Southern Trust Mortgage Co. of Virginia Beach late last week told its loan brokers that it would exit the channel, citing what it calls "increasing compliance implications" tied to the Federal Reserve's new loan officer compensation rule.
Instead of funding mortgages through loan brokers, STMC will concentrate solely on retail production. At press time, company officials could not be reached for comment.
Its intention to exit the wholesale channel was mentioned in a letter issued to its broker partners. Its last day as a wholesaler was Friday.
STMC apologized to its brokers for "any inconvenience" its departure might cause, but said its decision was driven by the "ongoing regulatory uncertainty surrounding [the] third party originated business…"
Last week a Federal court overturned a recent stay that would have temporarily blocked the Federal Reserve's new loan officer compensation rules, which dictate stricter terms on how independent third-party brokerage firms can be paid and how these firms pay their loan officers.
The National Association of Mortgage Brokers, and National Association of Independent Housing Professionals, are contemplating filing new legal motions to challenge the rule.
