Mortgage compliance challenges affect 60% of lenders

Amid a new administration and new lending rules entering the arena, 60% of organizations say they are struggling to keep systems aligned with evolving federal and state rules.

That’s according to new survey findings from Carleton, a provider of compliant loan calculation and disclosure solutions. The company evaluated the extent to which lenders face ongoing compliance risks, loan calculation inaccuracies and regulatory change management challenges.

A survey of more than 2,000 lending, banking, auto finance and fintech professionals — including mortgage technology providers, originators, banks and credit unions — found that two-thirds of organizations face loan payment discrepancies on at least a monthly basis — often due to miscalculated fees, interest rate errors or data entry mistakes.

Nearly half of respondents said compliance problems like inaccurate APRs or outdated disclosures had already led to rework, audit issues or legal risk, while 44% reported low confidence in their current systems.

“There was really, really poor confidence in everybody’s existing systems to actually do things the right way, which is shocking,” Tim Yalich, vice president of business development at Carleton, said in an interview with HousingWire. “There clearly is a tremendous amount of struggle to manage change.”

Across all respondents, regulatory change management remains a major challenge, with only one-third reporting that they can adapt within a month. Nearly one-quarter take three months or more, citing complex regulations, loan calculation updates and vendor coordination as top hurdles.

Complex loan structures add to the strain as 31% said tiered rates and variable payments cause frequent errors and delays. Another 17% called them a constant problem while only 14% felt their tools handle these scenarios well.

Compliance updates also drain efficiency. Over one-quarter require cross-functional coordination, while respondents named compliance risk (26%), deal delays (25%) and regulatory complexity (19%) as their top frustrations. Manual paperwork and a persistent reliance on spreadsheets were also flagged as productivity and compliance risks.

“I was blown away by how much manual work and the reliance on spreadsheets is out there to do computations,” Yalich said, adding that he’s concerned about the high frequency of errors and the prevalence of manual processes in the lending and compliance industries.

“This survey shines a light on just how much effort lenders continue to put into getting calculations and disclosures right,” Yalich said in the company’s press release. “When confidence in systems is low and errors remain frequent, it signals a broader industry problem — one that demands better integration, automation, and proactive compliance monitoring.”

Singling out the mortgage data

Of the survey respondents, 11.8% were from an organization representing loan management system (LMS) vendors, 11.3% represented loan origination system (LOS) vendors and 11.8% represented mortgage originators.

When parsing out the mortgage participants in the survey, the trend remains the same: regulatory churn is top of mind and disruptive. Fifty-three percent of respondents said they face regulatory changes “frequently (monthly or more),” and 72% said their organizations struggle to keep up with regulatory change management for internal tools.

That pressure translates into lengthy implementation timelines. About 35% said implementing new compliance requirements takes one to three months, while 29% reported it takes three to six months.

Calculation errors and compliance fallout are also common. Nearly two‑thirds (64%) said compliance‑related issues have led to rework, legal exposure, audit findings or customer complaints either regularly or occasionally.

As a result, 39% reported encountering discrepancies in loan payment calculations multiple times per week, and another 31% said they encounter them weekly.

Respondents pointed to miscalculation of fees (26.7%), software or calculator issues (25.3%), and incorrect interest rate or APR applications (20%) as the most common causes of calculation errors.

To mitigate risk, 51% said they are “very interested” in a third‑party centralized API loan calculation engine; when combined with other positive responses, the majority expressed interest in such services. Likewise, 78% indicated they are likely or very likely to consider a third‑party document generation solution to accompany calculation tools.