Gate House Strategies, a compliance firm formed in 2021 by former U.S. Department of Housing and Urban Development (HUD) deputy secretary Brian Montgomery and his partners, announced this week the launch of a new subsidiary that will offer its expertise to financial services firms seeking fair lending and other compliance management services.

The subsidiary, Gate House Compliance, will provide its services in concert with other housing and compliance experts. The subsidiary will also make use of a new partnership with CrossCheck Compliance, a regulatory compliance and risk management consulting firm.

Its service offerings include a subscription service, Gate House Compliance 365, which offers clients ongoing personalized support with compliance issues.

To get a better understanding of the new subsidiary, HousingWire sat down with the principals involved: Montgomery; civil rights attorney Paul Hancock of K&L Gates; Michael Waldron, founder and partner of Compliability Solutions LLC and former chief compliance officer at Community Loan Servicing LLC; and CrossCheck Compliance partner Michael Forrester.

Why now was the time

When asked about why this was the right time to launch a compliance subsidiary, Montgomery said that it comes down to the additional scrutiny that compliance-related issues are commanding in the current business environment.

“The heightened environment around fair lending, we see it every day,” Montgomery said, “whether it’s in settlements or just investigations from any number of government agencies.

“So, honestly, just one day it kind of dawned on me. Because we had been active with Paul, it seemed like this is an area we should really think about getting involved in.”

As a comparison, Montgomery referenced the heightened attention caused by recent high-profile cybersecurity breaches at a number of financial services institutions. These have led to cyber issues garnering more scrutiny from C-suite professionals.

“I think fair lending seems to be falling into a similar pattern,” he said. “I don’t want to say companies didn’t take it seriously, but in my experience they would conduct some fair lending reviews and compliance, but it never really made it up to the C-suite.”

Under the Biden administration, the federal government has also been increasingly serious in its fair lending posture, which serves as a reason for firms to take such issues seriously.

“Our goal as a platform, and certainly as we seek clients, is to use the opportunity to [emphasize] that there is this level of scrutiny,” Montgomery said. “And C suites and boards of directors need to be very serious about their approach to fair lending, fair servicing and other regulatory risks.”

Bringing different skills together

Hancock said that in his experience as an attorney serving in several different capacities, the government’s aggressiveness in this area necessitates additional compliance attention from financial services companies.

“What we’re seeing now is that there’s such a focus on compliance, and it’s no longer just a box issue,” Hancock said. “You can’t just say ‘we did it legally’ or ‘we did a review.’ The government agencies are really looking for the compliance to come from the very top of the institution, and they’re the ones who are going to be held liable if it isn’t done right.”

Waldron added that the differentiating factor will come from the different kinds of professionals who have been assembled in this Gate House subsidiary.

“That unique blend of talent and experiences is what we’re drawing upon to really maximize the benefit for our clients,” he said. “And so, we’ve taken the backgrounds that have functioned very well in different settings and pulled them together much in the same way that we’re looking for our clients to pull together.

“[We will take] disparate systems and perspectives and create — through our talents and our mix — a more proactive and unified approach to how companies can optimize their resources.”

Bringing these skills together also means pooling minds and talents based on the tasks at hand, rather than having a dedicated division of labor, Montgomery said.

“We think [of all our unique skills] as secret sauces,” he said. “We’re even stronger as a team, and I don’t think there’s any direct lines of demarcation as far as who’s going to do what.”

That’s exemplified in the alliance with CrossCheck, which does not have a longtime civil rights attorney or former HUD deputy secretary on its staff. But by being involved in this subsidiary, the company can add its experience in the compliance “trenches” to the expertise of the other principals, Forrester said.

“[With this group] having rolled up their sleeves and put these pieces together so well, it’s really a unique set of circumstances that we have here,” he said. “It’s a unique set of talents that we can offer to our clients.”

The subscription service

The Compliance 365 service is described as a subscription-based offering for lenders to access “a comprehensive approach for helping senior executives and board members navigate the increased scrutiny and risks they face from the array of today’s fair lending rules and regulations.”

The approach of the service is intended to be “proactive and holistic,” said Waldron, adding that it “brings together our backgrounds and talents, and it complements the resource and talent model of our client who subscribes to that service.”

Calling it a subscription service on its own does not completely encompass what it intends to offer, Waldron explained.

“What you get with 365 is a partnership with Gate House Compliance,” he said. “We take what [are] often disparate and, at times, a reactive structure at a client, and we bring a cohesiveness to that with the subscription service. You get the benefit of insights, and actionable advice and strategies that aren’t simply on a project basis.”