In the years following the mortgage crisis, many lenders –particularly small and mid-size financial institutions andoriginators – have had difficulty keeping up with the changingregulatory landscape.

Regulatory compliance continues to be an increasing concern forthe industry, with analysts expecting compliance-related spendingto be a priority for financial institutions this year. But theindustry hurdles will not only be maintaining compliance, but alsoincreasing and retaining membership.

While credit unions have collectively increased assets by morethan 30% over the past five years, focus on their core business maybe at risk as the financial burden and focus of added resourcesneeded to remain compliant threaten to interfere with continuedgrowth.

Many larger institutions are fairly well equipped to handleadded compliance guidelines, but smaller, community institutionswill likely face complex issues in managing efficient compliancemanagement within their organizations throughout 2013 and beyond.Hiring more staff, however, is not always the answer.

Credit unions can find their solution in outsourcing compliancefunctions to an experienced team, reducing the high costs andburden of managing internally. In doing so, credit unions canbetter focus on driving member satisfaction and loyalty while aseparate team focus on its core competency of staying abreast ofregulatory changes.

The Consumer Financial Protection Bureau, for example, hasintroduced significant rule changes in an effort to protectconsumers from abusive lending practices. While these well-intendedrules establish guardrails for a post-crisis lending era, failureto maintain compliance with these guidelines can stall growth,undermine acquisition plans, hinder profitability and even damage acredit union's reputation.

In order to adhere to regulatory guidelines and avoid penalties– up to $5,000 per day for a violation, $25,000 for a knownviolation and $1 million for a reckless violation – credit unionsshould consider leveraging an outsourced mock audit solution toconduct a “dry run” of a CFPB audit to discover and cure potentialviolations prior to the actual regulatory review.

But outsourcing is not the cure-all. Credit unions should alsoleverage modern technology and Web-based loan origination software,gaining access to complete functionality from point-of-sale toclosing and delivery of loans to the secondary market. By utilizingWeb application technology, credit unions can not only seamlesslyprocess mortgages anywhere, anytime, but benefit by empoweringstaff to be more efficient; significantly minimizing IT overheadand costs; streamlining system maintenance and support; andenhancing member service.

With additional regulatory changes undoubtedly on the horizon,credit unions should also invest in technology that allows forcustomization to effectively and efficiently manage ongoingmaintenance.

Credit unions originated a record amount of loans in 2012, withmore than $330 billion nationwide. The lending landscape isbeginning to slow down and transition from a refinance to purchasemarket. To effectively handle this increase in loan production,credit unions should consider implementing a multi-tierarchitecture to scale operations, which addresses staffingvariability.

A case in point – a small community financial institutionrecently increased volume output without expanding internalresources, generating an average of $8 million a month in loanproduction.

The institution's process began with the loan officer, whooriginated the loan and obtained the credit report and borrowerdocuments. The institution then leveraged an outsourced team ofexperts to support and speed up the document review process,performing nightly checks of pending loan applications andverifying documents for accuracy and compliance. The financialinstitution monitored the process by viewing dashboard stylereporting.

As a result, the institution increased production by taking amanufacturing approach in which loans were underwritten and closedusing a compartmentalization process, similar to cars on anassembly line. The flexibility and scalability of Web-basedtechnology allowed the institution to close loans in as little as15 days. Now, its average monthly sales have reached more than $8million and continue to increase, expecting to hit $20 million permonth by the end of 2013 – all while improving membersatisfaction.

The community institution also realized significant costsavings. The average cost to originate a typical loan increased in2012 to $5,163, which includes the total loan production expenses,including commissions, compensation, occupancy and equipment, andother production expenses and corporate allocations. As anindustry, leveraging technology and partnering with an experiencedmortgage team has the potential to save nearly $905 million inproduction costs each year, based on 2012 home sales.

As the government promises to further tighten regulatoryguidelines and the industry returns to a purchase market, manysmall, community financial institutions are asking themselves howto efficiently manage increases in loan production cost-effectivelyand without adding temporary staff – all while maintaining superiormember satisfaction.

When credit unions focus on their core competencies andoutsource other business operations like compliance and componentprocesses, they are ultimately able to better navigate the changingregulatory landscape, increase lending and improve memberservice.

Lisa M. Weaver issenior vice president of mortgage solutions for ISGN in Palm Bay, Fla.