With federal oversight shifting under the current administration, some mortgage lenders may feel less pressure to prioritize compliance and loan quality. But, according to industry experts Amanda Phillips, General Counsel and EVP of Compliance at ACES Quality Management, and Richard J. Andreano, Jr., Practice Leader of the Mortgage Banking Group at Ballard Spahr LLP, loosening internal controls now could have long-term consequences. In this Q&A, they share why lenders should remain vigilant — and how technology can support that effort.
HousingWire: With the Consumer Financial Protection Bureau (CFPB) facing potential reforms and federal oversight seemingly in flux, what’s the risk in letting compliance efforts slide?
Rich Andreano: While the regulatory tone may be shifting in Washington, lenders shouldn’t assume that means it’s safe to take their foot off the gas. First, many federal laws, like the Truth in Lending Act (TILA) and Equal Credit Opportunity Act (ECOA), allow for private rights of action and extended statutes of limitations. So even if the CFPB isn’t aggressively enforcing today, borrowers can still bring claims, and a future administration could look back years to scrutinize loan activity.
Amanda Phillips: That’s why it’s critical to stay the course. The cost of rebuilding a weakened compliance program far outweighs any short-term savings. Even during the last Trump administration when the CFPB was seen as less active, enforcement didn’t disappear. It just shifted. States stepped up, and we expect to see that again.
HW: Speaking of the states, what role are they and investors playing in filling potential regulatory gaps?
Andreano: State regulators are already signaling plans to increase oversight. For example, the New York Department of Financial Services just brought on a former CFPB deputy enforcement director. We’re seeing a reversal from when the CFPB was first created and pulled talent from the states. Now, it’s the states hiring federal expertise.
Investors are also paying close attention. They are more focused on technical compliance. That includes defects that might affect enforceability, assignee liability or loan performance. And they can be extremely strict—even minor formatting issues in disclosures have triggered concerns. It is important to know the position that your investors take on compliance matters, particularly ones where there are differences of opinion in the industry.
Phillips: That investor scrutiny extends beyond regulatory compliance to guideline issues like occupancy fraud. If a borrower claims they’ll occupy a property but immediately lists it for rent, that can affect loan performance. Investors are watching these types of “small c” compliance issues closely because they ultimately impact risk.
HW: Regardless of what’s happening at the federal level, what are some best practices for maintaining strong internal controls?
Andreano: It starts with robust policies and procedures. That means documenting how your institution complies with laws and regulations, training staff, auditing for adherence and updating processes when issues arise. Just as important is maintaining thorough records of each of those steps. Regulators want to see not only that you’ve taken action, but also how you made decisions, when you made them and why. If there’s no documentation, it’s as if it never happened. That paper trail is essential to demonstrating your commitment to compliance and mitigating potential enforcement risk.
Phillips: Compliance isn’t a “set it and forget it” function. It’s a continuous cycle: monitor, test, identify issues, fix them, train staff and start again. It’s not glamorous, but that process is what protects lenders when scrutiny does come.
HW: How can technology help lenders manage compliance, especially in a fast-moving regulatory landscape?
Andreano: Regardless of how enforcement priorities may shift, a robust compliance management system (CMS) remains essential. And that’s not just a best practice. It’s a regulatory expectation. Under the Federal Financial Institutions Examination Council (FFIEC) framework, an effective CMS is built on comprehensive policies and procedures, training, monitoring and independent review. Those elements are non-negotiable. A CMS is your first line of defense against regulatory scrutiny, reputational risk and operational missteps. And while it’s possible to implement those controls manually, it becomes exponentially more effective and scalable with the right technology.
Phillips: That’s exactly where tools like ACES can provide tremendous value. For instance, our ACES Managed Questionnaires offer a curated library of exam readiness checklists and compliance testing templates aligned with federal and state requirements. These are especially helpful for lenders trying to keep up with evolving expectations from agencies, regulators and investors.
Another feature we’ve introduced is ACES PROTECT, a configurable compliance testing module designed to automate rule-based audit reviews. It comes pre-loaded with test plans for high-risk regulations like TRID, ECOA and TILA and is updated regularly to reflect regulatory changes. It’s a way for lenders to stay audit-ready without having to build everything from scratch. Combined with our free Compliance NewsHub, which aggregates the latest regulatory developments, these tools help lenders monitor changes, adapt processes quickly and ensure nothing falls through the cracks.
Technology doesn’t replace the need for strong compliance leadership, but it does help ensure that no matter how the landscape evolves, lenders are equipped to respond.
HW: What other regulatory issues should lenders be watching, regardless of where the CFPB lands?
Phillips: Servicing rules are one area where we could see significant change. The industry has been asking for more streamlined loss mitigation policies, but the CFPB’s proposed rule was widely viewed as overly complex and burdensome. There’s bipartisan interest in getting this right, so we expect to see revisions.
Andreano: Appraisal independence is another hot topic. HUD is facing legal challenges for its stance on appraisal bias, which some argue conflicts with longstanding independence rules. Lenders are being asked to police appraisers while also maintaining arms-length separation, which puts them in a tough spot. It’s an area where regulatory clarity is badly needed.
HUD did take a step back in this area with Mortgagee Letter 2025-08 that rescinded guidance issued during the Biden Administration on appraisal review and reconsideration of value with FHA loans. We will have to see if HUD takes additional steps in this area.
In general, while some proposed rules may stall or disappear under the current administration, others could return in revised form. Lenders need to be prepared to pivot quickly if and when that happens.
Richard Andreano and Amanda Phillips will be presenting on May 19 and 20 at the ACES ENGAGE Conference in Colorado Springs, Colo.
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