John Vong: Compliance, Planning and Regulations

Tom Wilkins of Mortgage Media had an opportunity at the MBA Annual Conference in Austin, TX, to speak with John Vong, Founder and Executive Chairman at LogicEase Solutions, which has ComplianceEase under its umbrella. Vong, who founded ComplianceEase in 2001 and prior to that held senior executive roles with The Money Store as Founder, as well as First Union and Wachovia Bank, discussed eExams, compliance for new regulations, as well as weathering a potential market downturn.

Tom Wilkins: I’d like to start off with the big news, and that’s about ComplianceEase announcing that in cooperation with the Multi-State Mortgage Committee it will offer a complimentary pre-exam portal sandbox. Now tell me a little bit about that.


John Vong: I used to be a banker. I’ve been at mortgage banks since the ’80s, and understand now that we work with the states and several regulators and the 24E exam, that certain lenders, have anxiety when you get the examination notice – especially on the eExam when you have to transmit data. “Is it the right format?” “If my formatting is correct, is my mapping from the loan origination system to this file format correct?” “And how about the resell from the audits?”

So, we have decided to work with the state examination team of the Multi-State Mortgage committee to make it to open up free to any lenders in the U.S. – for them to play in the sandbox environment before they have the actual eExam. We allow them to run up to 100 loans in the 90-day period so that they can get a feel of their data export and also the resell how the examiner is seeing that. That kind of takes the uncertainty out of the eExam process. Hopefully. lenders of all sizes can take advantage of this offer.

Wilkins: The next question is kind of an obvious one, but I ask everybody……why attend this conference? Why is it important for John Vong to be here?

Vong: As a CMB and CMT I have been attending the MBA Annual Conference since the ‘80s. I’ve probably missed one and that was the year when they had a storm in Orlando. But other than that, I never miss MBA Annual events. It’s a good collaboration -see old friends and new friends and support the industry as well as doing my CMB duties.

Wilkins: As follow up to that, what do you hope to get out of this to take back to the team?

Vong: Certainly, it’s about meeting with our partners and clients. We’re seeing quite a lot of volume growth for the last three and six months and they have booked a low interest rate environment. This will hopefully continue to Q1 and Q2 of next year. Next year is an election year, so hopefully, the interest rate will stay low. However, the purchase market is slowing down. So lenders, especially smaller ones, have started reduction early this year and then they will ramp up. A lot of them are trying to close as many loans as possible. But some of them,because of the financials, have some warehousing capability issues, so I would suggest that next year, the next Q3 – Q4 of 2020 will be challenging.

From our standpoint, we still look at trade as a problem area for a lot of investors and aggregators because they are really spending a lot of time evaluating trade compliance before they purchase. And lenders have to write refund checks because they didn’t catch it through the closing process. So yes, I understand. I was a lender before. I understand that closing loans is important, but risk and compliance are very important too – whether you pay it now or you pay it later.

Wilkins: That’s so true. Being in the compliance business what is the one thing that every company in our industry should be doing to help them stay in compliance? What’s the elevator pitch for ComplianceEase?

Vong: Well, as the Consumer Financial Protection Bureau (CFPB) has set new guidance, I think that lenders need to have a good compliance management systems and it needs to be coming from the top, from the board level, from the executive level down to your LOs, your processors. They should all have a good compliance theme and a consumer protection spirit.

Wilkins: What has happened with ComplianceEase in the last few months? I know there’s been a little bit of change at the top level, could you tell everybody about that?

Vong: Yes.  My longtime partner, Anita Kwan, has retired and is just enjoying life. I brought in an old friend, Michael Jackman. Actually, he is not a stranger to the company,. He was acting CTO back in 2005 and an advisor as well as a shareholder of the company. So, with the departure of Anita, we brought him in as the CEO and continue to run the company.

Wilkins: What does that mean for you? I know you’re executive chairman now.

Vong: I’m more into the strategic planning and dealing with the regulators. So, Michael is taking care of the day-to-day running of the business.

Wilkins: That’s great. Congratulations. That must be a nice, new addition to the company and it frees you up to do a lot of things like planning the strategic initiatives. Where do you think the industry is headed over the next couple of years? I know that some people in my interviews have been talking about a downturn possibly on the horizon- and maybe it’s not a matter of if, but when.

Vong: At this point, we predict that next year tier three and tier four volumes will decline. So, it’s also depending on the interest rate movement, right? And as I mentioned earlier, purchased transactions are slowing down and that will hurt lenders after the refi boom is dried up. So, besides the interest rate movement policies also are important at how the CFPB and Congress is going to determine the QM Patch that will really set the path level.

We don’t have a true capital markets. The majority of the loans are securitized through the GSC. The QM patch will level the playing field for private securitizations, so that it can have a bigger market for lenders, more products for lenders. It’s kind of up in the air until that QM policy comes out.

Wilkins: One of the issues that has been coming up as well, is data security and privacy – specifically ransomware- What is ComplianceEase doing?

Vong: Fortunately, our system doesn’t require PII, but at the same time, most of our large customers, the banks, we have three of the top five banks and eight of the top 10 banks, so we get audited all the time aside from the regulators. We are putting all our efforts into privacy and security – especially with California. Our state has come out with the new law. We are putting in a lot of effort. We have full time personnel and an outside consultant helping us to be in compliance with the new legislation.

Wilkins: The last question I usually ask everyone is non-related to why we’re here or your industry or my industry. What does John Vong do in his spare time, because you hardly have any of it, but hopefully now you’ll have more. What do you do for sports or hobbies? I know you love to travel.

Vong: With my role, I get a little bit more time. And, yes, I do love to travel internationally, as you have, and can catch up with you in terms of experiences! But, yes, I do like international travel, learning cultures. And, also my wife, as you know, really enjoys that.

Wilkins: Well. And I know too that you’re very generous with your time in going to places like points in Africa and helping people out who are underprivileged and things through your church. So, that’s a big interest of yours as well.

Vong: Yes. My wife runs charitable foundations. She has four orphanages in West Africa and also supports other children’s programs in Asia. So, yes, we are putting effort and resources to the underprivileged elsewhere in the developing countries.

Content has been edited for length and grammar.