There was a Scottish painter named Smokey
Macgregor who was very interested in making a penny where he could, so he often
thinned down his paint to make it go a wee bit further.
As it happened, he got away with this for
some time, but eventually the Baptist Church decided to do a big restoration
job on the outside of one of their biggest buildings.
Smokey put in a bid, and, because his price
was so low, he got the job. So he set about erecting the scaffolding and
setting up the planks, and buying the paint and, yes, I am sorry to say,
thinning it down with turpentine.
Well, Smokey was up on the scaffolding, painting
away, the job nearly completed, when suddenly there was a horrendous clap of
thunder, the sky opened, and the rain poured down washing the thinned paint
from all over the church and knocking Smokey clear off the scaffold to land on
the lawn among the gravestones, surrounded by telltale puddles of the thinned
and useless paint.
Smokey was no fool. He knew this was a
judgment from the Almighty, so he got down on his knees and cried, "Oh,
God, oh God, forgive me; what should I do?"
And from the thunder, a mighty voice spoke:
"Repaint! Repaint!
There is only one state that has 1 syllable, but there are 30
days in September. And this month is full of wacky "days" such as
international Talk Like a Pirate Day (19th), and national Play-Doh
day (16th). Along those lines, there are 7 days for "Unmarried
and Single Americans Week" which takes place in the 3rd full week of
September (18-24... coincidentally September 18 is National Wife Day). In terms
of lending demographics, there are 109 million unmarried people in America 18
and older which makes up 45% of the total number of residents 18 and over. 47%
of those people are women, the other 53% are men. The number of people who
lived alone in 2015? 35 million, or 28 percent of all households, up from 17
percent in 1970.
This week the folks at National Mortgage Professional
Magazine and Silver Hill Funding will show you how adding a
profitable commercial mortgage division can be easy. Join them on Thursday,
September 15th at 2PM EDT for a 60 minute complimentary webinar where commercial mortgage experts Ski Swiatkowski
and Mike Boggiano show a simple paint by number approach on how to source
leads, market, originate and close profitable commercial mortgages. In this
webinar they'll reveal the top marketing channels and referral sources, how to
optimize your presence on LinkedIn and other social networks and how create your
multi-pronged marketing strategy. Reserve your complimentary space here.
There certainly has been no shortage of new technology
entrants into mortgage lending. Join the Maxwell CEO as he hosts an exciting panel discussion
with the former EVP Mortgages of Wells Fargo and now Founder and CEO of Varo
Money and the Founder and CEO of Morty. The fast-paced session will provide an overview
of the new tech-driven mortgage lenders in Silicon Valley and New York and
how originators and branch managers can build a business to compete with these
well-funded, determined competitors. Register for the 30-minute webinar: Digital Mortgage Lenders & the Battle for Borrowers
to be held on Monday, September 26 from 12:00PM to 12:30PM Pacific time (replays
will be available for registered guests). You'll walk away informed about
the new digital lenders and tangible steps you can take as a loan officer or
branch manager to combat the threat. Register your spot at the webinar and get ready to win!
The industry continues to digest the Wells Fargo
penalty news, and wonder about its implications. After all, if Wells
supposedly had the best compliance system going, and this was able to happen,
what chance do other companies have in stopping what may be happening within
their corporation? Wells stepped in this morning to eliminate, starting in
January, of the retail product sales goals for its bankers.
Jonathan Foxx penned, "Wells Fargo, a Predator's Tale" in Mortgage Compliance
Forum.
And this came from a national legal authority. "For
me, this Wells thing is a watershed moment. My observation (based largely on
the mortgage group) is that Wells probably has the most sophisticated
compliance team and compliance/risk management structure in the business.
So, compliance and risk management pro's like me must all be looking at what
happened with jaws on the floor. What happened to the risk management 'lines of
defense?!!' There is just no way that Wells wasn't getting
thousands of calls from consumers who were charged fees on accounts they never
opened. Customer service had to know about all the complaints.
Quality control in their account opening process had to know what was going on
in the documentation. HR or whoever paid the bonuses had to know there was
inflated reports and the terminations because of that. Compliance had to know.
Risk management had to know. Upper management had to know.
"If this was driven solely by lower level employees
seeking compensation bonuses, I could see it happening for a couple months in
an isolated branch or region or two, but then the feedback loop closes,
controls are implemented and the faucet of problems gets shut down.
Apparently, however, this thing went on for 2 or 3 years involving almost 2
million accounts and 5,300 employees fired over the same period! I'm just
totally baffled how that can happen without either: (1) incompetent management
and failure of compliance systems (again, virtually impossible to my
knowledge), (2) top level complicity of risk and executive managers (perhaps to
bolster cross sell numbers) and Wall Street's stock valuations (the fear of
SARBOX and whistleblowers ought to prevent that), or (3) the greatest
confirmation example in history that some banks have become just too big to
manage notwithstanding the most sophisticated compliance and risk
management resources available today (and the scariest new regulators designed
to prevent such problems).
"None of the options above are good for Wells' top
brass, but I think the problem is most likely #3 (#2 is possible, just hard to
believe). If there is a better option, I'd like to hear it. I doubt many
policymakers (or shareholders of big banks) today have the stomach to deal with
the consequences of my conclusion either (who wants to revisit TBTF and
the efficacy of our new consumer regulator?). For me, however, this was
truly insightful and #3 may explain why CFPB seemed content to walk away just
with the consumer redress and no scalps. Like Javert in Les Miserables,
the jailor's survival depends on the criminal."
While were on banking and regulators, the Federal Deposit Insurance Corporation (FDIC) is extending the comment
period for proposed guidance on third-party lending.
Comments on the proposed guidance, which was published on July 29, now must be
received on or before October 27. The 45-day extension was made in response to
requests from interested parties who asked for additional time to consider the
proposal. The proposed third-party lending guidance outlines the risks that may
be associated with third-party lending as well as the expectations for a
risk-management program, supervisory considerations, and examination procedures
related to third-party lending. Comments should be sent to thirdpartylending@fdic.gov and will be posted on the FDIC's website here.
Stocks and bonds both rallied Monday, and thus interest
rates went back down slightly. The reason? Who knows?! Dovish remarks
from Fed Governor Brainard? "To the extent that the effect on inflation of
further gradual tightening in labor market conditions is likely to be moderate
and gradual, the case to tighten policy preemptively is less compelling."
Atlanta Fed President Lockhart, who does not vote on the FOMC until 2018, said
that the data seriously warrant discussion of raising rates. For something more
concrete, all the Treasury supply that hit the market was soaked up without too
much trouble.
Today for thrills and chills we have...a $12 billion
30-year Treasury auction, along with some short-term maturity sales that
generally don't impact mortgage rates. Yesterday agency mortgage-backed
securities closed "higher and tighter" led by higher coupons, and
GNIIs in particular.
We closed Monday with the 10-year at 1.67% - the same as
Friday - but 5-year T-Notes and MBS prices were better about .125. Here this
morning in the early going, without much scheduled news overnight or ahead of
us today, the 10-year is hovering around 1.66% with agency MBS prices a
shade better.
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