Jonathan Foxx is president and managing director of Lenders Compliance Group based in Long Beach, N.Y., with offices in several states. Lenders Compliance specializes in legal and regulatory mortgage compliance guidance, and the firm offers a full suite of services in residential mortgage banking for banks and non-banks.
Brokers Compliance Group, an affiliate of Lenders Compliance, was established by Foxx in order to provide mortgage compliance to support the unique compliance needs of mortgage brokers.
With more than 35 years in the mortgage industry, Foxx is an expert in all areas of mortgage compliance, federal and state regulatory compliance, operations, underwriting, and guidance in credit policy. Mr. Foxx has held executive and senior management positions, including chief compliance officer for two publicly traded mortgage companies, as well as executive vice president of compliance, director of government lending, and director of operations and underwriting at several of the largest mortgage loan originators in the country.
Mr. Foxx holds a Ph.D. from Columbia University and an MBA from the Wharton School. He is also the founder and president of the Association of Residential Mortgage Compliance Professionals (ARMCP). Consisting of over 1,000 professionals, ARMCP is the first and only national organization in the United States devoted exclusively to residential mortgage compliance professionals.
National Mortgage Professional Magazine recently sat down with Jonathan to get an update on Lenders Compliance.
NMP: Can you give our readers some background on how Lenders Compliance was founded?
Foxx: I founded Lenders Compliance Group in early 2007 with the goal of providing comprehensive outsourcing solutions for companies that seek residential mortgage compliance services. Lenders Compliance is the country’s first full-service, mortgage risk management firm in the United States. Today, we are a national firm, specializing exclusively in legal and regulatory mortgage compliance guidance. We offer a full suite of services in residential mortgage banking for banks and non-banks.
In 2012, I also founded Brokers Compliance Group, the first and only full-service, mortgage risk management firm in the United States that specializes in providing outsourced mortgage compliance exclusively to independent mortgage professionals, such as mortgage brokers. NAMB—The Association of Mortgage Professionals has appointed Brokers Compliance Group as its Exclusive Compliance Provider.
NMP: What are the key value propositions of Lenders Compliance’s offerings?
Foxx: Lenders Compliance offers cost-effective, regulatory compliance advice to the residential mortgage loan origination and servicing industry by providing the professional knowledge and experience of subject matter experts in all areas of mortgage compliance. Clients are offered real world, practical solutions to business process issues, with an emphasis focused on operational assessment and improvement, legal and regulatory compliance, and all areas of mortgage risk management.
Many financial institutions involved in originating residential mortgage products are often unable to pay the cost of hiring a chief compliance officer and fully staffing a Compliance Department. For a fraction of the cost, financial institutions retain Lenders Compliance as an outsourcing solution for guidance in any and all regulatory areas associated with residential mortgage loans. LCG’s interaction is hands-on and direct. Its compliance and support services are usually provided on a monthly basis, in order to ensure continual compliance support, or the firm may be retained as well on a project basis.
NMP: What is the experience of your professional team?
Foxx: Lenders Compliance’s management team consists of professionals with proven knowledge, experience, and expertise in mortgage banking who have worked at some of the largest and most prominent loan originators in the country, as well as federal and state agencies, having held such titles as chief compliance officer, general counsel, compliance counsel, compliance manager, regulator (federal), deputy commissioner, director of consumer credit division (state), examiner (state), executive vice president of operations, and executive vice president of underwriting.
NMP: Can you explain how Lenders Compliance operates as a seamless extension of a client’s compliance function?
Foxx: Lenders Compliance provides an engagement team that meets the client’s size, complexity, and risk profile. The team provides compliance support virtually 24 hours a day, year-round, in all areas of residential mortgage compliance, including the drafting of policies and procedures, reviewing all mortgage banking operations and procedures, preparing a Compliance Management System, furnishing guidance with respect to disclosures, and federal and state banking law guidance, as well as a full range of loan analytics, such as quality control and forensic audits. Our risk management team meets regularly with clients to ensure the fulfillment of objectives and prepare the client for future changes in federal, state, and investor loan origination requirements.
NMP: What is driving the demand for your services?
Foxx: Most residential mortgage lenders and originators want to be proactive, not reactive, though, often, that is not always achievable, especially when new policies, guidelines, rules, procedures, and the actionable implementation of regulations seem to arise all the time. It seems that policies and procedures rise to the level of demands due to the increasing spate of regulations.
In mortgage compliance, it is certainly possible to be too late to do anything about a violation of law or the implementation of a regulatory rule. Compliance leaves traces; it is nearly impossible to obliterate its trail. Lenders Compliance has always had a straightforward mission principle: Preparation is protection! Therefore, the demand is driven by the need to be fully engaged in implementing all applicable regulatory compliance requirements.
Mortgage risk management is not an area for taking a pecuniary shortcut to being prepared, especially when an insufficient policy statement or violations of certain regulations may cause adverse CFPB, state banking department, and investor examination findings. If a residential mortgage lender or originator is not allocating sufficient funds toward reliable mortgage compliance, then the consequences for neglecting proactive and competent compliance eventually will lead to economically adverse results, such as administrative penalties, civil monetary penalties, and challenges to licensure or federal agency approvals, may far exceed a company’s ability to survive.
NMP: What key trends do clients have to be prepared for in 2014?
Foxx: On a short-term basis, lenders must be prepared for the following:
1) Ability-to-Repay and Qualified Mortgage Standards;
2) High-Cost Mortgage and HOEPA Rules;
3) Loan Originator Compensation;
4) Mortgage Servicing Rule;
5) ECOA Appraisal Disclosures; and
6) Appraisals for Higher-Priced Mortgages.
Longer term, the fate of the following regulatory compliance items will have a significant impact on future trends in the mortgage loan origination and servicing industry:
1) Changes and Revisions to the January 2014 Rules;
2) Disparate Impact Litigation;
3) Risk Retention, for QRM Rule Issued Aug. 28, 2013;
4) Home Mortgage Disclosure Act (HMDA) Rules;
5) RESPA/TILA Integration;
6) Future of Fannie Mae and Freddie Mac;
7) Federal Housing Administration Changes; and
8) CFPB Anti-Steering Rule.
This article originally appeared in the November 2013 issue of National Mortgage Professional Magazine.