Peter Cugno, Chairman & CEO of Secret! University, America's Money Center

As published in Scotsman Guide's Residential Edition, January 2005.

Have you ever heard the phrase “complies with all applicable laws?" What do you think it means? This vague string of words is included in every broker/originator agreement with a wholesale funding source. Being unaware of or ignoring it could be expensive. When they get squeezed, some wholesalers look “downstream” to squeeze others.

As a self-employed individual, you must follow many compliance rules, like having a written information security plan, or you may be asked to buy back your loans! Believe me, when a loan gets bought back by the wholesaler because their upstream funding source got burned, they look downstream at the broker of record and at the originator to see whom they can strong-arm into buying the loan back from them. Such situations happen every day in this industry. Perhaps it won’t happen to you next week, but it will happen in a year or two, when you are doing better and have more assets than you do now.

Even if you work for someone else, the Gramm-Leach-Bliley (GLB) Act requires you to comply with its provisions. It specifically affects what you do when dealing with applicants from your home office, even as an employee. Unless you live alone and nobody ever enters your home, you must: 1) lock rooms and file cabinets where paper records are kept; 2) use password-activated screensavers; 3) use strong passwords (at least eight characters long); 4) and so forth-the list is long.

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