National Mortgage Professional Magazine June 2015 by United Sports Publications

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Hard-hitting, fact based look at some of the most important issues facing the home ﬁnance industry today – with a bit of humor and irreverence thrown in.

N A T I O N A L

M O R T

Legends of Lending: REMN Wholesale ... Selling the Customer Experience By Phil Hall

36 NMP’s Mortgage Professional of the Month: John L. Councilman, CMC, CRMS, President of NAMB—The Association of Mortgage Professionals By Phil Hall

J U N E

2 0 1 5

V O L U

A SPECIAL FOCUS ON “COMPLIANCE TODAY” Side Effects to TRID Compliance: May Cause Drowsiness? By Jeremy Potter ............................................................................................52 It’s on You: Appraisers and Third-Party Regulations By Greg Schroeder ........................................................................................54 Less Paper, More Compliant By Harry Gardner ..........................................56 Licensing the Right Technology Can Combat Costs By Pramod Karachur ......................................................................................58 The Culture of Compliance Trumps the Culture of Defiance By Michael McNulty ........................................................................................60 Reduce Costs and Ensure Compliance With Technology By Jennifer Hamby..........................................................................................61

40 Loan Estimate: Deep Dive By Jonathan Foxx

AMCs in the Regulatory World By Michael Dresden ..................................62 Dinosaurs Don’t Care By Eric Weinstein ......................................................64 Gearing Up for the TRID Transition By Greg Stephens ..............................65 Getting Familiar With Today’s Marketing Compliance Trends By Alex Baydin ................................................................................................67 Deterring Mortgage Fraud in the Era of Compliance By Francine Delgado ......................................................................................68 Are You Prepared for TRID? By Heather Kerns ..........................................70

FEATURES A Better Understanding of the Final Rule for AMCs By Cari Burris............8

46 Lykken on Lending: Relationship Management ... Nine Stakeholders With Whom You Need to Nurture Relationships By Daved Lykken

The Elite Performer: A Q&A With FitzGerald Farms By Andy W. Harris, CRMS ................................................................................8 Thirty-Seven New Real Estate Agents Who Want to do Business With You? By Brian Sacks ............................................................................10

V I S I T Company

Web Site

O U R

A Page

Agility Resources Group ...................................... www.agilityresourcesgroup.com ......................................62 American Advisors Group.................................... www.aagwholesale.com ................................................68 American Financial Resources Inc. ...................... www.afrwholesale.com/wd-benefits ....................Back Cover Brokers Compliance Group.................................. www.brokerscompliancegroup.com ..................................80 CallFurst.com ...................................................... www.callfurst.com ............................................................63 Carrington Mortgage Services, LLC ...................... www.carringtonwholesale.com ..............................29 & 53 Document Systems, Inc./DocMagic ...................... www.docmagic.com ........................................................7

Equity Prime LLC................................................ www.equityprime.com ..........................................54 & 69

Step Inside Ginnie Mae: The Ginnie Mae Model and New Housing Finance Trends By Ted W. Tozer

Lykken On Lending ............................................ www.lykkenonlending.com ............................................37

FAMP ................................................................ www.myfamp.org ..........................................................37 First Guaranty Mortgage Corp. ............................ www.fgmc.com ..............................Inside Front Cover & 55 Freedom Mortgage Corporation .......................... www.freedomwholesale.com ............................27, 45 & 58 HomeBridge Wholesale ...................................... www.homebridgewholesale.com ....................................13 iServe Residential Lending, LLC .......................... www.joiniserve.com ......................................................17 MBS Highway .................................................... www.mbshighway.com/MNN ..........................................31 Monroe Capital, Inc. .......................................... www.monroecap.net ......................................................42 Mortgage News Network (MNN) .......................... www.mortgagenewsnetwork.com ......................................1

T G A G E

U M E

P R O F E S S I O N A L

N U M B E R

Growing Your Business in an Unpredictable Environment By Keith Bilodeau............................................................................................16 Five Tips to Get a Prospect to Return Your Call By K. Justin Restaino....18 NAMB Perspective ........................................................................................20 Tales From the Closing Table By Andrew Liput ..........................................24 Credit Crises: Avoiding Revenge Debt and Protecting Your FICO Scores By Laurie Zoock ..............................................................26 Investing in Vendor Performance Management By Judy Wheatley ..........28 Industry Updates By Gavin T. Ales ..............................................................30 NMP’s Economic Commentary: Why Rates Rose in May By Dave Hershman ........................................................................................34 Brokers Turn to Direct Mail..........................................................................38 Why 2015 Is the Time to Target Renters By Bubba Mills ..........................49 The Long & Short: The Business of Short Sales By Pam Marron ............44 Just Ask Eric & Laura By Eric Weinstein & Laura Burke..............................50 Vendors Keepers, Losers Weepers By Michael Goldhirsch Esq. ..............71 MBA’s Mortgage Action Alliance: A Message From MAA Chairman Fowler Williams ..................................................................74

COLUMNS New to Market..............................................................................12 News Flash: June 2015................................................................14 Heard on the Street ....................................................................44 Outstanding Places to Work ......................................................76 NMP Calendar of Events ............................................................77 NMP Resource Registry..............................................................78

D V E R T I S E R S Company

Web Site

Page

Movetube.......................................................... www.movetube.com ......................................................39 NAMB+ ............................................................ www.nambplus.com ......................................................25 NAMB National .................................................. www.nambnational.com ..........................................3 & 57 NAPMW ............................................................ www.napmw.org ....................................................33 & 64 NAWRB ............................................................ www.nawrb.com ............................................................75 Nationwide Appraisal Network............................ www.nationwide-appraisal.com ......................................65 Paramount Residential Mortgage Group, Inc. ...... www.prmg.net ..........................15, 43 & Inside Back Cover PB Financial Group Corp..................................... www.calhardmoney.com ................................................47 PreApprovalLetter.com ...................................... www.preapprovalletter.com/lender ................................56 Radian Guaranty ................................................ www.radian.biz ............................................................19 REMN Wholesale ................................................ www.remnwholesale.com ................................................5 Ridgewood Savings Bank .................................... www.ridgewoodbank.com ..............................................59 TagQuest .......................................................... www.tagquest.com ........................................................35 The Bond Exchange............................................ www.thebondexchange.com ..........................................46 The National Real Estate Post.............................. www.thenationalrealestatepost.com ..............................73 Titan List & Mailing Services, Inc. ........................ www.titanlists.com ..........................................................9 United Wholesale Mortgage ................................ www.uwm.com ..............................................................11

FROM THE

JUNE 2015 Volume 7 • Number 6

1220 Wantagh Avenue • Wantagh, NY 11793-2202 Phone: (516) 409-5555 • Fax: (516) 409-4600 Web site: NationalMortgageProfessional.com STAFF Eric C. Peck Editor-in-Chief (516) 409-5555, ext. 312 ericp@nmpmediacorp.com

Joel M. Berman Publisher - CEO (516) 409-5555, ext. 310 joel@nmpmediacorp.com

Joey Arendt Art Director (516) 409-5555, ext. 307 joeya@nmpmediacorp.com

Beverly Bolnick VP-Sales & Marketing (516) 409-5555, ext. 316 beverlyb@nmpmediacorp.com

Scott Koondel VP of Operations (516) 409-5555, ext. 324 scottk@nmpmediacorp.com

Phil Hall Managing Editor (516) 409-5555, ext. 312 philh@nmpmediacorp.com

Richard Zyta Social Media Ambassador (516) 409-5555 richardz@nmpmediacorp.com

Francine Miller Advertising Coordinator (516) 409-5555, ext. 301 francinem@nmpmediacorp.com

ADVERTISING To receive any information regarding advertising rates, deadlines and requirements, please contact VP-Sales & Marketing Beverly Bolnick at (516) 409-5555, ext. 316 or e-mail beverlyb@nmpmediacorp.com.

ARTICLE SUBMISSIONS/PRESS RELEASES To submit any material, including articles and press releases, please contact Editor-in-Chief Eric C. Peck at (516) 409-5555, ext. 312 or e-mail ericp@nmpmediacorp.com. The deadline for submissions is the first of the month prior to the target issue.

SUBSCRIPTIONS

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To receive subscription information, please call (516) 409-5555, ext. 301; e-mail orders@nmpmediacorp.com or visit www.nationalmortgageprofessional.com. Any subscription changes may be made to the attention of “Circulation” via fax to (516) 409-4600. Statements, articles and opinions in National Mortgage Professional Magazine are the responsibility of the authors alone and do not imply the opinion or endorsement of NMP Media Corp., or the officers or members of National Association of Mortgage Brokers and its State Affiliates (NAMB), National Association of Professional Mortgage Women (NAPMW), National Consumer Reporting Association (NCRA) and/or other state mortgage trade associations. Participation in NAMB, NAPMW, NCRA, and/or other state mortgage trade associations events, activities and/or publications is available on a non-discriminatory basis and does not reflect the endorsement of the product and/or services by NMP Media Corp., NAMB, NAPMW, NCRA, and other state mortgage trade associations. National Mortgage Professional Magazine, NAMB, NAPMW, NCRA, and/or other state mortgage trade associations do not make any misrepresentations or warranties concerning the regulatory and/or compliance aspects of advertisers, products or services and/or the editorial content contained in NMP Media Corp. publications. National Mortgage Professional Magazine and NMP Media Corp. reserve the right to edit, reject and/or postpone the publication of any articles, information or data.

publisher’s desk

Don’t be afraid of being accused of being guilty of love t is 4:10 a.m. the morning of Saturday, June 6 and I cannot sleep. Today is going to be one of the toughest days in my life for my wife Anna and our family. Today is the funeral of my 29-year-old stepson, John Joseph Hanley II, who I always considered as my son, sharing him with his wonderful father who has become a close friend, Michael Hanley. John left behind sisters Stacy Ann and Michelle, brothers Michael, Andrew and Aidyn, nieces, and a nephew. On June 2, for reasons we will never know, John took his life and our world forever changed. Death is something we all become victims of eventually, but when it is your child, the pain is so much deeper and your immediate question is why? For those who never had the chance to cross him in their paths and get to know John, you missed a great man. John, with his infectious smile, always saw the best in everyone and had the utmost respect for everyone who crossed his path. During the days following his passing when family and friends visited our home and at his wake, I learned more about the love he had for life and the many people he touched in his brief life. It added a greater perspective of just who John was and will give my wife and I even more beautiful memories to add to those he had already left with us. U.S. Sen. Paul Tsongas, who passed away at the age of 56 in 1997, said words that are so simple yet so appropriate to share at this time: ‘’Pour yourself into your children so when you’re not around, you’re still around.’’ For now, I’ve already moved on from the asking “why” phase and replaced it with “how” when I think of his passing. Just “how” can I be a better father, grandfather and friend? How can I touch someone’s life each day that will both improve their life and put a smile on their face. John taught me, as I suffer the pain of his passing, and never really understood until now, that it doesn’t take material things to make your life. Stop and look around you each day. Remember that a simple act of caring today creates an endless ripple effect. Every day is a good day to start your own chain reaction. When someone does something as simple as smile at you, pay it forward. Learn how important it is to put a smile on someone’s face, then drive to put a dollar in your pocket. Remember, as so well put by another great quote from Sen. Tsongas, “No one on his deathbed ever said, ‘I wish I had spent more time on my business.’” To John Joseph Hanley Jr. II, aka “The Franchise,” I dedicate this month’s column, and I thank God for the years (albeit a lot less than we had hoped for) I had the chance to call you “my son” and give me and your mother, family and friends a chance to enjoy your uniqueness … love “The Bermanator” (a nickname John gave me and he loved to call me). Never be afraid of being accused of being guilty of love … in fact, be proud of it! Sincerely,

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NAMB The Association of Mortgage Professionals

National Association of Professional Mortgage Women

2701 West 15th Street, Suite 536 l Plano, TX 75075 Phone: (972) 758-1151 l Fax: (530) 484-2906 Web site: www.namb.org

2014-2015 NAPMW National Board of Directors

NAMB 2014-2015 Board of Directors OFFICERS John Councilman, CMC, CRMS—President AMC Mortgage Corporation 10136 Avalon Lake Circle l Fort Myers, FL 33913 Phone: (239) 267-2400 l E-mail: jlc@amcmortgage.com Rocke Andrews, CMC, CRMS—President-Elect Lending Arizona LLC 3531 North Pantano Road l Tucson, AZ 85750 Phone: (520) 886-7283 l E-mail: randrews@lendingarizona.net Fred Kreger, CMC—Vice President American Family Funding 28368 Constellation Road, Suite 398 l Santa Clarita, CA 91350 Phone: (661) 505-4311 l E-mail: fred.kreger@affloans.com Rick Bettencourt, CRMS—Secretary Mortgage Network 300 Rosewood Drive l Danvers, MA 01923 Phone: (978) 777-7500 l E-mail: rbettencourt@mortgagenetwork.com Andy W. Harris, CRMS—Treasurer Vantage Mortgage Group Inc. 15962 SW Boones Ferry Rd., Ste 100 l Lake Oswego, Oregon 97035 Phone: (503) 496-0431, ext. 302 E-mail: aharris@vantagemortgagegroup.com

Donald J. Frommeyer, CRMS—Immediate Past President/NAMB CEO American Midwest Bank 200 Medical Drive, Suite C-2A l Carmel, IN 46032 Phone: (317) 575-4355 l E-mail: donald.frommeyer@gmail.com

P.O. Box 451718 l Garland, TX 75045 Phone: (800) 827-3034 Web site: www.napmw.org

National President Christine Pollard (607) 226-1046 president@napmw.org

Vice President–Western Region Anna Mackovska (323) 321-2222 westernregion@napmw.org

President-Elect Kelly Hendricks (314) 398-6840 preselect@napmw.org

Secretary Cynthia Nutter (360) 258-2206 natsecretary@napmw.org

Vice President–Central Region Judy Alderson (918) 250-9080, ext. 300

Treasurer Kimberly Rozell, CME (607) 229-5008 nattreasurer@napmw.org

Vice President–Eastern Region Cathy Kantrowitz (845) 463-3011 easternregion@napmw.org

Parliamentarian Dawn Adams, GML, CMI (607) 329-4622 dawnvadams@live.com

Vice President–Northwestern Region William “Bill” Sanderson, CME, CMI (360) 713-9264

National Consumer Reporting Association 701 East Irving Park Road, Suite 306 l Roselle, IL 60172 Phone: (630) 539-1525 l Fax: (630) 539-1526 Web site: www.ncrainc.org

2014-2015 Board of Directors

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DIRECTORS Kay A. Cleland, CMC, CRMS KC Mortgage LLC 2041 North Highway 83, Unit CPO Box 783 l Franktown, CO 80116 Phone: (720) 670-0124 l E-mail: kay@kcmortgagecolorado.com

Mike Brown President (908) 813-8555, ext. 3020 mbrown@cisinfo.net

Judy Ryan Director Credit Plus (800) 258-3488 judy.ryan@creditplus.com

John H.P. Hudson, CRMS Premier Nationwide Lending 1202 W. Bitters Road, Bldg. 1, Ste. 1205 San Antonio, TX 78216 Phone: (817) 247-4766 l E-mail: jhudson@pnlending.com

William Bower Vice President (800) 288-4757 wbower@continfo.com

Mike Thomas Director (615) 386-2285, ext. 285 mthomas@ciccredit.com

Maureen Devine Ex-Officio (413) 736-4511 mdevine@strategicinfo.com

Dean Wangsgard Director (801) 487-8781 dean@nacmint.com

Julie Wink Treasurer (901) 259-5105 julie@datafacts.com

Terry Clemans Executive Director (630) 539-1525 tclemans@ncrainc.org

Renee Erickson Conference Chair (866) 932-2715 renee@zipreports.com

Jan Gerber Office Manager/Member Services (630) 539-1525 jgerber@ncrainc.org

Olga Kucerak, CRMS Crown Lending 110 Broadway, Suite 360 l San Antonio, TX 78205 Phone: (210) 828-3384 l E-mail: olga@crownlending.com David Luna, CRMS Mortgage Educators and Compliance 947 South 500 E, Suite 105 l American Fork, UT 84003 Phone: (877) 403-1428 l E-mail: david@mortgageeducators.com Linda McCoy, CRMS Mortgage Team 1 Inc. 6336 Piccadilly Square Drive l Mobile, AL 36609 Phone: (251) 650-0805 l E-mail: linda@mortgageteam1.com Valerie Saunders RE Financial Services 13033 West Lindburgh Avenue l Tampa, FL 33626 Phone: (866) 992-0785 l E-mail: valsaun@gmail.com John Stevens, CRMS Bank of England d/b/a ENG Lending 11650 South State Street, Suite 350 l Draper UT 84062 Phone: (801) 427-7111 l E-mail: jstevens@englending.com

Mary Campbell Director (701) 239-9977 mary@advantagecreditbureau.com

Scott Ledbetter Director (801) 375-5522 sledbetter@propertysolutions.com

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A Better Understanding of the Final Rule for Appraisal Management Companies By Cari Burris Understanding the changing dynamics of the appraisal business can be challenging, especially when enormous regulation and tighter lending standards have become a driving force in the “new” world of the appraisal management industry. Regulatory pressures are fundamentally impacting the way financial institutions manage the appraisal function. Take for instance the recent ruling implemented by the OCC, Board, FDIC, NCUA, Bureau and FHFA (collectively the “Agencies”) requiring that the Dodd-Frank Wall Street Reform and Consumer Protection Act (the Dodd-Frank Act) be applied by participating states in the registration and supervision of appraisal management companies (AMCs). The AMC minimum requirements in the final rule apply to states that elect to register and supervise AMCs.

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Participating states will require AMCs to: l Register with, and be subject to, supervision by the state appraiser certifying and licensing agency in the state or states in which such company operates. l Verify that only state-certified or state-licensed appraisers are used for federally-related transactions. l Require that appraisals comply with the Uniform Standards of Professional Appraisal Practice (USPAP). l Require that appraisals are conducted in accordance with the statutory appraisal independence standards under the Truth-in-Lending Act (TILA) [15 U.S.C. 1639e] and implementing regulations. The rule establishes the foundation for a National AMC Registry and outlines certain minimum requirements each state must meet, including a variety of registry requirements and oversight controls. Remaining states not participating might follow suit in order to keep business processes for mortgages flowing smoothly. Word on the street is that the ASC Advisory Council is currently working on technology and procedures that will enable automated weekly updates to the national registry for appraisers. This valuable tool, once realized, will no doubt aid in the vetting process and greatly improve in the monitoring of the appraisal panel by providing more accurate, detailed information while saving time in the research and verification process. Leaders in the AMC universe have invested a great deal of time and money in sustaining a compliance task force who actively participate in emerging issues and industry changes. Smart lenders understand the importance of having an expert AMC in the trenches, always monitoring and actively participating in the changes in regulations–not just on the federal level, but state by state, keeping current, alerting its clients to any change that may affect them. Now more than ever, lenders need to build strong business relationships with AMCs who are leaders in valuation management compliance and quality, who are intimately familiar with each state’s rules and requirements and who apply the strictest standards across the board to remain in compliance with the new regulatory landscape. Cari Burris is a founding partner of Nationwide Appraisal Network (NAN). She brings more than a decade of AMC expertise to the industry. Cari may be reached by phone at (813) 749-8840 or e-mail at cburris@nationwideappraisal.com.

THE

elite performer A Q&A With FitzGerald Farms By Andy W. Harris, CRMS

This past Memorial Day weekend, my family and I went camping and horseback riding with some friends here in the beautiful state of Oregon. A couple of these friends were Josh and Erica FitzGerald who are involved in running FitzGerald Farms LLC, a family business established in 1903 on the island of Maui and now located in Yamhill, Ore. Josh FitzGerald was a professional rodeo cowboy riding saddle bronc horses for “The difference more than 10 years which also led him to between perseverance team roping professionally. Josh and Erica spend the majority of and obstinacy is that one their time providing equine care and comes from a strong encouraging community support, will, and the other from involvement and the enjoyment of horsa strong won’t.” es and equine programs with others. They hold a summer horse camp for —Henry Ward Beecher kids along with a riding program and started the non-profit Teens and Oregon Mustangs. I find their ability to organize youth camps and train horses (even wild Mustangs) quite fascinating, and I thought this would be a great opportunity to interview them and ask a few questions about running a successful business I hope you find valuable. What do you find most rewarding about your business? Josh: Being able to offer experiences to the youth that would not have the ability otherwise. Erica: To provide a lifestyle for us to spend more quality time with our kids and be involved with our family.” You are both very hard workers. What helps you maintain a strong work ethic, as well as develop and train others in this area? Erica: The demand the animals put on us requires that we stay on task. We also have a youth mentorship program to help develop future animal trainers and leaders which we believe is imperative to upcoming generations. Josh: We are very passionate about horses and enjoy sharing this with others, which motivates us to put in hard work which we certainly find rewarding. Where do you see your business in the next 10 years? Erica: We want to create a youth retreat center where kids can come and work with the BLM to help increase horse adoption and also teach practical life skills and leadership. What do you believe to be the best form of marketing and how do you implement that in your business? Josh: Word of mouth is the primary source for developing business by relationcontinued on page 16

SPONSORED EDITORIAL

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Thirty-Seven New Real Estate Agents Who Want to do Business With You? By Brian Sacks e all struggle to get real estate agents to give us business. Frustrating isn’t it? I often have to laugh when I see the next new “shiny object” that comes out promising to help you get more deals from agents. When I started back in the 1980s, I was told by my manager at the time to go out and make some new relationships with real estate agents. So I looked around at what the other loan officers were doing and simply copied them. They were all going out with rate sheets and stuffing them in the agents’ boxes and hoping and praying they would run into an agent they could meet. It took me many years to figure out that mailboxes, whether online or physical, don’t give you business … only people can give you business.

But first … you must accomplish three important tests. This is something you should be thinking about at all times. In order to get

“It took me many years to figure out that mailboxes, whether online or physical, don’t give you business … only people can give you business.” business from someone (a client or referral partner) they must feel like they know you. They must also trust you and they must like you. One final test is that they must feel like you know what you are doing–also known as “being seen as an expert.”

How can you pass these tests? I am not going to go into the obvious solution—which of course is to get buyers pre-approved before agents get to them. This question always puzzled me. I would drop off rate sheets. I would bring food. I would beg. I would have lunch. I would spend hours doing open house spreadsheets. I would worry! I could go on and on but I know you get the point and feel the pain too. Then it dawned on me. Why not go where there the real estate agents are? Where there are NO

BARRIERS, and in fact, you are welcomed as a respected guest. Do you have any idea where this magical place might be? It’s your local board of real estate agents. You should join and become active with your local board. This is a way to meet Realtors in a friendly setting as a peer instead of a vendor or beggar. But there are more opportunities as well. Real estate agents, like loan officers, need continuing credit hours to renew their license. Why not teach a class? It could be on any topic related to mortgage financing … even a basic mortgage course for new agents. Next week, I will be teaching a 90minute continuing credit course at my local board. The course will be on “How to Increase Your Closings Working With Boomerang Buyers.” There are already 37 agents signed up and we will likely double that total.

So imagine that for a minute … the board has now promoted you, your expertise and your course. The agents in attendance now get to meet you, know you and like you instead of meeting them one at a time. The fact that you are teaching shows them you are an expert. Try this and you will leave with new relationships and probably a few new loans! But always keep in mind that when a real estate agent gives you a deal, they are trusting you with their reputation and their paycheck. This is not something to take lightly. Make sure they are aware of just how important that last sentence is to you. Brian Sacks is a nationally-renowned mortgage expert who has career closing of more than 5,924 transactions for in excess of $1 billion. He has trained, consulted and coached, tens of thousands of loan officers and company owners over the past 29 years on how to close more loans, make more money and still have a life. You can download his report, “The Four Tools You Can Use to Immediately Grow Your Business,” a www.AgentsChaseYou.com. Brian may be reached by phone at (443) 324-8424 or email loanofficertips@gmail.com.

YOUNITED IS YOU AND UWM

consistent turn times in the industry. You have direct access to the industry’s most knowledgeable AE’s, underwriters and support teams. You can stay connected to your borrowers with programs like Unite, a contact information. Being Younited is having a partner that has your back 24/7 - no matter what. It means we’re a success only when you are. That’s why more brokers choose UWM than any other lender. Join our network, and unite with us at uwm.com.

800.981.8898 | UWM.COM This information is provided to mortgage and real estate professionals only and is not intended nor is it authorized for consumer distribution.

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quarterly home valuation emailed directly to your borrower personalized with your photo, company and

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At UWM we focus on YOU, not the transaction. When you’re Younited, you have the fastest and most

LCG Launches TRIDHotline.com Compliance Assistance Site

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Lenders Compliance Group Inc. (LCG) has announced the launch of TRID-Hotline.com, a free service to residential mortgage lenders and originators involved in implementing TILA-RESPA Disclosure Integration (TRID). Recently, LCG established TEAM TRID, consisting of subject matter experts in all relevant areas of regulatory compliance, the purpose of which is to provide guidance in TRID implementation requirements. “We decided to establish a no-fee outreach effort to financial firms involved in TRID implementation,” said Jonathan Foxx, president and managing director of LCG. “We want to listen to these companies! There are just too many pundits telling mortgage originators what they supposedly need to know. But these pundits are not listening to the specific needs of a financial institution. TRIDHotline.com is our way of listening!” TRIDHotline.com is a Web site that enables a user to send an e-mail to TEAM TRID. Its hours of operation are Monday-Friday, 9:00 a.m.-5:00 p.m. (EST), and inquiries are reviewed by members of TEAM TRID, is a compliance solution offered by LCG as a hands-on approach provided on a flat fee basis. Responses are generally arranged within 24-72 hours. In order to accommodate the number of inquiries, TRIDHotline.com accepts a limited number of inquiries per company within a 30-day period. “TRID implementation is coming soon, and we want to do what we can to help in this informal way,” said Foxx. “We believe that TRIDHotline.com is one way to offer some compliance support to mortgage loan originators.”

“The Carrington Loan” Now Available Via Carrington’s Wholesale Lending Division Carrington Mortgage Services has announced that it will make The Carrington Loan available through its national wholesale

lending division. Developed in support of Carrington’s commitment to serve the “underserved” market and firsttime homebuyers, The Carrington Loan offers borrowers a more transparent, simplified home loan process with no closing costs or upfront financing fees to facilitate home purchases. “The Carrington Loan simplifies the loan process and improves the experience to help remove the anxiety often associated with a mortgage loan, particularly for those who do not have sufficient cash on hand to pay upfront financing fees, appraisal and closing costs,” said Carrington Mortgage Services, Mortgage Lending Division Executive Vice President Ray Brousseau. “With The Carrington Loan, there is no need for a mortgage broker to modify the rate after it is presented to the borrower to offset loan costs and loan closing fees, and unexpected increases to estimated closing costs are not an issue. Removing these barriers simplifies the process for our mortgage broker partners and their borrowers who desire to fulfill their dream of homeownership.” This initiative presents additional opportunities for purchase-focused brokers to work directly with real estate agents, consumers and investors to extend their purchase home loan offerings. In addition, mortgage brokers who specialize in refinance opportunities provide The Carrington Loan as an option for FHA/VA borrowers. Carrington has started providing Carrington Loan training to its broker partners throughout the program’s launch period. Mortgage brokers can sign up for the company’s “Daily Rate Report” and view the Webinar schedule at www.CarringtonWholesale.com. The Carrington Loan is unique in that: There are no closing costs, appraisal fees or lender financing fees; Carrington pays all eligible loan costs as lender credits; and if any unanticipated lender costs arise, Carrington will issue a credit to cover them, including additional title or escrow service charges from the title or settlement company.

Parkside Lending Launches Improved Non-QM Product

Parkside Lending is reintroducing Parkside Collateral, a non-QM loan product created to provide affordable financing exclusively for investment properties. The product is currently available through Parkside Lending, LLC’s Wholesale Channel. By design, the Parkside Collateral loan focuses on positive cash flows and underwriting requirements that are both sensible and responsible. Some of the features of this 30-year fixed term product include: Unlimited Financed Properties (max 4 or $2MM with Parkside); loan-to-values up to 70 percent; minimum credit score of 700; loan amounts starting from $75,000 and up to as much as $1 million for four-unit properties; there is no borrower Debt-To-Income (DTI) calculation; qualification is based on the property DTI with a maximum of 90 percent; and eligible properties include single family residences, Planned Unit Developments (PUD), condominiums, and two- to four-unit multi-family dwellings. “This non-QM product addresses the current lack of liquidity for loans that do not fit the conventional mortgage space and answers a real need among creditworthy borrowers who wish to purchase or refinance investment properties,” said Clint Rosenthal, executive vice president of sales for Parkside Lending. “We believe the most impactful thing a lender can do for qualified borrowers today is to support them by creating viable non-QM solutions.”

LCG Debuts “Compliance Matters” on Mortgage News Network

Lenders Compliance Group Inc. (LCG), a

nationwide mortgage risk management firm, has announced the launch of its new weekly broadcast, “Compliance Matters.” The broadcast will be offered by Mortgage News Network, each week on Fridays, where members of LCG will speak on timely and important regulatory compliance topics. Mortgage News Network is quickly becoming an important opportunity to stay in touch with current events in the mortgage space. According to MNN’s founder, Joel M. Berman, the network is meant “To offer mortgage industry firms a resource for news and information.” This is the first network of its kind, devoted solely to residential mortgage lenders and originators. Viewers can subscribe to MNN and receive daily updates and news, plus they will learn about upcoming broadcasts. “We are honored that MNN has asked us to participate in its series, interviews, specials and events,” said Jonathan Foxx, LCG’s president and managing director. “Today’s Compliance Matters broadcast, our first, is about a subject that should be the foundation of every company’s business model: Building a Culture of Compliance. I have published an article on this concept, which can be downloaded from the articles page on our Web site entitled, ‘Creating a Culture of Compliance.’ This is a fresh, new way to bring mortgage lenders and originators the timely information that supports their compliance needs.”

Advanced Data Unveils New Flood Order Product Advanced Data Corporation has unveiled its national flood order and compliance platform that enables lenders to order flood certifications with the click of a button. “Our objective is straightforward: Deliver to lenders an automated flood service with the highest hit rates in the mortgage industry, fast turn-times,

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EWSFLASH l JUNE 2015 l NMP NEWSFLASH l JUNE 2015 NMP NEWSFLASH l JU that Congress and the White House will be able to agree on legislative changes to Dodd-Frank between now and August. So in the spirit of common sense, we urge CFPB Director Cordray to heed the warnings of our fellow industry leaders and provide a NAMB—The Association of Mortgage good faith grace period for compliProfessionals has joined other mort- ance with TRID from Aug. 1 through gage industry leaders, including the the end of 2015.” American Land Title Association (ALTA) and the National Association U.S. Homebuyers: of Realtors (NAR), in calling for a Mystery Remains Around good faith grace period for compli- Credit Scores As Americans ance with the massive TILA-RESPA enter the peak Integrated Disclosure (TRID) requiretime of year ments that are scheduled to go into to buy a effect Aug. 1, 2015. home, a recent “The U.S. House Financial Services survey from Subcommittee on Housing and Finance should be commended for TransUnion reveals a majority of those holding a hearing this week to shine planning on or considering buying a a light on the impending problems home in the next 12 to 18 months are with TRID enforcement scheduled unsure about actions that could help for Aug. 1, the busiest time of the improve their credit score. A majority year in the home buying cycle,” said was also unsure about what their credit John Councilman, president of score directly affects in the home NAMB. “While we appreciate the financing process. The national conCFPB’s efforts to create new integrat- sumer survey found that while nearly ed forms that are more logical and three out of four (74 percent) of potenconsumer friendly than those origi- tial homebuyers believe it’s important nally proposed, NAMB continues to to check the accuracy of their credit believe the strict requirements and report, only 45 percent or fewer correctexposure to legal liability that ly understand that their credit score lenders are subject to under the new measures the amount of debt they hold, rules will lead to a variety of unin- risk of not repaying back a loan, or the tended consequences that will have financial resources they have to pay a negative impact on consumers and back loans. “As many people across the nation the economy.” prepare to take advantage of still-low According to the NAMB, this additional time would allow the CFPB to interest rates and look to buy a provide written answers to industry home, it’s essential they understand questions regarding compliance that their credit score before applying for firms could then rely on to operate a mortgage,” said Ken Chaplin, senior within the law under the pending vice president at TransUnion. Despite the fact a majority of conregulations. sumers recognized the importance of “If CFPB Director Cordray maina credit score, one in three incorrecttains that his agency is constrained by the language in Dodd-Frank on ly thought increasing their income this and in other areas which are (33 percent) or closing old accounts harmful to potential homebuyers, (28 percent) before applying for a then we believe it is time, long past mortgage has the potential to help time, for Congress and the President to come together and make corrections to the flawed Dodd-Frank Act,” said Councilman. “We understand, however, that it is highly unlikely

NAMB Joins Others in Calling for Grace Period on TRID

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improve their credit score. While 76 percent of prospective homebuyers surveyed were at least somewhat confident (38 percent very confident; 38 percent somewhat confident) that they understand the finance process and the terms of their home loan, many were unable to identify the specific factors that a credit score affects in the home buying process. Only half of respondents correctly identified what a credit score affects, including interest rate (52 percent), the amount they can borrow (53 percent) and their mortgage lending terms (50 percent). “Leading up to a home purchase is a particularly important time to check and understand your credit score, as it affects lending rates and mortgage terms,” said Chaplin. “At TransUnion, we recommend prospective homebuyers begin regularly checking their score at least three months before securing a mortgage in order to maximize their potential for the best financing options.” According to the survey, just 22 percent of people correctly identified that they should check their credit score during the three months leading up to a mortgage application. In contrast, nearly one-third (29 percent) of people surveyed believed one month before purchasing a home was a good timeframe to check credit scores. However, a one-month time frame gives consumers little time to take action if they discover fraudulent activity like identity theft or old, unpaid credit card debt that could negatively affect their score.

Chase to Purchase $45 Billion in Ocwen MSRs

Chase has announced that it will pur-

chase the mort-gage servicing rights (MSRs) for 266,000 Fannie Mae loans, worth an estimated $45 billion from Ocwen Loan Servicing LLC, a whollyowned subsidiary of Ocwen Financial Corporation. Ocwen previously announced its intention to sell this portfolio of loans. “Buying this prime servicing book will improve the quality of our servicing portfolio and will help drive a stronger and less volatile mortgage business,” said Chase Mortgage Banking Chief Executive Officer Kevin Watters. “We expect the portfolio, in addition to lower delinquency rates overall, will help improve the value of our business.” The sale is consistent with Chase’s desire to enhance the quality and efficiency of the mortgage business. Chase will officially begin welcoming new customers—half of which already have another product with Chase—later this month and will begin onboarding the loan portfolio on June 1, 2015. “Ocwen previously announced that the company signed a letter of intent with a buyer on the sale of mortgage servicing rights on a portfolio of performing Agency loans owned by Fannie Mae with a total unpaid principal balance of approximately $45 billion. The letter of intent was subject to a definitive agreement and Fannie Mae and FHFA approvals,” said a statement from Ocwen. “The agreement is now signed and the necessary approvals have been obtained. This sale to Chase furthers Ocwen’s corporate strategy of reducing the size of the company’s Agency servicing portfolio” Mike Weinbach, Chase Mortgage Banking’s head of servicing, said, “We are pleased to welcome new customers to Chase Mortgage Banking and look forward to showing them why Chase is the number one large bank in customer satisfaction. Delivering a great customer experience will be our top priority as we begin transitioning new customers in June.”

Study Reveals HELOC Repayment Stress on the Horizon

NTC Raises $12,000-Plus for American Cancer Society

Palm Harbor, Fla. based research and document processing company Nationwide Title Clearing Inc. (NTC) raised more than $12,000 for the fight against cancer during the company’s participating in Relay for Life Palm Harbor and Tarpon Springs in late April.

A total of 31 teams and 337 participants raised $56,183.59. Relay for Life is the American Cancer Society’s signature fundraising event and to date, Relay for Life has raised over $5 billion for the American Cancer Society. Throughout the company’s six year history of participating in Relay for Life, NTC has been able to raise a lifetime total of $67,000.29 to help fund cancer research. The theme for this year’s Relay for Life Palm Harbor and Tarpon Springs was superheroes, and NTC represented the company as the “NTC X-Men” lead by team captain Erika Lance. The sixhour event began at 6:00 p.m. at Palm continued on page 16

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Experian has released its latest analysis on U.S. lending trends related specifically to home-equity lines of credit (HELOCs), showing that a large portion of HELOCs originated between 2005-2008 and representing $265 billion, are outstanding and nearing the repayment phase, which is referred to as “end of draw.” This could result in significant implications not only for consumers, but also for the lending industry as a whole. “This analysis is critical as we want to not only help lenders prepare and understand the payment stress of their borrowers, but also give consumers an opportunity to understand what the impact may be to their financial status and how to be better prepared for it,” said Michele Raneri, Experian’s vice president of analytics and business development. At the end of the HELOC period, the loan terms direct consumers to either enter into a repayment program, which can be structured over time, or pay the loan off in one lump sum or balloon payment. The study further evaluated what could happen to these loans, as well as other loan products and found that consumers coming to the end of draw on their HELOC are more likely to go delinquent—not just on the HELOC loan, but also on other types of debt—as the increase in repayment burden could mean higher monthly payments for the consumer. HELOCs encountered a large decline during the recession as many borrowers had little or no equity in their homes, but there is an upward trend showing that HELOCs have been increasing steadily since 2010. As of the fourth quarter of 2014, originations are up 81 percent to $37.04 billion from $20.44 billion in the same quarter in 2010. “As home prices have rebounded in much of the country, we’re seeing the same trend with HELOCs,” said Raneri. “This could be a sign of the economy further recovering, yet there are still concerns about the pre-recession HELOCs that are now in repayment and how that could negatively impact consumers and the economy as a whole.” HELOC delinquencies are down to pre-recession levels since their high in 2009, which is a trend that is occurring with other credit products as well. The study shows that the percentage of HELOCs that are in late-stage delinquency—those 90–

180 days past due—is down to 0.5 percent from its highest level of 1.81 percent in 2009, which can be viewed as a positive sign for the industry. While this might seem like the perfect scenario, with both increase in originations and pre-recessionary levels of delinquency, the study also finds that the consumers that are coming to the repayment phase of their HELOC are much more likely to go delinquent on their HELOC and on other types of credit. Between 2013 and 2014, there was a 307 percent increase in the number of 90-day delinquencies on HELOC loans for borrowers that were end of draw compared to just 29 percent that were not end of draw.

Growing Your Business in an Unpredictable Environment By Keith Bilodeau

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Over the last eight years, the mortgage industry has dealt with unprecedented regulatory changes. Among the most significant changes in recent years have been Regulation Z/loan officer (LO) compensation, followed by qualified mortgages (QM), and on Aug. 1, 2015, TRID (the Truth-in-Lending Integrated Disclosures). Understanding these rules presents a challenge in itself, let alone dealing with the requirements (once defined) necessary for implementation within a company’s technology and workflow loan manufacturing systems and processes. Each company, whether a retail origination lender or broker, wholesaler or correspondent, has separate needs necessary to move the rules from review to implementation. So, how does a mortgage lender grow its business while adjusting to these regulatory changes? Do your homework: 1. Become educated: Learn everything you can about the rules. Attend multiple Webinars and seminars. There is an abundance of resource material available today from industry specialists, whether it is legal and compliance firms, title companies, wholesalers or of course, industry associations. 2. Leverage your inside operations staff: Take time to walk and talk through the impending rule changes with key individuals involved in the daily work flow. They have a perspective many managers and department heads do not have. Sometimes, the simplest questions go unsolved because those individuals close to the process were not asked in advance. 3. Communicate with your key vendors early: Any vendor that has integration into your system needs to be part of your discussions early in the process, including your LOS vendor. Volunteer to be a part of their beta test group. This will give you an advance peek into the work flow and systems changes you will ultimately have to adopt. It will also give you a chance to help influence some of that functionality. 4. Leverage the knowledge of your vendors: Ask your vendors to include you in any think tank discussions surrounding the rule changes. Most vendors would gladly include a business partner in implementation discussions to share thoughts and concerns about implementation challenges and objectives. Both sides benefit from dialog on issues they may not have thought of on their own. 5. Review your vendor contracts: With many rule changes, especially TRID, the vendor relationships can have significant changes, so make sure you are reviewing any vendor contract to ensure it provides you with the desired services, Service Level Agreements, rights and remedies. 6. Select your vendors carefully: With each regulatory change, the complication of loan origination continues to increase. These regulatory changes are seldom changes that are “in place of,” but rather, are in “addition to” the existing regulatory rules. With TRID you still have to comply with, to name just a few, LO Comp, QM, and appraiser independence. Integrating with any type of vendor is time consuming and costly. Select your vendors based on someone you want to partner with for the long haul, has your best interest at heart and maintains a keen focus on “doing it right.” This will help to ensure that both you and your vendors are in compliance and out of harm’s way. Keith Bilodeau is Senior Vice President of Wholesale Production at Freedom Mortgage. With more than 30 years of experience in capital markets, operations and production, Keith offers unique expertise in helping mortgage professionals grow their business by leveraging Freedom Mortgage’s technology and programs. He may be reached by e-mail at keith.bilodeau@freedommortgage.com or visit www.freedomwholesale.com.

nmp news flash continued from page 15

Harbor University High School and continued through the evening to symbolize how “cancer never sleeps.” NTC came in as Relay for Life Palm Harbor and Tarpon Springs’ third-highest fundraising team after hosting multiple events including a corn toss tournament, a bingo night and a Valentine’s Day bake sale to meet its fundraising goal. NTC Relay for Life captain Erika Lance was the second-highest individual earner for Relay for Life Palm Harbor and Tarpon Springs overall, with $3,765 in donations raised. She is followed by fellow NTC employee Derek Temple, who came in as the third-highest individual earner overall with $3,019.89 in donations raised. “It’s overwhelming to think that millions of people will be diagnosed with cancer this year. It might be someone close to us—or you or me,” said Temple. “A Relay For Life event gives us the power to fight back.” Involvement with Relay for Life has become a backbone of NTC’s corporate social responsibility (CSR) initiatives. While NTC participates in many community events throughout the year, Relay for Life is the largest employee-volunteer event that NTC sponsors, and employee involvement has grown each year. “It is a privilege to be able to continue our commitment to being responsible corporate Palm Harbor citizens through an event we are all passionate about,” said Lance. Participating in Relay for Life is a meaningful activity as many NTC staff

Your turn National Mortgage Professional Magazine invites you to submit any information on regulatory changes, legislative updates, human interest stories or any other newsworthy items pertaining to the mortgage industry to the attention of: NMP News Flash column Phone #: (516) 409-5555 E-mail: newsroom@nmpmediacorp.com Note: Submissions sent via e-mail are preferred. The deadline for submissions is the 1st of the month prior to the target issue.

the elite performer continued from page 8

ships built over the years. We also get traffic and interest through our Web site (www.fitzfarms.com) for those searching for related services. What important lessons have you learned over the years that you would share with other business owners? Erica: Team up with other similar businesses and look at them as more than just competitors, but potential partners. We work to support each other’s strengths and understand our weaknesses, which allows us to exchange referrals to better help our customers and build friendships. Josh: Really put emphasis on customer service to attract and develop relationships. I find this to be the most important factor for any business owner. If you had to sum up in one word what it takes to run a successful business, what word would you choose and why? Josh: Perseverance. By staying focused

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members have experienced the loss of a loved one due to cancer, including Lance. Lance’s mother passed away from breast cancer over 15 years ago. “Every year, it seems like I am speaking with, or consoling friends on the loss of someone from this horrible disease,” said Lance. “I would like nothing more than to instead celebrate another birthday or another year of life because they were able to beat their illness.” The American Cancer Society estimates more than 1.6 million new cases of cancer will be diagnosed in 2015 and the World Health Organization projects that “without immediate action, the global number of deaths from cancer will increase by nearly 80 percent by 2030.” In order to fight against these statistics, NTC participated in the most personal of the company’s CSR activities, Relay for Life.

on the things that are important even when things get difficult as a business owner. You have to set goals and stick to your vision, keeping the business operational through any economic volatility. I would like to thank Josh and Erica for sharing their feedback and it’s great to see people not only working hard, but doing so in an industry they love. While every business is unique, certainly hard work and dedication is the prerequisite to success. Andy W. Harris, CRMS is president and owner of Lake Oswego, Ore.-based Vantage Mortgage Group Inc. and 2010-2011 president of the Oregon Association of Mortgage Professionals. He may be reached by phone at (877) 496-0431, e-mail aharris@vantagemortgagegroup.com or visit www.vantagemortgagegroup.com.

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Five Tips to Get a Prospect to Return Your Call By K. Justin Restaino It can be very frustrating when you fail to get a prospect on the phone. Worse still is when your prospect doesn’t return your call after you leave a voicemail. Fortunately, there are steps that you can take to increase the likelihood that you’ll get a response from your prospect. Below we list out top five tips: l Use multiple mediums: Everyone has a preferred method of communication—some people enjoy talking on the phone, while others prefer e-mail. Your job as a salesperson is to accommodate your prospect’s preference. When you are leaving a voicemail, indicate that you will get in touch with your prospect via e-mail, in case that works better. There are a number of people who are more likely to respond to an email that can be replied to at any time of day than a phone call during certain hours. l Send a written note: While it sounds old-fashioned, everyone enjoys getting personal mail. Send your prospects a handwritten note after meeting with them. This will increase your likeability and make prospects more likely to respond to your efforts to get in touch further down the road. l Use referrals: If someone referred a prospect to you, make sure to name-drop when you leave a message. Knowing that you have the person who made the referral in common can motivate the prospect to return your call.

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l Schedule it: Let your prospect know the best time to contact you. For example, you might say in your message, “You can reach me between 4:00 p.m. and 7:00 p.m. Wednesday evening.” One reason people are reluctant to return calls is because they don’t want to get into a timeconsuming game of phone tag. By letting the prospect know when you will be available to answer your phone, you are eliminating this concern. l Be reassuring: It’s a good idea to let a prospect know in your voicemail that if they have decided to go with someone else’s services, that’s fine because you don’t want to pester them with follow-ups. Usually, they’ll return your call and either let you know that they have gone with someone else or tell you that they have yet to make a decision. Either way, it’s to your benefit to have this information so that if they have retained someone else’s services, you can devote your time to likelier prospects. K. Justin Restaino is vice president of Titan List & Mailing Services Inc. For more than 15 years, he has led Titan’s Mortgage Division, helping lenders of all capacities grow their businesses utilizing targeted direct mail. With a specialized focus in refinance and purchase markets, Restaino has the insight for proper data and mail application for success. He may be reached by phone at (800) 544-8060, ext. 204 or e-mail justin@titanlists.com.

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new to market continued from page 12

unparalleled accuracy, and exceptional customer service,” said Allen Johnson, CEO of Advanced Data. “Lenders rely on us to ensure they comply with floodrelated regulations, in addition to this compliance and in contributing to the success of our clients, Advanced Data is committed to innovation, quality and the highest level client experience.” Nearly 20,000 flood certifications are ordered each day, proving that investors trust the quality of its comprehensiveness and rely on its instantaneous report results. The platform was designed with unlimited scalability, equipped to support the demands of lenders, and ensure they are compliant, even when they are at their busiest. The advanced technology platform is compliant with the Flood Disaster Protection Act of 1973 and the National Flood Insurance Reform Act of 1994.

ISGN Enhances Its Gators Platform for TRID Requirements ISGN Corporation has enhanced to its Gators settlement services and vendor management platform to help lenders and servicers prepare for the Consumer Financial Protections Bureau’s (CFPB) TILA-RESPA Integrated Disclosure (TRID) rules that will go into effect Aug. 1, 2015. ISGN’s Gators is a Web-based title and closing solution that streamlines the fulfillment and processing of orders. Gators will default to the correct closing disclosure form based upon the loan purpose. Gators users will still have the option to produce the HUD Settlement Statement and Good Faith Estimate (GFE) for those few loan products that do not require the new closing disclosure form. The new Gators platform will also soon support version 3.3 of the Mortgage Industry Standards Maintenance Organization (MISMO) Reference Model. ISGN developed the enhancements natively to maintain the platform’s current functionality for existing users, eliminating the difficulties associated with learning a new system. ISGN also developed one-on-one webinars and desktop support to assist users with the new functionalities. “Our team of compliance experts carefully examined the CFPB’s nearly 2,000-page document to develop the necessary enhancements for Gators to help lenders and servicers seamlessly comply with the new regulations by the Aug. 1 deadline,” said Don Gaspar, chief technology officer for ISGN. “While the next couple of months will certainly be challenging, we are embarking on a journey towards complete mortgage technology transformation, and these new system upgrades are what the industry needs to move towards greater efficiency and profitability.”

First American Launches Extensive Property Search DataTree Site First American Financial Corporation has announced the launch of the all-new DataTree Web site, delivering propertycentric information that professionals in the mortgage, real estate and land services industries require to make informed business decisions. It is built on the industry’s largest database of property and homeowner information and document images, spanning 99 percent of U.S. housing stock and including more than 5.5 billion recorded document images. “Our extensive market research revealed that professionals have three priorities when choosing a property and mortgage information research solution: data quality, speed and ease of use, both in the office and on their mobile devices,” said George Livermore, executive vice president, First American Data and Mortgage Solutions. “We created DataTree specifically to address these priorities and to deliver insight and flexibility that is superior to any other solution on the market.” Business professionals interviewed by First American cited data quality as the most important element of real estate research. DataTree’s new Verified Record feature uses proprietary processing algorithms to access and verify public record information to provide never-before achieved levels of data verification. When a data record is verified in this way, the transaction is designated as a Verified Record, offering an unmatched level of confidence in public record data. FlexSearch is a powerful new search engine that allows business professionals to conduct nationwide searches instantly for any name or phrase contained within billions of recorded land documents, such as deeds, judgments, liens and releases. FlexSearch, a feature available only within DataTree, provides access to information that was previously unsearchable, including homeowner’s association names, attorney names or the names associated with a loan.

Stewart Lender Services Integrates New Suite of Due Diligence Tools

Stewart Lender Services has announced the integration of services to create Stewart’s Due Diligence Solution Suite. This integration includes several significant enhancements to our Due Diligence System (DDS), a proprietary workflow platform designed to support real estate secured transactions for new originations and seasoned loan reviews. Components include regulatory compliance assessment, valuation review and continued on page 30

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NAMB PERSPECTIVE The President’s Message: June 2015 I’ve had the pleasure over the past several months of attending many conferences of NAMB state affiliates. There is little doubt that mortgage originators are alive and well, and most are making a good living. Some are so busy that they cannot find time to do anything

else. A wholesale lender visited a number of shops before coming to one of the conferences and asked if they were coming to the show. Some were, but quite a few said they were too busy. I sympathize with how much work we have to do to make a loan work. If all you do is pass everything on to a processor, one of two things is likely to

The CEO Perspective A Message From NAMB CEO Donald J. Frommeyer, CRMS

JUNE 2015 n National Mortgage Professional Magazine n

NationalMortgageProfessional.com

Have you ever wondered about why we live in the greatest country in the world? I ran into a soldier who wanted to refinance his property and we were talking about his 35 years of service in the military and some of the problems that he and his family had in dealing with his servicerelated injury. I was both shocked and amazed at what he had to tell me … how he was treated and how long it took for him to get something done to be able to get around and be able to walk and enjoy his family. He has a very strong family background that started with his father and the desire to go into the military and represent our country. I truly felt that it was his calling. I was very happy to be able to do something for him for all of the times he fought for us and defended our freedoms. I told him that I liked the fact that no one tells me what I have to do to make a paycheck or

get gas or buy food. All in all, we owe a lot to these brave men and women for what they have done. I was watching the news and a report came on that there was a horrible tragedy, not in America. Women and children are being forced to flee where they live because of mass murders and the kidnapping of young men and their fathers being forced to fight other rebels. The announcer then goes to a correspondent and they talk about all of the financial aid that the U.S. is sending to them to feed and give them water. Yes … our United States. I began to think about how wrong in some ways that this act is in the long run. Don’t get me wrong, I am for helping people … not watch them die, but we seem, as a nation, to do this at the expense of people here in America. Here is my example: We have young men and women who go overseas and fight for our country. They spend time there fighting to protect our freedoms. And again, freedom … not

NAMB’s Compliance Concerns By Rocke Andrews, CMC, CRMS NAMB—The Association of Mortgage Professionals understands that a major concern of small lenders has quickly become compliance. The massive scope and serious consequences of compliance has pushed many brokers and originators out of the wholesale channel. The Dodd-Frank Act and the Consumer Financial Protection Bureau (CFPB) have brought compliance concerns and fines to the forefront of broker’s business plans. NAMB is working on helping out through several avenues.

l NAMB has partnerships and discounts available with compliance providers. Brokers Compliance offers a complete program for a minimal monthly fee. Check out the NAMB+ Web site, www.nambplus.com, for more information. l The Government Affairs Committee is working on a series of monthly Webinars that will include regulatory updates, as well as compliance education. l NAMB’s Wholesale Summit Program involves discussions with our wholesale partners as to how best to work together to meet regulatory requirements while maxi-

happen. First, the processor will get overwhelmed with all of the details we have to put into a loan. Your loans will be delayed and may not close unless you are involved. Or, if you staff up so much that there is lots of processing power, you don’t make any money. We need some regulatory relief and more sense in underwriting. Those areas are driving this huge paper shuffle. Whether you work for a broker or a bank, you face the same problem. Hopefully, as memories of the mortgage meltdown fade, relief will come. In the

meantime, remember, you need to come to NAMB’s state and national conferences to learn about and discover new products. You may even learn some things that will make your day a little easier. Sincerely,

John Councilman, CMC, CRMS NAMB President president@namb.org www.joinnamb.com

just fighting for America. They are in harm’s way each and every day. They deal with everything that happens in that country. They are not traveling in a country club setting. It is hot, dusty and dirty. The conditions are not good on most days. They spend 13-16 months there, come back, and in some cases, go back over for another 13 months. And if they come back, most are not the same as when they went over. They are injured, hurt and often emotionally scarred. When they return to the U.S., they have to fight to get what they were sold when they signed up. And yes … these people were not drafted, they signed up to go and protect our freedom. When they get back, they are put through the system just to be seen by a doctor. This is where the injustice takes place. They seem to be a nuisance, not the hero they should be treated as. Their lives have changed so drastically, yet they are not at the top of the list. This brings me to my point! We send all of this money and supplies overseas, and we send aid to countries that have experienced earthquakes, famine, drought, etc. We do not do what we need to in order make our great nation grateful for their support. And this has to come from our Congress and

the Senate. These men and women we elect need to start thinking about America and not their next election. They are making decisions not as what their constituents want, but what may get them re-elected. It has always been a job to make it a better America. Maybe we, the voters, should put term limits on these men and women and hold them accountable for the people that they oversee. I pay my taxes every year, and honestly, I question where some of it goes. But we need to start being the American that you are and holding all of your elected officials accountable for what you want to see and happen. As far as I am concerned, they need to start treating our soldiers with the respect that they deserve. As a final note, get yourself involved in some of the military functions that are going on in your city and state. Volunteer to help in some way. Make yourself available to talk with these potential customers, and I promise you that you will reap the rewards tenfold. They did what they did for YOU!!

mizing efforts by all of us. l “News From NAMB” is another weekly update that includes regulatory news, as well as wholesale news. l Under the “Education” tab on the NAMB Web site is a list of education partners that offer NMLSapproved classes with a focus on compliance, as well as up-to-date Webinars through the Lorman link. l We are presently working with a cybersecurity provider that will provide education, as well as online solutions to meet the requirements by the CFPB, as well as vendor concerns. If you have any requests or needs that are not being met, please let me or any NAMB board member know,

and we will seek out a method to assist you. Our membership is growing due to the many benefits we offer, and we are constantly working on upgrading these benefits of membership to meet your ever-expanding needs. If you are not a member of NAMB, visit www.joinnamb.com and join today. If you are already a member, please explore all of the benefits available to you on NAMB’s Web sites: www.namb.org, www.nambga.org and www.nambplus.com.

Donald J. Frommeyer, CRMS is chief executive officer for NAMB—The Association of Mortgage Professional. He may be reached by e-mail at namb.ceo@namb.org.

Rocke Andrews, CMC, CRMS of Lending Arizona LLC in Tucson, Ariz. is presidentelect of NAMB—The Association of Mortgage Professionals. He may be reached by phone at (520) 886-7283 or email randrews@lendingarizona.net.

NAMB PERSPECTIVE TRID: Be Prepared, Not Scared By Fred Kreger, CMC The landscape of mortgage origination is about to change come Aug. 1, 2015. The TILA/RESPA Integrated Disclosure (TRID) is about to unleash the “We do not know, what we do not know” thought process. I use this expression because, just like all of the economic classes I took in college, it’s all theory. It is supposed to happen this way or that way. However, as we have found out with other rules and regulations; in practice, it is a completely different story. I bring this up because all of us need to be prepared. Not scared … prepared. Like most previous rules, we all need to look at our environment and decide how we are going to address this measure with our offices, staff, clients, vendors and referral partners. I will tell that I intend on going into Aug. 1 very confident. I want to be that expert for my clients and referral partners. I figure that if I have

that level of confidence, then everyone will react positively. Think about that statement. Everyone will react on how you handle the new disclosures and its timing rules. Be transparent, be honest and be supportive. We all are going through the same challenges so make the most of it. Become the expert who allows your clients and referral partners to trust that they have confidence in you. It is all about the delivery and follow through. Remember, you choose how to react to our new compliance landscape. You can only change your actions, not the actions of others. If your clients or referral partners panic, help them with that feeling by being the “go to” expert. I can tell you that if you show this level of confidence and transparency, it will pay off for you. I speak from experience. I learned very early on from my business partner Fred Arnold and lately with my current company, American Pacific Mortgage, to be and act prepared. The more regulation that is thrown at us,

Why the Cheapest Mortgage is Seldom the Best

these people guarantee that your loan will be processed within the rate lock, if they even offer a rate lock? Even if the originator’s Web site is good, you will have to put in a lot of information and wait up to three business days before you get all of your quotes. You could easily miss the time when the market was in your favor. Then, there is the poor person who is not Internet savvy. Shopping for them is a real ordeal. They may have to go physically to several banks, who probably don’t offer great rates and may not even offer the type of mortgage they are looking for. They may make phone calls and wait hours or days to even get a call back. Many people taking applications are not well-trained and often give bad advice. One must consider how much time and effort a borrower must put into this search. They may have to take time off from work. Let’s be perfectly honest, if you are really offering the best rates and fees, you cannot be paying much for loan originators or technology. So, what you get at the lowest-cost mortgage company is people who are not as experienced, don’t give much in the way of personal service, and probably have poor technology. Your loan process is likely to be a nightmare. Anyone who has applied for a mortgage and found the “missing originator” who never returns calls or e-mails knows all about this. There is something else that borrowers don’t know about until their loan closes. They may get a great mortgage broker, but the borrower insisted that the broker give them the lowest rate. That means the lender isn’t going

to make very much on servicing the loan. To the borrower’s horror, you can never get someone on the phone at the servicer. When you do finally get to talk to someone, they are likely people who know very little and may be in another country. Then, there is the servicer who tries to make up the servicing income by tacking on little fees or counting you late if the payment arrives one day late. They cannot seem to get things right on your statement, lose your insurance policy and hit you with force-placed insurance, etc. Even if the servicer is good at the beginning, they may look for an opportunity to sell the loan to someone who doesn’t service that well. If you should be so unfortunate to fall into financial trouble, servicers can be very different. Some will push for foreclosure as soon as they can legally, while others are very tolerant and do everything to work with you. Yes, you got the lowest possible rate and fees, but did you really get good value for your money? Borrowers don’t know to shop for servicing quality. They don’t know that some lenders are more lenient when it comes to foreclosure. Those who have had mortgages over the years are likely to stay with someone who has served them well. This may frustrate those is Washington, D.C. who think getting the lowest rate and fees is everything. Experienced borrowers know that isn’t true.

Fred Kreger, CMC is branch manager at American Family Funding, a Division of American Pacific Mortgage. He is also a past statewide president of the California Association of Mortgage Professionals (CAMP) and currently is the vice president and Government Affairs vice chairman for NAMB—The Association of Mortgage Professionals. He may be reached by phone at (661) 505-4311 or e-mail fred.kreger@affloans.com.

John Councilman, CMC, CRMS of AMC Mortgage Corporation in Ft. Myers, Fla. is president of NAMB—The Association of Mortgage Professionals. He may be reached by phone at (239) 267-2400 or e-mail jlc@amcmortgage.com.

n National Mortgage Professional Magazine n JUNE 2015

Over the past several years, we have seen various federal and state regulations finalized with what appears to be one goal. That goal is the consumer receives the lowest rate and fees available. On the surface, that seems like a very pro-consumer goal. Even if it isn’t the very lowest, the regulators believe the consumer should have made application with at least three lenders or brokers. In the regulator’s mind, that is likely to produce something near the best possible rate and fees. What could be better than the consumer getting the best possible rate and fees? The answer will surprise some. The answer is, it is usually NOT getting the very lowest rate and fees. No one ever gets the best rate and fees. It is impossible to know if someone else or some other lender may be offering something lower. It also depends on timing. Some people hit very near the bottom of a trough in the market; others miss it, even though both may close on the same date. No one knows the best time to lock or even if they should lock. Rates can change several times a day when the market is volatile. But, let’s assume that shopping will produce something close to the lowest rate. The Consumer Financial Protection

Bureau (CFPB) thinks shopping for a mortgage is easy, so the borrower should be able to quickly compile three Loan Estimates. After all, with the Internet, you should be able to just click and go. I once had a legislator tell me, “All you do is push a button and the rates are there in seconds.” Let’s examine that and find how easy it really is. Consumer #1 is Internet savvy, so they go to the Web. They may Google “Mortgage.” They will have to go to the very bottom of the first page of results to even find a real lender or broker. The entire first section is advertising that looks like lenders or brokers. When I wrote this article, I found, with the exception of one, they were all lead generators. Most are not even licensed. Some are licensed as “mortgage brokers,” but they say they don’t broker loans. Who knows where their information goes. The sole lender was a too-bigto-fail bank. Another savvy borrower goes to a site that purports to have “reviews” of lenders and brokers. It is really strange, but all of these people seem to have nearly all good reviews. The problem is that even ones that the CFPB recently fined for ripping people off had good reviews. I am personally aware of others that had horrible customer service and were taking 90-120 days to do a loan. Their rate locks expired long before the loan was finished, but they also had very good reviews. Do all of

(pathfinder) for them and help take away the pain and uncertainty of your transaction with them. This is how you develop and maintain trust. Your call to action this month is to go out and become a leader, teacher or pathfinder for your partners. Have oneon-one conversations with your partners on how you intend to help them with the TRID transition and timing rules. Have a lunch and learn. Host a Webinar or put together a meeting with your local real estate agents. If you have any questions on how to do this, e-mail me at fred.kreger@affloans.com or call me at (661) 505-4311. I would love to help you.

NationalMortgageProfessional.com

By John L. Councilman, CMC, CRMS

the more successful we become. The reason behind this is that most originators are saying: “Poor me” or “I can’t believe the government is taking away my livelihood.” Therefore, they are stuck in the quicksand and do not know how to get out. They struggle and struggle only to be trapped further into their own frustration. We make choices every day. We choose to wake up and go to work. We choose to help our clients and stay in this industry that has afforded us so many opportunities for our own families. Please do not allow yourself to be stuck in the quicksand. Observe your environment and adjust to it. Make the most of the challenge and make it an opportunity. That is one of the main reasons I love to speak in front of all of you. I want to remove those landmines that stop some of you from moving forward. Reach out and make yourself knowledgeable. You will find out that it really is not as terrible as the you might think. An interesting byproduct might occur with you clients and referral partners … you will strengthen your bond and relationship with them. You need to show them that you can be that leader

NAMB PERSPECTIVE

Mortgage Profe $3,500 for NAMB Leg big thank you to everyone who donated to the NAMB Legislative Action Fund at the recent 2015 Northwest Mortgage Expo in Portland, Ore. The response to the efforts of the Legislative Action Fund was tremendous. Due to the generosity of those in attendance, more than $3,500 was raised in Legislative Action Fund! Please take the time to reach out to those in the photo (listed below) and thank them for their tireless efforts in being a #MortgagePro. If you were unable to attend the Northwest Mortgage Expo, you can still help. Please visit www.namb.org/ActionFund/ and donate today ... your help is NEEDED! Again, many thanks to everyone who attended and contributed at the Northwest Mortgage Expo and are making a big difference for mortgage professionals nationwide!

NAMB PERSPECTIVE

essionals Raise gislative Action Fund Many thanks to the following attendees of the 2015 Northwest Mortgage Expo for their generous donation to NAMBâ&#x20AC;&#x2122;s Legislative Action Fund: Paul VanderPlaat Todd Hing David Jolivette Andy Harris Susan Tamashiro Kyle Blain Julie Fast Brad Tawzer Mayine Jones

Joulyn Watson Katie Hansen John Mafrici Ranae Loeb Tammi Lindley Barbara Alway Janet McCaslin Everardo Calderon Phil Gerstner

Bryan Ashby Timothy Carlson John Forsythe David Kleinman Christopher Bettis Dzung Nquyer Jad Hamdan Jonathan Capellen Tony Smith

Christian Disney Brie Fisher Fred Bachorner Nick Carter Robert Browne Carl Stein Matt Jolivette Sheila Freeland

TALES FROM THE

By Andrew Liput

You canâ&#x20AC;&#x2122;t make this stuff up! he mortgage closing transaction is the single largest financial transaction in the lives of most consumers, and it is also the riskiest stage of the mortgage process for lenders. While the vast majority of lawyers and notaries and title agents are experienced, ethical and diligent professionals, for a few the role of closing agent is too tempting a lure for selfish criminal intent. This column addresses the good, the bad and the ugly!

Top industry news â&#x20AC;Ś TRID, TRID and more TRID! While a few hopeful, and perhaps misguided, people are waiting for Congress to gain some kind of concession from the Consumer Financial Protection Bureau (CFPB) to delay TRID beyond Aug. 1, the vast majority of lenders are training, creating forms, having operational meetings, educating their MLOs and real estate referral sources, and otherwise preparing for the new Integrated Disclosure environment. The key facing lenders issues appears to be tracking receipt of the Loan Estimate (LE) and Closing Disclosure (CD), ensuring that any changes in loan terms will properly trigger a new Loan Disclosure, and coordinating the accurate preparation, delivery and execution of the Closing Disclosure. For MLOs it is managing expectations with real estate agents and consumers about firm closing dates.

This month, I am bringing you real life examples of Secure Settlements Inc. (SSI) case histories. SSI has vetted and is monitoring more than 15,000 agents nationwide for risk. During the past three years, we have uncovered every imaginable risk issue, and some we could never imagine â&#x20AC;Ś l In California, a mobile notary who was being sent to close loans in the private homes of consumers was on the nationwide registered sex offender list. Lenders had no idea their clients were welcoming into their homes someone who posed a serious risk to their children. Interestingly, neither did the company that hired the individual, because they failed to conduct complete background checks on their notaries. l A Pennsylvania closing attorney had his license suspended and served jail time for serving alcohol to a minor, as well as indecent sexual assault, yet had been reinstated and was once again practicing law. This attorney, like the California notary, was involved in close and unsupervised consumer interaction in real estate closing transactions. l A Maryland Area title company owner who was closing loans for large national lenders was previously convicted of wire fraud and his licenses were revoked.

E CLOSING TABLE l

National mortgage servicing company Green Tree agreed to pay $63 million to resolve Federal Trade Commission (FTC) and Consumer Financial Protection Bureau (CFPB) charges that it harmed homeowners with illegal loan servicing and debt collection practices. The FTC and CFPB alleged that Green Tree Servicing LLC made illegal and abusive debt collection calls to consumers, misrepresented the amounts people owed, and failed to honor loan modification agreements between consumers and their prior servicers, among other charges. Under the proposed settlement, Green Tree will pay $48 million to affected consumers and a $15 million civil penalty. The company also will stop its alleged illegal practices, create a home preservation plan for some dis-

On the lighter side …

… it read: 'MAIN ENTRANCE.’

A mortgage lender was dismayed when a competitor opened a branch office next door and erected a huge sign which read 'NO CLOSING COSTS.' He was horrified when another mortgage company opened up its own branch on his right, and announced its arrival with an even larger sign, reading 'LOWEST RATES.' The lender panicked until he got an idea. He put the biggest sign of all over his own office

Andrew Liput has been a corporate, real estate and banking attorney for more than 25 years He is the founder, CEO and president of SSI, the first data intelligence and risk analytics firm to offer specialized vendor management services addressing settlement agent risk to mortgage lenders and banks nationwide. He can be reached by e-mail at aliput@securesettlements.com.

NAMB+ is an independent, wholly-owned, for-proﬁt marketing subsidiary of NAMB, The Association of Mortgage Professionals. Dear Mortgage Professional, If you are not taking advantage of the special offers and discounts available exclusively through NAMBPLUS.com you are throwing money away. As you know by now, NAMB+ has established relationships with numerous companies that will help your business and save your business money. But, did you know that NAMB+’s strategic relationships are not just focused on your business. Do you need new family portraits for your wall? How about a unique graduation gift? Visit NAMBPLUS.com and check-out Custom Canvas Prints. Do you need new logoed polo shirts for summer days in the ofﬁce or maybe tee shirts for a child’s baseball or soccer team? NAMBPLUS.com has special discounts on custom promotional products from Kassing Andrews Advertising.

Go to BestMLOs.com to start learning from the best. NAMB members enter NAMB Member Coupon Code: NAMB15

BetterLoanOfﬁcers.com is free to get started with the option to upgrade if you’d like. As an NAMB member optional upgrades are discounted by 10%.

NAMB+ is here for you! We are all busy mortgage professionals, so save yourself time and money and visit NAMBPLUS.com today! Sincerely,

John G. Stevens, CRMS, President NAMB+, Inc. John@JohnGStevens.com • NAMBPlus.com • @JohnGlennStevens https://www.facebook.om/JohnGStevensUtah https://plus.google.com/114643023635445909618/posts See below for a complete listing of the current NAMB+ Endorsed Providers and visit NAMBPlus.com for more information.

NAMB members receive a 15% discount on all Custom Canvas Prints products and services!

LoanSquatch allows NAMB members to reduce their monthly pricing from $19.99 per month to $9.99 per month and the ﬁrst month is just 99 cents!

LoanTek’s platform is designed to save time, create better leads, and convert leads into new business. As an NAMB member, Birchwood Credit Services will waive the sign up fees! It’s a “NO RISK” way to experience the Birchwood difference ﬁrsthand!

NAMB members receive a discount off Brokers Compliance Group compliance support programs.

BusinessETouchCRM provides a Cloud based CRM for only $29.95 a month for NAMB members.

NAMB members get a $300 discount on coaching. NAMB members receive exclusive discounts training events, including live seminars and internet-based web shops

NAMB members receive a 10% discount on Path2Buy’s one-on-one coaching service.

NAMB Members will receive a Twenty-Five Percent (25%) discount off of the regular price with their NAMB Membership.

SYNCRO connects mobile salespeople to their ofﬁce website leads. NAMB Members receive a 10% discount off regular prices for monthly unlimited SYNCRO Web Chat packages.

NAMB members get special pricing plus 1 month FREE.

The Bond Exchange is a national surety agency specializing in providing mortgage license bonds to thousands of mortgage professionals across the country.

USA Business Lending is the nation’s premier commercial brokerage ﬁrm representing over 3500 lenders.

NAMB members receive a 10% discount off regular prices for Warm Welcome LLC services. For more information visit WarmWelcomeLLC.com.

NAMBPLUS Login Instructions NAMB Members receive a 10% discount off regular prices for all CallFurst.com products and services.

NAMB members receive a 19% discount for CopyTalk services.

If you want a social and mobile marketing strategy that gets noticed contact Social5 today for a FREE consultation and demo and to receive your NAMB member discount pricing.

Username = Member Number Password = First initial of your first name capitalized and your last name with the first letter of the last name capitalized (example = JStevens) *If you are not a NAMB member please visit NAMB.org and join today to gain access to NAMBPLUS.com and the many benefits NAMB members receive!

n National Mortgage Professional Magazine n JUNE 2015

Regulatory updates … CFPB and FTC announces huge settlement with Green Tree for consumer abuses

tressed homeowners, and take rigorous steps to ensure that it collects the correct amounts from consumers. “It’s against the law for a loan servicer to lie about the debts people owe, or threaten and harass people about their debts,” said Jessica Rich, director of the FTC’s Bureau of Consumer Protection. “Working together, the FTC and CFPB are holding Green Tree responsible for mistreating homeowners, including people in financial distress.”

NationalMortgageProfessional.com

Neither the lenders nor the title underwriter for whom the agent wrote title insurance was aware of his past and the fact he was unlicensed. A settlement agent from Tennessee was operating for 30 years without the required state business license, repeatedly stated that they did not need one. Eventually, when confronted with the evidence of state law, they finally obtained one. No one had ever asked him about it in his 30 years of practice. A Virginia attorney was using his personal account (husband and wife joint checking) as his trust account, and had been doing so for more than 20 years. Lenders and warehouse banks were happily wiring him funds into that account without ever verifying the type of account and the account owner information. Amazingly, the attorney never had that account audited by any regulator. A New Jersey title agent was writing title and closing loans, despite the fact that he had been charged in Pennsylvania with a criminal offense and had lost his title producer license in that state. The details of his real estate fraud apparently never made it across the state lines. A New York attorney was about to receive a wire in a refinance transaction (the loan had closed pending the three-day waiting period) when the lender asked to check him out as a test case. It was discovered that he had been arrested for mortgage fraud a month prior, released before trial, and still was using his trust account to close loans. The wire was never sent.

Credit Crises: Avoiding Revenge Debt and Protecting Your FICO Scores By Laurie Zoock As a consumer credit consultant and teacher, clients often come to me with a familiar and sad scenario—one that could have been avoided with financial planning and oversight. They are separated, divorced or have split up with a partner with whom they share joint credit lines. They do not realize how easily a former partner can destroy their credit because they don’t understand how jointly liable credit lines will affect their reports. Sometimes, one partner will destroy the former partner’s finances

and credit out of sheer anger. In the “credit world,” this is referred to as “revenge debt.” When a relationship is new or seems positive, partners are often far too trusting. So, when you enter a relationship, it is important to know the status of all joint finances. All too often, one partner trusts the other to manage the finances and is either “kept in the dark” or chooses not to pay attention. You and your partner should be able to discuss finances and agree to a budget. A great free budgeting tool is www.mint.com. At a minimum, you should agree to review finances monthly and credit reports annually. You can get your free

reports each year through www.annualcreditreport.com. If you are in the process of splitting up, here are some helpful tips: l Immediately remove yourself from any existing joint credit cards. If you are an “authorized user” with no financial liability on the credit card, it’s as simple as a phone call to the credit card company. Make sure you note the date, time, and name and identification number of the employee who assists you. Back up your withdrawal by writing to the company via certified, return-receipt mail. In the event of a problem that

could show up on your reports at a later date, you will have proof of the withdrawal. l If you are the responsible party on a credit card, and your partner is the authorized user, you can call the credit card company and remove him or her from your account. Back up the call with a certified, returnreceipt letter. You are liable for any debts already incurred, but your partner can’t run up additional debts, which is what is most important. l If you have a joint credit card, which means you are both liable for the debts, first open a new credit card with a different credit card company

there is any change on a credit report, but they do not use FICO scores. The purpose is only to avoid any additional damage. l Change passwords on any accounts that your ex-partner may have access to, such as bank accounts and online accounts. Have the creditor change the security questions to something only you know. Avoid the obvious, such as your social security number and your motherâ&#x20AC;&#x2122;s maiden name. l When beginning a new relationship, be sure to have credit in your own name, separate from your partner. Engage an attorney to draw up a cohabitation or prenuptial agreement that designates financial responsibility.

A partnership consists of both love and financial responsibility. Wisdom shows that it is better to have an â&#x20AC;&#x153;exit planâ&#x20AC;? that is never used than to ignore the possibility you will need one and find yourself faced with unexpected financial damage. Laurie Zoock is a consumer credit consultant and the owner of Credit Education Consultants. She is also the host of the nationally syndicated â&#x20AC;&#x153;Half Empty, Half Full Consumer Advocacy Radio Show,â&#x20AC;? featuring guest experts covering a multitude of topics designed to help consumers make better decisions. She may be reached by phone at (813) 500-6064, or visit www.lauriezoock.podomatic.com.

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n National Mortgage Professional Magazine n JUNE 2015

www.gethuman.com for the fastest way to reach a real person at most major corporations). This will offer some protection from a vindictive ex, who might use the former partnerâ&#x20AC;&#x2122;s personal information and Social Security Number to open new credit card accounts and then charge them to the limit. While itâ&#x20AC;&#x2122;s obviously illegal, the innocent partner may be unwilling to press charges, especially if they have children together. Because the credit freeze will make it more difficult (but not impossible) for the angry ex to open more accounts, the offended partner should also monitor his or her credit reports using a monitoring service. These services send alerts via e-mail when

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in your own name; then, cancel the joint credit card. Typically lenders offering joint accounts will not remove just one person from the card, so keep in mind that you are still both liable for the full amount due on the joint credit card. The debt is not split in half if the credit card company or a collection agency pursues you for the debt. Although opening a new card will take a few points off your FICO scores, as will closing an existing credit card account, it enables you to protect yourself from future monetary damage. Divorcing partners often mistakenly think that the judgeâ&#x20AC;&#x2122;s decision on how to split any existing marital debt will change their agreement with creditors. If the judge ordered that your credit card bill be paid 50/50 by you and your ex-partner and your expartner does not pay, the credit card company (or collection agency) will pursue each of you for the full amount. One late payment will drop your scores substantially. If you are the ex-partner who has left the residence, check your online credit card or mortgage account or call the company to confirm what is owed and when payment is due each month, since the bills wonâ&#x20AC;&#x2122;t be coming to you. If you are the ex-partner remaining in a home you purchased jointly, and youâ&#x20AC;&#x2122;re looking to buy out your ex and stay in the residence, do not risk late payments or you may not qualify for refinancing. FICO has revealed that the first late payment on a mortgage drops your score by 100 to 200 points. Your divorce attorney can always pursue your ex for payment based on the courtâ&#x20AC;&#x2122;s decision, but this is a separate issue from liability of debt owed to a lender. Failure to make timely payments will result in significant damage to your credit reports. The creditor may also pursue you in court for the debt. In the case of late mortgage payments, the lender may pursue foreclosure. Note that judgments are public records. If you are jointly responsible for mortgage or vehicle payments, the party not in possession should immediately contact the creditor and request copies of monthly statements. In additional, he or she should call the creditor a few days prior to the due date every month to see if the party in possession has made the payment. If not, the other party can choose to pay to avoid a negative impact on his or her FICO score. The partner remaining in the property may sometimes choose not pay the mortgage out of revenge, especially if thereâ&#x20AC;&#x2122;s little or no equity in the property. As for missed vehicle payments, the lender may repossess the vehicle and charge you for any balance owed. Place a credit freeze on your credit reports by contacting Equifax, Experian, and Transunion directly (try

Investing in Vendor Performance Management By Judy Wheatley Is vendor management a “check the box” regulatory routine for you mortgage company or is it the corporate investment it should be? I have seen both approaches and the one that provides the best value for the mortgage company and the service provider is the route that creates longterm business partnerships. Vendor management is an investment with real and viable returns for a company.

The Consumer Financial Protection Bureau (CFPB) has supervisory and enforcement authority over mortgage institutions, as well as vendors. Therefore, both have a vested interest to ensure compliance, but vendor management should be all about performance management, which results in reducing risks while meeting strategic objectives. As a senior manager for a business process outsource provider, I find the more experienced a company is in the outsourcing business, the more effective

their vendor management practices tend to be, and the more likely they are to achieve their business objectives. Companies with successful vendor relationships are as meticulous with vendors as they are with their employees.

First step … find a good fit Regardless of a company’s outsourcing experience, there are mortgage industry best practices that if effectively carried out will result in compliant and beneficial vendor relationships. Before enter-

ing into a vendor agreement make sure that what you are asking of a thirdparty vendor is aligned with your business strategy. You need to know the benefits you want from the vendor relationship and they need to know what you expect. Next, do your due diligence on potential vendor candidates, and evaluate them to determine if they have what is required for the service you need. I think the needs assessment and qualification process is in many ways like the steps a company takes to

recruit and hire new employees. Just as you interview perspective new employees to see if they are a good fit with your company, I believe making sure a service provider’s corporate culture is conducive to building a trusted working relationship is just as important. Certainly the best way to handle vendor management is to treat your service providers as if they were part of your company.

Well drafted contracts are the basis My considered opinion is that vendor management agreements should be drafted for the long-term, but must include short-term considerations like adequate termination and exit clauses. Expecting a service provider to deliver a quick fix for a short-term engagement does not work. Contracts between the company and the supplier must define the accountabilities of the parties clearly and distinctly. Service level agreements as well as performance benchmarks must be realistic and measurable. To ensure regulatory compliance, specific controls, monitoring parameters and security measures need to be built-in to the agreement. When it comes to pricing the service, my experience has shown that prices based on volume tiers work best. Consideration should also be given to pricing terms which drive the vendor to exceed service levels and performance benchmarks through bonuses.

“Just as you interview perspective new employees to see if they are a good fit with your company, I believe making sure a service provider’s corporate culture is conducive to building a trusted working relationship is just as important.”

may be more frequent if service levels and performance benchmarks are not being met. Just as you perform formal annual performance appraisals of your employees, an annual due diligence review of your vendors is essential. As part of the annual review assess your business objectives for the vendor’s

services. Are you meeting those objectives, whether they are risk mitigation, cost reductions, improved process efficiencies, or others?

Invest in vendor management Vendor management is a corporate

asset. While they are mandatory for regulatory compliance, that is not the only objective. Investing in vendor performance management will yield a solid return. The company will achieve their objectives and the service provider will grow, resulting in long-term successful partnerships. Judy Wheatley is senior vice president of compliance at Indecomm Global Services. She received her designation of Certified Mortgage Banker (CMB) in 2003 and the designation of Accredited Residential Underwriter in 1993 from the Mortgage Bankers Association (MBA). She can be reached by e-mail at jwheatley@indecomm.net.

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A centralized vendor management team for overall governance works best. The centralized team establishes compliant and consistent vendor risk management policies and procedures in addition to gathering and maintaining vendor information. However, decentralizing the day-to-day oversight of the third-party provider is a best practice. Companies need to ensure there are adequate technology tools and quality control processes to oversee their vendors’ performance in accordance with the terms of their agreements. My experience confirms monthly performance results need to be reviewed between the parties. These

Or learn Or learrn mor moree ab about out our pr programs rogrrams a online aat:t: CCarringtonWholesale.com/ToughLoans aarringttonWholes o sale a e.c .com/T o Tou o ghLoans

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onsumer © Copyright Cooppyr yriight 2007-201 2007-20155 Carrington Carringtton o Mortgage Mor tga gage g Services, Servicess, LLC LLC headquartered headquarter ered e at at 1600 1600 South South Douglass Douglaass Road, Roadd, Suites Suites 110 110 & 200A, Anaheim, Anaheim, CA CA 92806. 800-561-4567. 800 -561-45677. NMLS ID 22600. NNationwide ationwide Mor Mortgage tggage Lic Licensing ceensing SSystem ysstem (NMLS) CConsumer oonsume epartment of BBusiness usiness Oversight Oversight under the CCalifornia ending AZ: Mortgage CA:: Lic Licensed Mortgage AAccess ccess e website: websit e e: www.nmlsconsumeraccess.org. www..nmlscconsumer o rac a cess e .orrg. AZ Z: Mor tggage Banker Bankkeer BK-0910745; BK--0910745; 2159 2159 McCulloch McCCullo u ch Blvd Blvd 4, Lake Lakke Havasu Havasu City, Ciitty, AZ 86403. CA ensed bbyy the DDepartment aaliffor ornnia RResidential esidential Mor tgage g LLending AAct, ct, FFile iile 413 0904. CO: CO: CCheck hheck lic cense e sta tus of your yoour mortgage mortgage g loan originator orriiginator aatt w ww.dor . ra.sta a te.co.us/rreale estate/index.htm. e GA: Georgia Georrggia Residential Residential Mor tgage g Lic ensee 22721. IL Residential Mor tggage Lic ceensee. KS license status www.dora.state.co.us/real-estate/index.htm. GA: Mortgage Licensee IL:: Illinois Residential Mortgage Licensee. KS:: SSupervised upervised License SL.0000313. License MN:: TThis offer enter into interest lock agreement Minnesota MO:: RResidential Mortgage Broker License 09-1746-S. NH:: Lic Licensed LLoan oan Lic ense SL .0000313. KY: KYY: Mortgage Mortgage g LLoan oan CCompany oom mpanny Lic cense e MC21112. MN hhis is not an off ffeer ttoo ent ter e int to an a int teerreest rrate ate lo ck agr reement e under M innesota LLaw. aw. MO esi esidential Mor tgage g Br rok okeer Lic ense 091746 -S. NH ensed by by the th NNew ew HHampshire ampshirre BBanking anking DDepartment. epartmentt. NJ ed bbyy the N. epartment of BBanking ankkiing and Insurance. Insurraance. NY Y: Lic ceensed ens Mor tggage BBanker—NYS ankkeerr— —NYYS Department Department of FFinancial inanc i ial SServices. or ork Mor tggage BBanker ankkeer Lic ceense B500980/107664. OH: NJ:J: Lic Licensed N.J.J. DDepartment NY: Licensed Mortgage Mortgage License ensed ervices. New New YYork OH: Ohio Ohio Mortgage Broker Mortgage Exemption MBMB.850208.000 automatic OR: Mortgage License PA:: Lic Licensed RI:I: RRhode Licensed License Mortggage Br rookkeer AAct ct Mor tggage BBanker ankkeer Ex xemption e MBMB .850208.000 (FHA, DE & VVAA aut toomatic loans only) OR R: Mor M tgage g LLender ender Lic ense ML4886. PA ceensed bbyy the DDepartment epartment of BBanking. anking. RI hhode Island Island s Lic ensed LLender, enderr, LLender ender Lic cens eense 20112809LL. VA: VA: Lic censed e bbyy the VVirginia iirrgginia Sta te CCorporation orporration CCommission or oommission MC5382. WA: WA: CConsumer oonsumer LLoan oan Lic cense CL2 2600. Also lic censed in AL, ALL, AR, ARR, CT, CTT, DE, DEE, DC, DCC, FL D, IN N, IA, IA, ME E, MD D, MS S, MT T, NM, NM M, NC C, OK, OKK, SC, SCC, TN, TN N, TX, TXX, UT T, WV and WI NOTICE: All 20112809LL. Licensed State License CL2600. licensed FL,, ID ID, IN, ME, MD, MS, MT, NC, UT, WI.. NOTICE: onditions loans subjec subjectt ttoo ccredit, underwriting property approval guidelines.. OOffered products may state. guarantee thatt all bborrowers qualify. may apply.y. TThis lend. reeditt, under wrriting i and pr rop o erty appr roval guidelines ffffeerreed loan pr roducts ma ay vvary arry bbyy sta te. TThere hherre is no gu arrant a ee tha orrroweers will qu alifyy. RRestrictions estrriictions ns ma ay apply his h is not a ccommitment oommitment ttoo lend d. TTerms, eerrms ms, cconditions oondition rogrrams a are arre subject subject ttoo change without notic icce. TThis hhis inf for o rm mation is ffor oor mor tggage pr rof ofeessionals only and is no ot int tended e ffor oor distr riibution ttoo cconsumers. onsumers. CCarrington aarrringt i on Mor tggage SServices ervices is not ac ting on bbehalf ehalf of or aatt the dir rec e tion of HUD/FHA and pr programs notice. information mortgage professionals not intended distribution Mortgage acting direction agency. or any anny government goverrnnment agenc cy. All rrights iights rreserved. eeservedd.

n National Mortgage Professional Magazine n JUNE 2015

GGrowing rowing your your o business with wiith the right right i partner has never partner ha as nev er bbeen een easier. eaasier s r. Get Geet started starrteed Mortgage ttoday odaay with CCarrington ar arriington Mor tggage SServices. ervicces e.

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I know some companies execute agreements with their vendors and assume their service provider will do the heavylifting and figure out the best ways to adhere to the terms of the contract. But this method will not succeed, and it sets the relationship up for failure. A well planned and thoroughly executed transition phase is critical for the ongoing success of company-supplier relationship. I find each party needs to identify a relationship manager, and develop a communication plan where roles and responsibilities are clearly defined for all the associates involved. The transition phase sets the stage for the long-term ongoing relationship.

Industry Updates By Gavin T. Ales VA clarifies itemization of origination charges and lender credits The U.S. Department of Veterans Affairs (VA) recently issued VA Circular 26-15-6 (Circular), which provides for additional requirements for the itemization of charges that are aggregated on the HUD1 Settlement Statement. The VA previously required itemization of origination charges, title charges and lender credits shown in HUD line 802. The new Circular clarifies that lender credits that result from premium pricing are the only credits that may be included in HUD line 802. All other credits provided by the lender must be disclosed on page one of the HUD1 Settlement Statement in lines 204. Fannie Mae and Freddie Mac issue revised PMI requirements On April 17, 2015 Fannie Mae and Freddie Mac issued revised requirements for private mortgage insurance (PMI) companies that insure mortgage loans either owned or guaranteed by Fannie or Freddie. The new requirements set financial and operational standards that private mortgage insurers must meet in order to receive approved insurer status with Fannie and Freddie. In a statement from the FHFA’s Director, Melvin L. Watt said that these new requirements “are prudent steps to align and strengthen Fannie Mae and Freddie Mac’s operations and financial requirements for private mortgage insurance companies, which will reduce the overall risk [of Fannie and Freddie] and protect taxpayers.” The requirements are set to become effective on Dec. 31, 2015.

JUNE 2015 n National Mortgage Professional Magazine n

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Office of the Comptroller of Currency issues updated examination procedures On May 1, 2015, the Office of the Comptroller of Currency (OCC) released its revised TILA and RESPA chapters in its new publication of the OCC’s examination manual. The new publication focuses primarily on the new Truth-in-Lending Act (TILA) and Real Estate Settlement Procedures Act (RESPA) requirements which provide detailed procedural and substantive requirements for the new TILA-RESPA Integrated Disclosure (TRID) rule that goes into effect Aug. 1, 2015. The exam procedures were updated to create conformity in the examination process regarding the new TRID rules. FHA extends Single-Family Handbook effective date to Sept. 14, 2015 On April 30, 2015, the Federal Housing Administration (FHA) announced that it would be extending the effective date of its Single-Family Housing Policy Handbook (Handbook) from June 15, 2015 to Sept. 14, 2015. In a statement, the FHA says it “recognizes that there currently are a number of competing initiatives occurring simultaneously in the mortgage industry that may be challenging mortgagee and other industry partner resources.” They cite these as reasons as to why the FHA has granted a 90-day extension on their Handbook’s effective date with the expectation that the additional time will allow all those affected by the Handbook to become fully compliant. Gavin T. Ales is chief compliance officer with Torrance, Calif.-based DocMagic Inc. He may be reached by phone at (800) 649-1362, ext. 6446 or e-mail gavin@docmagic.com.

SPONSORED EDITORIAL

new to market continued from page 18

reconciliation, servicing assessment, portfolio oversight, and cash-flow reconciliation. The addition of Stewart’s Condition Clearing Tools in the suite provides a realtime link between buyers and asset sellers to identify, clear and report upon any conditions placed upon the asset transaction. Additionally, Stewart has upgraded their solution suite to incorporate the latest regulatory requirements. “We are committed to the growth of our mortgage services offering that assists our clients in their objectives to optimize loan-quality and to support regulatory compliance,” said Jason Nadeau, CEO of Stewart Lender Services. “Through a single solution with Stewart, our clients have access to a trusted partner with strong expertise, industry leading technology and a robust suite of services.” With more than 120 years of history, Stewart has grown to be a leading provider of real estate and mortgage services including our newly expanded suite of solutions for due diligence, loan review and quality control. In addition to providing the industry leading suite of securitization technology Stewart has expanded their suite of due diligence solutions through operational expansion and recent acquisitions.

CFPB Launches Consumer-Oriented Financial Coaching Initiative

The Consumer Financial Protection Bureau (CFPB) has announced the launch of its Financial Coaching Initiative, targeting recently-transitioned veterans and economically vulnerable consumers to help them with their financial goals. The program places 60 certified financial coaches at organizations around the country to provide individualized educational services. “Having a trusted, well-informed financial coach can increase your odds of financial success,” said CFPB Director Richard Cordray. “Our project aims to provide financial coaching services at critical points in consumers’ lives, especially as they transition from military service or from being unemployed.” Millions of consumers are economically vulnerable, including the 49.1 million people living below the poverty line, and the more than 68 million who are financially underserved. These consumers are the most likely to lack access to traditional financial services, which may include products that are more appropriate to their needs and less costly. In-person, individualized and trustworthy guidance can help these consumers make good financial decisions and reach their financial goals. Roughly 250,000 servicemembers leave active duty every year, and the financial transition into civilian life can be

challenging. The Department of Defense offers a Transition Assistance Program (TAP), but many transitioning servicemembers lack experience in money management, and find after they leave the service that they may need help in reworking the financial plan they made while in TAP. At this point a trusted source of financial information and advice could make the difference in a successful transition to a financially stable post-military life.

Mortgage TrueView Set to Launch New QC Tool

Mortgage TrueView has announced that it is developing the industry’s first independent benchmarking tool for quality control (QC). The new solution, QC View, will allow lenders, investors and regulators to compare the quality of loan pools within an individual lender’s portfolio or with the rest of the mortgage industry. Mortgage TrueView also announced the formation of a QC View Working Group and is inviting mortgage industry participants to assist in the development of standard data definitions and formats behind QC View. “To be able to accurately assess loan quality is everybody’s goal,” said Becky Walzak, executive vice president, director of regulatory compliance with Mortgage TrueView. “Regulators need to know which lenders are meeting requirements, originators want to know how their loan quality compares to competitors, and the secondary market needs better information about the quality of loans they are securitizing. With QC View, everyone will be able to get the answers they need.” QC View will give lenders the opportunity to make changes that are meaningful to their loan origination and servicing processes, as well as to avoid spending money on issues and reviews that add no value. Mortgage TrueView is planning to launch QC View in July of this year. The QC View Working Group was formed after Mortgage TrueView held two Webinars on how the mortgage industry can better approach quality control. “QC View is an industry-wide project, and it is open to all mortgage participants who want to help build the data definitions and formats behind it,” said David Moffat, president and CEO of Mortgage TrueView. “So far, we’re seeing wide support for launching a QC benchmarking tool such as QC View.”

Vantage Production Launches Referral Partner Center Vantage Production, a provider of automated marketing and sales-acceleration solutions for mort-

gage lenders, has introduced the latest enhancement to its VIP CRM (Customer Relationship Management), the Referral Partner Center. VIP’s Referral Partner Center gives loan originators a competitive edge in solidifying referral relationships by providing sophisticated, co-branded automated marketing and content that helps boost sales for the loan originator and the partner. The Referral Partner Center was developed to enable lenders to strengthen and grow real estate agent and other referral relationships. It enables the loan originator to provide a single portal to partners for shared-client loan status updates and implement co-branded marketing through an easy to use, responsive Web interface. “Loan officers want help developing and maintaining high-performing referral relationships, and we know how essential these partnerships are to our lenders’ successes,” said Vantage Production CEO and President Sue Woodard. “VIP’s Referral Partner Center makes growing these critical relationships far easier by enabling LOs to give their referral partners an automated way to send their clients great marketing content and messages. Lenders benefit from significant increases in loan closings as well as complete control over messaging for compliance.”

OpenClose Releases Upgraded Enterprise Analytics and Reporting Module

occurring in retail, wholesale, correspondent and consumer direct lending channels. Detailed reports can be created for any business channel as well as specific functions and processes within those channels. Directly from the dashboard, users are able to extract key information and populate it into a useful reporting presentation format that provides enterprise-wide management metrics and performance reporting from all desired business areas. This provides management with the oversight and intelligence to fully understand departmental and employee productivity and shows where areas for improvement and greater profitability can be realized.

MISMO Launches New Certification Program MISMO has announced the launch of a new certification program, the Certified MISMO Standards Professional (CMSP). The certification is a mark of excellence available only to those individuals who have demonstrated superior skills and knowledge in the MISMO standards. The CMSP was created in direct response to industry demands for skilled MISMO practitioners. The CMSP designation, along with the extensive supporting educational curriculum, ensures that individuals have the requicontinued on page 38

Why choose MBS Highway? BARRY HABIB— THE ORIGINATOR OF THE MARKET ADVISORY SERVICE Daily guidance and insights from Mortgage Market expert Barry Habib. He closed over $2 Billion in production as a Loan Originator, called the bottom of the Housing Market and currently provides sales and market training to thousands of Loan Originators across the country. STATE OF THE ART, USER FRIENDLY WEBSITE We've taken great pride in building a website that uses new technology, and enhances the user experience. No matter where you are on our site, you'll always have market data in sight. Never miss a lock alert with our real time market news and alert system.

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Always stay in touch with the market when on the go with our Mobile Web App. It's fast and easy to use. Whether you have an iPhone, Android, Blackberry, Windows Phone, you'll always have access to MBS Highway. No downloads, no annoying updates, just visit m.mbshighway.com in your phone or tablet's browser.

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OpenClose has announced that it has released version 4.0 of OC Optics, a Webbased analytics and reporting system that integrates tightly with its LenderAssist LOS platform. The enhancements provide clients with more control, added functionality, and robust editing and configuration tools that effectively customizes data analysis and reporting outputs. OC Optics 4.0 provides detailed analytics and up-to-the-minute reporting using an easy-to-configure dashboard-level user interface, which has been significantly enhanced to empower clients with more editing and report creation tools, while becoming more self-sufficient. Using OC Optics 4.0, lenders can view all metrics in a single graphical interface from multiple sources such as production, secondary marketing underwriting, processing, closing, post-closing, accounting, etc. The module utilizes business critical data to produce rich graphs, charts, performance management tools and more. As a result, organizations are able to execute intelligent, profitable business decisions while managing risk across the enterprise including other locations and branches. “Often, important information is

trapped in Excel spreadsheets located in various functional areas within an organization, which renders it either useless or onerous to make sense of for business decisions,” said Vince Furey, senior vice president of lending solutions at OpenClose. “One of the biggest advantages of OC Optics is that it provides clients with more autonomy and options to easily tap into information to create custom reports in the form of charts, graphs, dashboards and individual reports.” Version 4.0 of OC Optics allows permissioned users to leverage the multi-channel capability of OpenClose’s LenderAssist LOS to separately analyze various activities

legendsoflending

$ $

BY PHIL HALL

REMN WHOLESALE: SELLING THE CUSTOMER EXPERIENCE

REMN Wholesale prides itself in

well as the initial underwrite, where

bringing superior customer service

most competitors separate the two

to mortgage brokers, with same-day

to make it appear as if their

turn times being its trademark

underwriting turn-times are better

offering. National Mortgage

than what they really are.

Professional Magazine ventured to

Chapman: Our turn-times are

the company’s headquarters in

defined from the time it is received

Iselin, N.J., to speak with Carl

here to the time the broker receives

Markman, REMN’s director of

an underwriting answer. As long as

national sales, and Noel Chapman,

it meets minimum standards, the

executive vice president, to discuss

broker will receive a written

the company’s distinctive approach

disposition within 24 hours.

larger pipeline than would have

last couple of years due to the low-

been possible otherwise. We

rate environment keeping the

What makes REMN so committed

understand that our role is to make

industry so close to capacity.

It’s no secret that REMN

to the mortgage broker?

our broker partners look good every

Markman: I see a lot of private

Wholesale is known for its same-

Chapman: I spent the first 10 years

day, which helps them increase

equity getting back into the

day turn times. How have you

in this industry as a broker, where I

their market share.

market. It is positive, but I think it

been able to maintain that

had to deal with wholesalers. That

commitment through the ups and

experience gave me good insight as

What are some of the unique

Chapman: Non-QM requires

downs of the recent years?

to what brokers need from a

advantages that REMN has in the

heightened compliance diligence

Carl Markman: It’s a commitment

relationship with a wholesaler.

secondary market?

compared to securitized qualified

to being overstaffed. We have to be

Some wholesalers don’t have the

Chapman: We are large enough to

mortgage (QM)-type products. As a

overstaffed all the time. We can’t

experience as a broker, so they lack

enjoy economies of scale, and

result, the interest rates on those

have the excuse that we can

the same special insight, empathy

fortunate enough to have a

products are significantly higher.

provide same-day turn times one

and commitment to broker

seasoned and expert secondary

REMN will be rolling out a non-QM

day, and not have them the next

community. They don’t understand

market management team that

product over the next few months

day. It is our commitment to our

that it’s a partnership.

enables us to confidently navigate

to round out our already extensive

partnerships with our brokers and

Markman: Many of us at REMN

the market turmoil that has been

product menu.

bankers to maintain the same-day

have worked as loan officers and

fairly constant over the last few

Markman: While there is certainly a

turn times every day, which we’ve

understand what our broker

years.

segment of the market that requires

been offering from the beginning.

partners are going through each

Noel Chapman: There is a huge

day. Even our underwriting

What do you see as the near-

be a significant amount of our

difference between offering same-

manager, at one time, was a loan

term future of the secondary

overall business.

day turn times some of the time

officer. We understand that our

market? Is the private label

and offering same day turn-times all

broker partners are under extreme

market going to come back

What impact has TRID had on

of the time, because our brokers

pressure from all parties in every

anytime soon?

your business?

need to be able to count on same

transaction. Providing them access

Chapman: I think the new private

Chapman: Many of TRID’s

turn time every day, on every file.

to timely answers on a consistent

label marketplace is still in its

requirements and language don’t

Markman: REMN’s turn-times

basis empowers them to

infancy. It hasn’t gained as much

apply well to wholesale

include the opening process, as

comfortably originate and manage a

traction as it could have over the

transactions. The workflow presents

NationalMortgageProfessional.com

to business.

JUNE 2015 n National Mortgage Professional Magazine n

“It is our commitment to our partnerships with our brokers and bankers to maintain the same-day turn times every day, which we’ve been offering from the beginning.” —Carl Markman, Director of Sales, REMN Wholesale

will take a while to take effect.

a non-QM loan, I don’t expect it to

“Customer service is actually a cliché … it is really customer experience. What exactly are we selling here? We are selling the customer experience.” —Noel Chapman, Executive Vice President of Wholesale Lending, REMN

particular challenges for TPO

through ticketing and live chat.

business. There are still so many

However, it’s still our turn-times that

issues subject to interpretation that

set us apart.

it seems likely that TRID will go into effect prior to necessary

What do you look for when

clarification, which is undeniably

seeking recruits to become part

problematic. Additionally, it should

of your team?

be noted that the Mortgage

Chapman: Any team member who

Bankers Association (MBA) has

touches a file or has any customer

recently released data which

contact has to share our passion for

confirms that the average cost to

customer service. Customer service

produce a loan has increased by

is actually a cliché … it is really

over 50 percent ($2,500) over the

customer experience. What exactly

last few years, nearly all of which

are we selling here? We are selling

can be attributed to compliance

the customer experience. There

costs … and that’s before TRID.

really is no other way to differentiate yourself these days, because the

REMN has been very active in

products are almost all the same. In

educating mortgage

order to ensure a positive

professionals through Webinars.

experience there has to be a

How did you decide to pursue

consistent service philosophy

that strategy?

among all team members.

Markman: We can reach more can in person or over the phone.

next five years?

Our Webinars have anywhere

Chapman: It seems to me that the

between 400 and 1,000 attendees,

pendulum, since around 2008, has

and it would be impossible to reach

done nothing but swing one way.

that many people all at once. We

The industry has become

typically do about a half-dozen

increasingly risk-averse, there’s

Webinars annually. We are now

more and more over-regulation and

also offering weekly training

I would be shocked if this continued

Webinars pertaining to renovation

in that direction. Historically, there is

products, and we have about 100

a cycle, and we should start to see

participants on those Webinars. The

access to credit return to normal,

feedback that we receive is

with regulations being eased. Five

overwhelmingly positive.

years from now, the lending environment might be more

What is unique about your

conducive to mortgage companies

relationship with mortgage

prospering. Given our commitment

brokers that other wholesalers

to the customer experience, I

have not been able to duplicate?

believe REMN is well-positioned to

Markman: Our account executives

take advantage of that type of

are more knowledgeable and

environment.

empowered than any other in the industry. Plus, our partners have

Phil Hall is managing editor of

many other resources at REMN to

National Mortgage Professional

assist them, including our online

Magazine. He may be reached by

Helpdesk which is accessible

e-mail at philh@nmpmediacorp.com.

n National Mortgage Professional Magazine n JUNE 2015

Where do you see REMN in the

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people through Webinars than we

N A T I O N A L

M O R T G A G E

P R O F E S S I O N A L

M A G A Z I N E â&#x20AC;&#x2122; S

economic commentary

WHY By Dave Hershman Last month, we made the point that rates are still very low. But they have risen over the past month and the next question is: Why are they rising now? On the face of it, there are not very many reasons for rates to be increasing. For example, our economy barely grew in the first quarter of this year. There is also no signs of inflation right now or on the horizon. On the other hand, one must remember that markets move in mysterious ways, which often leaves us guessing. For example, are the markets predicting a big rebound in the economy for the second and third quarters? That would mean that the numbers released for economic growth in July will be

RATES

watched very closely. A paper was recently released by the Federal Reserve Bank in San Francisco which has argued that seasonal adjustments to the numbers had understated growth during the first quarter. Another factor that helps us explain recent movement in rates is the fact that oil prices are rising. While no one is expecting oil prices at their present levels will spark inflation, for a while last year, many were concerned that we could be heading into a period of deflation with oil and other commodity prices plummeting at the time. Now the prices have stabilized and are rebounding slightly. Thus, the deflation factor has been removed from the equation and bond prices are adjusting accordingly. If this is the major factor, the increases should level off. However,

ROSE

MAY

if the economy does rebound strongly, we may we may see continued rate increases. But, the next question is: Will the Federal Reserve lead or follow the markets with regard to these increases? Recent remarks have indicated that the Federal Reserve is still on track to raise rates this year. Delayed action would risk "overheating the economy," Fed Chair Janet Yellen said in a speech. Speaking recently in Providence, R.I., Yellen said the Fed will likely raise its key interest rate this year for the first time in almost a decade. It was a rare indication of confidence from the Fed chair, whom most analysts consider to be very cautious. "If the economy continues to improve as I expect, I think it will be appropriate at some point this year to take the initial step to raise the federal funds rate target," Yellen said.

During the same speech, the Fed chair expressed concern over the economy's recent slowdown. The pace of job gains has weakened in 2015, and economic growth has been flat. Wages aren't picking up much either. Yellen alluded to this in her speech by saying, "in my judgment we are not there yet" on the economic recovery. Although Yellen believes the Fed will raise rates this year, it still seems unlikely that will happen in June. Dave Hershman is a top author in the mortgage industry with seven books published. He is also the founder of the OriginationPro Marketing System, and currently the director of branch support for McLean Mortgage. He may be reached by e-mail at dave@hershmangroup.com or visit www.originationpro.com.

NMP Daily is the mortgage industry's source for news, insights, trends and tips. It keeps subscribers informed of the regulatory and legislative updates, latest industry happenings and breaking news about the mortgage technologies and services.

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Direct Mail Voice Personalize Your Marketing www.direct-mail-voice.com

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info@tagquest.com

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NMP M O R T G A G E P R O F E S S I O N A L

John L. Councilman, CMC, CRMS

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President of NAMB —The Association of Mortgage Professionals BY PHIL HALL

ohn Councilman has been president of NAMB—The Association of Mortgage Professionals since September of 2014, when he took office at NAMB National in Las Vegas. He has been president of AMC Mortgage Corporation in Fort Myers, Fla., for the past two years, previously in Maryland for 28 years. He has served in NAMB leadership roles including treasurer (2010-2012), vice president (2012-2013), presidentelect (2013-14) and is currently the organization’s president. In the past, he served as FHA Committee Chair. In his role as NAMB president, Councilman has been a vocal advocate of mortgage professionals, and has not been shy about calling out those who

“We’re an industry that has always been embattled, either on the federal or state level, or through regulators interpreting laws. This aspect drove me towards my involvement with NAMB.” continue to denigrate the profession or impede the efforts of would-be homeowners to pursue the American Dream. In a recent letter on behalf of NAMB, he challenged U.S. President Barack Obama to “speak more positively of mortgage brokers” following a controversial speech by the president earlier this year. He also cited the Consumer Financial Protection Bureau (CFPB) as offering evidence to support this faith in the profession, noting that

agency’s consumer complaint database presented “extreme consumer satisfaction with mortgage brokers, far exceeding that of any other segment of the finance industry, and that mortgage brokers accounted for less than 1/10 of one percent of the complaints.” National Mortgage Professional Magazine spoke with Councilman about his work with NAMB and the role the association plays in the industry.

How and why did you get involved with NAMB? Can you share the track within NAMB that led to your leadership role? John Councilman: At almost every NAMB meeting, I ask if anyone else has been with NAMB longer than me … no one has! Back in 1986, I was at a NAMB’s first national conference in Atlantic City, N.J. It was mainly a commercial operation at the time, but that began to swing toward residential in the late 1980s. In 1992, I was one of the founders of the Maryland Association of Mortgage Brokers. In the mid1990s, I started to get involved with NAMB’s government affairs committee. I chaired a number of committees, and later decided that I had enough time to devote my efforts toward a position in the association’s leadership.

OF THE MONTH Why do you feel members of the mortgage profession should join NAMB? Councilman: NAMB does quite a few things, and the organization has high quality people that you can fraternize with and learn from. Our conferences provide something very important–they make you a better professional– and NAMB’s certification allows you to rise in professionalism in the eyes of your peers and the public. Also, NAMB offers education. If you are getting education somewhere in your state, you are probably getting it through NAMB. There are also discounts to members—you get enough discounts in products that probably save you more than the cost of your membership. We’re an industry that has always been embattled, either on the federal or state level, or through regulators interpreting laws. This aspect drove me towards my involvement with NAMB.

www.LykkenOnLending.com 37

How would you define the state of the housing industry across the U.S.? Councilman: Some areas are hot, and there are bidding wars going on–even though property is less expensive than it was at the height of the housing bubble. We don’t seem to be losing value anywhere, with most places are gaining in value. Financing is readily available for those that qualify. Phil Hall is managing editor of National Mortgage Professional Magazine. He may be reached by e-mail at philh@nmpmediacorp.com.

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n National Mortgage Professional Magazine n JUNE 2015

What do you see as your most significant accomplishments to date with NAMB? Councilman: It’s a long, long history and I probably have not accomplished as much as president as I have in other capacities.

How would you define NAMB’s relationship with state mortgage associations? Councilman: It is much better than it has been in recent years. There was a period around 2008 when some state associations seceded from NAMB. That was a horrible mistake and we lost two of our largest state associations. But they are back now, and we’re going to rebuild two major state associations this year. I would hope that within the decade, we’ll again have state affiliates of NAMB in every state.

NationalMortgageProfessional.com

Let’s touch on the legislative and regulatory side for a moment … what has NAMB been doing on this front? Councilman: We support good legislation and regulation and try to stop bad legislation and regulation. But, there are a lot of moving parts to this process. There are quite a few people in the House and Senate that we have to work with who are relevant on these issues. They are constantly looking at legislation that can be extremely damaging to the industry. For example, we think that some of the Dodd-Frank Act needs to be fixed–it is tilted against mortgage brokers and non-banks and in favor of the “too-big-to-fail” banks.

At both a state and national level, I have been recognized as Broker of the Year. With NAMB, I was the first person to hold a fundraiser for a member of Congress and the first person to introduce legislation (relating to yield spreads), which was a rather major accomplishment. My work with the FHA is well known–I was involved with a lot of mortgagee letters and I worked tirelessly with Brian Montgomery to make sure Congress didn’t get rid of the FHA. You can see my fingerprints on the SAFE Act. And when everything exploded in the industry back in 2008, NAMB went deeply into debt and many suggested that we shut it down and start a new association. I worked to pay off our debts, and NAMB is now a very healthy organization.

Brokers Turn to Direct Mail

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NationalMortgageProfessional.com

Everyone knows direct mail CAN work, but it’s no secret that mail been in a slump for the last few years. Now it has risen back to the top. The most widely used marketing method for top mortgage brokers today. Better results than Internet leads, live transfers or online marketing. Direct mail is quietly taking the nation by storm. More loans are being funded today from direct mail than any other form of marketing. For brokers, the business is all about volume. Finding a marketing campaign that can produce consistent results is more important than ever. In today’s fast-paced environment, there’s just no time to shop around for marketing products and services in hopes of finding one that works. Your time needs to be spent closing loans. What’s going to consistently bring you the highest volume of calls while keeping the return-on-investment (ROI) you need to be profitable? A campaign you can track? One that provides reports that will keep you ahead of industry trends? Lead management tools that will allow you to work five to 10 times more loans at once? Direct mail incorporates all of these. This is why it has risen back to the most frequently used marketing method for today’s top mortgage brokers. In order for mail to work effectively, it needs to be dropped consistently. Companies that only drop mail three to four times per year (or less) usually see varied results, while people who drop mail weekly or bi-weekly all year long seem to have much more consistent, scalable and profitable results. Plan your growth and marketing efforts accordingly and keep it consistent throughout the year. Starting and stopping will decrease the effectiveness of your campaigns. You need consistent results so you can effectively follow the trends in the market. Keeping a pulse on your market will allow you to stay ahead of your competition. Most of your competitors wait to see what the market is going to do before they decide to make a move. The top mortgage brokers of today see what is happening now and forecast the future allowing them to capitalize while everyone else is waiting. Don’t wait to see everyone else’s results. Get out there and start producing top results for yourself. TagQuest client spotlight: John F. from Ohio Each month, we like to talk with our clients and find out how their campaigns are going. Here’s what we heard from one of our mortgage brokers, John F., in Ohio. Product used: Direct mail targeting VA refinance l 5,000 direct mail pieces l 45 inbound calls to date l 10 applications to date Highlights of the campaign that work well for John … “Being able to customizing the filters to fit my programs worked better than the live transfers I have tried in the past where filters are set kind of low and can’t be changed.” Highlights that could appeal to other loan officers or offices … “Calls are more qualified by targeting a specific demographic and more of the prospects seem like they are ready to move quicker.” Based in Medford, Ore., TagQuest Inc. is a full-service marketing firm developed throughout the ever-changing mortgage industry. Utilizing industry knowledge, marketing expertise, and technology we implement any or all aspects of your marketing and/or advertising campaigns. With a proven track record, more than 10 years in business, and decades of experience TagQuest knows what it takes to produce unprecedented results in today’s fast-paced mortgage environment. For more information, call (888) 7178980 or visit www.tagquest.com.

new to market continued from page 31

site ability to support, design and implement MISMO-based projects. The CMSP designation is the only MISMO certification program available for individuals within the mortgage industry. “The certification program will be valuable to the mortgage industry because companies leveraging Certified MISMO Standards Professionals will find it easier to comply with regulatory and counterparty requirements,” said MISMO President Mike Fratantoni. “Government and other large organizations have seen the benefit of using MISMO standards across their business processes and in communicating between organizations. The CMSP program is designed to develop and recognize individuals who are able to effectively apply MISMO standards to support their organization’s business and technology requirements.” The Certified MISMO Standards Professional (CMSP) program is a pointsbased program. Candidates accrue points by successfully completing MISMO education programs, as well as by participating in MISMO workgroups, summits and other activities. Candidates must also successfully complete a comprehensive exam in order to be certified. “I have learned more about the mortgage industry through my affiliation and participation with MISMO than any other endeavor I have participated in,” said Kyle Bensen, business manager at MGIC and former chairman of the MISMO Education Committee. “Individuals who find themselves working on integrations, data normalization, or other MISMObased projects would be well served by meeting the certification requirements. They will be stronger technical contributors to current and future data-driven and MISMO-driven projects. Business SMEs, such as business analysts and operations managers, are ideal CMSP candidates because they will learn how their business knowledge can be articulated within the MISMO framework.”

Collateral Analytics Announces New Home Price Model

Collateral Analytics has developed a new home price model that draws upon

both long-run factors and short-run market conditions to predict prices one year ahead. Long-run factors consist of key drivers such as local employment and the affordable price, which is driven by household income and interest rates. Short-run market conditions incorporate a wide variety of factors related to the recent sales and the current set of listings of properties on the market such as the months of remaining inventory and the number of foreclosure sales relative to regular sales. In addition, Collateral Analytics has also produced its own index of overall market conditions which captures a much larger set of these local market conditions. “Our approach to modeling future price changes rests heavily upon the belief that such changes are heavily dependent upon local market conditions and the responsiveness of local house prices to these variables,” said Michael Sklarz, president and CEO of Collateral Analytics. The key long-run factor is the gap between the level of prices and the level predicted by the levels of employment and the affordable price. All else equal, the larger this gap, the slower is the predicted growth in prices. The three short-run factors in the new Collateral Analytics Home Price Model are the months of remaining inventory, Collateral Analytics’s proprietary index of local market condition, and the ratio of foreclosure sales to total sales.

Your turn National Mortgage Professional Magazine invites you to submit any information promoting new “niche” loan programs, new products or any other announcement related to the introduction of a new program, to the attention of: New to Market column Phone #: (516) 409-5555 E-mail: newsroom@nmpmediacorp.com Note: Submissions sent via e-mail are preferred. The deadline for submissions is the 1st of the month prior to the target issue.

www.mortgagenewsnetwork.com SPONSORED EDITORIAL

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Loan Estimate: Deep Dive By Jonathan Foxx

that this review is not exhaustive or comprehensive, given that the TRID rule contains very complex disclosure requirements, far more involved, byzantine, elaborate, incisive, and potentially enigmatic than the compendiary features of it discussed herein. Please follow my analysis carefully. Allow at least two hours to consider this elucidation. Make notes, raise questions, seek answers from competent compliance professionals!

Highlights

l Three pages of the RESPA Good Faith Estimate; l Two pages typically used for early TILA disclosures; l One page typically used for the appraisal notice under the Equal Credit Opportunity Act; l One page typically used for the servicing disclosure. The Loan Estimate also incorporates disclosures of: l The total interest percentage (TIP);11 l The aggregate amount of loan charges and closing costs the consumer must pay at consummation;12 l For refinances, the anti-deficiency

TRID imposes strict specifications for the Loan Estimate. For instance, unless otherwise specifically provided, a disclosure that does not apply to a transaction should be left blank, not marked “not applicable” or “N/A,” and, as a general rule, may not be deleted.15 There are special rules for certain disclosures. For example, the Adjustable Payment and Adjustable Interest Rate tables may be included only when applicable to the transaction and otherwise must be excluded.16 The importance of complying with the specialized requirements cannot be overstated: Failure to comply with the precise and detailed rules may lead to significant liability and litigation risk, under both TILA and RESPA, as well as other statutes, such as the Equal Credit Opportunity Act, State and federal unfair, deceptive or abusive acts or practices (UDAAP) statutes, and State mini-TILA and miniRESPA statutes. Given the rigid features of the LE, I suggest that a creditor should use Form H-24 for all loans covered by the TRID rule, even if the loan is not a RESPA loan. TRID permits providing a cover letter so long as the Loan Estimate is provided separately from the cover letter.17 Creditors may not add pages in between the pages of the Loan Estimate, or at the end of the Loan Estimate, except as permitted by Regulation Z.18 Creditors may not add information not required by TILA Regulation Z. If the creditor devises its own form for loans not subject to RESPA, it must be very careful to compare that form to Form H-24 and ensure that each difference is carefully examined and justified. TRID does not permit any deviations from form H-24 for forms optimized to be shown on a computer screen or tablet. Timing and Receipt The creditor or mortgage broker must provide (either give or mail) the Loan Estimate to the consumer no later than three business days after receiving the consumer’s application for a mortgage continued on page 42

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Loan Estimate Form For any federally related mortgage loan,7 the Loan Estimate must be made using the model form set forth in Exhibit H— Form H-24 in the CFPB’s Federal Register issuance.8 TRID does not require the use of the model form for non-RESPA transactions; that is, those subject to the integrated disclosures because they are subject to TILA and secured by real property but are not subject to RESPA.9 There are numerous text, structure, and field descriptions associated with the LE disclosure. Thus, it would be wise not to deviate from the model provided. For those non-RESPA loans, the disclosures must be made with headings, content and format substantially similar to form H-24. Use of model form H-24, properly completed with accurate content, would constitute compliance for those loans.10 According to the CFPB, the Loan Estimate integrates at least seven pages of disclosures, including:

protection notice;13 l The homeowner’s insurance disclosure. 14

NationalMortgageProfessional.com

This is the third article of a four-part series that beckons us to a deep dive into the Loan Estimate. In the first article, I discussed the mission of TILA-RESPA Integration and the Loan Estimate (LE).1 The second article introduced and treated the numerous features of the Closing Disclosure (CD).2 Each of the foregoing articles were accompanied by detailed tables to be used for certain itemized categories and action requirements. The final and fourth article will provide an extensive analysis of the Closing Disclosure. I would suggest that you read all the articles in this series in order to better understand the TILA-RESPA Integration Disclosure (TRID) rule promulgated by the Consumer Financial Protection Bureau (CFPB). One of the reasons I have written this series is to cut through the information noise. My concern stems from the nearly profiteering stance of the flourishing punditry to opine on TRID. This approach to learning seems to have become the norm recently at conferences, conventions, Webinars, seminars, lectures, and pricey city-to-city forums. Indeed, also, people with no real experience in directing regulatory compliance, though having some training background, seem to hang out their TRID Webinar shingle. I view the latter as but shills for generating leads for their affiliated pundits. Attendees sometimes leave these convocations and ad hoc caboodles more confused than beforehand. Occasionally, they call my firm and want to know who has the correct view, Mr. Pundit A or Ms. Pundit B. I have noticed recently that certain pundits that previously, freely offered advice on TRID are now charging fees for their Webinars or offering their guidance, for a fee, via well-known Webinar purveyors and online audio/visual enablers. I offer these reflections not as exculpation, rather as expiation, since I have been on panels, and given lectures and webinars, alongside many members of the conscientious punditocracy. But I happen to think that TRID is too

important, being a generational change in disclosure, to hog the helpful information about TRID by charging a fee just so somebody could attend and possibly learn something about it. With that in mind, my firm recently did two proactive things: (1) We established the TEAM TRID task force,3 a relatively inexpensive, costeffective way to get TRID integration implementation done efficiently; and importantly (2) we established TRIDHotline.com,4 an entirely free online service, manned by our task force, to assist people with their questions about TRID. We want to listen to their compliance needs! In my view, these two foregoing measures help to address the challenge we face as we head toward the compliance effective date of Aug. 1, 2015. I want to do what I can to ensure that we all are ready! “Ready” means ready for everybody, since the stability of the residential mortgage loan originations industry and the financial protection of the consumer depend on understanding and implementing the many features of the TRID rule. Hopefully, you will have read the previous two articles (i.e., Part I and Part II). Now we will embark on a detailed review of the new disclosures, beginning in this third article with the Loan Estimate. Let’s get real close to the Loan Estimate. In this article, I will not discuss pre-application estimates and worksheets in detail, except to mention that a creditor or other person may choose to provide a consumer with a written preliminary estimate of terms or costs specific to that consumer before providing the Loan Estimate. If it does so, the creditor or other person must clearly and conspicuously state at the top of the front of the first page of the estimate in a font size no smaller than 12-point: “Your actual rate, payment, and costs could be higher. Get an official Loan Estimate before choosing a loan.”5 Furthermore, the estimate may not be made with headings, content, and format substantially similar to the Loan Estimate or Closing Disclosure.6 So let’s focus on the Loan Estimate, since I plan to take you solely through the Loan Estimate in considerable detail. I will discuss salient highlights of the Loan Estimate, though I caution you to realize

loan estimate: deep dive continued from page 41

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loan. The standard definition of “business day” applies (i.e., a day on which the creditor’s offices are open to the public for carrying on substantially all of its business functions).19 A mortgage broker that gives a Loan Estimate must comply with all the Loan Estimate requirements as if it were the creditor.20 If the LE is not delivered in person, “receipt” occurs three business days after the Loan Estimate has been delivered or placed in the mail. Alternatively, the creditor may rely on evidence (i.e., a signed receipt for overnight delivery) that the consumer received the disclosures earlier than the end of the three business days.21 One question that comes up often is how to manage the timing with respect to electronic delivery. The three-business-day period applies to methods of electronic delivery, such as email. Thus, if a creditor sends a Loan Estimate by email on a Monday, the consumer is considered to have received the disclosures on a Thursday, unless the creditor relies on evidence that the consumer received the emailed disclosures earlier (such as an acknowledgment of e-mail receipt). Creditors relying on electronic delivery methods must comply with the consumer consent and other applicable provisions of the E-Sign Act.22 Irrespective of E-Sign consent provisions, we advise our clients to consider: l Whether procedures are needed to deal with electronic disclosures returned undelivered; l Whether electronic disclosures are provided in a form that can be retained; l The duration of electronic notices or disclosures available to consumers through the financial institution’s systems;

l Establishing a process to appropriately respond to consumer requests for paper copies of electronic notices and disclosures; l Dealing with changes in hardware or software that may create a risk that consumers will no longer be able to access or retain electronic disclosures; and l Ensuring their electronic disclosures comply with the timing, format, content, and recordkeeping requirements of the underlying substantive rule (i.e., Regulation Z). The creditor or broker must provide the Loan Estimate to the consumer no later than the seventh business day before consummation of the transaction (except for time-share transactions).23 There is a more specific “business day” definition (viz., includes non-holiday Saturdays) that applies to the requirement that the Loan Estimate be provided at least seven business days before consummation. The term “consummation” means the time when the consumer becomes contractually obligated on the credit transaction. This seven-day period begins when the creditor delivers the Loan Estimate or places it in the mail, not when the consumer receives or is considered to have received the disclosures.24 In this definition, excepting only timeshare transactions, “business day” is all calendar days except Sundays and legal national public holidays (i.e., New Year’s Day, Birthday of Martin Luther King, Jr., Washington’s Birthday, Memorial Day, Independence Day, Labor Day, Columbus Day, Veterans Day, Thanksgiving Day, and Christmas Day). A question I often get is: How do these two different definitions of “business day” affect the proper disclosure timing?

Commercial Real Estate Financing up to $10,000,000 • Acquisition, Renovation, Bridge and Mezzanine Financing • Typical Loan Term 12-24 Months • Interest Only Payments • Closings Generally Within 30 Days of Commitment Issuance • Brokers Protected

The three-business-day period is timed from receipt of an application, whereas the seven-business-day waiting period begins when the creditor delivers the Loan Estimate or places it in the mail, not when the consumer receives or is considered to have received it. The consumer may modify or waive the seven-day waiting period if he or she determines that the loan is needed to meet a bona fide personal financial emergency. Any modification or waiver may not occur until after a Loan Estimate has been received. To modify or waive the seven-day waiting period, the consumer must give the creditor a dated written statement describing the emergency, specifically modifying or waiving the seven-day period, and bearing the signature of all consumers who are primarily liable.

l l

l Delivery: How and by Whom? Regulation Z allows either the creditor or a mortgage broker to provide the Loan Estimate.25 This rule closely reflects the requirements under RESPA’s Regulation X,26 including: l If a mortgage broker receives an application, either the creditor or the broker must provide a Loan Estimate within three business days of receipt. l If the mortgage broker provides the Loan Estimate, the mortgage broker must comply with all applicable requirements as if it were the creditor. l The creditor must ensure that the Loan Estimate is provided in accordance with all the applicable requirements. l Disclosures provided by a mortgage broker in accordance with the requirements satisfy the creditor’s obligation. l If a mortgage broker issues a Loan Estimate, the broker also must comply with the three-year record retention requirements.27 l The creditor is not permitted to issue a separate Loan Estimate or revised

Gary Robinson Vice President, Commercial Loans

585.424.2750 l www.monroecap.net

Taylor Wold Commercial Loan Officer

3445 Winton Place, Suite 228 l Rochester, New York 14623

Sarah Montz Commercial Loan Operations

disclosures to correct a mortgage broker’s error.28 The creditor is expected to maintain communications with the broker to ensure that the broker is acting in place of the creditor (even if the creditor does not know about the broker’s involvement until after the Loan Estimate has been given).29 Either the creditor or the mortgage broker may provide revised Loan Estimates based on any of the six legitimate reasons for revisions. Mortgage brokers are not required to get authorization from creditors before providing Loan Estimates. Creditors are bound by the terms of the Loan Estimate, subject to one of the six legitimate reasons for revisions, whether or not the creditor has authorized the mortgage broker to provide the Loan Estimate. The regulation does not explicitly require a mortgage broker to provide application information to the creditor nor establish other conditions brokers must satisfy before they issue a Loan Estimate. The regulation considers the creditor to be in the best position to set requirements contractually.

To emphasize: Even if a mortgage broker provides the Loan Estimate, the creditor remains responsible for complying with all requirements concerning provision of the form; and a broker that provides a Loan Estimate also is required to comply with all requirements regarding the Loan Estimate as if it were the creditor.30

Application Definition TRID formally does away with the catchall, seventh information item. Six information items are needed to constitute an application. A creditor may provide a Loan Estimate without receiving all of the six items of information that comprise an “application” within the meaning of Regulation Z. But if it does this, the receipt of any of the missing items does not constitute a “changed circumstance” to justify a revised Loan Estimate. Prior to providing the Loan Estimate, a creditor may collect, but may not require, documentation verifying information provided by the consumer in the application. For example, a creditor may not require a purchase and sale agreement before providing a Loan Estimate for purchase transactions but it may accept a copy if the applicant voluntarily offers it. A creditor need not provide a Loan Estimate if it declines the loan or the consumer withdraws the application within the three-business-day period. However, if the creditor fails to provide the Loan Estimate and then later consummates the transaction on the terms originally applied for, then the creditor has not complied with the TRID Rule. Therefore, if, following a decline or withdrawal within the three-day period, the consumer later amends the application because of the creditor’s unwillingness to approve it on the terms originally requested, the creditor did not violate the regulation by failing to provide a Loan Estimate based on the original

terms, but the amended application must be a new application that requires a Loan Estimate. In other words, procedurally, if the creditor determines within the threebusiness-day period that the application will not be approved on the terms requested by the consumer, or if the consumer withdraws the application within that period, the creditor does not have to provide a Loan Estimate. If the creditor does not provide the Loan Estimate, it will not have complied with the Loan Estimate requirements if it later consummates the transaction on the terms originally applied for by the consumer. If the consumer then amends the application and the creditor determines the amended application may proceed, the amended application is a new application that requires a Loan Estimate within the there-business-day period.

receives a Loan Estimate, the creditor does not comply with the TRID rule, even if the creditor or other person stated that the check would not be cashed until after a Loan Estimate was received by the consumer and waited to cash the check until after the consumer indicated an intent to proceed. Similarly, a creditor may not require the consumer to provide a credit card number before the consumer receives the Loan Estimate and indicates an intent to proceed, even if the creditor promises not to charge the card until after that time—although the creditor may accept a credit card number for purposes of imposing a reasonable and bona fide credit report fee, and may maintain the number on file so long as no other fee is imposed until the Loan Estimate is

received, the consumer has indicated an intent to proceed, and the creditor has received a separate authorization to process the additional fee charge.35 With respect to consumer documentation, a creditor or other person may not require a consumer to submit documents verifying information related to the consumer’s application before providing a Loan Estimate.36 The creditor or other person may collect from the consumer any information it requires prior to providing a Loan Estimate or at the same time as it collects the six items of information that constitute an “application,” but the creditor or other person may not require the consumer to submit documentation to verify that information until a Loan Estimate has been provided.

Consider these two examples: The creditor may ask for the sale price and property address, but may not require the consumer to provide a purchase and sale agreement to support the information the consumer orally provides until after a Loan Estimate has been given. A mortgage broker may ask for the names, account numbers, and balances of the consumer’s checking and savings accounts, but may not require the consumer to provide bank statements or similar documentation until the Loan Estimate has been provided.37 Both this fee imposition prohibition and the prohibition against requiring verification documentation take effect continued on page 72

Collection of Fees and Consumer Documents With the exception of a creditor or other person imposing a bona fide and reasonable fee for obtaining the consumer’s credit report, TRID prohibits a creditor or other person from imposing a fee on a consumer before the consumer has: l Received the Loan Estimate,31 and l Indicated an intent to proceed with the transaction.32

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The consumer may indicate intent to proceed in any manner the consumer chooses, unless the creditor requires a particular manner of communication, provided that the creditor does not assume silence indicates intent. The creditor must document the communication of intent to satisfy TILA’s record retention requirements.33 A consumer’s signature or initials on a Loan Estimate do not constitute an intent to proceed. A creditor may not allow the Loan Estimate to be signed by the consumer to document intent to proceed—the optional signature on the Loan Estimate is only to document receipt of the Loan Estimate. Oral communication in person immediately upon delivery of the Loan Estimate sufficiently indicates intent; also valid would be an oral communication over the phone, written communication by email, or signing a pre-printed form, if the action occurs after receipt of the Loan Estimate.34 But silence is not acceptable. One highly charged question usually is posed whenever I outline the requirements concerning the collection of fees prior to the consumer receiving the Loan Estimate. The fact is no manner of constructive receipt of fees is permitted prior to the Loan Estimates receipt by the consumer, other than the bona fide and reasonable fee for obtaining the consumer’s credit report. A creditor or third party imposes a fee if the person requires a consumer to provide a method of payment, even if payment is not made at that time. For example, if a creditor or other person requires the consumer to provide a $500 check to pay for a “processing fee” before the consumer

heard street ON THE

Our Heard on the Street column is a chronicle of events, changes and passages in the lives of the people and companies shaping the mortgage industry.

DocMagic Crosses 100 Million Mortgage Industry Milestone for eSignatures

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DocMagic Inc. has announced that its eSign platforms have now processed more than 100 million mortgagerelated eSignature transactions. “We are very pleased with the sheer number of eSignatures that we are seeing executed among our client base,” said Dominic Iannitti, president and CEO of DocMagic. “This is positive news for the mortgage industry as a whole. In previous years, eSign adoption was much lower among lenders working with borrowers. We have always encouraged clients to take advantage of our eSigning technology; this impressive number of transactions certainly reflects that.” DocMagic is a leader in the mortgage industry for eSign technologies. The company has a long-standing reputation for developing innovative eSign solutions that integrate seamlessly with mortgage workflows. DocMagic has two eSign solutions for clients to take advantage of: eSignSystems’ SmartSAFE XL eSigning, eDelivery and eVaulting platform was added to the DocMagic family in 2014. DocMagic’s eSign platform is a separate SaaS-based solution that features the company’s proprietary ClickSign technology. SmartSAFE XL is ideal for companies that require more flexibility, extendibility and control over eSigning processes. In 2011, in an effort to encourage industry-wide adoption of eSignatures, DocMagic made its eSign technology available to anyone to sign any type of document at no charge. Documents executed using DocMagic’s eSign technology are as legally effective, valid and enforceable as documents printed and signed in ink.

Reverse Mortgage Solutions Partners With Security 1 Lending on New Rebranding Initiative Reverse Mortgage Solutions Inc. (RMS) and its retail brand, Security 1 Lending, a division of Walter Investment Management Corporation, have announced the formal launch of their rebranding and repositioning initiatives along with their new TV spot. RMS and Security 1 Lending have grown and evolved since 2007, particularly over the last year. Operating its wholesale and servicing business as RMS, and originating Home Equity Conversion Mortgages (HECMs) as Security 1 Lending, the company has become more integrated, more efficient and, most importantly, 100 percent customer focused. “Our people have worked tirelessly the past couple of years to get us where we are today,” said D. Scott Clarke, president and CEO. “The first thing we wanted to do was throw out the ‘Tell and Sell’ mentality that’s so prevalent in the industry today and commit ourselves to educating the customer about all their options and letting them choose the one that meets their needs. At the same time, we have been improving our internal processes so the entire customer experience will be as quick, efficient and enjoyable as possible.” “In addition to the redesigned logos and tagline, the comprehensive multimedia introduction kicks off with the unveiling of our exciting new, integrated, solutions-driven internet site, updated sales materials, direct marketing and a number of other components,” said Sharon Robbins, RMS SVP and CMO. “It also marks the debut of a fresh TV spot showcasing our updated brand positioning. The Boomer and

Greatest generations have been responsible for so many amazing changes and seen so much, and they now have the opportunity to choose and change how they fund the next chapter of their lives. While we will always want to serve the clients who need a Home Equity Conversion Mortgage to stay in their home, it is time for the industry to start painting a picture and educating homeowners about how this product may also be a great solution to help them live a better life and fund their future. Our goal is to educate our customers by explaining every facet of our HECM products so they can make an informed decision on whether it is the right financial solution for them.”

Flagstar Named a Lenders One Preferred Investor

forms in the country, Lenders One is an incredible partner for Flagstar as we deliver our expertise and resources to its members,” said Brian Vieaux, senior vice president and national sales director for Wholesale Lending at Flagstar. “The mortgage industry requires highquality, differentiated products to meet customer needs, and now we’re able to provide these offerings to Lenders One Members.” Jeff McGuiness, chief executive officer of Lenders One, said, “With Flagstar Bank, we are able to bring to the Lenders One Members one of the most trusted correspondent investors in the market today. Flagstar’s focus on superior customer experience and strong industry presence give our Lenders One Members a quality provider on which they can depend.”

Angel Oak Capital Advisors Surpasses $5 Billion in Assets The Lenders One Mortgage Cooperative, a national alliance of independent mortgage bankers, correspondent lenders and suppliers of mortgage products and services, has announced that Flagstar Bank as a new preferred investor with its full suite of products now available to Lenders One Members. Flagstar’s mortgage products are designed for a wide range of borrowers including jumbo, renovation and rural mortgage products. With more than 1,300 correspondents and brokers as partners, Flagstar is a top 10 mortgage originator, top 10 warehouse lender and a top five Federal Housing Administration (FHA) lender. Chartered in 1987 as a federal savings bank, Michigan-based Flagstar provides home loans through a wholesale network of brokers and correspondents in all 50 states, as well as through 16 retail centers in 11 states. “As one of the largest mortgage plat-

Angel Oak Capital Advisors LLC has announced that the firm has reached a milestone of $5 billion in assets under management across its family of investment products. “Angel Oak Capital continues to grow as we identify new ways to provide innovative solutions for fixed income investors,” said Angel Oak Co-Founder and Managing Partner Brad Friedlander. “We are pleased to have achieved such a significant milestone and believe the continued demand for less traditional, credit-focused fixed income products will allow us greater room to grow.” The company’s two public mutual funds, the Angel Oak Multi-Strategy Income Fund (ANGLX), which received an overall rating of 5 Stars from Morningstar as of April 30, 2015, and the Angel Oak Flexible Income Fund (ANFLX) have been key drivers of asset growth for the firm. The Multi-Strategy Income Fund has more than $4 billion

in assets as of April 30. The Fund is actively managed and has a current bias toward credit and low duration assets. The strategy will shift over time as the managersâ&#x20AC;&#x2122; macro view on the economy, credit, interest rates and capital market conditions continue to change. The new Flexible Income Fund, launched in November of 2014, has $160 million-plus in assets as of April 30. The Fund takes a distinct approach to credit investing, actively allocating across higher-yielding global fixed income instruments that may be less sensitive to changes in interest rates. The flexible nature of the Fund provides Angel Oak Capitalâ&#x20AC;&#x2122;s portfolio managers with the freedom to invest in securities outside of indices, lowering the expected correlation to traditional fixed income. The Fund currently has a significant allocation to corporate credit with an emphasis in structured credit. â&#x20AC;&#x153;We remain committed to creating investment vehicles that are positioned to capitalize on opportunities in asset classes that have been unavailable to investors in recent years. Focusing on this market segment has enabled us to sustain a strong growth rate,â&#x20AC;? said Sreeni Prabhu, co-founder and managing partner.

with search capabilities built into the AllRegs by Ellie Mae platform.â&#x20AC;? AllRegs, which was acquired by Ellie Mae in October 2014, is the exclusive electronic publisher of underwriting and loan product guidelines for Fannie Mae, Freddie Mac, the Federal Home Loan Bank of Chicago MPF Program, Wells Fargo, Citibank, Chase, U.S. Bank and Flagstar Bank, in addition to publishing internal guidelines and hosting over 250 Web sites for some of the most progressive mortgage companies in the country. In addition to publishing loan product and guideline data and analytics, AllRegs by Ellie Mae offers virtual and live training, designation and practical

guides, as well as off-the-shelf policy and procedures manuals and other documents that can be customized for each company. Its extensive content library of regulations and investor guidelines is relied upon by virtually all of the top 100 U.S. lenders.

Ellie Mae Moves Into New 100,000-Square Foot HQ

Ellie Mae has announced that it has moved its headquarters into a new building in Pleasanton, Calif. to accommodate the companyâ&#x20AC;&#x2122;s growing work-

force. The new Ellie Mae headquarters has 100,000 square feet of office space, more than twice the size of the companyâ&#x20AC;&#x2122;s former Pleasanton offices. Ellie Maeâ&#x20AC;&#x2122;s staff has nearly doubled over the past three years, with more than half of its 685 employees based in Pleasanton. Earlier this month, the company was named one of the â&#x20AC;&#x153;Best Places to Work in the Bay Areaâ&#x20AC;? by the San Francisco Business Times and Silicon Valley Business Journal for the third time. The new Pleasanton building includes a state-of-the-art executive briefing center for hosting clients and prospective customers from Ellie Maeâ&#x20AC;&#x2122;s continued on page 48

AllRegs by Ellie Mae Named Official Publisher of FHA Handbook

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Ellie Mae has announced that AllRegs by Ellie Mae began publishing the FHA Single Family Housing Policy Handbook (HUD Handbook 4000.1), scheduled to go into effect on Sept. 14, 2015. Ellie Mae became the official publisher of FHA handbooks after being awarded a contract by the U.S. Department of Housing & Urban Development/Single Family Office this past September. The addition of the FHA Handbook creates an improved user experience for lenders with greater functionality and reliability, including robust links between AllRegs and other FHA resources and information. In addition to publishing FHAâ&#x20AC;&#x2122;s online resources, AllRegs by Ellie Maeâ&#x20AC;&#x2122;s offerings include training and help desk support services for HUD staff and other users. The AllRegs by Ellie Mae publishing platform also includes searchable access to both current and archived FHA loan guideline documents, including dynamic searches using keywords and synonyms, and the ability to export content into various formats. â&#x20AC;&#x153;With the FHA playing a critical role in todayâ&#x20AC;&#x2122;s housing market, lenders need resources and tools that help them comply with the agencyâ&#x20AC;&#x2122;s policies quickly and efficiently,â&#x20AC;? said Jonathan Corr, president and CEO of Ellie Mae. â&#x20AC;&#x153;The FHAâ&#x20AC;&#x2122;s decision to publish its guidelines with us will provide lenders that originate and close FHA loans with better access and efficiency, especially

LYKKEN ON

leadership

Relationship Management: Nine Stakeholders With Whom You Need to Nurture Relationships By David Lykken

uch of success in life and in business boils down to how well you deal with people. As leaders in

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the mortgage industry, we interact with all sorts of people on an everyday basis. How we nurture the relationships with these various groups will either make us or break us. When we think of building relationships as leaders, we typically only think

about internal relationships—those within our own companies. We often neglect building some of the relationships that we don't really consider necessary, but strengthening the relationships with people outside of our organizations can give us a competitive advantage down the road. In order to be the best leaders we can possibly be, we have to treat everyone we come into contact with as stakeholders in our success. Here is a small list of people with whom I think a strong relationship is key for success as a leader in the mortgage industry. First, we'll start with the most obvious—those within our organization, our employees. Building a trusted relationship with the staff of our companies is vital not only for increasing productivity but also for indirectly strengthening relationships with all the people those employees will come into contact with. If we treat our employees well, they will treat our customers well. An employee who trusts his leader is worth ten times as much as the employee who doesn't. That employee won't cut corners and will work just as hard even when you aren't looking. You want people on your team who go above and beyond because they care about the relationship they have with you—they don't want to let you down. The only way to keep these people on your team is spend time building relationships with them. The second group of people you want to continue to nurture relationships with is your existing customer base. All of the people for whom you have originated or serviced loans—are you still in contact with them? Have you reached out to them since the last time they signed something for you, or have you completely forgotten about

them? The best companies are relentless about follow-up. Repeat customers and referrals are the least costly and most effective means of generating revenue. If you don't stay in touch with your current clientele, you're missing out some substantial opportunities. Next, you need to focus on building relationships with prospective customers—those who are in the market now or will be in the market soon. This is where your marketing comes in. Do you have a good e-mail marketing platform? Are you involved with any form of social media? Do you host any events to attract people who may be interested in home ownership? These strategies aren't merely components of the marketing toolkit—they're tools for building relationships. Don't think of these people as nameless faces that you're blasting with your messaging—think of them as people you need to get to know. They are your future customers. Another group of people with whom you need to nurture relationships is your vendors. We often throw around the phrase "vendor management," but I think can sometimes dehumanize what it really is. Vendors are partners; they are like other members of your team, employees by another name. You've got to treat them like they matter to you—like they aren't merely mercenaries for hire. If you have strong relationships with you vendors, you'll be able to produce the results you need both profitably and sustainably. A good partnerships is hard to find and you should be willing to fight tooth and nail for its success when you have good fortune of finding one. Another obvious group of people with whom you need to forge strong

building relationships is competitors. If there's one group of people that we'd think we can keep our distance from, this is it. But, actually, it's useful to develop relationships with competitors for a number of reasons. First, since we're all in the same industry, there are synergies that exist between us. If we're willing to share more with each other, we can create mutual success by baking a bigger pie rather than taking a bigger slice. Secondly, we may not be competitors in the future. Mergers and acquisitions take place in our industry all the time. Down the road, we may be working for them, they may be working for us, and we both might simply be working together. If you want to become a suc-

cessful leader in the mortgage industry, you've got to have foresight. What's true today might not be true tomorrow. Everyone from customer to competitor must be treated with respect and dignity. The relationships with all the people we come in contact with matter more than we could ever know. David Lykken is 40-year mortgage industry veteran who has been an owner operator in three mortgage banking companies and a software company. As a former business owner/operator, today David loves helping C-Level executives and business owners achieve extraordinary results via consulting, coaching and communications, with the objective of

eliminating corporate dysfunction, establishing and communicating a clear corporate strategy while focusing on process improvement and operational efficiencies resulting in increased profitability. David has been a regular contributor on CNBC and Fox Business News and currently hosts a successful weekly radio program, “Lykken on Lending,” that is heard each Monday at noon (Central Standard Time) by thousands of mortgage professionals. He produces a daily one-minute video called “Today’s Mortgage Minute” that appears on hundreds of television, radio and newspaper Web sites across America. He may be reached by phone at (512) 501-2810 or by e-mail at dlykken@mbs-team.com.

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relationships is investors. Of course, you'll probably make most investors happy if you've covered your bases on relationships with those others mentioned so far. But building relationships with investors is less about what you're doing in your organization and more about how well your communicating it to them. Investors don't like to be left in the dark. They have skin in the game, and they want to feel secure in their investments. To build relationships with your investors, you've got to spend time talking with them about what's going on in your organization. Keep your investors in the loop—and you'll keep them investing with confidence. Now, we get the more counterintuitive groups of people in the mortgage industry with whom it's a good idea to build relationships. First, there's the regulators. Often viewed as the enemy, I honestly believe that most regulators have good intentions and want to see the industry flourish. Instead of constantly pushing back against regulators, great leaders will work with regulators to create a more vibrant industry. Besides, who do you think regulators are more likely to be lenient with— those who are compliant and helpful or those who are constantly fighting and arguing with them? More today than ever before, building solid relationships with regulators can go a long way. Another group with whom we need to build strong relationships is journalists. The people who are covering our industry through magazines, television, Web sites, or other mediums have direct stake in our success. Journalists, as objective third parties, have the power to create a perception of our organizations that we can't create ourselves no matter how much we spend on advertising. Media relations is a key ingredient to building a healthy image. Do you know any of the journalists that cover our industry by name? Have you had coffee with them—opened yourself up for comments? Relationships with the media is not something we should overlook if we want our organizations to succeed. One group that you won't see on many lists like this is academic institutions—but I think relationships with this group are vital for a number of reasons. First, many of your best future employees with be coming out of colleges and universities. If you build relationships with the Professors and administrators of these institutions, your organization will be where they send their best and brightest. Secondly, the research conducted by universities is the scientific basis for what is covered by journalists and read by the general public. If you collaborate on projects for researchers, it's a good way to get your organization associated with something positive and scientifically robust. In the industry, we don't often see educational institutions as key constituents, but perhaps we should. The relationship clearly has a lot to offer. One other counterintuitive group of people with whom we need to focus on

The Long & Short: The Business of Short Sales

“Free Home for Deadbeat Homeowners” Story Taints True Problem at Root of Distressed Properties By Pam Marron

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Again, the press has covered a dysfunctional foreclosure process where state statute of limitations were exceeded and resulted in a free home for a “deadbeat homeowner.”1 As state courts ramp up cases to determine how the statute of limitations for foreclosures are applied, frustration mounts for underwater homeowners who see that these rare stories overshadow the problems of millions who continue to stay in or who have short sold their underwater homes. The good news is that there has not been a flood of free homes, even with an undecided statute of limitations law, at least in Florida, where the problem persists. Florida foreclosure defense attorney Matt Englett, quoted in the May 2015 RealtyTrac Housing News Report, “We’ve gotten people houses for free before, but it’s been on other grounds. It hasn’t been on statute of limitations.”2 As fewer of these legal victories believed to be the basis for strategic default surface, a push needs to be made to focus on an alternative policy that will not 48 require mortgage delinquency first for underwater homeowners who are seeking assistance or need to exit their home with a short sale. The common advice given to underwater homeowners seeking assistance for second mortgages or for trying to short sale an underwater home is that the homeowner must be delinquent on the mortgage first ... advice usually given by the homeowners’ own mortgage lender or “investor.” Mortgage delinquency is still a requirement for many lenders today. Why is this required delinquency such a big deal, and why is a foreclosure story noted in a short sale article? Short sale credit is reflected as a foreclosure after 120 days of delinquency. Foreclosure credit is much more harmful than short sale credit and homeowners who have closed on a short sale that exceeded 120 days are usually not aware that their credit is viewed as a foreclosure, rather than a short sale. In fact, short sales are mistakenly noted as a foreclosure on credit reports, in automated underwriting findings and in many data providing services. The foreclosure code is often why past short sellers eligible for a new mortgage are turned down. I am going to pull a “Bernie Sanders” here and give a solution that is so simple it might just work because it has in the past. For a short sale, provide a policy for those who truly need to exit an underwater home WITHOUT REQUIRING MORTGAGE DELINQUENCY. Let the homeowner make 50 percent of the mortgage payments for five months while the home is listed as a short sale. Don’t ding credit for that five-month period in which the home must be sold and closed as a short sale. Don’t put the mortgage into a costly loss mitigation department. If after five months the property has not been sold and closed, the 50 percent payment not made is due and the home is taken out of the program. This incentivizes all parties to get the home closed with the least amount of expense towards loss mitigation and servicing, increasing the bottom line net for a distressed property.3 This program was called the STIP Plan and was done by Citibank prior to 2009. The first short seller I helped was on this plan and his credit stayed intact through the five-month timeframe of his short sale. A similar proactive plan can be provided for 1.8 million underwater homeowners who need a modification of resetting interest only HELOC’s and ballooning second mortgages. The mortgage industry is now seeing the return of up to 7.3 million Boomerang Buyers (those who had a past short sale or foreclosure). It is presumed that credit was already negative for a bankruptcy or a forecontinued on page 75

heard on the street continued from page 45

growing clientele of mortgage bankers, l WFG National Title Insurance lenders and credit unions. The headquarCompany has promoted Roger ters’ site includes several auditoriums with Blauvelt to lead the continued video conferencing capabilities to enhance growth of its relationship with the collaboration between Ellie Mae offices nation’s largest independent title nationwide. The site also includes a fitness agencies, as senior vice president center and a full-service café for employees. overseeing the company’s National “Thanks to the hard work of our employAgency Division. WFG has also named ees, Ellie Mae has grown tremendously over Executive Vice Presidents Charles the past several years. With this move, we Cain and Gene Rebadow to co-manare making sure that the talented people age its Agency Group. Both will be responsible for our success have the finest charged with overseeing and leading work environment we can provide,” Ellie the company’s work with independMae President and CEO Jonathan Corr said. ent title agencies in their respective “Our new headquarters and its amenities geographic regions. will ensure that both our employees and l LoanLogics has announced the hiring our clients can grow, learn and innovate of Catherine Doherty as vice presinew ways to bring compliance, quality and dent of human resources. LoanLogics efficiency to the mortgage process.” has also named Meg Guard vice president of account management and Mortgage Professionals support. to Watch l LRES has announced that Kenneth l Paramount Residential Mortgage Shepardson has been hired as the Group (PRMG) has announced the new vice president finance/conpromotion of Lara Rausch from the troller, where he will be responsible position of product development for managing LRES’ fiscal controls manager to the role of vice president and budgets to help the firm mitiof products and training. gate risk and remain in compliance l Credit Plus Inc. has announced that it with industry accounting principles. has added Colleen Knapp as senior l Primary Capital Mortgage (PCM) has vice president, national product speannounced the expansion of its mancialist, responsible for providing agement team with the addition of mortgage lenders with progressive Debbie Turner as senior vice presiverification products. Credit Plus has dent, chief compliance officer. also announced that it has added l United Guaranty Corporation has Darleen Aragon as a regional account selected Mimi Eaton to join its executive, where she will be offering Strategic Accounts Team as a vice lenders throughout the U.S. a full president. range of Credit Plus’ third-party verifi- l GSF Mortgage has added Charles cation tools. Monroe as branch manager in the l Parkside Lending has expanded its company’s Overland Park, Kan. sales management team with the office. GSF has also named Rick addition of Dennis Waller as regional Purkins as a branch manager in the sales manager for the Northwest company’s Webster, Texas branch. Region of the country. Koby Luedtke has also joined GSF as l B2R Finance has announced the a mortgage loan originator in the appointment of Matt Malanga as chief firm’s Brookfield, Wis. location. marketing officer, reporting to the l Guild Mortgage has named Eugene firm’s Chief Executive Officer Jason Fera as district manager for its Hogg. Southwest region. l Castle & Cooke Mortgage LLC has l Caliber Home Loans Inc. has announced the promotion of Ernie announced that Sarah Johanns has Martinez to the position of branch joined the company as an account manager for the firm’s El Paso, Texas executive covering Minnesota and location. the surrounding Midwest territory. l Ocwen Financial Corporation has announced that it has appointed Alan Your turn J. Bowers as a new independent direc- National Mortgage Professional Magazine tor to its Board of Directors. Bowers’ invites its readers to submit any inforappointment expands the Ocwen mation, events, passages, promotions, Board to eight directors, seven of personal or professional occurrences whom are independent directors. that seem appropriate and/or other perl Mortgage Network Inc. has opened a tinent data to the attention of: branch office in Tampa, Fla. to be managed by Audi Spiridakos, who has Heard on the Street/Mortgage 13 years of mortgage banking experiProfessionals to Watch column ence in the Tampa area. Jennifer Phone #: (516) 409-5555 Kasper has also joined Mortgage E-mail: newsroom@nmpmediacorp.com Network as a senior loan officer in the company’s Tampa, Fla. branch office, Note: Submissions sent via e-mail are responsible for serving homeowners preferred. The deadline for submissions and homebuyers throughout the is the 1st of the month prior to the tarTampa Bay region. get issue.

Why 2015 Is the Time to Target Renters By Bubba Mills ortgage lenders lead a great (and oftentimes charmed) life for many reasons, but one that has always been near the top is renters. It’s rare in the business world to have such a perfectly defined and reachable market right in front of you—a market you know that’s likely to be in need of a mortgage sooner rather than later. The image of fish in a barrel comes to mine. And yet, it boggles my mind how many lenders don’t have a plan that targets renters. I meet these lenders regularly and it just blows me away. These next five words make up a fact that simply cannot be ignored in mortgage lending: “Today’s renters are tomorrow’s borrowers.” That’s especially true right now. I recently came across a study from

Zillow that says a wave of 5.2 million renters plan to buy homes in the next year. That’s nearly a 25 percent boost from the same time last year. And the same study says renters’ confidence in real estate is growing faster than homeowners’ confidence. Zillow also reports young adults, low-income and minority renters are all particularly eager to buy in the coming months. So how can you capitalize on renters and turn them into homebuyers? Here are a few tips:

1. Refocus your advertising When you consider Zillow’s study, it makes sense to go after those potential buyers who are on the bubble of being able to qualify for a mortgage. Take some time to reexamine your advertising and marketing messages so that they appeal to that market and emphasize ways you can help them get qualified for a mortgage.

2. Be more selective about your partners Sure, you want always want to be strategic about who you’re partnering with. And yes, it makes plenty of sense to partner with real estate agents. But what about agents who specialize in property management? That’s a straight path to a steady and fresh crop of potential homebuyers. I know many property managers who track lease dates and hit up renters 90 days before their leases are up with e-mails reminding them their leases are expiring and explain the benefits of buying versus continuing to rent.

3. Create a “rent versus buy” campaign Develop a database of renters and send out periodic e-mail blasts and traditional mailings to highlight the differences between renting and buying and that they can potentially save hundreds of dollars each month. Use real-life exam-

ples and testimonials from past renters you’ve helped secure mortgages. There’s so much (excuse my French) crap out there, it’s refreshing to see actual, real-life truth in a marketing campaign. But also follow up your mailers with phone calls to avoid getting lost in all the marketing noise out there. Live conversations can seal the deal.

4. Keep a sense of urgency Letting renters know interest rates can rise at any time is vital. Even though we’ve seen historically low interest rates lately, explain they’re not going to last forever. If you can get renters a little nervous about missing out, you can up the odds they’ll make a move. Bubba Mills is executive vice president of Corcoran Consulting & Coaching Inc. He may be reached by phone at (800) 9578353 or visit www.corcorancoaching.com.

Just Ask

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Eric Weinstein & Laura Burke nowledge is power. Power translates to success, whether it is dollars in your pocket, stronger leadership, increased bottom lines or peace of mind, we are here for you. This month, we are introducing a new column for questions relating to starting a business, managing a business, training, networking, tax-related issues, corporate security policy, fraud alerts and compliance. All answers are for informational purpose only, and are not intended to practice law, or are meant to provide tax advice or tax opinions. After reviewing our information, we both recommend seeking legal counsel or the advice of a tax profes-

sional. Please e-mail us at JustAskEricandLaura@gmail.com to voice any questions or problems. We are here for you!

David in Waco, Texas asks … I just got a random e-mail from a customer I refinanced in 2006. She said she was going to sue me since her negative amortization loan caused her to lose her home in foreclosure. What is the Statue of Limitations on mortgage fraud? Can she actually sue me? Eric’s reply to David … I had no idea. So, I looked it up and

found it here: www.justanswer.com/law/5puyq-statute-limitations-lyingmortgage.html. The law is 18 U.S.C. 1044. It was originally enacted, June 25, 1948, Ch. 645. It has been amended more than 10 times, most recently in May 20, 2009, 123 Stat. 1617). The Statute of Limitations for the law is found in 18 U.S.C. 3293(1). The most recent amendment to the limitation was Sept. 13, 1994. The notes section of the U.S. Code related to Section 3293 states: “The amendments made by subsection (a) [amending this section] shall apply to any offense committed before the

date of the enactment of this section [Nov. 29, 1990], if the statute of limitations applicable to that offense had not run as of such date.” In short, a misrepresentation on a loan application made in 2006 would be subject to a 10-year statute of limitations, because the 10-year statute of limitations has been in effect since Nov. 29, 1990. Laura’s reply to David … Unfortunately, we live in a litigious society, and anyone can sue anyone at any time. The question is: Does the suit hold merit? It looks like Eric did a good job researching the statute and

k Eric & Laura it appears your client would be within the Statute of Limitations. Do you still work for the same company; is the company still in business? If so, give your old boss or someone you know a heads up. Did they carry some type of E&O insurance? Are they bound to legally represent you? So many uncertainties. An attorney that you choose to represent you should be able to give you the ins and outs of whether you can be held accountable for someone else’s actions, or failure of action. I imagine your client failed to pay. Often, when bad things happen, even to good people, the response is, “Who is to blame for this?” Once the client speaks to an attorney, she will be guided as to if it is worth her proceeding. It won’t bring her house back. Best wishes for a non-litigious answer.

Randy in Rancho Cucamonga, Calif. asks … I recently took an application via the Internet, but when I visited the client to get the papers signed, I noticed she was nine months pregnant. Will this affect my loan application?

This means, the lady will need to qualify on her maternity leave income plus she will need the letter from the employer stating that she has a position waiting for her and a letter from her stating she intends to return back to work after the birth. Laura’s reply to Randy ... I disagree with Eric. The Fair Housing Act, Title VIII of the Civil Rights Act of 1968, as amended, prohibits discrimination in the sale, rental and financing of dwellings, and in other housingrelated transactions, based on race,

l For the birth of a son or daughter, and to care for the newborn child; l For the placement with the employee of a child for adoption or foster care, and to care for the newly placed child; l To care for an immediate family member (spouse, child, or parent— but not a parent “in-law”) with a serious health condition; and l When the employee is unable to work because of a serious health condition. This paid family leave program will allow workers to take up to six weeks off to care for a newborn, a newly adopted child or ill family member. The way I understand the rule to apply is that an employee must keep the position open, or a similar one, with equal pay for any woman on maternity leave, no different than if it was any other medical condition that an individual would need time off for, such as a surgery.

A reader of National Mortgage Professional Magazine asks … I am a real estate agent who also reads National Mortgage Professional Magazine and my question is what if when I was listing a house, there were no comps to increase value, the home has been on the market for years with another agent overpriced. I got the listing, made some suggestions and reduced the price. We sold the house in less than a week, to a specific buyer that wanted the area. When a home inspection was done, a leaking roof caused a serious amount of mold to grow in the attic. My client has to remediate the mold and put on a new roof. While all of this was happening, a home closed in the nearby vicinity of similar quality at a substantially higher price. I only know that my client doesn’t know it yet. Ethically, my dilemma is should I suggest accepting the negotiations the current potential buyers are offering, or should I advise my client that if they don’t accept the offer, for reduced price plus repairs, they could simply do the repairs, and we could ask substantially more due to the repairs being complete and the new comp increasing value. What do you suggest? On one hand, we could lose the only potentially will-

ing buyer in years, but we could also stand to make a larger profit. Laura’s reply … It’s simple … it’s not your decision, it is the decision of the seller. Explain to them exactly what you just wrote to us (hopefully you have done this already), and lay the cards on the table. This way, you are not ethically involved, you are doing your job by presenting both choices to your sellers, and let them choose which path to take. Sometimes, when we are too close to a situation, we don’t see the answer staring us in the face. I think perhaps you were too worried about your client to see the simple answer. Best wishes for a successful closing either way! Eric’s reply … Whenever a person starts a sentence with the word “Ethically,” you can be pretty certain they already answered their own question. Does business and the need to make money trump doing the right thing? If you are not sure, read your local Bible, Koran or Torah to double check. Laura, as usual, is right on the money in her answer. It is not your decision. As close as we all get to a transaction trying to protect and help our clients, we must constantly remind ourselves, “We are ADVISORS, not the decision-maker.” Explain the situation to the sellers, give your advice and step back. To do anything less is immoral and unworthy of you. Disclaimer: All answers are for informational purpose only, and are not intended to practice law, or provide tax advice or tax opinions. After reviewing our information we recommend seeking legal counsel or the advice of a tax professional. Eric Weinstein worked in banking, on the commercial real estate side until 1991, when he fell in love with residential lending. In 1995, he started a small mortgage company in his basement called Carteret Mortgage Corporation, which in 2003, grew to one of the largest mortgage broker companies in the United States. He may be reached by phone at (703) 505-8692 or e-mail eweinstein4u@gmail.com. Laura Burke is an author and trainer with 20-plus years of experience in the mortgage arena. She may be reached by e-mail at lauralynnburke@gmail.com.

Eric & Laura welcome your questions, please send your inquiries to JustAskEricandLaura@gmail.com.

n National Mortgage Professional Magazine n JUNE 2015

“If a borrower is on maternity or shortterm disability leave at the time of closing, lenders must document the borrower’s intent to return to work, that the borrower has the right to return to work, and that the borrower qualifies for the loan taking into account any reduction of income due to their leave.”

more of the following reasons:

NationalMortgageProfessional.com

Eric’s reply to Randy … Of course it will affect you loan. Remember, lenders call right before closing to verify employment. The employer is bound to report her out on maternity leave. Let me refer you to HUD No. 11108, Press Release dated June 1, 2011 entitled “HUD Acts Against Pregnancy Discrimination in Home Mortgages” (http://goo.gl/XbWzob). It states in part:

color, national origin, religion, sex, familial status (including children under the age of 18 living with parents or legal custodians, pregnant women, and people securing custody of children under the age of 18), and disability (taken from www.hud.gov). This Act was put in place to protect pregnant women, not discriminate against them. In reference to the above article Eric mentions in his response, “last July, HUD launched multiple investigations into the lending practices of certain mortgage lenders to determine if they illegally denied families mortgages because the mother is pregnant or on pregnancy-related leave. HUD enforces the Fair Housing Act which prohibits discrimination in lending based on sex or familial status (pregnancy or children in the family). The Act protects consumers from being discriminated against because a borrower is on maternity leave if she can demonstrate that she intends to return to work and can otherwise continue to meet the income requirements to qualify for the loan. The Federal Housing Administration (FHA) requires its approved lenders to review a borrower’s income to determine whether they can reasonably be expected to continue paying their mortgage. FHAinsured lenders cannot, however, inquire about future maternity leave. If a borrower is on maternity or shortterm disability leave at the time of closing, lenders must document the borrower’s intent to return to work, that the borrower has the right to return to work, and that the borrower qualifies for the loan taking into account any reduction of income due to their leave. In my opinion, if the woman is pregnant and not on maternity leave, it is not the loan officer’s obligation to pay attention to it, as that would be an act of discrimination, no different than pointing out someone has a disability. If when a verification of income and work is done, the response comes back that the client is out on maternity leave and is expected back on a specific date at full pay, then there should be no further questions. If the company does not keep her position open or a similar position with the same pay, they are in violation of Title VII of the Civil Rights Act of 1964. The U.S. Department of Labor rules that an employer must grant “Leave Entitlement,” a covered employer must grant an eligible employee up to a total of 12 work weeks of unpaid leave in a 12-month period for one or

“Like medical treatment, regulations can have unintended consequences. Some have a higher risk of side effects than others. TRID is no different.”

Side Effects to TRID Compliance: May Cause Drowsiness? By Jeremy Potter

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Regardless of whether watching the ballgame, reruns of “Big Bang Theory,” or “Love It or List It,” the pharmaceutical commercial is ubiquitous. The middle-aged couple gardening with a golden retriever in the background; the snappy-dressed woman walking with oddly-long strides down the sidewalk in slow motion; the rugged-looking-but-entirely-clean hiker pausing to grimace in pain next to a giant sequoia tree. These commercials flood our consciousness each evening. The only constant is the required disclosure toward the end where the litany of side effects are released into the universe. As the compliance officer of a mid-sized mortgage company, I am suffering from an affliction common to compliance officers everywhere over the last few years. It used to come around once every 10 years. Then it was more like every three years. Now, it seems to come around every year. Instead of aches and pains during flu season, I am experiencing regulatory fatigue and compliance soreness during Dodd-Frank amendment season. This year’s strain is called TRID. “TRID,” of course, stands for the “TILARESPA Integrated Disclosure” rule. The Consumer Financial Protection Bureau (CFPB) titled the rule “Know Before You Owe” when it was announced in November 2013, and later coined it “TRID” to give a nickname to our foe. Having learned from experience, most compliance officers did not take an adversarial position to this rule. Rather, we did what we always do by setting out to determine how to improve our businesses while we comply with the rule. Over the last yearand-a-half, lenders have been gathering information about TRID. Seeking a second (or third) opinion, we diligently attended Webinars, conferences and seminars. Compliance officers began

researching cures, establishing protocols and formulating treatment plans. More recently, compliance officers and operational folks have been redoubling our efforts and coordinating with business partners, vendors and referral sources. Nevertheless, attempts to address any problem come with possible risks. In the pharmaceutical context, these are called side effects. TRID preparation, implementation and training have resulted in side effects some more severe than others. Here are just a few:

Side effect: Impaired judgment/“blurry” vision Affected party: Attorney, broker, lender Symptoms: Manifests in frustrated individuals who can be found using phrases such as: “You know that real estate brokers are just going to handle that in the parking lot, right?” in reference to negotiations or adjustments in a purchase transaction stemming from the walk-through or related credits. When speaking with closing agents and attorneys, in particular, this is the one refrain that appears more than any other. Cause: The fear is that TRID treats last minute changes harshly—even if changes do not require a new waiting period most require an update to the Closing Disclosure (CD) document prior to closing. Instead of following the proper procedure for such changes, closing agents/attorneys feel that real estate brokers will begin negotiating certain adjustments outside the CD and outside the view or knowledge of the lender. This is expected to put closing agents and attorneys in the awkward position of possibly gaining knowledge of something that would violate TILA whether the attorney wanted to or not.

Complicating factors: Borrowers do not react kindly to delays and increased paperwork (even when it exists for their protection). Closing agents may be staring a practical solution in the face, literally, when deciding to pause the transaction in order to call the lender and request approval the change. Possible cure: Upfront negotiation and discussion of contingencies and credits, scheduling walk-throughs the day before instead of day of, training and oversight of settlement providers, and pure hope. Worst-case scenario: Money exchanged outside the CD (what used to be called “off HUD activity”) is a TILA risk. TILA includes a private right of action and civil penalties. The same borrower who pressured the closing agent into looking the other way while walking through the parking lot is the same borrower who will be more than happy to use the situation to their advantage in the event of default. If that is not enough, this could be one of the first questions a plaintiff’s attorney will ask their client after Aug. 1, 2015 just before filing suit against the lender.

Side effect: Heightened sensitivity to suggestion Affected party: Real estate and mortgage brokers, LOs, some settlement agents Symptoms: Uttering the phrase “I heard …” during coffee breaks and networking receptions at industry events, forwarding e-mails declaring the illegality of preapproval programs and recommending 90-day contingencies for real estate contracts. Worse yet, some lenders are using TRID to mask (read: Blame) their own policy choices that are not specifically dictated or required under the rule. Cause: It is not a new phenomenon that lenders’ policies vary and that can create confusion in the market. Who hasn’t heard “my old lender let me do it this way?” Initially, misinformation about TRID was prevalent due to the combination of the length and complexity of the rule, coupled with the unforeseen operational ramifications.

Before the CFPB began attending industry events and hosting Webinars (now a total of five in all), it was easy for anyone in the industry to begin accidentally (or even intentionally) spreading misinformation. Lenders who set policy inside the CFPB boundaries are tempted to imply (or outright claim) that other lenders are violating the law. That is the point at which healthy competition becomes a disease. Complicating factors: The complexity of the rule and timeframes left to implementation do make it difficult for all lenders to know everything about the rule. Therefore, simple misinformation rather than intentional deception can exist by the nature of the size and scope of a lender’s operation. Possible cure: All lenders working hard to educate and train both internally and externally will go a long way for the industry as a whole. The secondary market investors and aggregators have also been out ahead of the TRID questions for a while, and that will likely allow mid-sized and small lenders to properly establish operations in accordance with industry standards. Worst-case scenario: Take this and call me in a few days. Individual customers or organizations suffer harm or a violation due to reliance on the wrong source.

Side effect: Restless disclosure syndrome Affected party: Lenders and mortgage brokers Symptoms: Desire to over-disclose certain fees, limit lender credits, and disclose more fees “just in case.” Cause: TRID, including the related commentary, has specific and strict treatment of upfront fees, tolerances and revised disclosures. As a result, the immediate reaction by many lenders and loan originators is to build in a margin of error by overstating fees. TRID establishes a bestinformation-reasonably-available standard, which applies to both the LE and CD.

Complicating factors: CFPB has stated that a fee increase, without a changed circumstance, will be deemed not in good faith whereas fees that decrease will be considered in good faith. This increased pressure on lenders to look for ways to protect the business against a presumption that there is a violation. Possible cure: No cure but containment is likely. Loan origination systems (LOS) and related technology can be used to protect against this practice. A strong TRID review and internal audit will ultimately tell the story of the validity of disclosures. Worst-case scenario: A pattern or practice of over-disclosure has implications that reach beyond TRID, including affecting Qualified Mortgage (QM) calculations, consumer protection issues and investor buybacks.

Side effect: Head in the sand disease

Side effect: Hallucinations

the end, preparation and good intentions might not be enough to completely limit the possibility of some of these side effects, but identifying the risks that remain is the first step to a clean bill of health this summer.

Like medical treatment, regulations can have unintended consequences. Some have a higher risk of side effects than others. TRID is no different. Admittedly, the scope and technical nature of the rule has created many, if not more, side effects than the previous Dodd-Frank amendments combined. As the industry prepares for Aug. 1, 2015, lenders, vendors and settlement providers alike are identifying the pain points to ensure that it is our companies and not the consumer bear the brunt of those unintended consequences. In

As general counsel and chief compliance officer for Avon, Conn.-based Norcom Mortgage & Insurance, Jeremy Potter is responsible for legal and regulatory compliance. He also maintains all licensing requirements and advises senior management on operational and risk decisions. Jeremy serves on the board of directors of the Massachusetts Mortgage Bankers Association (MassMBA) and the Regulatory Compliance Committee of the Mortgage Bankers Association (MBA). He may be reached by phone at (860) 470-2942 or e-mail jeremy.potter@norcom-usa.com. 53

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© Copyright 2007-2015 Carrington Mortgage Services, LLC headquartered at 1600 South Douglass Road, Suite s110 & 200A, Anaheim, CA 92806. 800-561-4567. NMLS ID 2600. Nationwide Mortgage Licensing System (NMLS) Consumer Access Web Site: www.nmlsconsumeraccess.org. AZ: Mortgage Banker BK-0910745; 2159 McCulloch Blvd 4, Lake Havasu City, AZ 86403. CA: Licensed by the Department of Business Oversight under the California Residential Mortgage Lending Act, File 413 0904. CO: Mortgage Company Registration 2600 and Supervised Lender’s Licenses 989668 and 989668-001. To check license status of your mortgage loan originator, visit www.dora.state.co.us/real-estate/index.htm. GA: Georgia Residential Mortgage Licensee 22721. IL: Illinois Residential Mortgage Licensee. KS: Kansas Supervised Loan License SL.0000313. MN: This is not an offer to enter into an interest rate lock agreement under Minnesota Law. MS: Licensed by the Mississippi Department of Banking and Consumer Finance. MO: Residential Mortgage Broker License 09-1746-S. NH: Licensed by the New Hampshire Banking Department. NJ: Licensed by the N.J. Department of Banking and Insurance. NY: Licensed Mortgage Banker—NYS Department of Financial Services. New York Mortgage Banker License B500980/107664. NC: Carrington Mortgage Services, LLC is licensed under the North Carolina Agency Permits 102107 & 103455 and North Carolina Secure and Fair Enforcement Mortgage Licensing Act. OH: Ohio Mortgage Broker Act Mortgage Banker Exemption MBMB.850208.000 (FHA, DE & VA Automatic loans only). OR: Mortgage Lender License ML4886. PA: Licensed by the Department of Banking. RI: Rhode Island Licensed Lender and Broker. VA: Licensed by the Virginia State Corporation Commission MC-5382. WA: Consumer Loan License CL-2600 & Mortgage Broker License MB-2600. Also licensed in AL, AR, CT, DE, DC, FL, ID, IN, IA, KY, MD, MT, NE, OK, SC, SD, TN, TX, UT, WV, WI, WY. All rights reserved.

n National Mortgage Professional Magazine n JUNE 2015

Affected parties: Lenders Symptoms: Seeing frequent private causes of action, waking up envisioning civil penalties, imagining everyone as scheming against you. Causes: Though it may have begun as a $40 billion settlement with the U.S. Department of Justice (DOJ), large lenders have become increasingly sensitive to any liability. The possibility of errors throughout the loan application process is intimidating enough when only dealing with our own employees, but as the liability extends to vendors and service providers, compliance officers are finding exposure everywhere. Though TRID does not define the line between RESPA liability and TILA liability, it is safe to say that many lenders are aligning their policies under the assumption that TILA liability will apply to both documents in their entirety. Complicating factors: Even if a particular lender does not fear TILA liability associated with the CD, investors and large aggregators may establish their third-party organization (TPO) guidelines to protect themselves against TILA liability. Smaller lenders can be subject to secondary market considerations even if their own risk appetite may be broader. Possible cure: Over time, the undefined interpretations and liability will be worked out by regulators, investors and the courts. Hopefully, the first two groups will be more active than the latter, but the short-term risk will give way to regular industry practice. Worst-case scenario: In regulatory compliance there is always the “be careful what you wish for” problem. TRID’s undefined areas may be defined more conservatively or harsh-

ly if the industry demands the CFPB identify black and white boundaries. Successful TILA lawsuits arising within the first 36 months of the rule would also have a detrimental impact on the availability of credit.

NationalMortgageProfessional.com

Affected parties: Lenders and mortgage brokers Symptoms: Closing one’s eyes, covering one’s ears and singing “la-la-la” when a consumer attempts to provide a property address during an initial meeting. This symptom can also manifest itself online where a consumer cannot move forward with an online application without providing additional information about their income or assets. Cause: TRID has two provisions that restrict how lenders collect information and what information triggers a Loan Estimate within three business days. In the first context, the lender cannot avoid the timing requirement if a borrower voluntarily provides the six pieces of information that constitute a loan application under the rule. In the second context, the lender is not allowed to require certain information or verifications before issuing a LE. Complicating factors: Lenders with preapproval programs. Preapproval programs are still allowed under the rule but are complicated with the verification requirements. Possible cure: CFPB has stated that lenders can strategically collect information in order to make the disclosure process more sensible. Lenders can also establish LE disclosure procedures that protect the preapproval

program before achieving all six pieces of information and provide a LE within three business days of obtaining all six pieces. Worst-case scenario: TILA liability spreads to UDAAP. TILA civil penalties covering the treatment of the disclosure requirements could easily be compounded with Unfair, Deceptive, Abusive Acts and Practices (UDAAP) claim if a class of borrowers could not access the lender’s systems properly.

“… it’s important to know–really know–who you’re doing business with. That means more than simply having a name, address and phone number in a spreadsheet.”

It’s on You: Appraisers and Third-Party Regulations By Greg Schroeder Lenders today have all they can do to keep up with constantly changing regulations governing their interactions with consumers. The regulatory requirements are being driven by the Dodd-Frank Wall Street Reform and Consumer Protection Act, which established the Consumer Finance Protection Bureau (CFPB). The

goal of the legislation was simple: protect borrowers and make certain they understand what they are signing up for when they take out a mortgage. The result? Time will tell if it all truly helps consumers, but the requirements are certainly testing everyone in the industry, from lenders to those they count on to help them through-

JUNE 2015 n National Mortgage Professional Magazine n

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out the loan process. A key area of focus for the CFPB is thirdparty vendor management. The regulatory alphabet soup of the Federal Housing Finance Authority (FHFA), Office of the Comptroller of the Currency (OCC), Federal Deposit Insurance Corporation (FDIC) and National Credit Union Administration (NCUA) also provide guidance on lenders’ management of their third-party vendors. While there has been a fair amount of attention paid to regulations on the need to supervise and manage third-party vendors, there has been less focus on whether or not appraisers are included in that third-party group. Unfortunately, the regulations are not crystal clear with regard to what types of service providers are included. By and large, we do not see that appraisers are being vetted and monitored. There are some lenders that are beginning to require a thorough check of appraisers by their appraisal management companies (AMCs). Today, AMCs are starting to receive lender requests for proposals (RFPs) which include a background check of their appraisers and ongoing surveillance—with proof of both to be sent to the lender. Yet all too often, many lenders are still not informed that the responsibility for the appraisers being used on loans they originate falls directly on the lender’s shoulders. Third-party originators (TPOs) and brokers have been vetted for years, but the newest regulations include all of the vendors that come in contact with the consumer, including appraisers. In fact, we believe regulators will likely look closely at appraisers because they come in direct contact with the consumer and enter the consumer’s home. It’s not surprising that many in the industry are unaware of the inclusion of appraisers in the third-party vendor group lenders need to keep track of. Staying on top of the changing regulatory landscape is a tremendous challenge. However, lenders need to know that the penalties for noncompliance are steep. The Dodd-Frank Act authorizes the CFPB to increase its assessment of civil monetary penalties from up to $5,000 per violation per day to as much as $25,000 per violation per day if violations are reckless, and as high as $1 million per violation per day if violations are knowingly occurring.

While you may use a reputable AMC to manage the appraisals on mortgage loans, ultimately, it’s you as the lender who is held responsible if there is a problem with an appraiser. The bottom line is that lenders need to vet appraisers, or they need to require that their AMC does so. The following are some of the regulatory directives governing third parties, including appraisers and AMCs: CFPB Bulletin 2012-03 cautions that financial institutions under CFPB supervision may be held responsible for the actions of the companies with which they contract. The Bureau will take a close look at service providers’ interactions with consumers. It will hold all appropriate companies accountable when legal violations occur. The CFPB recommends that supervised financial institutions take steps to ensure that business arrangements with service providers do not present unwarranted risks to consumers. These steps include: l Conducting thorough due diligence to verify that the service provider understands and is capable of complying with the law; l Requesting and reviewing the service provider’s policies, procedures, internal controls, and training materials to ensure that the service provider conducts appropriate training and oversight of employees or agents that have consumer contact or compliance responsibilities; l Including in the contract with the service provider clear expectations about compliance, as well as appropriate and enforceable consequences for violating any compliance-related responsibilities; l Establishing internal controls and ongoing monitoring to determine whether the service provider is complying with the law; and l Taking prompt action to address fully any problems identified through the monitoring process. The Office of the Comptroller of the Currency (OCC) also makes clear that lenders are ultimately responsible for third-party vendors, including the appraisers they select. According to OCC Bulletin 2013-29, banks and mortgage lenders that use third-parties to manage appraisals should choose those vendors carefully, as

Regulators say, in no uncertain terms, that

lance work you’ve done, and make sure you’re able to readily access it to show to auditors. Monitoring third-parties to comply with the regulations can seem like an impossible job. It’s rare that a lender has the capability to truly manage the surveillance and oversight of appraisers and other third-parties. However, there are products and services available now that are designed to help lenders manage appraisers and other third party relationships in an effective and compliant way. A word of caution: Not all vendors offering this service monitor third-parties on an ongoing basis, so it’s important to ensure that the vendor or service you choose provides continuous updates on all of your third party relationships. Third-party oversight has always been important and good for business, but it’s become even more important to regula-

tors and the government-sponsored enterprises (GSEs). The goal is to protect the consumer, and someone needs to be held responsible for any slip-ups in the mortgage process. Today, lenders are being held to a higher standard when it comes to managing their third-party relationships. It’s not just important to be aware that appraisers fall into that category in today’s regulatory environment— it is vital. Why risk getting fined by an auditor? By ignoring the issue, that is the chance you take. Greg Schroeder is president of Comergence Compliance Monitoring LLC, a provider of third-party originator (TPO) and appraiser risk management solutions. Comergence provides lenders and appraisal management companies with tools that review and continually monitor registered mortgage loan originators and appraisers. 55

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This information is solely for mortgage professionals and should not be provided to consumers or third parties. Information is subject to change without notice. This is not a commitment to lend and there is no guarantee that all borrowers will qualify. All loans are subject to credit, underwriting, and property approval. Other restrictions may apply. FGMC is not acting on behalf of HUD, VA, FHA or any other agency of the federal government. First Guaranty Mortgage Corporation (Company NMLS ID 2917) is licensed by the Department of Business Oversight under the California Residential Mortgage Lending Act; Regulated by the Division of Real Estate in the State of Colorado; Licensed by the Delaware State Bank Commissioner to engage in business in this State under License No. 2403 (renewed through 2015); Georgia Residential Mortgage Licensee; Illinois Residential Mortgage Licensee; KansasLicensed Mortgage Company; Licensed by the Mississippi Department of Banking and Consumer Finance; Licensed by the Nevada Division of Mortgage Lending to make loans secured by liens on real property; Licensed by the New Jersey Department of Banking and Insurance; Licensed Mortgage Banker – NYS Department of Financial Services, Licensee No. B500800 (d/b/a FGMC In Lieu of True Corporate Name First Guaranty Follow us on: Mortgage Corporation); Rhode Island Licensed Lender. For complete corporate and branch licensing information, visit www.fgmc.com or www.nmlsconsumeraccess.org.

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Regulators step up enforcement

lenders aren’t just being held accountable for their own actions, but for the actions of all the third parties with whom they do business as well. In other words, lenders cannot point fingers elsewhere when it comes to how someone they work with conducts their business. And in our opinion, that includes appraisers. Regulators are stepping up their enforcement in this area. In fact, they have already uncovered cases in which lenders have failed to properly assess third parties for risk and failed to monitor their activities. This poses a difficult question for mortgage companies and other lenders: How do they keep track of what their third-party vendors are doing without losing focus on their primary mission, which is selling and servicing loans? First and foremost, it’s important to know–really know–who you’re doing business with. That means more than simply having a name, address and phone number in a spreadsheet. Lenders must confirm that appraisers and other third-party vendors are registered and have the proper certifications and licenses, policies and procedures and financials. This all needs to be kept up to date. It’s also a good idea to look into a thirdparty’s character and past compliance performance, as both can be indicative of problems. A comprehensive background check will help assure regulators that you’re on top of appraisers and other third-party vendors. Next, having an actionable plan is important. It’s no longer enough to simply “check the box” or state that your thirdparties are in compliance—you must have a clear action plan and be able to prove that you are indeed following it. Auditors are looking for documented strategies and procedures, and proof that a program to monitor third-parties has been put into action. Regulators are also looking for lenders to test their programs to make sure they are working. Lenders need to monitor appraisers and other third-party vendors on an ongoing basis. Once is no longer enough. This is very critical as many companies don’t realize that a “point in time” check of a third-party vendor won’t matter to auditors if a problem pops up six months later, or even before a loan is closed. Most lenders don’t have the time or resources to perform regular checks and are turning to an outside vendor to manage that function—which can also spell trouble if such a vendor is not chosen carefully. Keep complete records of the surveil-

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regulators will hold lenders responsible for the quality of their work, including any errors by appraisers. According to the OCC, lenders should adopt risk management processes that are “commensurate with the level of risk and complexity of its thirdparty relationships” and that run through the entire life cycle of those relationships. Specifically, the OCC states that lenders should have plans that: l Identify the risks of the third-party activities l Explain how the vendor was selected l Include ongoing monitoring of the third-party’s activities and performance l Maintain property document and reporting l Include independent reviews of the risk management process l Contain written agreements or contracts that cover the responsibilities of the third-party, as well as contingency plans for ending the relationship. The OCC said it will pursue enforcement actions to address violations of the law and unsafe practices by the lender or its third party, and has the authority to assess special fees against lenders when it finds transgressions in the activities of their third party providers. The FDIC also makes clear that lenders are responsible for third-party service providers in its compliance manual on abusive practices: “The board of directors and senior management of an insured depository institution (institution) are ultimately responsible for managing activities conducted through third-party relationships, and identifying and controlling the risks arising from such relationships, to the same extent as if the activity were handled within the institution,” the manual states. “The use of third-party relationships does not relinquish responsibility of the board of directors and management.” Fannie Mae offers its own guidance on appraisers. “Lenders remain directly responsible for the selection and management of appraisers and appraisal quality,” the agency states in guidance on appraisal quality monitoring (AQM) on its Web site. Even though Fannie Mae began providing its seller-servicers with an AQM list, lenders are held accountable for the quality of the appraisers they use. “Appraiser monitoring augments lenders’ controls but does not replace or alter lenders’ obligations,” the agency cautions.

“In an e-mortgage compliance environment, lenders can also close loans faster by showing proof of receipts under the CFPB’s requirement, while slashing the three-day timeframe to just minutes.”

Less Paper, More Compliant Regulatory issues are likely to push the paperless needle By Harry Gardner For years, the mortgage industry has been pursuing electronic mortgages only to find itself stymied from reaching long-term solutions by one obstacle or another. The technology and the infrastructure exist, but e-recording and e-notarization are still major challenges, among others. Meanwhile, RESPA-TILA and compli-

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ance have moved to the forefront of industry concerns. Thanks to the pending regulatory imperative, most lenders are far more worried about meeting the Consumer Financial Protection Bureau’s (CFPB) mandate than they are excited about paperless mortgages. Yet the push toward compliance

could be the very thing that finally moves the industry over the paperless hurdle. New regulations are increasing the demand for data transparency, loan compliance and the ability to perform forensic analysis when loans go bad. Interestingly enough, electronic mortgages inherently aid these three components of compliance and make them much more attainable. Unless ink and paper are a requirement for some reason, it’s much easier to be compliant when you’re already doing everything digitally. Lenders and mortgage professionals now have the opportunity to leverage paperless technology and electronic signatures as a key solution framework to enable better compliance. To the average mortgage sales professional, it may feel as though the real work and decision-making behind electronic mortgages happens outside of their world. But for these innovations to take hold, it is critical that the people who deliver loan products to the public are able to understand and convey the benefits of these advancements to their clients and help make them a reality.

Safer, more streamlined customer service

satisfying borrower experience. Due to rising prices, low inventory and escalating demand, many markets around the country favor sellers, which puts pressure on the buyer to move quickly. When approaching a multiple offer situation, being able to remove a loan contingency earlier than the competition puts buyers in a much stronger position. Electronic closings provide faster delivery of enotes to investors, which speeds the pipeline and shortens closing times. While this is not something the average borrower gets to see or experience, they greatly benefit from the result when their offer is accepted over a competing buyer’s and they are able to move into their new home on time.

Improved compliance RESPA-TILA reform has created challenges for today’s lenders, specifically with regard to the three-day disclosure requirements both at application and closing stages, fee change tolerances, training and other issues. As it turns out, utilizing a single system of record to create mortgages electronically and reduce paper can help ensure lenders meet these compliance challenges with ease. In fact, using electronic documents and eSignatures make a great foundation for managing RESPA-TILA and other rules and investor requirements when compared with paper documents. For example, lenders are responsible for ensuring that data is consistent between the initial disclosures that are provided to borrowers and the closing documents. For many, it is an opportune time to revise their disclosure and closing processes by moving toward a paperless system, which allows much better control over data and the entire loan file. This also creates better transparency among lenders, title insurers and settlement service providers, as fee discrepancies are historically an all-too-common occurrence in the closing process.

Consider the myriad conversations the average mortgage sales professional has with borrowers, agents, underwriters, processors, title companies and staff, every day. Then, think of all the data that passes across one’s desk— bank statements, credit reports, employment and identity verifications, credit scores, appraisals, disclosures and more. No one can remember all this data. And yet, information is often missing, incorrect, conflicting, or changes during the course of a mortgage transaction. Besides saving borrowers the hassle of receiving, signing, copying, faxing and sending paper documents, electronic files enable lenders to quickly and clearly see through files and discover their weaknesses. This gives professionals the ability to resolve issues earlier in the process and head off problems Saving time—and deals before they develop, creating a far more When embraced through digital

Better security

The bottom line Electronic mortgages are no panacea in and of themselves. But in almost every case, they provide better security, reliability and efficiency to mortgage transactions when compared to wasteful and outdated paper loans. The electronic mortgage benefits transform the front end of the mortgage transaction and carry equal advantages for the warehouse industry and secondary markets—specifically with regards to security, speed and overall loan quality. Everything can be kept securely in an e-vault, with access strictly monitored and controlled. As electronic documents are being increasingly embraced by the residential real estate industry, more and more borrowers are wondering why their lenders do not offer the same convenience in the loan phase. While mortgage transactions are far more complex, the principles are the same. Smart lenders are taking advantage of the new integrated disclosure rule to move to electronic documents, which is a better process for everyone. It saves lenders and borrowers time and money, but most importantly, it results in cleaner data

and fewer headaches. Electronic disclosures also give mortgage professionals the ability to develop tighter bonds with their clients, both borrowers and referral partners, because they spend less time on paperwork and more time understanding and helping people reach their goals— which is the real key to success in this business.

Harry Gardner is vice president of eStrategies for Ellie Mae. His previous roles include vice president of Industry Technology for the Mortgage Bankers Association (MBA), where he managed industry task forces on eMortgage adoption, and president and chair of MISMO’s Residential Governance Committee. He can be reached by e-mail at harry.gardner@elliemae.com.

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With the right partners and tools, electronic mortgages can be kept safe and secure under lender’s control. This eliminates the risk of personally identifiable information being shared with outside parties and allows mortgage professionals to manage all borrower interactions with greater safety and efficiency. Plus, electronic signing environments allow both lenders and borrowers to access and view disclosures and applications at any time via their computer desktop or mobile devices. Typically, electronic disclosures can be generated from the LOS and stored in a secure online “signing room,” where borrowers can access the documents and create and apply their electronic signature to them. Borrowers are simply notified via email when their documents are ready to be reviewed and signed. And

as they go through the process, an audit trail is created for everything they do and how long it takes them to do it. Such systems are also capable of sending automatic reminders to loan officers and borrowers, alerting them when documents have not been viewed. Once you send out paper, there’s no way to tell what’s happening to it. Was it signed? Sent back? Misplaced? Eaten by the dog? In a paper environment, transactions can easily get slipped up in the event that something prevents documents from reaching borrowers on time. As a result, mortgage professionals spend a great deal of time e-mailing and calling borrowers to find out the status of their applications and to make sure everything is okay. In a paperless disclosure environment, loan officers know exactly what is happening with every document—whether they were received, reviewed and signed, down to the minute and second of the day.

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means, today’s compliance requirements can save lenders an extraordinary amount of paper and time, too. Typically, disclosure packages are shipped overnight to borrowers, signed in ink, and returned–often with additional paper in the form of tax returns and bank statements. This whole process can take a week or more and consume more than a ream of paper. It’s worse if there are any substantial changes to critical data elements, such as the annual percentage rate, pre-payment penalties, or changes to the loan product, which can cause the whole process to start all over again. With electronic mortgages, mortgage professionals can avoid the tired “stare and compare” system of ensuring documents are complete and ready to be sent to borrowers for signing or to underwriters for approval. This too enables everyone to spend more time on solutions rather than being forced to serve as human spell checks. In an e-mortgage compliance environment, lenders can also close loans faster by showing proof of receipts under the CFPB’s requirement, while slashing the three-day timeframe to just minutes. If key information is incorrect, electronic disclosures also allow quick remedy, which saves a huge amount of time and frustration.

â&#x20AC;&#x153;Big banks have started to realize that the cost of compliance is indeed affecting them. By the end of last year, Citigroup estimated having more than 30,000 compliance officers.â&#x20AC;?

Licensing the Right Technology Can Combat Compliance Costs By Pramod Karachur

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Reduce compliance expenses: The shock of the increased cost of compliance might be for the short term, until lenders figure out how they can effectively cut, eliminate or absorb the cost. Most of these lenders are looking at technology to help in that effort. When implemented correctly, technology can:

survey of nearly 600 compliance professionals from financial services firms, two-thirds of the firms were expecting skilled staff to be more expensive in 2015. The rising expense of compliance has in turn affected mortgage opera- l Update compliance requirements tions greatly by rising staff expendiwith less effort; tures. As it has in other areas of the l Provide online training to all compliindustry, technology can help alleviate ance staff; and l Provide management updates on progress.

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With stricter regulations for all types of lenders, from small community banks to large national banks, the industry has had to adjust to escalating compliance expenses. This has significantly affected mortgage operations with increased quality control (QC) and staff salaries. In fact, according to Thomson Reutersâ&#x20AC;&#x2122; â&#x20AC;&#x153;Cost of Compliance 2015,â&#x20AC;? a

some of the steep costs that come with becoming and remaining compliant.

There is a duality in the cost of compliance that often leaves lenders struggling. While consumers are protected, the added compliance-related costs and possible additional fines ultimately set companies on edge. To top this mix, the rules that have been set are constantly evolving; meaning the lender must make changes to their procedures according to the new rules. Once new rules are implemented, staff members must be efficiently trained, taking away time from daily tasks and ultimately costing the banks money. Maintaining compliance through technology can be expensive as systems need constant support. The Thomson Reuters survey goes on further to say that more than one-third of firms spend at least an entire day every week tracking and analyzing regulatory change. The infrastructure needed to maintain the compliance application is not inexpensive. If it was hosted through a cloud environment to cut costs, additional security monitoring places a burden on the banks, leading to yet another expense. Alternatively, licensing a compliance technology product from a vendor is an option. The support and infrastructure cost would be less and banks would have to work with the application provider for any changes or updates to be implemented into the application. The risk is if the company takes too long

to provide an update, it could result in fines for the lender, which in turn, defeats the purpose of using a thirdparty. Companies must vet the vendor, as well as the technology to ensure their needs are met. In 2013, the Consumer Financial Protection Bureau (CFPB) interviewed seven institutions that reported technology costs made up 10 to 43 percent of the total compliance budgets of both internal and licensed vendors. According to the agency, compliance expenses can substantially be reduced because vendors are able to spread the technology investment over multiple banks. So instead of one lender bearing the entire amount of compliance technology, through licensing they can enjoy lower costs and the infrastructure that meets the required security standards.

Why so costly? One of the driving forces behind all of the compliance changes and costs is the CFPB, which has become one of the most powerful agencies governing the mortgage industry. The CFPB has stirred mixed emotions in the mortgage industry. While the agency seeks to protect consumers by eliminating a wide range of abusive practices by unscrupulous people, it has significantly changed the way some processes are approached and completed. The CFPB strongly encourages using technology to improve an institutionâ&#x20AC;&#x2122;s processes and compliance efforts. According to the CFPBâ&#x20AC;&#x2122;s Financial Protection Bureau Strategic Plan, the CFPB embraces new technology, as it continuously improves the overall efficiency of processes. As a result, consumers are provided with a positive experience. Other government agencies, such as the Federal Reserve Board (FRB) and the Federal Deposit Insurance Corporation (FDIC), are setting regulatory rules similar to the CFPB, ultimately adding more burdens to lenders. Regardless of an institutions size, more rules mean a more costly effort to become and remain compliant.

Big banks have started to realize that the cost of compliance is indeed affecting them. By the end of last year, Citigroup estimated having more than 30,000 compliance officers. From a small or community bank perspective, having to invest in this level of compliance efforts would have a much more significant effect on their bottom line. A study done by the Minneapolis Fed found banks with less than $50 million assets would need a staff of nine full-time employees while a bank of $500 million to $1 billion would need a staff of 155 to maintain these efforts. Thomson Reutersâ&#x20AC;&#x2122; survey also cites that the major reason for the expected increase in the cost of senior compliance professionals for the full population was the demand for skilled staff and knowledge (82 percent).

To recover the additional costs, some banks are modifying their fee structure and bank fees. Bankrate expects the fee to go up by 25 percent year-over-year, thus pushing the compliance expense onto consumers. There are other ways consumers are paying as well, whether they have a mortgage or not. Free checking was offered by 76 percent of the banks in 2009 and in 2012, only 39 percent was offered. This number will continue to decrease. The minimum balance for free checking has also risen to more than $700 in order to side step fees. Consumers who are living paycheck to paycheck may find this balance very difficult to maintain. Loan originations are also seeing an increase in costs. According to the Mortgage Bankers Associationâ&#x20AC;&#x2122;s (MBA) Quarterly Mortgage Bankers Performance

Report, the net amount to originate a loan, including all production operating expenses and commissions, is $5,238 per loan, an increase from $5,038. Lender fees can include document preparation, underwriting and origination.

A bright future As compliance costs continue to rise with no clear end in sight, banks are looking for efficient ways to reduce their sting. While there may not be one strictly defined way to decrease this, banks have options such as technology, trained staff or a combination of both. By considering the options and their needs, banks can create a customized plan that works to their advantage. The right technology can greatly decrease worries of remaining com-

pliant, as well as provide an easy way to ease the minds of lenders. At the same time, well-trained staff members can keep up with the everchanging regulations, as technology can be at times difficult to tweak. Regardless of the option that banks may choose, multiple options must be tried to ultimately reduce costs and headaches that may come with remaining compliant. Pramod Karachur is project manager with Columbia, Md.-based IndiSoft. In his six years at IndiSoft, Karachur has implemented various grant programs, worked with multiple servicers such as Wells Fargo and Bank of America as well as thousands of non-profit and for-profit counseling agencies. He can be reached by e-mail at pramod.karachur@indisoft.us. 59

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“Possibly relegated to the role of support function in the past, internal compliance resources are now claiming a significant seat at the management table, arguably on par with sales and marketing in terms of operational effectiveness and institutional health.”

The Culture of Compliance Trumps the Culture of Defiance By Michael McNulty

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In response to the financial crisis of 2007-2008, Congress successfully passed the Dodd-Frank Wall Street Reform Act, which, via Title X of said Act, authorized the creation of the Consumer Financial Protection Bureau (CFPB). According to Annual Reports1, the CFPB has grown from less than 75 employees in 2011 to nearly 1,500 employees today, and has levied penalties in excess of $150 million, to include $78 million in fiscal 2014, up from $50 million in FY 2013. Expanding its reach well beyond credit card issuers and mortgage companies to include investigations of and actions against the payday lending, automobile finance, debt collection, for-profit education and banking industries, the CFPB has established itself as a serious contender in the fight for consumer protection within the financial services industry. As a result of this focus, many companies are left wondering how

to effectively establish an internal compliance program that not only protects the consumer, but also the company itself. While many of the affected industries to date require licensure to practice, it can be effectively argued that licensure is not enough, as most licensure examinations are constructed to measure only minimum competency in the chosen field. Compliance, human resources and legal departments are quickly coming to realize that minimum competency is not a viable, long-term solution. Further, without specific guidelines as to what and how much training must be undertaken, it is left to the individual companies to decide how best to implement a valid and defensible culture of compliance within their organizations. Possibly relegated to the role of support function in the past, internal compliance resources are now claiming a significant seat at the manage-

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ment table, arguably on par with sales and marketing in terms of operational effectiveness and institutional health. Enter the need for governance, risk and compliance (GRC) training on a much grander scale. Companies that have expanded their view of employee training are adding terms like Anti-Money Laundering (AML); Unfair, Deceptive or Abusive Acts or Practices Act (UDAAP); UDAAP, the Real Estate Settlement Procedures Act (RESPA); Truth-in-Lending Act (TILA); and Bank Secrecy Act (BSA) to their vernacular and enforcing strict adherence to a compliance culture that ensures an ethically practicing and educated workforce is in place. Depending on industry and size, many companies are finding it necessary to push this same training down to third party vendors to alleviate any exposure due to outsourcing. Few companies had a significant line item associated with compliance in the past, and now, few can afford not to. A cursory Internet search of “CFPB fines” will indicate that there is a need to take this new focus seriously. It has been said that the Internet is written in ink, and it can be argued that the fines levied against financial services firms pale in comparison to the long-term impact to their reputation, which is oftentimes crafted over many decades. A 2013 study published jointly by Deloitte and Compliance Week2 revealed that 52 percent of respondents to a survey of companies between $1 billion to $5 billion in revenue and 5,000 to 10,000 employees dedicated five or fewer full-time personnel to compliance. Clearly, this is a need that successful companies can no longer discount. Regulatory oversight aside, the very health of our industry is at stake. Establishing a culture of compliance is not a static goal, but, rather, this ongoing exercise must be viewed as a process that is constantly evolving and requires support, maintenance, and, most importantly, leadership. The need for GRC training

must be acknowledged, accepted, and clearly established within an organization’s DNA, and this can only be accomplished through leadership—leadership in word, without question, but also leadership in action. The process that must be undertaken, however, is not arduous and is remarkably similar for all financial services employers, regardless the size of the employee cohort in question. Be it an internally-established program or one that is outsourced to a group, the devil is in the details. Constant organizational support and communication are necessary for success and, as in most projects, planning is vital. Careful consideration must be given before a course of action is taken as companies must ascertain their weaknesses, identify areas for improvement, build a solution, and, most importantly, develop processes that continually monitor the program to assure the control environment is effective. Every day brings increased scrutiny on our industry and increased regulatory oversight is quickly becoming the only constant in our business. Without question, the time for action is now—abandon the culture of defiance and recognize the value inherent to a culture of compliance. Michael McNulty is executive vice president of financial services for Hunt Valley, Md.-based OnCourse Learning Corporation. In this role, Michael maintains complete financial and operational responsibility for OnCourse’s mortgage, insurance, bank and credit union, and money services compliance products. He may be reached by phone at (410) 628-1060, ext. 7202 or e-mail mmcnulty@oncourselearning.com.

Footnotes 1—http://files.consumerfinance.gov/f/201411cfpb_report_fiscal-year-2014.pdf. 2—http://deloitte.wsj.com/riskandcompliance/files/2013/09/us_aers_grr_final_deloitte_compliance_week_pdf_080813.pdf.

“The overall cost of originating a loan has gone from $2,291 per loan in 2008, to $6,769 in 2014, according to the MBA, with compliance costs being the fastest growing operational costs in the industry.”

Reduce Costs and Ensure Compliance With Technology By Jennifer Hamby

Jennifer Hamby is marketing project manager for Data Facts. She may be reached by phone at (901) 685-7599 or e-mail jenniferh@datafacts.com.

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l 72 percent of the lenders surveyed say the new regulations have had “significant” impact on their business. Mid-sized lenders (84 percent) are more likely than smaller lenders (62 percent) to report “sig-

nificant” impact, with 73 percent of larger lenders reporting “significant” impact.” l 72 percent of lenders reported spending more on compliance in 2014 than in 2013. Across all lenders surveyed, institutions reported a median increase of nearly 30 percent in compliance spending. Mid-sized lenders reported the largest increase of 50 percent, on average. l Post-closing QC review and servicing are the business functions most commonly reported as being outsourced as a result of increased regulations and associated costs. In addition, mid-sized lenders are more likely than smaller lenders to outsource compliance/legal functions. l Compliance risk is reported as the top area of focus by most lenders. In addition, larger lenders are more concerned with operational risk while smaller lenders are more concerned with credit risk and interest rate risk. Lenders also reported increased reliance on outsourcing due to increased regulations and associated costs, particularly in relation to postclosing Quality Control (QC) review and servicing. With costs steadily increasing for the majority of lenders, and greater partnering with vendors, the challenge is to figure out how to meet compliance requirements in the most cost-effective, least labor-intensive manner possible. The answer … TECHNOLOGY Technology is changing the mortgage industry. TRID, of course, is only the most recent compliance challenge that technology is trying to address. One law, the Dodd-Frank Act, created a “cascade” of changes

New regulations recommend that lenders thoroughly vet, monitor and manage each third-party vendor they use throughout the loan process. Unfortunately, this can be expensive, and more importantly time consuming. Because regulatory guidelines for vetting third-party verification providers run the gamut from “very specific” to “somewhat vague,” many lenders are unsure of the level of due diligence they should undertake when scrutinizing each new vendor. In this day and age, lenders need to take an extremely thorough approach to be safe—time and money quickly add up when you must vet multiple third-party companies. Then, once all the evaluations are complete and you’ve entered into relationships with various vendors, you must continue to monitor the process at each vendor to manage risk and ensure all are regularly updating procedures to remain in compliance. Whew! Exhausting, time consuming and potentially expensive, right? Well, it doesn’t have to be. Fortunately, there are several new products on the market that offer a comprehensive solution for thirdparty vendor management. These solutions will help you maintain compliance in an efficient and costeffective way. When looking for any new solution, try to look for the most all-inclusive and comprehensive. And most importantly make sure it aids in compliance with all industry regulators and lenders. By effectively blending in-house expertise and qualified third party vendors working together and using technology to quickly complete tasks that used to be labor-intensive, we can ensure new regulations do what they’re supposed to–protect consumers and lenders from mortgage defaults–without breaking the bank. Now, that’s a good thing!

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Over the past few years, the mortgage industry has faced multiple significant regulatory changes. The Office of the Comptroller of the Currency (OCC), the Consumer Finance Protection Bureau (CFPB), the Federal Reserve, and the Federal Deposit Insurance Corporation (FDIC), just to name a few, all have issued new rules and regulations that affect our industry. And like everything else, these changes come with a price. The overall cost of originating a loan has gone from $2,291 per loan in 2008, to $6,769 in 2014, according to the MBA, with compliance costs being the fastest growing operational costs in the industry. Given the large amount of discussion in the mortgage industry about increased regulations, and the rising costs associated, Fannie Mae’s Economic and Strategic Research Group surveyed senior mortgage executives in August 2014 via its quarterly Mortgage Lender Sentiment Survey to understand how lenders view the impact of new regulations on their business practices. According to the survey of senior mortgage officials, “Compliance Risk” was voted as the TOP AREA OF FOCUS by the majority of lenders surveyed. Seventy-two percent of respondents said they paid more for compliance in 2014 than they did in 2013. The median increase in compliance spending was close to 30 percent. And with TRID and other pending regulations, those compliance costs are expected to increase even more in 2015. Specific survey findings include:

that, by our count, has affected 23 different federal lending laws and regulations. With all the new requirements, regulations, verifications and more, utilizing technology is the best way to overcome the costs of compliance. Because the reality is that, when it comes to compliance, the same two choices always apply: You pay for it now (by investing in technology) or pay more later (in loan buy backs, fines and consumer reimbursements). If lenders are not equipped to handle new compliance processes, outsourcing to a vendor that specifically focuses on these areas will ensure compliance standards, updates and performance are adequate and accurate. Predatory lending and loan documentation are common compliance areas that are outsourced. However, third-party relationships are closely monitored by the CFPB and will result in fines if not managed responsibly. Lenders will be held accountable for managing and maintaining their third-party vendors to ensure compliance with CFPB standards. A best practice for outsourcing compliance is to have a mixture of in-house knowledge and solid third-party vendor relationships that cover all of the compliance areas—documentation, fair lending, fraud, reporting, etc. The regulatory environment is changing too rapidly to not cover all of your compliance bases and guarantee your business’s and customers’ safety. Lenders are finding that using thirdparty vendors that offer advanced technology and larger staffs can provide economies of scale that result in verifications being completed faster and at less cost than if the lenders did the work themselves. In fact, many lenders have discovered that the technology offered by third-party vendors not only takes tedious verification work off their desks, but they get answers so quickly and the data is so reliable, they are able to make better-informed lending decisions.

“More regulations, more paperwork, more layers of reviews would all seem to imply ‘more’ time and ‘more’ costs.”

AMCs in the Regulatory World By Michael Dresden

The regulatory community has made it clear that the appraiser’s final work product and compliance with Dodd-Frank and other industry oversights are the responsibility of the lender. Moreover, in the wake of our most recent financial crisis, regulatory surveillance and enforcement, including through the Consumer Financial Protection Board (CFPB),

remain intense. The stream of new guidelines flows briskly. As a result, not just major national lenders, but, also, a growing number of the industry’s small to midsize banks and mortgage companies are considering the benefits of outsourcing appraisal management. In doing so, it is important to select an experienced appraisal management

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company (AMC) with impeccable credentials, backed by active leadership and financial resources. In this article, we will review some of the advantages of working with an AMC as well as what to look for in choosing one.

Achieving appraisal independence Clearly, appraiser independence of the loan origination function and full regulatory compliance are paramount. While lenders can fulfill the requirements of the Dodd-Frank Act by establishing internal systems that ensure separation of the appraisal process from loan origination, there are many advantages in working with an AMC. These include: l Ensuring that all regulatory and consumer protection dictates with respect to home appraisal are fulfilled, while conducting appraisals in a timely, economical manner. l The best AMCs will already have an established panel of quality, veteran appraisers with knowledge and experience of distinct markets, as well as skills in managing and supervising appraisers. Also, consider the size of the AMC’s panel of appraisers and its stability. l The best AMCs will be able to ramp up and down quickly as workloads demand, an important consideration in the mortgage lending industry. l New regulations and procedures put a stress on each of us in such a time-sensitive, complex and competitive industry as mortgage lending. More regulations, more paperwork, more layers of reviews would all seem to imply “more” time and “more” costs. By specializing in this area, the goal of the AMC is to limit those last “mores” as much as possible. This is accomplished through having outstanding management and quality assurance systems in place; excellent communication and cooperation with assigning lenders; and great technical knowledge in

appraisal and rapport with appraisers. The latter is extremely important as the appraiser community continues to age, which intensifies the competition to recruit the very best ones for one’s appraiser panel. In these ways, the best AMCs both buffer and expedite.

Strategic partnership Today’s AMCs may be divisions of lenders or wholesalers, or independent specialists. Regardless, several key areas to consider in choosing an AMC include: l The entity and how they work with you: Consider the AMC’s leadership, financial strength, customary annual volume of appraisals completed and degree of national coverage, or at least coverage in the states in which you are doing transactions. Are the leadership and account executives accessible? Was the firm an active participant in the recent reforms that have strengthened mortgage lending and consumer confidence? Above all, the AMC should have a strong management team to oversee both production and compliance. l The value of experience: How long has the AMC worked exclusively in the area of appraisal management? What is the breadth and depth of their professional practice in such areas as annual volume of appraisals; numbers, types and average length of lender relationships; contributions to professional organizations; and operational systems? With respect to the latter, does the AMC have advanced systems in place to identify and resolve problems in an appraisal report before it goes back to the lender? An example would be an AMC that has created its own Uniform Collateral Data Portal (UCDP) hard stop matrix, complete with rec-

ommended actions, to resolve the many hard stops that can be generated by Fannie Mae’s Collateral Underwriter. l How the AMC works with appraisers: Realistically and admittedly, the new standards established by Dodd-Frank have stressed the appraiser community, as it has other mortgage and related professionals. As a result, it is incumbent upon appraisal managers to cultivate positive relationships with appraisers, especially those agile, experienced appraisers with great local knowledge and insights—the ones that we don’t want to lose! A strong AMC will have an established panel of experienced appraisers, supervise and compen-

sate them appropriately, and pay them in a timely manner. In this way, we achieve a great work product for mortgage lenders. l National profile and state registration: Dodd-Frank requires that each state enact its own statutes and registration programs to oversee AMCs. At present, nearly 40 have done so and we expect all states to eventually comply with this provision of Dodd-Frank. While Dodd-Frank spells out the AMC responsibilities, as might be expected, there are variations in state compliance provisions. It is important to select an AMC that not only has broad national coverage with proper registration, but, also, is attuned to the subtleties of different jurisdictions.

l Regulatory compliance and quality control: Compliance begins with training. Does the AMC’s staff receive initial and ongoing training on regulatory issues? Are they Uniform Standards of Professional Appraisal Practice (USPAP)-certified? Do the AMC’s audit and quality control programs satisfy the needs of regulators, its own operational standards, and the specified reporting requirements of the lender? Also, does the AMC have proven information security and disaster recovery capabilities? The goal is no errors. But that is unrealistic in our real world lending and appraising environment. The real test is how well the AMC is able to detect issues before they reach the attention

of any assigning lender and how well they resolve them.

Final thoughts Overall, working with a qualified AMC can help achieve smoother operations through the entire mortgage lending process and better ensure regulatory compliance, while saving a lender time and money and reducing the potential for internal conflicts. Michael Dresden is the executive vice president of Dart Appraisal, an independentlyowned, nationwide AMC founded in 1993. Dresden leads the integration of customer service solutions and operations for the company, effectively leveraging the company’s innovative technology and flexible solutions to create custom integrations which serve the complex needs of any appraisal customer. 63

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www.callfurst.com

“Shouldn’t it be referred to as ‘TILA-RID,’ which is actually what it is, because they are doing away with the TILA form? That’s my primary concern.”

Dinosaurs Don’t Care By Eric Weinstein

TRID, TRID, TRID … that’s all everyone is talking about … TRID! That’s what most of this magazine is about this month … TRID! Let me tell you my real issue with TRID. TRID is an acronym for TILA-RESPA Integrated Disclosure. But TILA itself is an acronym for the “Truth-in-Lending Act.” Shouldn’t it be referred to “TILA-

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RID,” which is actually what it is, because they are doing away with the TILA form? That’s my primary concern. Listen, I am a mortgage broker, and have been one now for 20-plus years. You might say I am a dinosaur. While everyone has moved to become a lender, I remained a broker. I have seen forms come and go. Well, mainly come. They don’t ever seem to ever go

away. The stack just gets bigger every year. But, replacing a few forms with another form, who really cares? Yes, I know there will be changes in the mortgage industry because of the new law. But let’s face it … as a broker, my wholesalers will tell me what I have to do and I will do it. Yes, if I was a lender right now, I would be panicking, but I am not. I am a dinosaur. I am a broker. Finally, a new law that is not trying to put us out of business or favoring the large banks! I can remember when the government changed its mortgage laws where brokers had to print one form on RED paper instead of white. The purpose was to call attention to the fact that if you don’t make your mortgage payments, the lender could foreclose on your house. Stupid as that law was, it affected me more than TRID. I had to go out and buy red paper and change my forms group so that form printed out separately. That was 10 times more hassle than this. Okay, delete these forms and add that form. Got it. I can do that. Heck, my LOS system will do it for me. I am pushing the same buttons as before. Granted, I am not an expert on the new law and the overall repercussions to the industry this will have, but this is my take on it. The Consumer Financial Protection Bureau (CFPB) is a new player in the federal bureaucracy. They have to make a name for themselves and look like they are working. This new law is a way for them to put their thumbprint onto every mortgage in the industry. I remember when the Federal Reserve came out with the TILA and its newfangled APR calculation. I even remember when the U.S. Department of Housing & Urban Development (HUD) came out with the Good Faith Estimate (GFE) and the self-named HUD-1. This is the CFPB’s way of doing away with them and declaring itself the new sheriff in town. To me, the new forms have basically the same information as before. You would have hoped the four pages would have been replaced with less papers rather than more, but oh well. I cannot help but think, this is a new form in search of a problem to solve. I cannot see it as anything, but putting all the dis-

closure under one roof. What exactly is it fixing? Here is the major fear I am hearing from brokers: “The borrower must get the HUD three days before closing.” As everyone who is reading this is wellaware, many times closings are rushed at the last minute and the HUD is cobbled together a few nano-seconds before closing. “Now, everybody will be delayed three days.” But I don’t think that is what is going to happen. As it is, the GFE must now be pretty accurate or you will have a lender cure. With the new law, the new Closing Disclosure (CD) has to be re-disclosed ONLY if there are major changes like the interest rate, loan program or a prepayment penalty. In most loans, that does not happen. With the bank doing the CD, most items are already known and the few things that could change like the survey, etc. are not subject to the 3 day rule. The new CD could go out weeks before closing. We know most of the figures well in advance. If anything, I like the new Loan Estimate (LE) because it has cash to close and other items the old GFE never had. Not enough to change an entire form over, but those are your tax dollars at work. As a broker, I always said, “Just tell us the rules and we will follow them.” As Godzilla, I wade through the center of Tokyo, overturning subway trains, pulling high tension wires down and picking up buses. I really don’t care about the follies of men. Eric Weinstein worked in banking, on the commercial real estate side until 1991, when he fell in love with residential lending. In 1995, he started a small mortgage company in his basement called Carteret Mortgage Corporation, which in 2003, grew to one of the largest mortgage broker companies in the United States. These days, Eric is semi-retired, doing mortgages by referral only. As he likes to put it, “He is either saving people money per month or helping them buy a new home. What a great job!” He may be reached by phone at (703) 505-8692 or email eweinstein4u@gmail.com.

“As the old saying goes, ‘The devil is in the details.’ In this case, the devil is in the ‘absence’ of detail.”

Gearing Up for the TRID Transition By Greg Stephens

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19, 2015. The 37-page Final Rule is titled “Amendments to the 2013 Integrated Mortgage Disclosures Rule under the Real Estate Settlement Procedures Act (Regulation X) and the Truth in Lending Act (Regulation Z) and the 2013 Loan Originator Rule under the Truth-in-Lending Act (Regulation Z).” In their Summary, the CFPB state “This final rule modifies the 2013 TILA-RESPA Final Rule. This rule extends the timing requirement for revised disclosures when consumers lock a rate or extend a rate lock after the Loan Estimate is provided and permits certain language related to construction loans for transactions involving new construction on the Loan Estimate. This rule also amends the 2013 Loan Originator Final Rule to provide for placement of the Nationwide Mortgage Licensing System and Registry ID (NMLSR ID) on the integrated disclosures. Additionally the Bureau is making non-substantive corrections, including citation and cross-reference updates and wording changes for clarification purposes, to various provisions of Regulations X and Z as amended or adopted by the 2013 TILA-RESPA Final Rule.” As the old saying goes, “The devil is in the details.” In this case, the devil is in the “absence” of detail. There is an unintended consequence resulting from the language in the Rule. The Rule fails to provide lenders an opportunity to begin using the new disclosure form prior to the Aug. 1 implementation date. As a result, industry participants will not have the ability to test the systems and procedures they developed prior to Aug. 1 when the rule goes into effect. The “heartburn” being experienced in the industry is in response to the potential risk of unanticipated disruptions discovered on Aug. 1 or shortly thereafter. The requested grace peri-

the new Rule. A query of the CFPB website reveals a section dedicated to the TRID which include links to a: 91page Compliance Guide; 98-page Guide to Forms; and 14-page Disclosure Timeline. Also provided is a link to integrated loan disclosure forms and samples which include: Eight samples of blank and completed loan estimates; 11 samples of blank and completed Closing Disclosure documents; four samples which include a blank model form, a sample of written list of

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The Truth-in-Lending Act Real Estate Settlement Procedures Act Integrated Disclosure (TRID) is scheduled to take effect Aug. 1, 2015. TRID is one of the hundreds of rules required by the Dodd-Frank Wall Street Reform Act back in 2010 and issued by the agencies on Nov. 20, 2013. If you are concerned whether the systems and processes you established are in complete compliance with the new rule when it becomes effective, you are not alone. Many industry stakeholders have expressed similar concerns that have been significant enough to get the attention of members of Congress. In response to those concerns, 253 House members wrote a letter to Consumer Financial Protection Bureau (CFPB) Director Richard Cordray requesting a grace period that would provide some relief to lenders and homebuyers for compliance with the new rule. Additionally, Reps. Steve Pearce (RNM) and Brad Sherman (D-CA) introduced (HR 2213) that will provide temporary leniency from lawsuits and law enforcement concerning compliance by the institutions impacted by the new rule. The bill contains two conditions for which a covered person may be granted relief for failure to comply: The first condition applies if the person has made a good-faith effort to comply with the requirements, and the second condition applies if the conduct alleged to be in violation of the requirements occurs on or before Dec. 31, 2015. These exceptions would provide the industry stakeholders as well as the CFPB an opportunity to test the effectiveness of the rule. So why all of the heartburn? After all, the Rule was issued back in November 2013. Should be plenty of time for everyone to prepare. However, the Final Rule official interpretations was not published in the Federal Register by the CFPB until Feb.

od by the members of Congress would hopefully provide the market participants enough time to discover any “glitches” in their systems or processes between Aug. 1-Dec. 31, 2015 that would cause them to be out of compliance. The objective of market participants obviously is to have their systems and processes compliant by Aug. 1. So let’s take a look at some of the guidance provided by the CFPB to assist those impacted by the Rule to be in compliance. To their credit, the CFPB has provided volumes of information relating to

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providers that lenders can and cannot shop for; and a blank model form of the escrow cancellation notice. On June 17, 2014, the CFPB also conducted a live Webinar entitled “TILA-RESPA Integrated Disclosures” that was recorded and is available on their Web site. This informative 30slide presentation states that TRID consolidates four existing disclosures required under TILA and RESPA for most closed-end consumer credit transactions secured by real estate into two forms: A Loan Estimate given three business days after application and a Closing Disclosure given three business days prior to consummation. It also clarifies what the rule does not apply to: l Reverse mortgages; l Home equity lines of credit (HELOCs); l Chattel-dwelling loans; l Loans made by a person who makes five or fewer mortgages a year; and l Certain no-interest loans secured by subordinate lines made for the purpose of downpayment or similar homebuyer assistance, property rehabilitation, energy efficiency or foreclosure avoidance or prevention. The Rule integrates and replaces the Initial Truth-in-Lending (TIL) disclosure and the RESPA Good Faith Estimate (GFE) and clarifies that the Loan Estimate must: Provide con-

sumers with a good faith estimate of credit costs and transaction terms; be in writing and contain the information prescribed in TILA Section 1026.37; and satisfy timing and delivery requirements set forth in the Rule.

received it three business days after it is delivered or placed in the mail. For the purposes of providing the Loan Estimate, a business day is defined as a day on which the creditor’s offices are open to the public for carrying out substantially all of its business functions. For other purposes, including delivery of the Closing Disclosure, business day means all calendar days except Sundays and legal public holidays.

Key elements of TRID Loan Estimates–a comparison with existing disclosures l Basically a different format of the same information l Information considered most helpful to consumers is on page one l Costs can be itemized, but each category is subtotaled l The annual percentage rate is disclosed on page three l Signature of the consumer confirming receipt of disclosure documents is permitted

Application—can be found in TILA subsection 1026.2(a) (3) For the purposes of the Rule, an application consists of the submission of: l The consumer’s name; l The consumer’s income; l The consumer’s Social Security Number to obtain a credit report; l The property address; l An estimate of the value of the property; and l The mortgage loan amount sought.

Loan Estimate Delivery Requirements—can be found under TILA subsection 1026.19(e) (1) l A creditor MUST deliver or place the Loan Estimate in the mail not later than the third business day after the creditor receives the consumer’s application l If a mortgage broker receives a consumer’s application, either the creditor or the mortgage broker may provide a consumer with the Loan Estimate l If the Loan Estimate is not provided to the consumer in person, the consumer is considered to have

Loan Estimate: Good Faith Requirement—can be found in TILA subsection 1026.19(e) (3) l Loan estimate figures must be made in good faith and consistent with the best information reasonably available to the creditor at the time disclosed. l To Determine Good Faith: Look at the difference between the estimated charges originally provided in the Loan Estimate and the actual charges paid by or imposed on the consumer. Generally, if the charge paid by or imposed on the consumer exceeds the amount originally disclosed on the Loan Estimate it is not in good faith. l Per the CFPB–this is true regardless of whether the creditor later discovers a technical error, miscalculation, or underestimation of a charge. The Rule also provides for an Alternative Loan Estimate to be used if the transaction does not involve a seller. Changed Circumstances are a significant concern to lenders and a major source of debate. References can be found in TILA subsection 1026.19(e)(3)(iv)(A). A Changed Circumstance for purposes of a revised loan estimate is defined as followed:

l An extraordinary event beyond the control of any interested party or other unexpected event specific to the consumer transaction; l Information specific to the consumer or transaction that the creditor relied upon when providing the Loan Estimate and that was inaccurate or changed after the disclosures were provided; or l New information specific to the consumer or transaction that the credit did not rely on when providing the Loan Estimate. Examples provided by the CFPB include war, natural disaster or unexpected event specific to the consumer or the transaction (e.g., loss of employment) And lastly—the Closing Disclosure —which can be found in TILA Subsections 1026.19(f) and .38. Per the CFPB, the Closing Disclosure: l Integrates and replaces the final TIL disclosure and the RESPA HUD-1 l Closing Disclosure must: Generally contain the actual terms and costs of the transaction, be in writing and contain the information prescribed in TILA 1026.38 and satisfy timing and delivery requirements set forth in the Rule. As noted earlier, there are volumes of information and guidance relating to TRID compliance. This article is intended to focus on some of the major elements addressed by the CFPB, as well as provide guidance to the resources available for additional compliance questions. Greg Stephens is senior vice president of Appraisal Operations and Compliance for Metro-West Appraisal Company. Greg is a recognized subject matter expert in appraisal regulations and standards, whose career in the industry of more than 35 years includes owning and managing a five-office regional appraisal firm in northern California for more than 20 years. Greg’s professional credentials include Certified General Appraiser, SRA Designation from the Appraisal Institute, AQB Certified USPAP Instructor through The Appraisal Foundation, and CDEI certified distance education instructor through the International Distance Education Certification Center.

“… collective actions by federal regulators are steadily making headlines nationwide and have resulted in everything from steep fines to total company ruin.”

Getting Familiar With Today’s Marketing Compliance Trends By Alex Baydin

Trends Survey conducted by Deloitte and Compliance Week, 50 percent of the senior level corporate compliance professionals surveyed now have a stand-alone chief compliance officer, up from 37 percent the previous year.

Transparency in everything from steep fines to total company ruin. How will this changing climate impact your organization? It is challenging for mortgage professionals to stay on top of the latest regulations, but absolutely necessary so as to avoid compliance violations. How can you best ensure that you are following the new rulebook? Here are five compliance trends to watch in the mortgage industry:

Compliance management

Marketing compliance teams Another trend worth tracking is the formation of dedicated compliance teams within organizations that are charged with being marketing compliance watchdogs. These teams are separate from sales and marketing, preferably with a chief compliance officer leading the team and reporting to the CEO or board of directors. This separation from sales and marketing is crucial for companies to objectively monitor their marketing activities and minimize potential risks and violations. The good news is that compliance is being taken more seriously over the past several years. In fact, according to a 2014 Compliance

Consumer complaints Remember that it’s usually consumer complaints that trigger action from regulators. The CFPB accepts complaints from consumers and forwards those complaints to the company in question. The CFPB then publishes all complaints in the Consumer Complaints Database. One of the most important things a company can do is review complaints as they are made and take firm steps to resolve them quickly. In addition, it is a good idea to review the complaints being made about other companies in your space, and other industries, to ensure your company doesn’t replicate those mistakes.

Stricter regulatory enforcement Scrutiny of marketing practices among federal regulators continues to

As our country’s economy continues to recover and the mortgage market continues to rebound, mortgage professionals would be remiss not to tread carefully when it comes to their marketing practices. As federal regulators like the CFPB and FTC continue to rule with an iron fist, “compliance” is a term that is here to stay. Knowing and understanding today’s marketing regulations and making an appropriate investment in marketing compliance activities and monitoring could mean the difference between enhancing or permanently tarnishing your company’s reputation. In today’s world, it takes just one compliance infringement to cause irreparable harm. Alex Baydin is founder and CEO of PerformLine Inc. He founded PerformLine as he saw the growing need for compliance and risk mitigation in the marketing and advertising space. Using his deep experience in media and compliance he developed the PerformMatch cloud-based GRC platform to bring automation and scale to companies looking to mitigate risk and ensure regulatory and brand safety across multiple channels.

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Mortgage companies will increasingly need to implement comprehensive Compliance Management Systems (CMS) to accurately track customer acquisition activities across all marketing channels—including thirdparty vendors. This system should include monitoring capabilities, a clear procedure for violation remediation, and technology that flags the potential violations with enough time for companies to make modifications and document their actions.

In the mortgage space in particular, many different marketing partners and vendors can be involved in securing mortgage customers. To ensure that everyone is aligned, companies are taking active steps to communicate to both internal and external partners that what they say and do is being monitored around the clock. When mortgage professionals know that any mistake they make can easily come under the spotlight, they are more likely to exercise caution when making mortgage disclosures to consumers. Furthermore, companies that act swiftly and decisively when a violation happens will help professionals think carefully about how they are representing themselves and their terms. Again, the CFPB has made it clear that “institutions under Bureau supervision may be held responsible for the actions of the companies with which they contract.”

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The U.S. mortgage market, a multi-trillion dollar market and one of the largest consumer markets worldwide, is one of the most significant forces in the U.S. economy. When the mortgage market hits turbulent times, the impact is felt universally, as indicated by the financial crisis of recent years. In an effort to head off another financial meltdown, the Consumer Financial Protection Bureau (CFPB) is leading the charge to ensure that the mortgage industry is fully compliant with new rules surrounding lending and marketing practices. Since its creation, the CFPB has instituted a myriad of new rules designed to protect consumers by curbing reckless lending and cracking down on false or deceptive advertising, especially when it comes to misrepresenting government affiliation. In fact, CFPB Director Richard Cordray recently stated in one enforcement action, “Deceptive advertising has no place in the mortgage marketplace, and the Consumer Bureau will continue to take action against companies that mislead consumers.” Since January 2015, the CFPB has taken action against eight mortgagerelated companies for engaging in deceptive marketing activities. The Federal Trade Commission (FTC) is also a key player in the compliance enforcement arena. In fact, the FTC joined forces with the CFPB in 2012, reviewing 800 randomly selected mortgage-related ads across the country and issued warning letters to approximately one dozen mortgage companies after uncovering potential violations of the 2011 Mortgage Acts and Practices Advertising Rule. These collective actions by federal regulators are steadily making headlines nationwide and have resulted

increase. Regulators are prepared to do everything in their power to ensure that marketers across a wide range of industries, including the mortgage industry, are abiding by the new regulations and treating consumers as fairly as possible. Forrester’s most recent GRC Playbook anticipates an even more challenging risk and compliance business environment in 2015, predicting a corporate risk event could lead to $20 billion in losses. In fact, the 2015 CFPB enforcement budget is $13.5 million more than the 2014 budget. And the Federal Trade Commission (FTC) continues to closely monitor advertising claims, filing a number of actions against affiliate marketers for violations of Section 5 of the FTC Act and updating their Dot Com disclosures guide that explains how to make disclosures clear and conspicuous to avoid deception.

“Qualifying for loans in these markets tend to present greater challenges, and therefore, raise the incentive for misrepresentation.”

Deterring Mortgage Fraud in the Era of Compliance By Francine Delgado

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Mortgage fraud is something that is continually evolving making it difficult to detect. The financial losses associated with mortgage fraud can be devastating. Identifying the “red flags” contained in the loan application will assist in detecting and averting loans that contain mortgage fraud. Let us begin with defining the term “mortgage fraud.”

Mortgage fraud is a crime in which the intent is to materially misrepresent or omit information on a mortgage loan application to obtain a loan or to obtain a larger loan than would have not been obtained had the lender known the truth. Mortgage fraud perpetrators (fraudsters) take advantage of economic and market opportunities. For the past several years,

areas with concentrations of distressed properties and borrowers have presented a wealth of opportunity. Housing price pressure and home affordability can closely correlate with fraud risk. Higher fraud risk is associated with markets that have lower affordability metrics with respect to their borrowers. Qualifying for loans in these markets tend to present greater challenges, and therefore, raise the incentive for misrepresentation. Inconsistencies in the loan file are often a tip-off that the file contains misrepresentations. The presence of one or more red flags in a file does not necessarily mean that there was fraudulent intent. However, several red flags in a file may signal a fraudulent transaction. Deterring mortgage fraud begins with the application. Every individual involved in the mortgage transaction has the responsibility to detect and take appropriate action. The earlier in the process that those red flags can be identified, the sooner a determination can be made of whether or not to proceed with the transaction. Below are six areas of the application that should carefully be reviewed for red flags:

1. Liabilities The applicant may have a second, undisclosed mortgage or may have inaccurately reported debt. Compare the application to the credit report; are there recent inquiries that could lead to new debt that has not been disclosed. All documents in the loan file should be considered. A description for a payroll deduction noted on a paystub could indicate a loan or child support obligation. The originator should get clarification on any discrepancies, and should require supporting documentation of explanations that claim that obligations have been paid in full or are not the responsibility of the applicant.

2. Credit Beware of “credit cleaning.” An applicant could receive their credit report before the loan process begins and falsify credit history by frivolously disputing derogatory credit. Disputed items can be temporarily removed from the credit report during that process, and could leave the mortgage company unaware of derogatory credit. Are the debts reported on the credit report in line with the borrower’s other characteristics? For example, does the majority of the borrower’s

revolving debt have high balances consistently in the $5,000 range. However, recently an account was added/opened with a high limit of $20,000. This could indicate that the borrower was added to an account to improve credit scores. In addition, review the entire loan file for other signs that the borrower has had credit trouble. For instance, are there delinquent taxes reported on title, yet the borrower appears to have made timely payments on all other accounts.

3. Assets Fraudsters could be motivated to cause the loan file to reflect that the applicant has more money than they actually have—especially if the applicant has insufficient assets to cover the minimum required investment. Are the bank statements in the file real? Even if they appear to be real, they could be altered. Scanning and Photoshop technologies have greatly assisted fraudsters, however, many fail to ensure the mathematical accuracy of falsified statements’ debits and credits, or fail to match aspects of the bank’s statement formatting. The complete bank statement should be reviewed and not just the ending balance. The details in the bank statements can reflect much information about the applicant. If documentation appears to be altered or does not balance, the originator can check the bank’s Web site to see what its statements look like, validate the balance with the depository, and/or ask for an additional statement. The originator may request additional documentation to eliminate any concerns.

4. Employment and income Employment and income are sometimes misrepresented to obtain a higher mortgage than an applicant is qualified to receive. Or, in the case of a straw buyer, employment and income could be completely manufactured. When reviewing paystubs, W-2s or tax returns, the originator should look beyond the bottom-line income number. Conduct a more thorough review to ensure that the documentation makes sense and doesn’t contain unanswered questions: Payroll deductions are accurate, calculations net, and the picture painted by these documents aligns with the application and other documents in the file. For example, is the information on the paystubs, W-2s and verifica-

tion of employment consistent? Do the bank 6. Appraisal statements reflect sufficient assets to sup- Value is a critical component to many port the interest/dividend income on the tax fraud schemes. Manipulating value returns? (and/or property condition) allows fraudsters to avoid making a financial invest5. Occupancy ment in the transaction (increasing the It’s difficult to proactively prove misrep- lender’s risk position), and/or to siphon resented occupancy intentions, especial- money out of the transaction. At the most ly on a purchase transaction; however, sinister end of the spectrum, schemes an originator can be aware of the red that inflate the property’s value someflags that warn of a potential misrepre- times plan for immediate default, leaving sentation, such as: the lender with huge losses after foreclol Is the applicant’s employment distant sure. from the property? Watch for the following appraisal red l Is the applicant downgrading from a flags: more expensive home? l The purchase price is substantially higher l Does the homeowner’s insurance policy than the predominant market value. reflect a different mailing address than l Large positive adjustments were made to the subject address for an owner-occucomparable properties. pied transaction? l Comparable sales prices do not bracket l Is the borrower obtaining a large gift for the subject’s adjusted value. downpayment and closing costs? No per- l Comparables’ sales are not similar in style, sonal investment in the transaction. size and amenity.

l All comparable sales are located in subject development. l Comparable properties are a significant distance from the subject or are located across neighborhood boundaries (main arteries, waterways, etc.). l Map scale distorts the distance of comparable properties from the subject. l Photos appear to be taken from an awkward or unusual standpoint. l Significant appreciation in a short period of time since last sale. l Prior sales are listed for the subject and/or comparables without adequate explanation. l Do the addresses return the same property(ies) as pictured in the appraisal? l Is the appraiser’s map scale skewed to make the comparables appear as if they are within the subject’s neighborhood, when they are actually in different neighborhoods? l How did the real estate agent describe the

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service levels. • Staffing Staf fing and and Relationship-based Relationship-bas • Custom Custom rrate ate sstrategies trategies tto o ssuit uit your profile. Support available when • Su pport tteam eam a vailable w hen you need them. • Consistent Consistent rrate ate ssheet heet pricing pricing to t allow for predictable origination flows. p redictable o rigination fl ows.

Growing? Growing? We’ll We’ll help! help! •T ransition to to Mini-C. Mini-C . Transition •M ini-bulks available available ffor or llower ower net worth. Mini-bulks ur rrelationship elationsh to suit your needs. We’ll customize our •W e’ll c ustomize o

Francine Delgado is VP of compliance for Mountain West Financial Inc., overseeing the Compliance and Quality Control Department. She has 28 years of mortgage industry experience from originations through servicing. Most of her experience has been in operations, managing several corporate departments, production, underwriting and closing. 69

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Relationships Relationships a are re e everything verythin

Every loan application tells a story, each document a page in the book. Step back and ask yourself if all the pieces seem to fit together and if the “story” makes sense. If the information does not make sense, obtain additional information and documentation to ensure that the story is complete.

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Winning… Winning…

subjects’ and comparables’ characteristics and condition? l Does the listing’s history make sense when compared to the sales price?

“Lenders, vendors and settlement companies should be in the throes of testing system functionality, integration of data and reviewing the internal and external business processes to keep the market running in support of the TRID regulation.”

Are You Prepared for TRID? By Heather Kerns

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The Consumer Financial Protection Bureau’s (CFPB) Integrated Disclosure Regulation ruling has now been coined TRID, with more than 1,888 pages of rule, commentary and examples in the behemoth regulation, the acronym is the easiest aspect of the entire rule. So how are lenders, vendors and settlement providers preparing for the upcoming enforcement date of Aug. 1, 2015? Lenders, vendors and settlement companies should be in the throes of testing system functionality, integration of data and reviewing the internal and external business processes to keep the market running in support of the TRID regulation. However, the technology, data and business processes are not the only areas needing action. What about the thousands of loan officers, closing agents and even real estate agents who need to know and understand the details in order to explain these new forms to potential borrowers. The key question to ask is: “Are your people ready to go live?” If not, here are some tips to help your organization go live on Aug. 1.

Lenders must be … Able to speak to every aspect of the

forms, loan estimate and closing disclosure, because we all know the borrower will ask, “Why?” or What is this?” It all boils down to training and being prepared to go live. Organizations do not expect their resources to read the entire regulation and be able to understand or interpret the rule. Ensure that your organization has internal training ready to execute internally no later than June. Train your resources on both your process and the form details. Focus on each section of each form, explain what its purpose is and why the information is on the form to better arm your human resources with the knowledge to convey confidently to the borrower. Additionally, lenders and mortgage professionals must be able to understand the entire end-to-end process not only from a technology perspective, but also from the business process perspective. Incorporate the end-to-end processes within your organization’s internal training, allowing your human resources a better “big picture” understanding in order to explain the process to borrowers when asked. Finally in regards to lenders, it does not hurt at all to ask your vendors and settlement companies to provide their high-

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level business processes, because you are on the hook for any CFPB enforcement. Being better-equipped to understand all points in time of the business process enables faster issue resolution throughout the loan origination process. Then, incorporate the downstream high-level business processes into your internal training materials. Education is an important aspect to the execution of TRID come Aug. 1 when enforcement begins.

Vendors and service providers should be … Conduct user acceptance testing with your lenders and downstream service providers. This makes your organizational go live, even more critical due to the functionality of the LOS systems and document preparation systems to create the forms correctly. User manuals and training should be a key component for your organization’s execution in order to keep your systems running and executing the origination processes correctly. Training on the use of the systems to your lenders, training for your internal resources on the systems and business processes for maintenance should be a primary focus at this point in time. Vendors and service providers must also be prepared to communicate to both lenders and settlement companies, thus a communication plan is key especially when issues arise. Think of items that can go wrong and how it will be addressed. Document questions your organization comes up with and ask your lenders what keeps them up at night in order to prepare for worse case scenarios. Include these scenarios within your communication plan to address the how and when.

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Settlement companies … Have a more challenging training responsibility. Not only do they need to be knowledgeable of the state and local rules for real estate transactions, but now throw in the new CFPBs Integrated Disclosure forms of Loan Estimate and Closing Disclosure which further compounds their need for understanding. Most settlement firms should be fairly focused at this time on training their settlement agents, title agents and attorneys for each section of

each form since they are face-to-face with the customer on closing day. Internal training should span from assistants to the title agent because you never know who is going to get the question, so why not have all of your resources prepared. Education is important for settlement companies to meet with borrowers and sellers on closing day, answers to questions need to be second nature.

Real estate agents should not be impacted … If you are doing your job then these forms should not be an issue. Because when you get to the closing table, there should not be any surprises. Any items should have been resolved during the origination process and the negotiations of the sale. The focus of the real estate agents is more on helping the consumer communicate and provide the necessary information to the lender or mortgage broker. Real estate agents may need more training to help the consumer meet their documentation needs and assist with any communication that is not specific to the financial decision. Not stating that real estate agents do not need to understand the entire process, they should, because they are supporting their client from the day the borrower decides to purchase a home, so it never hurts to have more education regarding the overall process and the new regulation.

Start training … The overall message is education and training of the industry’s human resources. All of the technology in the world will not close a transaction without human interaction. We need information and education to be able to communicate appropriately between industry specialists and the end consumer. So, in preparation of the TRID enforcement date of Aug. 1, organizations need to be focused on training their resources, crafting the appropriate materials and ensuring their organization’s staff are ready to execute along with all of the technological changes. Heather Kerns is a senior manager at Actualize, managing all MISMO offerings for the firm. She may be reached by e-mail at hkearns@actualizeconsulting.com.

Vendors Keepers, Losers Weepers By Michael Goldhirsh Esq.

agement program will be scrutinized not just by the CFPB and state regulators, but by the government-sponsored enterprises (GSEs), loan purchasers and warehouse lenders. All of these entities want to make sure their business partners are walking-the-walk, and conducting themselves in a compliant and responsible fashion. The CFPB has not only fired shots across the bow regarding its vendor management requirements and expectations, it has delivered some direct and consequential hits. In this author’s opinion, it was done thoughtfully and with the intent to deliver a message. The message—choose your vendors carefully and pay attention to what they are doing—should be heeded by financial institutions before they feel the message like those writing checks to the Bureau. Michael Goldhirsh Esq. is executive director of Vendors Compliance Group and director/legal and regulatory compliance at Lenders Compliance Group. He can be reached by e-mail at mgoldhirsh@lenderscompliancegroup.com or call (516) 4423456, ext. 142.

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l An assessment of the risks involved and to ensure that the vendor relationship is consistent with the financial institution’s risk tolerance and overall business strategy. l Due diligence to qualify and select a third-party vendor—and also at various points throughout the relationship and/or when considering a contract renewal.

The CFPB’s authority to examine nonbanks subject to its jurisdiction extends to the entity’s service providers under authority derived from Title X of the Dodd-Frank Wall Street Reform and Consumer Protection Act, and thirdparty service providers must understand and be able to apply and comply with the laws and regulations to which their financial institution customers are subject. Failing

to do so will expose both a service provider and its customers to potential supervisory and enforcement actions and, depending on the nature of the service being provided, to potential civil liability to consumers. Financial institutions should also keep in mind that their vendor man-

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ith the steady stream of Consumer Financial Protection Bureau (CFPB) guidance, pronouncements and enforcement actions that have included findings relating to vendor management, third-party compliance and oversight is no longer a matter addressed solely by the existence of a well-written policy. Financial institutions must manage all of their third-party vendor relationships, including their closing agents, in a safe and sound manner and in compliance with all federal and state laws. And as each financial institution’s risk profile is unique, an institution’s risk management approach should be individually crafted and carried out. Finally, each third-party vendor should be vetted and monitored at a level commensurate with its unique characteristics and the type of service it provides (e.g., vendors providing consumer contact or critical services should always receive a high level of scrutiny and oversight). Though some or all of the following steps may seem logical and intuitive when employing a third-party vendor (regardless of industry), a financial institution needs to document the steps it takes and the results of their efforts. The tailoring of an institution’s vendor management process should generally consider:

l Written contracts to outline the duties, obligations and responsibilities of both parties. l An ongoing oversight program of the third-party vendor and its activities, making sure to report the results to the financial institution’s board of directors.

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Step Inside Ginnie Mae The Ginnie Mae Model and New Housing Finance Trends By Ted W. Tozer Ginnie Mae has made the news frequently this year. A lot has changed, but several things remain clear: l Ginnie Mae’s model has succeeded in the face of the worst housing market in our lifetime. l Participants in the mortgage lending and servicing landscape are changing drastically. l The shift in the types of entities now servicing mortgages emphasizes the important differences between Ginnie Mae and the government-sponsored enterprises (GSEs).

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Why are these differences so important? Because, in short, Ginnie Mae does not buy loans from originators, nor are we responsible for servicing them. Ginnie Mae does not securitize mortgage-backed securities … we guarantee the timely payment of principal and interest to bondholders. Further, Ginnie Mae spreads the credit risk among its more than 400 Issuers, none of which is too-big-to-fail. If not for the flexibility of Ginnie Mae’s single security platform, non-depository institutions would not have been able to step into the void left by the retreat of large banks. But these new institutions did step in, and now they fill a vital role in today’s housing finance market, providing credit access to borrowers who might otherwise have been shut out. As of May 2015, 64 percent of Ginnie Mae’s new issuance was from non-banks–up from about 18 percent in 2010. While their financing structures are complicated, these new players in the Ginnie Mae program are generally financially sound. They present a variety of challenges that Ginnie Mae must navigate in order to protect the government guarantee. With the increase of these non-banks, we must effectively manage our risk by monitoring these new institutions closely to ensure they have the necessary liquidity to meet monthly principal and interest payments to bondholders. These entities fund their operations in ways that are more complex and not as well-tested as traditional banking operations. Those differences, in turn, could affect how they perform under stress, calling into play Ginnie Mae’s responsibility to monitor and evaluate. And because we expect nonbank lenders to account for such a large portion of our business this year, we will need to make significant investments to support this trend. However, given that we are a government agency operating within the environment of spending constraints, this can be a challenging situation. But, it is an important challenge as we lay the groundwork to permit private capital to more efficiently step in to support mortgage servicing and financing. It is important to remember that Ginnie Mae is placing private capital well in front of taxpayer risk. It is preserving access to safe and simple loan products such as the 30-year, fixed-rate mortgage (FRM). It is enabling lenders to borrow from global capital markets at low costs, so affordable credit is available far and wide. And it keeps smaller lenders competitive against the nation’s largest banks because investors are indifferent to the size and financial strength of its Issuers. All investors care about is the full faith and credit of the U.S. government that stands behind Ginnie Mae’s guaranteed mortgage-backed securities (MBS). Ted W. Tozer is was sworn in as president of Ginnie Mae on Feb. 24, 2010, bringing with him more than 30 years of experience in the mortgage, banking and securities industries. As president of Ginnie Mae, Tozer actively manages Ginnie Mae’s $1.5 trillion portfolio of mortgage-backed securities (MBS) and more than $460 billion in annual issuance.

Aug. 1, 2015 and are not tied to the receipt of a loan application. Good Faith and Tolerance Rules TRID continues and expands the general RESPA rule that the charges actually paid by or imposed on the consumer for certain settlement services and transfer taxes when the loan is closed may not exceed the amounts included on the early disclosures, with several exceptions.38 Like RESPA, TILA (as amended by the TRID rule), establishes tolerance categories limiting the permissible variations between the estimated amounts and the actual amounts: The 10 percent category, the unlimited variation category, and the zero percent category. An amount disclosed on the Loan Estimate is considered in good faith and in compliance with TRID if the actual charge does not exceed the estimated amount by the amount permitted by the applicable tolerance rule.39 10 Percent Category An estimate of a charge for a third-party service or a recording fee is in good faith if: 1. The aggregate amount of actual charges for third-party services and recording fees does not exceed the aggregate amount of those charges disclosed on the Loan Estimate by more than 10 percent; 2. The charge for the third-party service is not paid to the creditor or an affiliate of the creditor;40 and 3. The creditor permits the consumer to shop for the third-party service. Only these items fit into the 10 percent category: Fees paid to an unaffiliated third party if the creditor (Permitted the consumer to select a settlement service provider not on the written list of service providers and disclosed on that list that the consumer may select the provider); and recording fees.41 Assume that the Loan Estimate includes a $300 estimated fee for a settlement agent, the settlement fee is included in the 10 percent category, and the sum of all 10 percent category charges, including the settlement agent fee, equals $1,000. If the actual settlement agent fee exceeds 10 percent (i.e., exceeds $330), then the creditor does not violate the tolerance rule if the sum of all 10% category charges does not exceed 10 percent (i.e., $1,100). The focus of the 10 percent tolerance rule on aggregate amounts also provides flexibility in disclosing individual fees. For example, if the creditor does not include an estimated charge for a notary fee, but a $10 notary fee is charged to the consumer and the notary fee qualifies as a 10 percent category fee, then the creditor does not violate the tolerance rule if the sum of all 10 percent category amounts does not exceed $1,100, even though the creditor did not disclose the notary fee on the Loan Estimate.42

Unlimited Variation Category An estimate of the following charges is in good faith if it is consistent with the best information reasonably available to the creditor at the time it is disclosed, regardless of the amount of variation between it and the amount actually charged: 1. Prepaid interest; 2. Property insurance premiums; 3. Amounts placed into an escrow, impound, reserve or similar account; 4. Charges paid to third-party service providers for which the consumer is permitted to shop and which the creditor did not identify on the written list of service providers; and 5. Charges paid to third-party service providers not required by the creditor, including affiliates of the creditor. Under TRID, a fee is not considered “paid to” a person if the person does not retain the fee. A fee is also not considered “paid to” a person if the person retains the fee as reimbursement for an amount it has already paid to another party.43 Differences between the amount of these charges disclosed in the Loan Estimate and actual charges do not constitute a lack of good faith so long as the original estimated charge, or lack of an estimated charge for a particular service, was based on the best information reasonably available to the creditor when the Loan Estimate was provided. A charge is considered to be in good faith if the creditor charges the consumer less than the amount disclosed on the Loan Estimate. Zero Percent Category All other charges are in good faith only if the actual charge does not exceed the estimated amount. These include, but are not limited to, fees paid to the creditor, fees paid to the mortgage broker, fees paid to an affiliate of the creditor or mortgage broker, fees paid to an unaffiliated party if the creditor did not permit the consumer to shop for a third-party settlement service provider, and transfer taxes.44 Changes and Revised Loan Estimates: Six Situations A creditor may provide a revised Loan Estimate at any time. The provision addressing revised Loan Estimates45 does not prohibit a creditor from providing updated disclosures. Rather, it provides an exception to the general rule that an actual charge must be compared to the amount in the original Loan Estimate. There are six specific situations where providing a revised Loan Estimate allows the creditor to compare the actual amounts charged to the updated figures that have increased since the original Loan Estimate and that justify the revised Loan Estimate. If the creditor issued a revised Loan Estimate for a reason other than the

six situations, then the creditor must compare the actual amounts charged to the earlier disclosures, not those on the revised Loan Estimate. I provide a brief outline of these six situations.46 If the creditor wants to use a revised Loan Estimate, the creditor must provide the revised Loan Estimate within three business days after receiving information sufficient to establish that one of the six situations applies.47 The six situations are these: 1. Changed Circumstance Affecting Settlement Charges A changed circumstance causes the estimated charges to increase or, in the case of a 10 percent category charge causes the aggregate amount of those charges to increase by more than 10 percent.

3. Revisions Requested by the Consumer The consumer requests revisions to the credit terms or the settlement that cause an estimated charge to increase.50 4. Interest Rate-Dependent Charges The points or lender credits change because the interest rate was not locked when the Loan Estimate was provided. On the date the interest rate is locked the creditor must provide a revised version of the Loan Estimate to the consumer with the revised interest rate, points as are required to be disclosed in Section A under Origination Charges on the Closing

6. Delayed Settlement Date on a Construction Loan In transactions involving new construction, when the creditor reasonably expects settlement to occur more than 60 days after the Loan Estimate is timely provided, the creditor must provide a revised Loan Estimate if the original Loan Estimate clearly and conspicuously states that at any time prior to 60 days before consummation the creditor may issue a revised Loan Estimate. If no such statement is provided, the creditor may not issue revised disclosures unless one of the other five situations outlined above applies. If a use and occupancy permit has been issued for the home before the issuance of the Loan Estimate, then the home is not considered to be under construction and the transaction would not fit within this provision.54 By new construction loan, I mean a loan for the purchase of a home not yet constructed or the purchase of a new home where construction is currently underway; I do not mean a loan for financing home improvements or remodeling, or adding to an existing structure, or for which a use and occupancy permit has been issued before provision of a Loan Estimate. The timing of a revised Loan Estimate relating to providing it prior to consummation has been the source of much consternation. There are several scenarios, but the following are the primary concerns: 1. The creditor may not provide a revised Loan Estimate on or after the date on which a Closing Disclosure is provided.

A change of circumstance may happen within four days of consummation. What then? The remedy takes into consideration that the creditor will not be able to provide and rely on a revised Loan Estimate. Instead, the creditor may provide a Closing Disclosure reflecting any revised charges resulting from one or more of the six specific situations and rely on those figures, rather than the amounts disclosed on the Loan Estimate, for purposes of determining good faith and the applicable tolerance.55 Procedurally, if the changed circumstance or other triggering event occurs between the fourth and third business days from consummation,

the creditor may reflect the revised charges on the Closing Disclosure provided to the consumer three business days before consummation; and if the event occurs after the first Closing Disclosure has been provided to the consumer (i.e., within the three-business-day waiting period before consummation), the creditor may compare charges on the revised Closing Disclosure with the amounts actually charged for purposes of determining good faith and tolerances. Rounding Rules for Loan Estimates On many occasions, the TRID rule requires rounding, but its general rule is to require numbers and percentages to be disclosed as exact numbers. This does not mean that a number like 3.14159265 should not be rounded. A creditor may safely assume that a dollar amount would be rounded to the nearest cent. Obviously, a borrower cannot pay $3.14159265; the actual payment will be $3.14. A percentage amount would be rounded to 3.141 percent or 3.14 percent. TRID generally offers an option for percentages to either two or three decimal places.56 The rounding rule is influenced by the CFPB’s view that, due to its consumer testing results, “a large number of exact dollar amounts and percentages had the potential to cause information overload and reduce the overcontinued on page 74

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2. Changed Circumstance Affecting Eligibility The consumer is ineligible for an estimated charge previously disclosed because a changed circumstance affected the consumer’s creditworthiness or the value of the security for the loan.49

5. Expiration The consumer indicates an intent to proceed with the transaction more than 10 business days after the Loan Estimate is timely provided. TRID requires no justification for the revised Loan Estimate other than the lapse of 10 business days (using the definition of business day that applies for Loan Estimate timing rules— days on which the creditor’s offices are open to the public for carrying on substantially all of its business functions).53

2. The consumer must receive the revised Loan Estimate not later than four business days before consummation. 3. If the revised Loan Estimate is not provided to the consumer in person, the consumer is considered to have received it three business days after the creditor delivers or places it in the mail. 4. If fewer than four business days remain between the time the revised Loan Estimate must be provided and consummation, the creditor complies with the Loan Estimate timing requirement by reflecting the revised disclosures in the Closing Disclosure.

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A “changed circumstance” means: l An extraordinary event beyond the control of any interested party (i.e., a war or natural disaster that damages the property or otherwise results in additional closing costs) or other unexpected event specific to the consumer or the transaction (i.e., the title insurer goes out of business during underwriting). l Information specific to the consumer or transaction that the creditor relied upon when providing the Loan Estimate and that was inaccurate or changed after the disclosures were provided (i.e., a consumer misrepresented income and the creditor relied on the misrepresentation when providing the Loan Estimate, or a coapplicant becomes unemployed during underwriting and the creditor relied on the combined income when providing the Loan Estimate). l New information specific to the consumer or transaction that the creditor did not rely on when providing the Loan Estimate (i.e., the creditor relied on the value of the property in providing the Loan Estimate, but during underwriting a neighbor of the seller, learning of the impending sale, files a claim contesting the boundary of the property).48

Disclosure, lender credits, and other interest-rate dependent charges and terms.51 An inquiry we have received relating to this category involves the complexity of rate lock timing. So let’s assume that a creditor executes a rate lock agreement with the consumer and then provides a Loan Estimate. The actual points and lender credits are compared to the estimated points and lender credits disclosed in the Loan Estimate to determine if those charges have increased. If the consumer enters into a rate lock agreement after a Loan Estimate has been provided, then the creditor must provide, on the date of the rate lock agreement, a revised Loan Estimate reflecting the revised interest rate, points, lender credits and any other interest rate-dependent charges and terms. Assuming that the revised Loan Estimate is appropriate, the actual points and lender credits are compared to those disclosed on the revised Loan Estimate to determine if the fees have increased.52

MBA’s Mortgage Action Alliance A Message From MAA Chairman Fowler Williams he Mortgage Action Alliance (MAA) is a free, voluntary and non-partisan nationwide grassroots lobbying network dedicated to strengthening the industry’s voice and lobbying power in Washington, D.C. and state capitals across America. The policies and legislation the industry faces impact our day-to-day jobs in tangible ways. We have a right and duty to join that conversation. Recent events show our voice is being heard in Congress. Last month, the Senate Banking Committee passed Chairman Richard Shelby’s (R-AL) proposed regulatory relief package, the Financial Regulatory Improvement Act. The bill includes many Mortgage Bankers Association (MBA)-supported provisions that would improve the regulatory environment for mortgage finance, on issues ranging from GSE reform to Qualified Mortgage (QM) lending standards to transitional licensing for loan originators. Following the Committee’s vote, MBA’s President and Chief Executive Officer David H. Stevens issued a statement applauding “Chairman Shelby and members of the Senate Banking Committee for moving this bill forward” and stating that the legislation “goes a long way toward removing many of the barriers and regulatory burdens MBA has identified as impacting the ability of qualified consumers to obtain a mortgage.” “MBA strongly supports many provisions in this legislation,” Stevens continued. “We are encouraged by the stated willingness of senators on both sides of the aisle today that they wish to continue trying to reach consensus on this measure now that it has cleared the Committee. MBA looks forward to working with policymakers and other engaged stakeholders to achieve a bipartisan agreement prior to its floor consideration” Your continued engagement on these issues is critical. The legislation will likely have to undergo further changes before it is considered by the full Senate. Members on both sides of the aisle indicated that they will continue to negotiate in an attempt to reach bipartisan consensus prior to further consideration on the Senate floor. Getting involved with MAA allows industry professionals to play an active role in how laws and regulations that affect the industry and consumers are created and carried out by lobbying and building relationships with policymakers. It only takes a moment to get started, and you do not have to be a member of MBA to enroll. The larger the group, the louder the voice! If you would like to run an MAA campaign, please contact Stephanie Graham by phone at (202) 557-2818 or e-mail sgraham@mba.org to receive an enrollment campaign kit and learn more about how you can engage your colleagues and employees in MBA’s advocacy programs. Real estate finance industry professionals who wish to join or learn more about MAA can do so at www.mortgageactionalliance.org. If you have any questions regarding MBA’s advocacy programs, please contact MBA’s Associate Director of Political Affairs Annie Gawkowski by phone at (202) 5572816 or e-mail agawkowski@mba.org.

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Fowler Williams is chairman of the Mortgage Bankers Association’s Mortgage Action Alliance. He is also president of Atlanta, Ga.-based Crescent Mortgage. Williams speaks regularly to financial institutions and their respective organizations on compliance, regulatory changes in mortgage lending, and assessing their overall mortgage operations to maximize income, while minimizing the risks associated in today’s mortgage lending environment. He may be reached by phone at (800) 851-0263 or e-mail fwilliams@crescentmortgage.net.

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all effectiveness of the disclosure.” The CFPB believes “that rounded disclosures allow consumers to digest the information on the Loan Estimate faster and more easily than disclosure of nonrounded numbers. Moreover, given that many of the numbers on the Loan Estimate are simply estimates and will likely change on the Closing Disclosure, disclosing exact values is unnecessary and may contribute to information overload without any real benefit to consumers.”57 A Written List of Settlement Service Providers Like RESPA, TILA requires a creditor to provide a written list58 of settlement service providers if the creditor allows the consumer to shop for providers.59 A creditor permits a consumer to shop for a settlement service if it permits the consumer to select the provider of the service, subject to reasonable requirements. For instance, a creditor may require that a settlement agent chosen by the consumer must be appropriately licensed in the relevant jurisdiction.60 In contrast, a creditor does not permit a consumer to shop if the creditor requires the consumer to choose a provider from a list provided by the creditor. Thus, the written list requirement does not apply if the creditor does not permit the consumer to shop for any of the settlement services. In any event, the written list must: l Identify at least one available provider of each settlement service for which the consumer is permitted to shop. An entity that the creditor lists for a particular service must be available to provide the service. The settlement service providers identified on the written list must correspond to the settlement services for which the consumer may shop, as disclosed in the Loan Costs table on page 2 of the Loan Estimate. l State that the consumer may choose a different provider for that service. Model form H-27 in Appendix H of Regulation Z offers a model statement. l Be provided separately from the Loan Estimate but according to the same timing requirements. How should affiliates be treated, with respect to the written list of settlement service providers? A creditor may include affiliates on the list.61 But the listing of an affiliated provider, under a heading that clearly states that a consumer can shop for different providers (even if the affiliate is the only provider listed), does not make that provider a “required provider” under RESPA, although the listing constitutes a “referral” under RESPA62 and

the creditor must give an affiliated business arrangement (ABA) disclosure as required by RESPA’s Regulation X. A creditor is allowed to state on the written list the service providers for which the consumer is not permitted to shop,63 provided that the creditor clearly and conspicuously distinguishes those services from the services from which the consumer is permitted to shop. In providing this broad overview of the Loan Estimate, it is my hope that this analysis encourages management to meet to discuss the ways and means available to effectuate its proper and timely implementation. Jonathan Foxx is president and managing director of Lenders Compliance Group, Brokers Compliance Group, Servicers Compliance Group and Vendors Compliance Group, national companies devoted to providing regulatory compliance advice and counsel to the mortgage industry. He may be contacted by phone at (516) 442-3456, by e-mail at jfoxx@lenderscompliancegroup.com or visit www.LendersComplianceGroup.com.

Footnotes 1—Foxx, Jonathan, RESPA/TILA Integration–Part I: Overview and Loan Estimate, pp. 28-54, National Mortgage Professional Magazine, October 2014. 2—Foxx, Jonathan, RESPA/TILA Integration–Part II: Closing Disclosure and Action Plan, pp. 26-50, National Mortgage Professional Magazine, December 2014. 3—www.teamtrid.com. 4—www.tridhotline.com. 5—Regulation Z §?1026.19(e)(2)(B)(ii). 6—Regulation Z §?1026.19(e)(2)(ii). 7—As defined by RESPA, Regulation X §?1024.2(b). 8—78 FR 79729, 79993, Dec. 31, 2013. 9—Construction-only loans with terms of less than two years that do not finance the transfer of title to the borrower, loans secured by vacant land on which a home will not be constructed or placed using the loan proceeds within two years after settlement of the loan, and loans with a consumer purpose secured by non-residential real property. TILA §?105(b) explicitly provides that nothing in TILA may be construed to require a creditor to use any model form or clause prescribed by the CFPB under that section (viz., §?105(a) being the authority relied upon by the CFPB for these non-RESPA loans). 10—Regulation Z, Official Staff Commentary, Comment 37(o)(3)-1. 11—TILA §?128(a)(19), added by Dodd-Frank Act §?1419. 12—TILA §?128(a)(17), added by Dodd-Frank Act §?1419. 13—TILA §?129C(g)(3), added by Dodd-Frank Act §?1414(c). 14—TILA §?106(c) and Regulation Z §?1026.4(d)(2)(i), required to exclude homeowner’s insurance premiums from the finance charge. 15—Regulation Z, Official Staff Commentary, Comment 37-1. 16—Regulation Z §?1026.37 includes special rules for certain disclosures. See also § 1026.37(i), (j). 17—Applies also the Closing Disclosure with respect to allowing a separate cover letter. 18—Regulation Z Official Staff Commentary, Comment 37(o)(1)-1; see also §?1026.37. 19—Regulation Z §§?1026.19(e)(1)(iii)(A) and 1026.2(a)(6). 20—Regulation Z Comment 19(e)(1)(ii)-1. In a future article, I will provide an analysis of the cred-

43—Regulation Z, Official Staff Commentary, Comment 19(e)(3)(i)-3. 44—In general, transfer taxes are state and local government fees on mortgages and home sales based on the loan amount or sales price, while recording fees are state and local government fees for recording the loan and title documents. See Regulation Z, Official Staff Commentary, Comments 37(g)(1)-1 and -3. 45—Regulation Z §?1026.19(e)(3)(iv). 46—The comparison must be between the actual charges and either the charges on the original Loan Estimate or the charges on the most recent Loan Estimate revised to reflect one or more of the six situations. 47—Regulation Z §?1026.19(e)(iv)(D) overrides this 3-business-day rule if the reason for the revised Loan Estimate is the locking of the interest rate. See Official Staff Commentary, Comment 19(e)(5)(i)-2. 48—Regulation Z §?1026.19(e)(3)(iv)(A) and Official Staff Commentary, Comment 19(e)(3)(iv)(A)-2. 49—Regulation Z §?1026.19(e)(3)(iv)(B) and Official Staff Commentary, Comment 19(e)(3)(iv)(B)-1. See also Item section 8.5 in the CFPB’s TILA-RESPA Integrated Disclosure Rule Compliance Guide, available at http://files.consumerfinance.gov/f/201403_cfpb_til a-respa-integrated-disclosure-rule_complianceguide.pdf. 50—Regulation Z §?1026.19(e)(3)(iv)(C) and Official Staff Commentary Comment 19(e)(3)(iv)(C)-1. 51—This requirement of disclosure on the day the interest rate is locked applies notwithstanding the three-business-day rule set forth in Regulation Z §?1026.19(e)(4)(i). See TILA Regulation Z §?1026.19(e)(3)(iv)(D) and Official Staff Commentary, Comment 19(e)(4)(i)-2. 52—Regulation Z §?1026.19(e)(3)(iv)(D) and Official Staff Commentary, Comment 19(e)(3)(iv)(D)-1. 53—Regulation Z §?1026.19(e)(3)(iv)(E) and Official Staff Commentary, Comments 19(e)(1)(iii)-1 and 19(e)(3)(iv)(E)-1. 54—Regulation Z §?1026.19(e)(3)(iv)(F) and Official Staff Commentary, Comment 19(e)(3)(iv)(F)-1. 55—Regulation Z, Official Staff Commentary, Comment 19(e)(4)(ii)-1. 56—Regulation Z Official Staff Commentary, Comment 37(o)(4)-1 and -2. 57—78 FR 79730, 79995, Dec. 31, 2013. 58—It seems to me that the CFPB used a certain finesse by including the requirement in the main text of the regulation. In an unusual way of imposing a significant regulatory requirement, HUD included this requirement in Appendix C to RESPA Regulation X, which contains instructions for completing the Good Faith Estimate. 59—Regulation Z §?1026.19(e)(1)(vi). 60—Regulation Z Comment 19(e)(1)(vi)-1. 61—Regulation Z Comment 19(e)(1)(vi)-7. 62—Regulation X 1024.14(f). 63—Regulation Z Comment 19(e)(1)(vi)-6.

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closure. This isn’t always the case for short sellers who work with their lender to get the short sale completed. Most short sellers must move due to relocation, job loss, divorce, etc. Requiring mortgage delinquency is a lender policy, not a law. A new policy that does not require mortgage delinquency for resetting interest only HELOCs, ballooning second mortgages and for short sales where need is determined can reduce the amount of loss to lenders, speed up the process, and can ultimately improve good will between lenders and consumers. Pam Marron (NMLS#: 246438) is senior loan originator with Innovative

Mortgage Services Inc. (NMLS#: 250769) in Tampa Bay, Fla. She may be reached by phone at (727) 375-8986, e-mail pmarron@tampabay.rr.com or visit HousingCrisisStories.com, CloseWithPam.com or 8Problems.com.

Footnotes 1—“Foreclosure to Home Free, as Five-Year Clock Expires,” Michael Corkery, March 29, 2015, The New York Times, www.nytimes.com/2015/03/30/business/foreclosure-to-home-free-as-5year-clock-expires.html?_r=0. 2—“Foreclosures SOL in Florida,” Daren Blomquist, May 2015, RealtyTrac Housing News Report, www.realtytrac.com/dashboard/NewsReportPdf/79/HNRR/12482991. 3—Distressed property: Where amount owed on mortgage is greater than value of the property.

n National Mortgage Professional Magazine n JUNE 2015

the long and short

NationalMortgageProfessional.com

itor and mortgage broker relationship relating to TRID requirements, responsibilities, and regulatory implementation. 21—Regulation Z §?1026.19(e)(1)(iv). 22—Regulation Z §?1026.37(o)(3)(iii), and Official Staff Commentary, Comment 19(e)(1)(iv). 23—Regulation Z §?1026.19(e)(1)(i)(C). 24—Regulation Z §§?1026.19(e)(1)(iii)(B) and 1026.2(a)(6). “Consummation” means the time the consumer becomes contractually obligated on the credit transaction. See also Regulation Z §?1026.2(a)(13). 25—Regulation Z §?1026.19(e)(1). 26—Regulation X §?1024.7. 27—Regulation Z § 1026.25(c). 28—This may be an area vetted through litigation. The applicable Comment states that “the creditor is responsible and may not issue a revised disclosure correcting the error.” Yet TILA §?130(b) generally offers the creditor the opportunity to escape civil, enforcement or criminal liability for TILA disclosure errors by issuing corrections within 60 days after discovery, provided that an appropriate notification accompanies the notification. Although issuance of a revised disclosure may not erase liability for actual settlement charges that fall outside the tolerances for determination of good faith, it might allow the creditor to escape liability for the damages specified by TILA §?130. The area of dispute may be a claim that Regulation Z should not be permitted to contradict this statutory provision. 29—Regulation Z, Official Staff Commentary, Comment 19(e)(1)(ii)-1 and-2. 30—Regulation Z also follows this convention, that is, the term “creditor” used in the Regulation Z generally refers to the creditor or the mortgage broker, as applicable. 31—Regulation X §?1024.7(a)(4) and (b)(4) and TILA Regulation Z §?1026.19(a)(1). 32—Regulation X §?1024.7(a)(4) and (b)(4). 33—Regulation Z §?1026.25. 34—Regulation Z, Comment 19(e)(2)(i)(A)-2. 35—Regulation Z Official Staff Commentary, Comment 19(e)(2)(i)(A)-5. 36—This requirement parallels the requirement in Regulation X §?1024.7(a)(5). 37—Regulation Z §?1026.19(e)(2)(iii) and Official Staff Commentary, Comment 19(e)(2)(iii)-1. 38—A charge “paid by or imposed on the consumer” refers to the final amount for the charge paid by or imposed on the consumer at consummation or settlement, whichever is later. 39—Regulation X §?1024.7(e)-(f). 40—An “affiliate” is “any company that controls, is controlled by, or is under common control with another company, as set forth in the Bank Holding Company Act of 1956.” See 12 U.S.C. 1841 et seq. 41—Regulation Z §?1026.19(e)(3)(ii) and Official Staff Commentary, Comment 19(e)(3)(ii)-1. 42—Regulation Z Official Staff Commentary Comment 19(e)(3)(ii)-2.

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Monday-Wednesday, June 22-24

Ultimate Mortgage Expo 2015 The Hotel Monteleone 214 Royal Street New Orleans, La. For more information, call (860) 719-1991, e-mail info@agilityresourcesgroup.com or visit www.ultimatemortgageexpo.com.

Wednesday-Thursday, June 24-25 MBA’s Strategic Markets and Diversity Summit 2015 Marriott Marquis Washington 901 Massachusetts Avenue NW Washington, D.C. For more information, call (800) 793-6222 or visit www.mba.org. AUGUST 2015

Thursday-Friday, August 6-7

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2015 Florida Association of Mortgage Professionals (FAMP) Convention & Trade Show Omni Orlando Resort at Champions Gate 1500 Masters Boulevard Orlando, Fla. For more information, call (850) 942-6411 or visit www.myfamp.org. SEPTEMBER 2015

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Sunday-Tuesday, September 20-22 MBA’s 2015 Regulatory Compliance Conference Grand Hyatt Washington 1000 H Street Washington, D.C. For more information, call (800) 793-6222 or visit www.mba.org. OCTOBER 2015

Wednesday-Friday, October 7-10 American Land Title Association 2015 Annual Convention Westin Copley Place Boston 10 Huntington Avenue Boston, Mass. For more information, call (202) 296-3671, visit www.alta.org or e-mail service@alta.org.

Thursday, October 8

NOVEMBER 2015

Florida Association of Mortgage Professionals Miami Chapter 2015 Trade Show Miami Airport Convention Center 711 NW 72nd Avenue Miami, Fla. For more information, call (305) 333-0130.

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2015 Mortgage Star Conference Canyons Resort 4000 Canyon Resort Drive Park City, Utah For more information, call (860) 719-1991 or visit www.mortgage-star.net.

Saturday-Monday, October 17-19 2015 NAMB National Conference Luxor Resort and Hotel 3900 South Las Vegas Boulevard Las Vegas For more information, call (860) 719-1991, e-mail info@agilityresourcesgroup.com or visit www.nambnational.com.

Sunday-Wednesday, October 18-21 Mortgage Bankers Association Annual Convention and Expo 2015 San Diego Convention Center 111 West Harbor Drive San Diego, Calif. For more information, call (800) 793-6222 or visit www.mortgagebankers.org.

Thursday-Friday, October 29-30 Virginia Association of Mortgage Brokers 27th Annual Convention Hilton Garden Inn Richmond Innsbrook 4050 Cox Road Glen Allen, Va. For more information, call (804) 285-7557 or visit www.vamb.org.

Wednesday-Friday, November 18-20 2015 Mortgage Bankers Association Accounting and Financial Management Conference The Roosevelt New Orleans 130 Roosevelt Way New Orleans, La. For more information, call (800) 793-6222 or visit www.mortgagebankers.org. DECEMBER 2015

Wednesday-Friday, December 2-4 MBA 2015 Independent Mortgage Bankers Conference Omni Nashville 250 5th Avenue S Nashville, Tenn. For more information, call (800) 793-6222 or visit www.mortgagebankers.org. JANUARY 2016

Sunday-Wednesday, January 31-February 3 MBA’s 2016 CREF/Multifamily Housing Convention & Expo Hyatt Regency Orlando 9801 International Drive Orlando, Fla. For more information, call (800) 793-6222 or visit www.mortgagebankers.org. FEBRUARY 2016

Tuesday-Friday, February 16-19

To submit your entry for inclusion in the National Mortgage Professional Calendar of Events, please e-mail the details of your event, along with contact information, to newsroom@nmpmediacorp.com. * Looking for additional exposure at key industry events? Call 516.409.5555, ext. 4 to discover how to maximize your event coverage.

MBA’s 2016 National Mortgage Servicing Conference & Expo Hyatt Regency Orlando 9801 International Drive Orlando, Fla. For more information, call (800) 793-6222 or visit www.mortgagebankers.org.

n National Mortgage Professional Magazine n JUNE 2015

Louisiana Mortgage Lenders Association (LMLA) 2015 Education Conference The Hilton New Orleans Riverside Hotel 2 Poydras Street New Orleans, La. For more information, call (225) 590-5722 or visit www.lmla.com.

Wednesday-Saturday, August 26-29

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2015 California Association of Mortgage Professionals Summer Convention Manhattan Beach Marriott 1400 Parkview Avenue Manhattan Beach, Calif. For more information, call (916) 448-8236 or visit www.ca-amp.org.

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