Key Takeaways from the California MBA Mortgage Quality and Compliance Committee’s First 2025 Webinar

QC Ally

By: Jeffrey Flory, CEO of QC Ally & CMBA’s Chair, Mortgage Quality and Compliance Committee

Last week, I had the pleasure of helping kick off California MBA’s Mortgage Quality and Compliance Committee’s first virtual webinar of the year. It was an energizing start to a series of collaborative, high-impact discussions on the evolving landscape of mortgage compliance. Our esteemed panel of experts was led in discussion by MQAC Vice-Chair and Chief Compliance Officer at Guild Mortgage, Bella Guerrero and included:

This panel brought insight and candor to the most pressing issues shaping our industry. From enforcement trends to AI regulation and fair housing, the session was packed with actionable guidance and nuanced perspectives. Below are some of the key takeaways:

Fair Lending Enforcement: A Shift in Momentum

While federal fair lending enforcement has decreased, states are stepping in to fill the gap. Rich Horn detailed recent actions by New York’s Department of Financial Services and New Jersey’s investigations into discriminatory practices. Importantly, states are leaning into disparate impact claims and alternative data sources beyond HMDA to pursue fair lending violations.

Josh Weinberg also noted the increasing friction between current administrative priorities and longstanding legal frameworks. As Bella Dominguez pointed out during the session, enforcement theory is shifting from gatekeeping during application processes to broader, data-informed interpretations of bias.

Lessons from the Townstone Case

One particularly illuminating discussion centered on the CFPB’s settlement with Townstone Financial. Despite limited evidence of intent to discriminate, the Bureau pursued the case due to the nature of Townstone’s radio advertising — an approach many saw as controversial. Ultimately, the case settled for a minimal amount and was later vacated, raising questions about the CFPB’s strategy and evidentiary standards.

For lenders, the takeaway is clear: Compliance risk isn’t always about policy. It can also stem from marketing tone, messaging, and perception.

Regulatory Practices: Documentation Is Defense

The panel emphasized the importance of maintaining rigorous, consistent compliance processes regardless of the political environment. Chelsea Binder noted that while Deephaven hasn’t made major changes to its operations, it prioritizes detailed documentation to prepare for future exams.

Anna Boone shared how Zillow proactively builds compliance into its DNA through internal policies, training, and robust marketing reviews. As I mentioned during the discussion, the statute of limitations on ECOA violations is long, and that means today’s decisions could be scrutinized years down the line.

AI in Lending: Promise Meets Accountability

AI is rapidly reshaping mortgage workflows, but it brings a unique set of regulatory questions. Zillow, for example, developed a fair housing classifier to assess algorithmic impact and made it open source to promote industry transparency.

Panelists agreed: AI must be built on a foundation of fair housing principles, not used as a way around them. Even good intentions like reaching diverse audiences through targeted ads can open the door to scrutiny if not backed by sound legal and ethical practices.

California’s Regulatory Wave

California continues to lead the way in shaping national regulatory trends. Josh Weinberg updated us on two proposed AI bills (AB 1018 and SB 420) and one (AB 801) that would apply CRA obligations to independent mortgage banks. These bills raise real concerns about compliance burden and unintended consequences, especially for lending in underserved communities.

We strongly encouraged participants to get involved in advocacy efforts, including the Mortgage Action Alliance and California MBA’s Legislative Committee. As always, participation shapes policy.

Private Listings and Fair Housing

Private listing networks, once seen as neutral, are now raising red flags for fair housing compliance. Anna Boone explained how these networks can limit housing access for communities of color, and Richard Horn noted the potential legal exposure for lenders who partner with agencies using exclusionary listing practices.

The consensus? Monitor your data, know your partners, and stay proactive. Fair housing isn’t just about what you do — it’s about what your ecosystem enables.

Final Thoughts

These conversations help keep us sharp, collaborative, and forward-thinking. Whether it’s navigating state-by-state regulation, integrating AI responsibly, or fostering inclusive lending practices, the mortgage industry has both challenges and opportunities ahead.

I’m proud to be part of a committee that’s not just tracking trends but helping shape them and even prouder of the way our community continues to show up, ask the hard questions, and support each other.