I own a shovel. Actually I own a couple of them. So do my neighbors. Do we use them all the time? No. Plenty of time elapses between shovel use. The same thing happens across neighborhoods, the nation, around the world, with lawn mowers, ladders, power washers, etc. One doesn’t have to look too far to figure out what’s driving the “shared economy?” At Happy Hour tonight you can mention something about Uber drivers having someone in their car 50% of the time, versus taxis at only 30%. Things are changing. And if everyone on the street doesn’t need to buy or own their own shovel, or their own car, and the world needs to make fewer of them over time, what does that do to manufacturing-related GDP as the years pass?

One never ceases to be amazed at the money flying around out there. For example, online lender Social Finance, which has a burgeoning mortgage division, is looking to raise $500MM in equity to fund growth initiatives; this would be one of the industry's biggest fundraising rounds this year.

On the flip side, Wells Fargo, said to "touch" a third of Americans through one or more of its products, is the subject of a regulatory enforcement action related to its cross-selling of products and sales tactics. Richard Cordray might have had a fine time putzing around in the Wells Fargo stagecoach in San Francisco a few years back, but that didn't help when it came time to assess penalties. Secretly issuing credit cards without a customer's consent, creating false email accounts to sign up customers for online banking services, and setting up sham accounts that customers learned about only after they started accumulating fees were mentioned which cost Wells Fargo $185 million in fines, including a $100 million penalty from the Consumer Financial Protection Bureau, the largest such penalty the agency has issued.

And the industry continues to watch Ocwen Financial Corp. Joseph Smith, the monitor of the National Mortgage Settlement reports Ocwen is making progress but still not completely up to par in its reporting procedures and failed two tests at the end of 2015. Remember that Ocwen's relationship with the NMS began more than two years ago, when federal and state regulators hit the company with a $2.1 billion fine related to charges of loan servicing misconduct. The two failed tests in the fourth quarter of 2015 related to force-placed insurance, which encompasses consumers who cannot or do not provide evidence that they have homeowners' insurance. The tests specifically assessed whether Ocwen is timely in its communications to borrowers and whether or not the company terminated unnecessary force-placed insurance and refunded premiums in timely manner.

I am occasionally asked by non-bank lenders about buying a bank. I love it when non-depository lenders think that they're regulated just as heavily as depository banks, and it's a "no-brainer" to go buy a bank. Au contraire. I recently asked a bank compliance person for a list of regulators/entities that have some type of jurisdiction over a typical bank, and could, or do, audit them on a regular basis. Of course immediately what jumps to mind are the likes of the Department of Justice, the Federal Reserve, OCC, FDIC, HUD, CFPB, Fannie Mae, Freddie Mac, and state-level regulators. And groups like Ginnie Mae, MERS, VA, and the NMLS don't necessarily audit banks but require additional monitoring.

But don't forget that the IRS has purview over Bank Secrecy Act matters. The NACHA (National Automated Clearing House Association) requires an annual audit of ACH and can audit, as well as state ACH associations. FINRA if the bank is dealing in securities. The Securities Exchange Commission (SEC) is for broker dealer relations. FFIEC has broad IT implications. Financial Stability Oversight Council (FSOC) is gaining authority as CECL and BASEL 3 kick in. MasterCard and VISA also have a secondary overview that can affect our operations with separate rules that exceed fed rules, imagine trying to bank without a VISA or MasterCard Brand. They can cancel your use of their brand for rule infractions.

But don't take my word for it. The Congressional Research Service put out a 45-page document by Murphy and Jickling titled, "Who Regulates Whom? An Overview of U.S. Financial Supervision." It is a far different piece than "Horton Hears a Who."

And of course lenders and investors continue to announce changes to their processes and guidelines based on changes in the regulatory environment.

Plaza Home Mortgage announced announce that its Wholesale Loan Submission User Guide has been updated to reference TRID required documentation. Verbiage now reflects Loan Estimate in lieu of GFE and TIL. The following updates have been made: The "TILA/PLAZA UPFRONT DISCLOSURES" Section has been updated to: "INITIAL DISCLOSURES/FEES". The "2010 GFE" HELPFUL HINTS Section has been removed. The "CHANGE OF CIRCUMSTANCE" Section has been updated to comply with TRID requirements. 

The NMLS 2016.3 Release Notes have been posted to the NMLS Resource Center. The Release Notes detail the list of enhancements and system maintenance updates that comprise the release scheduled for September 12, 2016. The Notes include an additional section found on page 23 that includes Electronic Surety Bonds (ESB) in NMLS.

Released on September 2, the Uniform Closing Dataset (UCD) collection solution allows lenders and non-seller correspondents to begin testing your ability to deliver UCD XML files through either a user interface or the business-to-business direct integration platform (details provided in the July Announcement). The Web-based user interface can be accessed from the UCD page or within Loan Delivery. As a reminder, the UCD will be required by both Fannie Mae and Freddie Mac in Q3 2017.

Plaza Wholesale's News and updates included  Federal Housing Finance Agency, Freddie Mac and Fannie Mae (the GSE's) published the redesigned Uniform Residential Loan Application (URLA), the standardized form used by many borrowers to apply for a mortgage loan. While lenders cannot use the form until January 1, 2018, the GSEs are publishing these documents now to provide the industry with time to begin the analysis and planning necessary to implement the redesigned URLA and updated automated underwriting system (AUS) datasets. The CFPB must also complete its safe harbor review of the HMDA government monitoring information section of the form. The GSEs worked closely with many stakeholders including the MBA to solicit feedback during the redesign process. As a result of these discussions, significant improvements were made to the form which shortened it from the initial redesign, and made it more borrower friendly.

Turning to interest rates...we continue to be reminded that our economy, and the world's, is a global "continuum." What happens in Russia, Asia, the Middle East, and so on impact stock markets and bond markets around the world. We saw this in late June with the vote in the United Kingdom.

Before we dive into what the United Kingdom has done to the world with Brexit, let's look at what the U.K. has positively given to the world: what you are reading this on, the world wide web was invented by a British computer scientist. Wells Fargo asks the question "how financially exposed is the world to the U.K.?" The answer in short is that while most major economies have a stake in the U.K.'s economy, the problems Brexit could possibly create are manageable. Joining others who believe the same thing, Wells Fargo's economists expect the British economy to slip into a modest recession. Now what will that do to global GDP? Not much since the U.K. only accounts for 4% of global GDP.

Individual economies, however, that have bigger ties to the U.K. could experience meaningful losses. For instance, Irish and Spanish banks have significant assets in the U.K. Ireland has 27.2% of its total bank assets in the U.K. and Spain has 11.9%. How does it affect U.S. banks? While the $424 billion the U.S. has in U.K. banks that only accounts for 3% of total banking system assets. Countries with export exposure could be negatively affected if U.K. does go into a recession. Overall, the analysis in this report suggests that the financial exposure that most foreign economies have to the U.K. is manageable.

But a study done by the DIW Institute shows that Germany's economy and foreign trade will suffer, with growth next year falling by nearly half, as Brexit's effect begins to be felt. Growth in 2017 is projected at 1%, down from an expected 1.9% this year, with Brexit alone knocking about a third of a percentage point off the 2017 figure.

Yesterday Initial Jobless Claims came in lower than expected at 259,000 marking the fourth week in a row that claims have beaten expectations and the 79th straight week below 300,000. Prior to that we had the European Central Bank's statement with no mention of extending Europe's Quantitative Easing program. Lastly we had the price of oil shoot higher. The 10-year note worsened nearly .75 in price to close at a yield of 1.61%, 5-year Notes sank nearly .375, but agency MBS prices "only" sold off .250.

Ahead of today's market opening we've had inflation updates from China, a spate of Fed speakers. But there is no news of market-moving substance in our continent. For numbers in the very early going we're up to 1.62% on the 10-year and agency MBS prices are worse about .125.

Jobs and Announcements

In wholesale job news CMG Financial Wholesale Lending continues to grow and is looking for Account Executives nationwide, and is particularly interested in hiring a well-seasoned and highly ambitious AE to take over the existing Maryland market. The territory comes with an established client base and is producing over $175M annually. "If you are looking for a rewarding career opportunity, look no further. We are also looking for Account Executives in the Florida market with excellent growth opportunity. With headquarters in California CMG Financial is a nationwide mortgage lender and an approved GNMA/FNMA/FHLMC Seller/Servicer whose Wholesale AEs can sell both wholesale and non-delegated correspondent business. If you are interested in joining our employee-friendly, growing organization, please send an updated resume in confidence to Denise Tragale."

On the retail side, a very well-known and well-capitalized company in related industries is preparing to enter the mortgage business and is looking for someone to be its Head of Production "with the experience, vision and passion to help build a world-class mortgage business. This position reports to the Head of Mortgage and "work closely with the development team to build out our loan origination system and auxiliary technologies. The Director of Production will assist in the phased maturation of our technology to build an industry changing LOS. We are not looking for people that want to build the Mortgage operation they have always seen. We are looking for people to rethink the business from the ground up. Recruitment and retention of top talent will be a priority and capacity management will be of paramount importance and you will own management of our production pipeline - 100% purchase money. All leaders in the Mortgage business will be accountable for their function's ability to deliver a top-notch borrower experience while operating within all regulatory guidelines." Resumes should be submitted to me; please specify opportunity.

In personnel news...New America Financial welcomed its new CFO, Bill Napier. Ditech announced that Robert Groody has been hired as SVP of Consumer Lending Operations responsible for overseeing consumer operations teams company-wide and driving growth within the division. And Dallas' Supreme Lending hired Matt Garlinghouse as its SVP of Capital Markets. Congratulations to all!