Millions of parents around the nation will be sending their ex-high school seniors off to college this autumn. And what better thing to teach them is how to fold a t-shirt in 5 seconds. (No matter how many times I've seen this, I still can't do it...)

Compliance

Compliance officers are supposed to keep banks, lenders, hedge funds, etc., out of trouble. And yes, often that means telling the owner or CEO that they have to follow the rules, which might mean that they make less money. What happens when compliance officers don't do their job correctly? We read about some lawsuit, some settlement, some penalty. And so compliance folks live in fear of missing something. What is a good day? Not missing something, or misinterpreting a regulation.

Of course compliance departments rose up primarily during the Obama Adminstration, which required companies to have internal watchdogs. What about the Trump Adminstration? What does, "We're going to do a big number on Dodd-Frank" mean? The tone has certainly changed, and that change filters down to lenders' compliance departments. But regulations help promote ethical behavior. It is important to be compliant. And until rules change, taking liberties with them is not a successful long-term strategy.

Ken Perry, President & Founder of The Knowledge Coop, observes, "I read every case I can get my hands on and spend quite a bit of time analyzing the activities of the regulators. I want to know why they do things, what they are thinking, and where they are going. If you read the DOJ false claims acts cases, the state enforcement actions through the MMC, and the constant CFPB press releases and enforcement actions you will notice a major trend in their work. They are shifting away from, 'Did you do it?' to 'Why did you do it?' Everything flows back to the compliance management system. What was your policy? How did you communicate that policy? How did you monitor for compliance? What was your plan for success?

"I spoke for a whole day to 85 state regulators at regulator school in Kentucky and I thought it would be fun to ask how many examiners in the room had seen a company using a policy that was a template and hadn't been updated for the company. They all raised their hands. I asked if they had seen policies with another company's name on it and many had. That's a huge problem they are finding, and it shows the company hasn't focused at all on doing it right, because they haven't even defined 'right.'

"Our highest recommendation right now is for companies look at what their policies say and how they train on those policies. Template training without any customization is a recipe for disaster, and the regulators are figuring that out! It's time to get the executives and/or board together to document a plan for compliance success. Hand that to your regulator along with proof of company specific policies and training and watch them smile!"

The Consumer Financial Protection Bureau has certainly been busy. It published a blog post of the country's top 5 financial services complaints. Interestingly, the top mortgage complaint was being unable to pay the monthly payment. These complaints probably range from being unable to access resources the mortgage servicer has available to not knowing what to do when you realize you'll miss a payment. Jeremy Potter asks, "What's the appropriate amount of responsibility on the consumer, on the servicer and on the mortgage origination company/organization that made the loan (may or may not still be the servicer)?"

The CFPB also finalized updates to its "Know Before You Owe" mortgage disclosure rule with amendments that are intended to formalize guidance in the rule, and provide greater clarity and certainty. The changes will facilitate implementation of the Know Before You Owe rule by the mortgage industry. The CFPB is also releasing a limited follow-up proposal to address an additional implementation issue. 

Let's not forget the CFPB's new rule banning financial companies from using arbitration clauses to restrict consumers' right to file class-action lawsuits. In its rule, the CFPB noted its authority does not extend to broker-dealers, investment advisers and other SEC-regulated entities. This new rule makes it easier for class-action suits against lenders. Financial firms will be restricted in their ability to use mandatory arbitration clauses to protect themselves against lawsuits. Under the Congressional Review Act, Congress has 60 days to overturn the new rule. The OCC has asked the CFPB for their data, and Republican Jeb Hensarling has already come out against it.

But it isn't as if some thought and research didn't go into it. The Rule is a product of the CFPB's rulemaking process, which received more than 110,000 comments on its May 2016 proposed arbitration rule, and the CFPB's March 2015 Arbitration Study. But it certainly caught the attention of the industry since it prohibits the use of mandatory pre-dispute arbitration clauses in certain contracts for consumer financial products and services. The Rule has the potential to profoundly impact the way disputes concerning consumer financial products and services are resolved. Law firm Buckley Sandler did a write up of it: Click here to read full special alert.

What do lawyers think of it? The headline says it all.

Bond Markets

Agency mortgage-backed securities tagged along Tuesday with U.S. Treasuries higher in a curve-steepening move as Fed Governor Brainard said that the Fed may not have much more hiking to do to get policy rates to a neutral stance. And we had a decent $24 billion 3-year Treasury auction. The 10-year note, 5-year note, and agency MBS prices all improved a few ticks (32nds).

Today we've already had last week's read on residential mortgage applications. Yes, there was a holiday, but a drop of 7.4% is noticeable. (Refis were -13%, purchases -2.5%.)  Fed Chair Yellen (voter, dove) will appear before the House Financial Services Committee when she delivers her semi-annual monetary policy testimony. Her prepared comments with be released at 8:30AM ET with her testimony and subsequent Q&A beginning at 10AM ET. We also have a $20 billion 10-year note auction, and the release of the Beige Book which the FOMC uses to gauge economic activity around the U.S. To start the day, we find rates slightly better than last night with the 10-year, which closed Tuesday yielding 2.36%, at 2.34% and agency MBS prices better by almost .125.

Company News

Home Point Financial Corporation announced that Chad Patton has been named Executive Managing Director-Chief Strategy Officer focusing on funding and capital planning, business intelligence and strategic initiatives. Home Point recently announced the expansion of its Third-Party Origination (TPO) channel following the acquisition of Stonegate Mortgage Corporation. "This new structure will allow Home Point to increase its wholesale client base by expanding the geographic reach and number of third party originators the channel will serve. Lisa Patterson, Executive Managing Director - TPO Production, will continue to lead Home Point's TPO channel and report to Chief Production Officer Brian Brizard."

United Wholesale Mortgage (UWM) set a new milestone last month, as it closed more than 10,000 loans in the month of June. "The mark is an all-time monthly production record for UWM, as it also recently announced plans to move into a new 600,000-square-foot headquarters in the summer of 2018. The move will support UWM's rapid growth, as it has expanded from 400 team members to 2,100 since 2010." In 2016, UWM set a company record with $23 billion in loan volume, and is on pace to surpass $30 billion in 2017.

The U.S. Department of Housing and Urban Development announced that the Department's Mortgagee Review Board (MRB) is immediately suspending Pennsylvania-based mortgage lender Seckel Capital, LLC from originating and underwriting new mortgages insured by the Federal Housing Administration (FHA). "In addition, HUD's Departmental Enforcement Center suspended owner John Seckel from doing business with the Federal government" because of an investigation by HUD into the financial practices of Seckel and his company, based in Newtown, Pennsylvania. "Specifically, that Seckel knowingly and fraudulently submitted false financial statements to the government certifying there were audited by an independent accounting firm when, in fact, they were not. HUD found that Seckel Capital and John Seckel engaged in a years-long pattern of submitting false financial statement to FHA, representing them as properly audited by independent certified public accountants. Read more about HUD's Mortgagee Review Board.

Jobs, Products, and Personnel

Planet Home Lending, LLC's correspondent division is now offering the following products to meet the needs of its fast-growing customer base: 203k, FHA manufactured housing, and FHA sponsorship for banks and credit unions. For more info, visit www.phlcorrespondent.com, contact your regional sales manager, or contact Jim Loving, Director of National Sales, at 414-270-0027. In addition, Planet's correspondent division welcomes Kat Cunningham as NW Regional Sales Manager where she will use her extensive correspondent experience to serve customers in San Francisco North, AK, ID, MT, OR, WA, and WY.

The Wholesale division of Finance of America Mortgage, which was ranked #8 for wholesale lenders by volume by Scotsman Guide, is expanding its team of top producing Account Executives across the country. Expansion into new markets offers new AEs access to open territories with no account overlap or internal competition. FAM Wholesale AEs have access to a diverse suite of products including Renovation, Commercial (Fix & Flip, Investor Line of Credit) HELOC product and Non-Delegated Correspondent. FAM Wholesale offers a consistent, competitive pricing model along with customer-centric operations centers. To learn more, visit Elevate your Career  or contact Brady Shepard at 317-727-9493 or email Brady Shepard.

In job news, I am happy to share an update on US Mortgage Corporation, a National IMB client I am working with that is making 2017 all about Expansion, Investing, and Giving Back. So far management has successfully opened an additional 4 branches in 3 states (SC, FL, CA) since we started our relationship. I am happy to say they are committed to opening new offices in any state as per your request. Whether you are an Area, Branch or Sales Manager, or an Originator looking to step up; I encourage you to reach out to them. This Bank is eager to chat with you and learn more about what you want and need to make 2017 an even more successful year, and is looking to connect with individuals and teams that understand the importance of giving back to a local charitable organization within the community. Management has the infrastructure to support you with Marketing, Technology, Business Development and More. Please send all inquiries directly to Scott Milner, Bank President.

"Continuing its aggressive expansion efforts in California, Academy Mortgage is pleased to welcome Patrick Dudum as Area Manager in Santa Clara County. Patrick comes to Academy with over 14 years of retail mortgage management experience and has a proven track record of building and growing production in his marketplace, and demonstrates a high level of integrity and professionalism in his career, always supporting his teams, clients and referral partners. In his new role, he will be recruiting branch managers, loan officers and operations personnel. Patrick will be reporting to Leif Boyd, Regional Manager for California/Nevada. Academy is excited about the opportunity to grow with a proven leader. Please reach out to Pat (408.499.4348) if you would like to join the Academy team!"

Are you tired of your LOS dictating your company's loan processes and roles within workflows? If so, you should consider Path®, the first fully-configurable LOS designed for your workflow, not the other way around. Path is the hottest, truly multi-channel LOS on the market utilizing the latest cloud-based technology to provide role-based functionality designed to improve your specific processes in all channels - wholesale, retail and correspondent. With an advanced data-driven platform, you can quickly and easily increase efficiencies and transparency, ensure data integrity, mitigate risk, and improve loan origination process management. Path transforms the way mortgages are originated from beginning to end. Learn more about Path here.

"DocProbe, the nation's premier providers of trailing document fulfillment services, is thrilled to welcome Cissy Larkin to our Team! She brings years of experience in the Mortgage Industry which will enable her to showcase our outstanding services and contribute to DocProbe's Revolution of the Post-Closing scene in the Banking and Mortgage world! We will be attending the Western Secondary Market Conference next week to present our services. Please contact Libi (below) to schedule an appointment with a specialist. DocProbe is currently looking to further expand our nationwide close-knit Business Development team. The is an exciting opportunity for Account Executives with experience selling to Mortgage Bankers, who possess the drive and ambition to make calls, network, and have the face-to-face visits necessary for success. The ideal candidate possesses outstanding interpersonal skills and has an established mortgage banker client base within which they can network. Interested contenders may confidentially submit resume for consideration to Libi Pruzansky."