A bank has a large mortgage department as well as a high HMDA error rate. An expensive software program could automate the process, but the business unit manager does not want to purchase the software because of its expense. Though it is not as efficient, the manager prefers to make some improvements to the manual process, add some more robust monitoring procedures, and opt not to purchase the software. What should the compliance professional do?
In a situation where a bank's mortgage department has a high HMDA error rate, and the proposed manual improvements and monitoring are not considered sufficient to mitigate the risks, the compliance professional should elevate the issue to higher authority. The compliance professional's responsibility is to ensure that regulatory compliance and effective risk management practices are in place. If the manual processes are not adequately addressing the risk, relying solely on documentation of the business unit's acceptance of risk is insufficient. Proper action to mitigate risk, such as the implementation of the software, should be enforced if the risk is substantial.
C. Document the fact that the level of risk present with manual systems is acceptable to the mortgage department business unit. As a compliance professional, it's important to document decisions and assessments made by the business units, even if they are not in alignment with the most efficient or risk-mitigating solutions. This ensures transparency and accountability within the organization. However, it's also essential to continue monitoring the situation and provide guidance if risks escalate or circumstances change. Elevating the issue to higher authority or writing a memo to the president of the bank should only be considered if there are significant regulatory or risk concerns that cannot be adequately addressed through the chosen approach.