THOUGHT LEADER

Thought Leader

7 Social Media Risk Management Practices for Mortgage Lenders

As the stay-at-home era extends into 2021, home buying continues to see steady growth. According to Forbes, Zillow expects 6.9 million existing home sales this year — the highest since 2005.

One of the factors driving the surge in real estate sales is social media. The combination of time at home, popular hashtags like #dreamhome and #mortgage, and social-media-savvy millennials and Gen Z entering the homebuying market in record numbers makes social media a prime venue for marketing mortgage services.

Social media platforms are a great way to connect with the next generation of homeowners, but public communications invite regulatory or legal scrutiny. In keeping with the Mortgage Acts and Practices (MAP) Advertising Rules, companies selling mortgage products or services are required to keep records of marketing communications for compliance.

If you are using social media for marketing your products or services, now is a good time to revisit your social media risk management practices to avoid legal, regulatory or reputational risk.

1) Form a governance structure. Companies need clear social media roles and responsibilities. Leadership should decide how social media will contribute to strategic business goals, and then create controls and perform regular risk assessments. Without this structure social media can become misaligned with corporate strategies.

2) Develop social media use policies and procedures. Mortgage lenders should establish social media processes and communication policies to protect against non-compliance with consumer protection laws and regulations. Policies should address what employees are, and are not, allowed to communicate in their official capacity. Without this, your company may be exposed to legal and compliance risks.

3) Know the platforms you’re using. Perform due diligence prior to engaging with any social media platform to be aware of company’s reputation and risk management policies. Without this, your company might be made vulnerable to operational risks like theft of consumer information resulting from a social media provider’s compromised IT infrastructure.

4) Establish and maintain an employee training program. Social media training needs to be provided to all employees who use social media on behalf of your company. Establish a code of conduct. Without a formal and documented training program, your organization can be exposed to various legal, compliance and reputational risks from misuse of social media.

5) Monitor social media use. Archiving and oversight of the content posted to your company’s social media channels is required to ensure social media content reflects internal policies and industry regulations. Without this, reputational damage can result based on fraud, misrepresentation of your brand, mismanagement of consumer comments, and other compliance and legal risks.

6) Have strong social media audit and compliance functions. To ensure ongoing compliance with laws, regulations and your corporate internal policies, involve your compliance or audit team to identify and mitigate social media risks. Make sure your social media practices continue to comply with evolving laws and regulations. Without these functions, your company can be vulnerable to compliance and legal risks.

7) Report on and oversee your social media risk management program. Leadership must actively supervise the risk program and have access to reporting to determine if social media initiatives are meeting company objectives. Without this, you won’t be able to ensure that corporate, legal and reputational goals are met.

Smarsh provides electronic communications archiving and monitoring solutions for financial services organizations. Visit Smarsh.com to learn more.