Industry · 04/05
Non-bank lenders & specialty finance.
Mortgage, consumer, and commercial credit issuers. State-licensed, CFPB-supervised, capital-markets-funded.
Mortgage, consumer, and commercial credit issuers. State-licensed, CFPB-supervised, capital-markets-funded.
A non-bank lender has bank-level scrutiny without bank-level infrastructure.
Non-bank lenders — independent mortgage banks, consumer finance companies, commercial specialty lenders, BNPL platforms — operate under a regulatory architecture that does not look like a bank's but produces similar pressure: state-by-state licensing (and the multi-state examination network through the MMC), CFPB supervisory authority for the larger institutions, capital-market funding with covenants that imply control-environment expectations, and warehouse-line providers that require operational reps.
Our practice for this sector covers the work that does not have a natural home in a non-bank lender's organizational chart: internal audit functions that did not exist five years ago, model validation for credit and pricing models that were built by the founders, SOX programs for the issuers that are now public, and a particular focus on consumer-compliance posture for institutions whose product surface area is what the CFPB looks at first.
Funding-source diligence is the multiplier. A warehouse renewal request that includes operational reps is a separate audit cycle on its own. We help institutions get to a place where those reps are not a fire drill.
An independent mortgage bank with $4.7B in annual originations had grown to the point where its three primary warehouse lenders were requesting operational reps that the institution could not credibly sign. The CFO engaged us to build a first internal-audit function — risk assessment, an audit plan calibrated to the warehouse reps, and the first three audits of the cycle. Andres led; the function has continued in steady state for two years.