0:08
OK, good afternoon, Welcome, everyone. Thank you for joining us today for this exciting topic and for responding to the poll.
0:17
Today's topic is definitely all around social media compliance, which is an ever evolving concern for the financial industry, and it's not going away anytime soon. Before we again, we have some housekeeping items to review. So all attendees know you are automatically muted for the webinar, but do you have any comments or questions for the panelists. As the webinar proceeds, please use the questions chat box that's on the right-hand side of your screen and the control panel to type out anything that might be needed. My name is Melissa Thomas, and I'm head of Compliance here at Active Comply. For those that may be unfamiliar, our cloud based solution makes it easy for mortgage lenders, banks and credit unions to engage with social media safely and also meet those pesky compliance and archival requirements.
1:01
If you feel in trade, during the course of the webinar, wanna learn more about social media compliance, or would like a demo of our system, please visit activecomply.com or you may e-mail our national account executive Chase Connor for more info.
1:17
And panelists, you are welcome to now join us.
1:19
Go ahead and turn on your lights, and your cameras.
1:25
Welcome, Mike.
1:26
Well commit.
1:27
OK, with me today, we have two of our esteemed members of the Active Comply Advisory Board. First, we have Mitch Carter, who is the chairman and managing partner of Wiener Brodsky, ..., a national law firm specializing in the representation of financial institutions, residential home builders, and real estate settlement service providers.
1:48
And also with us today is Michael Dunn CMB, who currently serves as General Counsel for FPC Mortgage LLC.
1:55
Mike is also a proud affiliate member of the AA RMR, a member of the Central Florida Compliance Association, and sits on the Legal Issues and Regulatory Compliance Committee for the national MBA.
2:06
Welcome, gentlemen. Thanks so much for being with us today. I know it's a busy, busy time for everybody in our industry right now.
2:13
But compliance concerns can never fall to the wayside, especially now with the big changes in the upcoming administration.
2:20
Perhaps that's a great place for us to start today.
2:23
Maybe, Mitch, you can start us off with one of the topics of discussion, which is what can we expect from the Biden administration and what kind of impact will this change in administration have on the mortgage industry in general.
2:39
All right, well, that's quite a big question, too. To start this off with, there's a lot to talk about in that area alone. And I'm going to start with the very beginning, I think what we all need to realize is that there's going to be a transition period. There's always a transition period. When a new president and the new administration takes office, it takes time.
3:00
So, no, it's a time where there's literally a little bit of a layer of enforcement's, and a lag in issuing new regulations. And, in fact, what happens typically is regulations that have not become effective yet, or generally postpones, so that the new administration, to take a look at those things.
3:21
I mean, the things that the administration wants to worry about right now is really staffing up.
3:26
Getting Senate confirmation for cabinet members and others, And they want to take the time and review their priorities at every agency, see what's going on. Maybe reshuffled the particular priorities they are going to change.
3:39
Well, what's going to happen here, is there going to be a change as it applies to mortgage banking industry, and others, as well?
3:46
The answer to that question is yes, There's definitely going to be a change, If nothing else, is going to be a shift in tone that regulators are going to take, and there's going to be a shift in the agenda, as well, that comes whenever there is a change of administration, and it certainly comes whether that change of administration crosses party lines itself, So you can expect some changes, now, You know. I'm not one that's going to run around and tell you that the sky is falling, because the sky is not falling.
4:15
I actually think it's going to take time for some of these changes to take place. and I think they're going to be somewhat moderated.
4:23
Let me give you a little example.
4:24
Kinds of things I think we're going to see.
4:27
No enforcement over the last four years, and there has been enforcement actions over the last four years. In fact, last year, I think the CFPB had more investigative matters Enforcement matters than in any other year in its history.
4:39
So, even though you HAE a political rhetoric about, uh, you know, one party going after another, for not enforcing enough and things of that sort, every Catholic Parameter actually did a pretty decent job in the enforcement, in the enforcement itself.
4:54
But her enforcement philosophy with this, And this is really the enforcement philosophy throughout the last four years, let's stay within the lines.
5:03
If there is a violation, if it's clear that there's a violation, **** straight, we're going to go out there, enforce it. But we're not going to make up the law.
5:12
We're not just going to go after the lenders and others, the things that we, we may not live, but may not violate the law itself.
5:20
I think you're going to see a little bit of a change along those particular lines.
5:23
I think you're going to see this administration at the CFPB at the banking potential regulatory agencies. I think you're going to see them push the envelope a little more.
5:33
Well, they go as far as Richard Cordray did.
5:37
When he headed up the CFPB and basically indicate that they're going to do regulations through enforcement actions, I don't think so.
5:45
I don't think so. I'd be very disappointed to see that happen.
5:48
And one of the reasons that I think that will not happen is because many courts, many courts rejected that, that theory.
5:57
And realized that just didn't follow the Administrative Procedures Act itself. Not the least of which was the PHH court case that I litigated, which ended up with a very large decision telling the CFPB how to interpret Section Databricks.
6:13
What else can we see? I think that when you see enforcement actions, you're going to see people asking for larger dollars.
6:19
I think that the settlements are going to involve some large valves as well.
6:23
I think there's gotta be an emphasis on consumer readdress because for the last four years, the Democrats had complained about the CFPB not providing enough restitution to consumers when they self case. So they got us, you're going to see more consumer reach us.
6:40
I fear that sometimes, even when consumers themselves aren't really homes, there are other matters that you're going to continue to see. We have False Claims Act Prosecutions.
6:50
You know, that HUD and the Justice Department entered into a Memorandum of Understanding. I think that Memorandum of Understanding will hold. I don't think that the government, in terms of going after FHA, lenders, will go back to what they were at the end of the Obama administration of our created taskforce, simply to go after lenders themselves.
7:13
But the cat's out of the bag, there are key Tim actions which really are whistleblower suits, and I actually see them come and my door every week, quite frankly.
7:22
Terms of the CFPB, it's really interesting, you know, we litigated the PHH case.
7:27
We told the court the structure was unconstitutional because I'm the director of the CFPB.
7:34
I can only be removed for cause, and that, without cause.
7:38
And that case went along, and now in the Civil law case, the Supreme Court, I went ahead and said, well, that's right.
7:45
It was an unconstitutional structure, and that's why Kevin grabbing, there is no longer the direct to the CFPB, and we have someone new that's been appointed to take over the CFPB itself.
7:57
So, know, there could be even more politics involved in that as well.
8:03
Not as much independence, CFPB is going to act, basically, as an executive agency.
8:10
So, let me sum up a couple of enforcement priorities that I think you're going to see coming out of this.
8:16
I think that we're, as the enforcement you've seen in the last couple of years, dealt with enforcement based on a literal interpretation of a statute or regulation violated, or units.
8:29
I think you'll still see some of that.
8:31
But, I think this new group that's coming in is going to be even more concerned about what is good for and what is bad for the consumers. So, I think they're going to expand that. Not just the literal interpretation itself.
8:46
I think that the enforcement charities that have been near the Courtroom Administration, and Therefore Mulvaney, Granger, and now will be there through this new administration at the CFPB as well.
8:57
They always make recommendations. I don't know how many of their recommendations for enforcement actions lived up to and how many you know how many were abided by him. And many times they were green mode.
9:09
But they will be green lighted a lot more, so you're going to see more enforcement actions.
9:14
You will also see fair lending on the very top of the list, And that's because discrimination, in general, not just for this industry, but it's discrimination in general, is on the very top of the priority list, addressing discrimination is on the top of the priority list of the Biden Harris Administration.
9:34
So the CFPB, you know, is responsible for ....
9:37
Now they're expanding coke into red lining, something that has never done before and doing it for independent mortgage bankers as well. Again, something that has never been done before.
9:47
It has the Fair Housing Act and red line traditionally has been prosecuted under the Fair Housing Act, is a disparate impact rule. That's gonna go back to the way it was four years ago. They're gonna kind of skip over what we've seen happen.
10:02
So, fair housing.
10:03
It's going to be on the very top of the list today set of advertising, deceptive practices. Absolutely. On the top of the list, and remember, the new director that's coming in as an FTC commissioner.
10:15
And so, this is a big issue for them.
10:18
And privacy and data security, also very, very big issues. And all of those issues, by the way, and I'm sure we'll talk about it as we go on fair lending, their privacy and data security, wasn't real, really important issues when you're talking about social media and things that can happen and things that you need to watch out for.
10:39
So, true, so, true. The administration definitely has made, you know, part of their pillars of attack definitely fair lending and also you know thanks to the pandemic forbearance. It's definitely something that's also concerning for the administration and how a lot of those are handled for consumers.
10:58
So, with that in mind, the change in the CFPB leadership in particular, Mike, maybe you can, can speak to the impact of how you as an independent mortgage banker approach compliance policies within your organization.
11:13
Well, we rely on folks like Mitch to help guide us, but we also need to pay attention to things like the Consumer Compliance Outlook webinar that came out in late 2020 to basically set forth the agenda.
11:26
On the fair lending side there, they're telling us what they're going to be focused on.
11:32
From my perspective, reputation risk is a big issue, especially surrounding this particular topic, because no one, no one wants to make the front page of the National Mortgage News by being the first independent mortgage banker to be canceled based on some Erin comment that one of their loan officers may have made on a Facebook page, or something like that.
11:57
Um, so the evolving nature of online advertising, the reputation risk involved with, you know, just the nature of the, the political climate, and looking at what they said in that consumer compliance webinar, they're telling us what they're going to be looking at.
12:20
Um, so what is my policy going to be around marketing agreements? What does my policy going to be around social media compliance? What is my staff look like to monitor?
12:31
social media, social media, and online advertising, as we, as we have grown and even form new joint venture companies? What does our monitoring program look like?
12:43
So, then there's education and training that they're very likely going to be focused on and ask us, Hey, Toso, your education and training, is surrounding rest, but with your loan officers surrounding online advertising, with your, with your loan officers.
12:59
So, those are the types of things that are top of mind to me.
13:02
The big issues, the respire type issues, the, the reputation issues, Not so much whether, or not an animal last number is on a, on a Facebook page, Those are things that we can catch an incorrect, and hopefully, not have repeat findings if there's a finding.
13:20
Which are important.
13:20
I don't want to downplay that, because that's kinda the first thing.
13:24
What we've experienced, is that a regulator, state regulator will come in, and they'll do social media review of all your social media before they even come in and examine you. We have a handful of states that have done that.
13:36
And then, their initial call to us, is, Let's go over your social media violations.
13:41
And so, they kind of get an idea of how, seriously, we're taking compliance based on that. I think that's probably their approach. Let's see how these folks are monitoring their online presence.
13:53
So, those are the types of things that are, that are top of mind for me, um, and making sure that we're, you know, staying on top of those, those policies.
14:04
Sure. I know that the FFIEC issued guidance specifically around social media compliance in 20 13 and 1 of the big pillars of that document that lenders are responsible for is having a training program in place for those loan officers.
14:20
You know, we had actually come alive very often, see that it's the Wild West out there with social media, and Ellos, or their own marketing departments. And that can be really hard to wrangle in for any one person or one department even. So, on that note, Mitch, you know, how do you think going with this meat and potatoes of low hanging fruit for regulators?
14:42
How do you think this change in administration is going to impact, you know, social media activity, in particular?
14:48
Well, so, I think the, depending on have the general industry issues, play, those are the issues that we've just talked about, it's the issues of fair lending. It's the issues that you deputy issues of privacy, things along those particular lines.
15:03
The matter which they play at are definitely going to impact social media because there's a component of social media that each one of those and other regulatory topics scopes, OK. So, that, by its very nature, means that social media is going to be on a much greater scrutiny.
15:25
It means that you're going to have to be really careful in your advertising, and making its termination, what is an ad and what isn't? What do you otherwise doing?
15:34
It means it's gonna make a big difference as to where you show certain things on social media, and where you don't show certain things on social media. So that you don't run into fair lending issues.
15:45
There can be issues that arise with privacy and data security, depending on how you utilize social media, and whether or not you're going to interact with consumers, and allow them to post on social media as well.
15:59
So, all of those things are going to come into play, and there's going to be great impact on it.
16:03
And I think social media listen, we just came through an incredible year. And I don't necessarily mean incredible in a good way.
16:12
But we came through quite a year where social media played a huge role in so many different areas outside of our industry.
16:20
OK, so social media itself is something today that regulators are frowning upon.
16:26
That legislators are frowning upon as well.
16:28
Make progress itself is definitely considering it probably will reign in the expansive freedoms that social media platforms otherwise provide mean.
16:41
The Democrats already already off it up in Amendments A bill that's called the Safe Take Tech, the Safe Tech Act.
16:51
And that would amend Section 230 of the Communications Act of 19 34.
16:56
Now you might say, So what does to 30 of the, you know, of an X from Section 230, even act from 19 34, have to do with it?
17:05
Well, that provided the basis for the protection that large tech providers have today, from liability for the content that they otherwise post.
17:16
And they have protection along those particular lines, And legislators are offering a bill to work, particularly change there.
17:24
So you know that social media is right up there, OK? It's right up there, it's being looked at.
17:30
I don't see these types of changes are going to impact mortgage bankers or loan officers are going to impact the Facebooks of the world.
17:40
They're meant to address the Facebooks of the world, but they're not meant to address lenders itself, and they don't need to, because lenders and loan officers and others that are the end users of social media is still liable.
17:56
For deceptive trade practices. For deceptive advertising, on it is still liable for targeted advertising that results in fair lending violations.
18:06
They're still liable for fair lending period. And this still responsible.
18:11
We're ensuring the integrity of the information that they otherwise collect. So, they're liable potentially on data security breaches breaches of privacy itself.
18:21
Now what's going to happen is the new administration is going to scrutinize this much more closely.
18:29
They have in the past, they have people that, you know, that basically drove through the internet to see what loan officers, what lenders and otherwise doing, OK. And that's where you got to do to make sure that lenders are, you know, are compliant.
18:46
It's a necessary thing, or from a regulator's perspective, because they need to see what's being told, What's being said, what's out there?
18:54
And from a company perspective itself, it's going to be a high priority area is going to be a lot more scrutiny, that's what's going to come out of it. That's the real impact that we're going to see on social media.
19:09
Troll through the internet that is entirely right. That we just spoke to a former regulator a couple of days ago about that very thing, and we've seen quite the rise in social media audits from state regulators.
19:21
Specifically New York, with, you know, fair lending being the center of the issue, and definitely a concern, or those lenders and regulators. So to that point, you know, we've kind of outlined the issues that are out there around social media. So, Mike, maybe you can tell us a little bit about what your organization has done, you know, made any updates to strategies around social media and online marketing compliance in general?
19:48
We've engaged a social media compliance company called Active Comply, and they've helped us tremendously.
19:54
But, um, we did, we have dedicated staff to work with our compliance consultant in that regard.
20:03
But the scary part for me is not knowing necessarily what we don't know, so, for example, how many Webpages are out there that loan officers might have that have a Contact Us section?
20:14
And what information are they collecting from consumers, and what are they doing with that information once they get it?
20:21
Why don't I have eyeballs on that.
20:24
Those are things that those are things that, you know, are top of mind for me and we have to, we have to create policies around how we're going to approach that.
20:33
How are we going to educate the loan officers about the potential liability surrounding it and then encouraging them, incentivizing them to follow policy by having no progressive marketing strategies. We can't, We can't turn these. These people want to market themselves and we have to, we have to support that.
20:50
Um, So then not knowing what we don't know is a little scary.
20:54
What's actually out there that we're not monitoring, Um, But from a from a day-to-day standpoint, I think it's around your policy itself.
21:06
Whoa.
21:07
Making sure that you're actually following what you have written down, and what you've handed to a regulator once they come in and audit you, that you're Most of us have had.
21:15
Most of us have some type of advertising policy, if not a more granular social media policy.
21:23
And so making sure that you're actually following that policy is going to be, Is going to be crucial, in my, in my opinion.
21:31
And then to, you know, being able to answer the question regarding, Does your company have a diversity and inclusion policy? And how does that impact your advertising strategies?
21:42
And making sure that we have feedback for that, because I can anticipate that that question is going to come across, you know, the desk when when we're sitting in front of an examiner, we need to be prepared to answer that question.
21:56
So, development of policies is, where is, is where my focus is, and also monitoring, then there's the corrective action phase where we actually have to show the, We have to show that we, OK, we're monitoring, we notice the violation, we corrected it, and here's what we're doing to make sure it doesn't happen.
22:15
Again, I think if you, if you have some level of documentation in that regard, you're going to be OK, generally.
22:25
That, that brings up a good point, is that, it's really hunky dory to talk about social media compliance and monitoring, but you really can't go anywhere unless you have a foundation of policy in place and then instruct, you know your employees. How that should be manage, how they can utilize this tool without fear of losing their license, right?
22:44
Active completely, very often. Offer some best practices, is what to lender peers are doing, how to get buy in from different parties within the organization to make things happen, and be compliant. We did have a question come into the chat kind of around this topic, in considerations about, you know, what liability does a bank have for the activities of its correspondent, lenders, broker relationships around social media and marketing activities?
23:09
Specifically regarding fair lending concerns?
23:15
So, let me, let me jump into that.
23:18
If you're talking about a corresponding lender, you're talking about a lender that is a licensed mortgage banker, or it could be a bank that doesn't need a license but is otherwise registered and it's one that originates the loan really from A to Z themselves, pretty much, you're talking about a lender that sells the loan to you in the secondary market.
23:38
That's a corresponding work.
23:41
And correspondent, lenders are obviously responsible for their own work and, and for the implications and consequences of what happens as a result of the originations that they that they otherwise do.
23:55
Do you have any liability or responsibility for fair lending issues that may be generated by a corresponding lender for work that they've done, say, or that their loan officers did, By way of social media, in other words, not advertising properly, you're doing something else along those particular lines. You know, the real answer is you should not.
24:19
You should not. That's not to say that regulators might not try along those particular lines, but you shouldn't that, because you're really purchasing and close the loan on an arm's length transaction in the secondary market from someone else. A correspondence is not your vendor, as opposed to a broker situation, which is very, very different.
24:40
But, at the end of the day, if this correspondent has fair lending issues, and those fair lending issues basically bubble up to your level, and you have fair lending issues in terms of the loans that you purchase, how many loans you purchase and whether or not you're not purchasing from protected minority groups as the results of your correspondence not originating along those particular lines, that's where the liability is going to go.
25:10
That's where the liabilities got gotta come into place, but having said what I did, a bad correspondents being responsible for their own actions and responsible for their loan on their own loan officers, as they, as they work with social media.
25:26
You know, if you have a correspondence, you should absolutely be looking and, what they're doing in social media, as well, It's absolutely something that needs to be done to avoid future problems, and to ensure that your portfolio and the loans that you purchase aren't going to be problematic from fair lending, or any other for any other reason along those lines.
25:50
True! Those, those ties come with responsibilities. And one of those responsibilities is, is management of, of the social media presence and what that represents. So, keeping with this more specific question, you know, what are some specific regulatory issues, Mitch that the industry should watch out for in the coming months And even years when it comes to social media? Because it's not, it's not going away anytime soon?
26:14
All right. So, I mean, broadly, we hit on some categories. We get our fair lending restful, you data privacy, data security, things along those lines. Let's break it up a little bit, OK.
26:25
Specific regulatory issues to watch out for over the next couple of years include all of those particular categories, But, if we jump into fair lending, fair lending issues. If loan officers that are going to arise, if loan officers are conducting business by way, of social media.
26:44
So here are the types of things from the fair lending perspective, OK?
26:48
give you, give me, heightened concern things you need to watch out for targeted advertising, OK?
26:55
Advertising on social media doesn't have an exception, it's advertising. That's what it is and targeting advertising becomes problematic.
27:03
Just because a platform like Facebook, allows loan originators to select certain parameters on which to focus and that doesn't mean that all of those parameters should be treated saying, it doesn't even mean that you shouldn't necessarily set those particular parameters.
27:23
Facebook gotten trouble just through offering those particular parameters, OK? Lenders that utilize it will get an even more trouble along those lines.
27:32
You have to think about targeted placements like any other area, and you have to ensure that you're not choosing prohibited bases when making those, uh, those particular uh placements.
27:46
Your company needs a policy are your compliance team to identify you have to put do's and don'ts in there.
27:53
For those selections, you gotta make the parameters you set out as to who you're going to reach and why are you going to reach certain people and those do's and don'ts and that policy really needs to come from the corporate level.
28:06
By appropriate departments, you have to think about other things like whether or not your loan originators are tagging certain groups or reposting certain spaces in social media, and you have to consider the affiliations like you would any social media environment. I mean, you wouldn't send fliers to certain communities.
28:31
So, why would you allow posts to be provided to only certain communities?
28:35
All right, you have to treat it the same way.
28:38
You also have to consider content to advertize social media as opposed to your content that you advertize in other places. In other words, discuss it saying, are you providing the same offers, if not, what's different, and why?
28:55
And, you know, are there office that are specific to social media, uh, participants, that otherwise cantab, and what impact is that going to have from a fair lending perspective as well?
29:11
It could well create unintended lending, fair lending consequences.
29:16
You have to think about who uses social media here and where and what you really are proposing.
29:23
Ah, you also, as a practical matter, have to think about and address compliance obligations in light of the very limited space that social media provides for you, and it is live on limited space. How are you going to deal with critical disclosures and disclaimers or you simply got to admit them because that's going to create some real problems for you.
29:45
Are the marketing materials suggesting improper activity because of limited space?
29:50
So you don't have sufficient diversity in your ads in, you know, in physical representations in the ads themselves.
30:00
Posting in groups that are only available to people with certain characteristics that may be based on prohibited bases. So you have those issues. So that's fair lending.
30:10
Respite issues are, you know, are about they comprise of a lot of different things. The first question that you have to ask yourself from a restaurant perspective is, what's a referral?
30:23
What's a referral under these circumstances?
30:26
If I like someone's post, is that an endorsement, which is akin to a referral or something else along those lines?
30:34
If I stand some next to someone in a picture in my effectively saying to the people that are viewing that post, that, Hey, this is my personal view here.
30:44
You should go to them to do things along those particular lights, when you co brands together, when I retreat, and what I share what, what message might delivering, what I do, something along those particular lines? And when you co brand presentations, I mean, even educational, once.
31:01
I know, am I making any referrals in there?
31:06
By doing that with someone else, these are all really difficult calls, and yet, rest is really implicated in these ways. So those are things those are things that you have to think about, as well.
31:21
And, you have to think about what's a thing of value, OK?
31:24
If you co brand together on a site, and someone else has created, the, the contents are doing that, right, is that a thing of value? That probably is a singular value.
31:36
If you happen to be referring business to them, or you can look at, look at the example the the other way around.
31:43
So, you have to, you know, you have to be careful and look at those things from that particular perspective.
31:51
Ah.
31:52
So, that's pretty much the way I look at it. I mean, from a UDL perspective, we talked about that you're going to be making representations on social media doing it in real time. You're doing it in the heat of the moment. I'm sure that, in most instances, this is not something that's being run by your compliance form, and that's what the, the rest of your advertising and things of that sort. And, you have you'd have concerns that come back come into play along those particular lines. And, again, I addressed before and I guess I'll just, a little more later, privacy concerns. The interaction that you have with the consumer.
32:28
And what are you doing to ensure the privacy of the information that you're otherwise utilizing?
32:35
Those are just some of the issues that you've got to think about, and watch out for when it comes to social media.
32:43
Yes, I think you hit multiple males on the head there I know that respire it's definitely a big concern for a lot of our vendor partners who come in and join Active Comply. We have found many things that were less than unsavory when it came to rest of Section eight. Concerns where top mortgage lenders have fellows that are out there saying So glad to be with such and such a realtor partner on this great fishing trip glad we were able to sponsor it. Thank you for the continued business, keep those referrals coming in.
33:12
There was a huge red flag, and we were able to identify that for our lenders. So that's definitely a concern where a lot of loan officers don't necessarily think about social media as advertising, but that's definitely what it is, and it's front and center for every regulator. Let's take a peek at. So to that point, one of the questions that came into the chat is about the value of a like, is it a thing of value.
33:35
And I know that some of the attendees might have seen on Reg list recently a discussion about a thing of value and how jets tickets were fine to give out because they didn't have any value at all. But to that point, Mike, done, I know you and I have had quite a few conversations about this. Can you speak to the value of Alike, and how that that could be concerning for respite?
33:59
Well, our policies talk about a pattern or practice, so we're looking out for, for patterns, as opposed to single instances.
34:08
So, uh, so in that regard, we're much more concerned with, no, the same things that an examiner might look for in terms of an examination.
34:20
So, if they come in and say, Hey, we noticed that no, Mike loan officer over here is liking Mitch Realtor's post, like, every single day.
34:31
How many, how many loans have come in from Mitch to make, They're gonna look at. That means, it's pretty commonsense stuff. So, we're mainly looking at patterns.
34:40
Um, what we're, we're noticing is that there's a lot of no flyer builder type software out there that is really easy to create flyers, and there's a lot of co branding happening.
34:53
From a compliance perspective, we're advising the marketing departments that we must share equally in those costs.
35:00
and in their feedback to us, is: There is no cost, we purchase this.
35:05
We purchased the software, you know, two years ago, and we can make a quick flyer and we can place a realtor face on it, and we can place our loan officers face on it. What are we supposed to do?
35:15
charge the realtor $7 for, you know, the, the hour that it took me to put this together?
35:23
And so, what we're doing is we're creating documentation of, of little to no cost when it comes to, to some of these kinda co branded items that are online or a quick flyer type things, because it's very difficult to identify what the cost is in involved with those things.
35:41
Um, So those are some of the challenges, because we know we know we are going to need to answer those questions when they come in, and they say, No.
35:49
We see a bunch of these co branded flyers.
35:52
Show us the receipts that your year Paying your fair share and fair share that's being paid by the Realtor, the Builder, whoever it is.
36:01
And so we're gonna need to be prepared to answer that question with some level of documentation, whether it's whether it's your department's policy to collect the $7 check or if it's your department's policy to have some level of documentation of a de minimis type of amount.
36:19
Those are the things that we're actively considering now.
36:23
Um, enter kind of challenging to put true policies around, but the overarching policy is compliance with with respire, Section eight, looking for patterns.
36:35
And when there is something identified, having a swift response with a corrective action.
36:42
So let me jump in for a minute. I think that's great, Mark. I think you're right on top of what needs to be done.
36:47
But I just want to point out for, for, for our listeners, there actually is no de minimus S in rescue.
36:55
A lot of people thought there was a de minimis test, you know, is at $25 or something like that, but there's no de Minimus test when it comes to a thing of value.
37:05
That test doesn't exist. And so as Mike said, you know, you wrestle with the issue, so are we going to split up to $7 or are we just gonna say it really is de Minimus command? Don't make me did $7, because next week he'll pick to the 7000 cells. But the other thing that you've got to realize is, it's really difficult.
37:24
It's really just difficult to figure out what the costs are and to split up the costs on social media, because the platforms, for the most part are free, And so, there's that.
37:34
But there's a lot of sophisticated stuff going on in social media, with loan officer, and with lenders.
37:41
And there are people behind those sophisticated things, the ones that are creating the content itself.
37:46
And it costs money to create the contents. So really, that doesn't happen all the time.
37:52
But really, what you need to do is you need to sit down and make a determination as to how this was all produced, and whether or not their work costs along those particular lines. Because as you are being examined, these examiners are looking for those things as well. So.
38:13
Being able to provide that documentation, because you know what they're going to ask for, when when they do come.
38:18
So it's better to have that documented for, for the time being to that point, talking about some of the technology available out there.
38:26
Mitch, do most companies that you work with utilize software for social media, or are they using a manual process where humans are really doing a lot of that manual review?
38:39
I think it's a mix there, quite frankly.
38:42
I think that's the way I would answer that.
38:46
I mean, I think there are a lot of efficiencies to doing it with software, right?
38:53
And finding, you know, the issues and being able to reach more along those particular lines.
39:00
I think the industry is still in the process of coming to terms with what needs to be done, to monitor social media and two, and to ensure that it's compliant.
39:15
And do I think that ultimately, it's most of it, if not all of it, is going to move to technology. And technology solutions for these matters? Yes, I do.
39:28
It's mixed.
39:30
Very good. So, with that in mind, what are some strategies, whether you're manually monitoring, or if you're making use of, of technology solutions. What are some strategies that both companies and aloes, because that's where this all begins, can take to mitigate social media concerns?
39:49
Wow.
39:50
So, companies are the ones, the principal, you have. The concern ... should have a concern as well, because they are personally liable for violations of the various acts and statutes that we are being made. But you can consider limiting social media to to business pages themselves.
40:09
And there are a number of companies that do that, and they try to keep, you know, personal matters on one set of social media and business matters on business pages. You can take it one step further.
40:24
You know, there are companies that actually provide the social media and business pages and they don't allow anything else on those pages and they provide that for their loan officers. I mean, there's obviously benefits to that. Great benefits to that, you know, the better controls it's easier to monitor and to administer and things of that sort. But there are downsides to it as well, ellos or active sales, people and they're going to resist limiting themselves.
40:51
Along those particular lines. They have this great media out there where they can go out and reach people and they're going to and they're going to want to reach it.
41:01
And, you know, sometimes if your social media policy is too restrictive, it's too restrictive.
41:12
You may not get that loan officer to even work at your company quite frankly.
41:15
It becomes a recruitment issue at times and I've seen that happen as well.
41:21
So, that was a couple of strategies for you.
41:24
I mean, obviously, the best strategy, that should be incorporated and everyone's plan, is to monitor.
41:30
You have to monitor. You need to know what's going on out there in the, you know, with URLs, you need to know in an almost real-time basis.
41:38
And you need to be able to turn around and train URLs based on what you learn from the monitoring itself.
41:44
That's the key.
41:46
I mean, you just have to keep at it, and every time you see what potentially is an issue, you've gotta go back and you gotta train again and again, you need to have policies and procedures. You need to have, you know, do's and don'ts. Do this, don't do that. Which include the regulatory requirements.
42:06
You know, your, your policies and procedures in your training has to, you know, make sure that you're loan originators and others that are using social media in this way. Understand what a trigger terminus.
42:20
Understand the, the licensing information that needs to be placed on the social media, that they are promoting themselves and their company through, Uh, So you need that, Another policy, I would not just have policies and goals, but I would have my loan originators acknowledge receipt of it and the fact that they've gone through it and I might even have a section in my training, where they get to ask those questions.
42:48
You walk the fine line, though. I have to tell you.
42:51
This is one of the toughest compliance issues that's out there for for mortgage bankers. And I'm sure in other industries as well, because, you know, there's a lot of exposure out there.
43:03
It's dynamic, it's, it takes place in real time.
43:10
And you don't have a lot of control at that very moment of time when someone's posting something themselves, right? So you have control upfront, you can set your parameters, set of rules as to what you can and can't do. You can give them pages and vacuum pages, get those policies and procedures, and make sure you train them and make sure they understand everything else, but, boom, they were out there on their own, and then marketing on their own right after that.
43:37
And, you know, you gotta hope that they follow it.
43:40
But one of the other things that makes this, you know, so difficult is, you have to be really careful when you try to regulate an employee's speech, OK?
43:51
Because there are state employment and labor laws that protect employees rights to certain types of speeches, OK?
44:03
And so, you can't simply say, You can't talk yesterday, There are states out there that will not allow you to say, you know, to prohibit an employee from posting something negative about the company.
44:19
All right?
44:20
That's protected speech under under a number of states, labor laws, so you're walking a real fine line as you put your policies and your procedures together?
44:31
I haven't exactly at the front.
44:35
Just it just came to mind as something that, you know, maybe some other companies can relate to, or, or along those lines of regulating speech, where we have a policy that says that we require business pages, but people have their own personal Facebook pages and Instagram and things like that, and they post things.
44:56
All right, so sometimes people's political views, or personal opinions are maybe outside of the norms, and somebody can really easily cut and paste somebody's personal page.
45:10
You know, outside of the box, opinion, and posted on a company's main page and say, this company employs people like this. You should not go to this company.
45:20
And so, we have to be proactive in talking to them about that, and I think that goes back to the training piece, number one, but two that they have to be thinking about how they're how their posts are going to be impacting them, their job, whether or not there, even indicating that they work at our company on their personal page.
45:40
Um, but those types of things happen. I've seen it.
45:44
So, um, people, you know, cancel culture, isn't it. It's out there, and it's real. And people are looking for things to get offended by.
45:52
So when we see that one of our employees may have gone rogue, and then all of a sudden it appears on our main page.
46:00
We have to, we have to decide how we're going to do that from kind of a public relations standpoint.
46:06
Yep.
46:08
I think that you both made good points that it's a fine line between not only you know, personal speech versus business opportunities, how the brand is recognized by the public, how your employees are representing your brand, on their, on their pages, whether it's personal or business.
46:26
But you know, one of the big things definitely we keep coming back to is training, very often an active comply. We get questions about what are some best practices, how should we tackle this type of issue. one of the cool things that all of our attendees today you're gonna get after the conference is over is our Social Media Compliance Cheat Sheet for Lowes. And it kind of helps you strike the balance with your sales team between how can I make use of this really great tool safely. And it gives that the binding force between compliance Department happiness, and an elo Salesforce happiness for sure. So that'll be made available to everyone after the conference.
47:03
So, with these things in mind, we kind of briefly spoke about co marketing.
47:08
So we know that ellos are constantly getting and seeking opportunities to advertize alongside potential referral sources, like real estate agents. This is only getting more complicated when it gets to posting on social media.
47:21
So can you remind us of some key co marketing issues and let us know whether any of those are specifically implicated by doing this activity through the social media medium, you know, with, you know, sharing posts, potentially, realtor partners, things of that nature?
47:36
Yeah, there are a number of things to think about. And we've covered, we've covered a number of things. A number of these things as well.
47:42
Already, when you're talking about cobol, first of all, co marketing is when two parties are on basically, one marketing piece. That's what idiots. The platform provider is not considered the cold market. It's a two parter, so you have a loan officer, and you have a real estate agents or someone else along this particular lives.
48:02
We've already addressed the issue of paying your fair share, paying the pro rata share doing that. And that's really hard to do.
48:10
And hard to find as we discussed, You know, when you're dealing with social media, and that's why I say a little more creatively about it. Thinking about, put together the content. You know, did someone got paid on an hourly basis, right?
48:26
What went into these particular things, and how are you going to split the costs? Are, you know, social media?
48:34
The c.f.p.b.'s biggest concern, and I think other regulators, biggest concern, is that when you co market with each other, but consumers.
48:43
So, you put a real estate agent or broker, and you put a loan officer, or mortgage company there, and we, the consumer, is going to look at it as, Yeah, they're telling me, this is my guy.
48:57
Go to them, these are my people over here and they're good, and that's a referral. And that's what they're worried about.
49:03
And there's one way of dealing with that, that's pretty easy.
49:08
And that's when you, when you co market together, market an advertisement over each one section, just put that little word advertisement, just like when you're reading a magazine and all of a sudden you're reading an article and it basically has the same theme. And you think But it's a little different but it's got the same thing then you'll look on top of it. And it says Advertisement right on the top right there.
49:29
No. And I have my clients do that.
49:31
And I think the important thing, the other thing about co marketing that we went over already is no endorsements. So, none of this stuff about, this is my preferred partner.
49:42
This is the best, you know, or anything else along those lines, another thing to think about is who you're marketing to.
49:52
So if you come market with a realtor that simply sends, and you want to simply send the marketing pieces to the realtors clients, you gotta prominence as a marketing piece that needs to go to the general public.
50:03
Back in 2010, HUD issued an interpretive rule, which is still good law today. It was published in the Federal Register. It is a law that says, you gotta pay for marketing.
50:13
OK, it's gotta be marketing to the general public. It can't be marketing just to a specific set of consumers, so that's, that's an important thing as well.
50:22
two more things don't pay, and don't pay each other based on capture rates, based up, because you do that, you're just paying on referrals, and it's a straight out section, the rest of the violation and the last thing that I'd point out, is, you know, sometimes you have these social media platforms that you have to join.
50:46
And so, you know, lenders, Realtors, both loved and that is, will I joined that. You can't use it's only Through me, So I'm bringing you in. So there's a gatekeeper that's over there, and you can't find yourself in a gatekeeper situation.
51:02
Because if you're a gatekeeper and you're bringing someone else in, and telling them they can only advertize with you, if that party is referring business to you, you've got a problem.
51:13
Because that's a thing of value.
51:14
by letting them into something they otherwise could get into. So, if you're on one of those platforms where you actually have to sign up, you have to be admitted intuitive. Something along those particular lines.
51:24
Each of the part better have access to that platform themselves.
51:30
And not necessarily just with each other. Not just with each other that they need to have, both be eligible and have access along those lines.
51:40
So the brief time we had available, that's what I would throw out there about comore.
51:46
Sure. It's funny that you say those comments about endorsement, because it's not just between an elo and a Realtor though very often, that's what we see at Active Comply. We've seen instances where a lender has turned on different trigger terms around trademark infringement issues that they're suffering from, where somebody in, their team had said endorsed by Dave Ramsey, or the Green Bay packers Love us come get a loan just like them where there was all these other issues with social media that didn't really come to mind outside of regulatory compliance. Until that point, this one might be a good question for you, Mitch. specifically, From the chat, somebody asked, can you outline what regulators want to see from a monitoring standpoint.
52:29
Obviously, it would be nice to work with the vendor to manage, but what is the regulator looking for to ensure we are doing our due diligence?
52:37
So, what the regulators, in fact, looking for, is to see that you are on top of what's being posted by members of your company.
52:49
Are your employees in social media?
52:51
That's what they are looking for.
52:53
They want you to control advertising number one.
52:57
And if you can't control advertising, because we have these things called social media, and you can't stop people from going on social media, and saying certain things.
53:06
They want you to know who's out there, who's doing what, and what it is that the robots. So, that's really the bottom line. It's, it's critical. Its importance and, and that's what regulators expect you to do, but they expected to do more with it.
53:23
They expect you to address, OK, they expressed, expect you to quickly address any issues that you might see through anyone's postings on on social media.
53:34
And if you can do that, you can save yourself a lot of money, frankly, you know, through a lot of potential harm Ultimately being being stopped. That's what they're looking for.
53:48
Definitely the goal I think of most people here is to to avoid the fines that, that might be associated for sure. We are nearing the ending minute mark for the conference, but we're gonna go ahead and launch one more poll to the attendees before we have our closing remarks and answer a couple more of these questions that came in the chat. Really great questions.
54:10
Together, minute or so, for everyone to answer the poll?
54:17
Unless I just had, just to add to mitchison, I'll go for it.
54:22
The, uh, we've actually seen, in, in regulated questionnaires and in Audit questionnaires, um, some proactive questions about our corrective actions are, say, show us, have you had any advertising?
54:39
Have you had any advertising violations that you've uncovered in your internal audit program or in your compliance program? Show us any corrective actions that you've taken.
54:49
So they'll ask us right upfront whether or not we have corrective actions and they're expecting to see some level of documentation on that because they want to know that we're on top of it, Just like Mitch said. So that's that's part of your CMS. That's part of your compliance management system.
55:02
You know, you could find problems, Everyone's gonna find problems in all different areas, especially in this particular industry, but one of the most important components of your, of your compliance management system is what you do when you found those problems.
55:17
That's why they're asking that. So, that's a really good point.
55:22
So, true, and very often act to comply, we see, you know, different examinations come in where they're wanting instances of social media advertising, That can be really difficult if everyone's their own marketing departments. So one way that we help our lender partners is we capture all that information. We archive it so that they're ready at any point in time when a regulator comes in, whether it's internal audit or a state regulator, and they'll have that opportunity.
55:46
I think we're nearly at time, so are there any more closing advice or, or notes that you'd like to share with today's audience?
55:55
Yeah.
55:57
So, I'll start, I'll just say that social media is really important.
56:01
The purpose of my coming onto this particular panel was not to tell you, don't do social media, and don't allow your loan officers to do social media. I think that would be absolutely ridiculous, quite frankly.
56:14
I think it's really important, but I think it's really important for you to find the range that you're comfortable with.
56:22
You need to put yourself in a position where you are satisfied, that you're ellos, no one understands what they can do, what they can't do, and what pitfalls and ramifications of doing. Something else really are.
56:34
You need to walk that fine line of allowing them to take advantage of the Incredible freedom.
56:42
These platforms have allowed them to get out there, but, at the same time, doing it with an understanding that all of our marketing regulations and there are a number of different statutes that come into play, you know, come into play in social media as well.
56:59
So, it's a matter of, you know, it's tough. And it. And you're going to be battling with this for the rest of your careers, quite honestly, because social media is not going away.
57:11
And, you know, and you're not going to be able to hold your loan officers back, nor should you hold your loan officers back.
57:18
So, you do your best, monitor, and train, monitor, and train, Train off your manji, because training alone is only as good as what information you already have.
57:31
So you need to go out there and see where the issues are, see what the problems are, and then train them on that.
57:36
That's my address.
57:39
I'm going to be real quick because we're up against the hour, But if it didn't, if you didn't document it, it didn't happen.
57:44
And so, that's, that's my, you know, kinda parting advice is that you gotta document your corrective actions. Your policies be able to defend it.
57:52
Have a reasonable, um, you know, the reason why you put it in place in the first place. and then have a corrective action documentation.
58:04
Sweet and succinct.
58:06
Well, said, Mike and Mitch, Thank you again for your time today and for shedding light on these increasingly relevant compliance topics. If anyone has a question that they did not get answered today, we had quite a few come in. It's definitely an exciting topic. We're going to partner with our panelists afterwards to relay those over for sure.
58:24
And if anyone is interested in learning more about social media compliance through automation or wants to receive a free social media compliance report, please reach out to chase at active Y dot com for more information. Otherwise, thank you so much, gentlemen, and have a great rest of your Thursday.