recognized consumer credit reporting agencies on a monthly basis.