March 2017 Issue by HousingWire

HOUSINGWIRE MAGAZINE ❱ MARCH 2017

MORTGAGE INNOVATION Consumer demand is fueling mortgage transformation.

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PLAYING IT SAFE How to overcome the latest challenges in cybersecurity. HOUSINGWIRE MAGAZINE ❱ MARCH 2017

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<h2><strong>Mortgage disruption</strong> is here.</h2> <blockquote> <h2>As companies sprint to keep up with consumer demand, the only question is — Are you ready?</h2> </blockquote> <p><em>HousingWire</em> recognizes the <strong>most innovative</ strong> technology companies in housing.</p>

HOUSINGWIRE MARCH 2017 EDITORIAL EDITOR-IN-CHIEF Jacob Gaffney MAGAZINE EDITOR Sarah Wheeler ASSOCIATE EDITOR Caroline Basile SENIOR FINANCIAL REPORTER Ben Lane DIGITAL REPORTER Brena Swanson REPORTER Kelsey Ramirez CONTRIBUTORS Casey Cunningham, Fred Holstein, Colin Mease, John Vong

CREATIVE CREATIVE ASSOCIATE Chantae Arrington

SALES AND MARKETING NATIONAL SALES DIRECTOR Jennifer Watson Laws jlaws@HousingWire.com MARKETING DIRECTOR C. Scott Smith SALES DIRECTORS Christi Lingard clingard@HousingWire.com David Wilson dwilson@HousingWire.com AD OPERATIONS MANAGER Kristy Figueroa

CORPORATE PRESIDENT AND CEO Clayton Collins

WHAT IT WILL COST YOU AT THE BEGINNING OF THE YEAR, the CFPB ordered Prospect Mortgage, a major mortgage lender, to pay a $3.5 million fine for improper mortgage referrals, in what the regulator calls an alleged “kickback” scheme. The CFPB also dealt out penalties to two real estate brokers and a mortgage servicer who took kickbacks from Prospect. These three will pay a combined total of $495,000 in consumer relief. Here’s one example of what the CFPB considered a kickback: “Prospect and Planet Home Lending had an agreement under which Planet worked to identify and persuade eligible consumers to refinance with Prospect for their HARP mortgages. Prospect compensated Planet for the referrals by splitting the proceeds of the sale of such loans evenly with Planet. Prospect also sent the resulting mortgage servicing rights back to Planet.” Planet Home Lending later contacted HousingWire and noted our coverage did harm to their business. But let’s not shoot the messenger, here. If Planet wished its business to not endure harm, they should be reading the No. 1 source of mortgage finance news on, well, this planet. In December of 2015, we ran a story titled: “It’s not just MSAs: Barclay’s warns CFPB is looking at all referrals.” Sarah Wheeler reported then that the CFPB “sharpened its enforcement of marketing services agreements” and may be expanding its definition of a kickback to include any type of referral. That gave both Prospect and Planet a full year to review their operations before earning the ire of the CFPB. Instead, their business as usual turned into the cost of doing business. Sadly, it’s also further proof that not reading HousingWire may cost you dearly. Thankfully, if you are reading this, you won’t make the same mistake.

CONTROLLER Kimberly Hudson OFFICE ADMINISTRATOR Stephanny Morales

Subscriptions are available for $149.00 for one year. A subscription includes the print magazine and online access to the digital magazine. Canada and foreign are only eligible to purchase the “Digital Only” subscription plan at $149 for one year. For subscription orders, call 1-800-869-6882 or email HW@ kmpsgroup.com. Postmaster: Send change of address to HW Media, P.O. Box 47627, Plymouth, MN 55447. Subscribers: Please send last magazine label along with change of address requests. The information contained within should not be construed as a recommendation for any course of action regarding legal, financial or accounting matters. All written materials are disseminated with the understanding that the publisher is not engaged in rendering legal advice or other professional services. HW Media does not guarantee the accuracy of information provided, and is not liable for any damages, losses or other detriment that may result from the use of these materials.

Jacob Gaffney Editor-in-Chief @jacobgaffney TWEETS FROM THE STREET White House cybersecurity chief abruptly departs, with others worried for their jobs. Zack Whittaker @zackwhittaker

HOUSINGWIRE ❱ MARCH 2017 7

CONTENTS

VIEWPOINTS CONTINUED... 28 COMMUNICATION REQUIRED FOR TIMELY TAX PAYMENTS

Fred Holstein at LERETA lists six areas of communication for effective tax management.

30 RECRUITING LOAN OFFICERS Casey Cunningham of Xinnix explains why companies should look for new recruits.

12 22

THE LINEUP 12 PEOPLE MOVERS The MBA named Rick Arvielo, CEO of New American Funding, as its new chairman of its political action committee, MORPAC.

14 EVENT CALENDAR

MBA’s Mid-Winter Housing Finance Conference kicks off March 1 in Avon, Colorado. On the agenda: lending under President Trump.

15 ON THE SHELF With years of experience in wealth management, author Chris White explores the human psychology behind investor decisions.

16 DISPATCH Determining the most appropriate disposition strategy for an asset requires a thorough understanding of the market.

18 HOT OR NOT The economy could be on track for its longest period without a recession in modern history.

20 SOUNDING BOARD

VIEWPOINTS 24 THREE TECH TRENDS TRANSFORMING LENDING Colin Mease at Alight Mortgage Solutions outlines the three things you must know now.

26 REGTECH TAKES CENTER STAGE John Vong of ComplianceEase explains what’s next in mortgage compliance.

Find out what industry insiders have to say about the current state of mortgage regulation.

22 TECH INNOVATORS Hudson & Marshall talks about the importance of old fashioned, high quality customer care in the midst of innovative technology.

TWEETS FROM THE STREET Trump sued over “1-in-2-out” executive order on regulations The Hill @thehill

HOUSINGWIRE ❱ MARCH 2017 9

CONTENTS

FEATURES CONTINUED... 32 MORTGAGE INNOVATION The $14 trillion mortgage market is quickly making up ground as it sprints to keep up with consumer demand for a smarter, easier mortgage process.

56 PLAYING IT SAFE Last year, the number of data breaches in the United States reached an all-time high of 1,093, a 40% spike over the 780 reported for 2015. 2017 isn’t shaping up to be any better.

62 BACK DEPARTMENTS 62 INSIDE BASEBALL Trump signed an executive order that begins to roll back Dodd-Frank.

66 INDUSTRY PULSE What’s the right action on FHA mortgage insurance? NAR calls for a reinstatement of the cut, but others in the industry aren’t so sure.

70 KUDOS NewDayUSA presents children of fallen veterans with academic scholarships to distinguished military high schools.

72 TAKE 5 Find out what Leah Fox, EVP of technology and services delivery at LoanLogics, considers her most important tech tool.

74 KNOWLEDGE CENTER SecureView and LoanLogics offer insights through white papers.

FEATURE

76 COMPANIES/PEOPLE INDEX

THE HW TECH 100 FOR 2017 HousingWire recognizes the most innovative technology companies in housing. From fintech startups to legacy lenders, find out who made our prestigious list this year.

77 AD INDEX 78 PARTING SHOT

TWEETS FROM THE STREET Stockmarkets are confident, banks not so much The Economist @TheEconomist

HOUSINGWIRE ❱ MARCH 2017 11

Rick Arvielo MORPAC

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GOMEZ

MCDONNELL TAYLOR

COBEN POWER

. S. B A N K announced Bet h McDonnell to the new role of senior vice president and chief marketing officer. Before joining U.S. Bank, she worked as vice president of brand, advertising and marketing at Anthem. She also spent almost 20 years in positions of increasing responsibility in advertising, communications and marketing at UnitedHealthcare and subsidiaries of PacifiCare/Secure Horizons. Pioneer Bank’s board of directors named Ron Coben its new president and CEO, effective immediately. He began his career at Texas Commerce Bank, then moved to Bank United where he served as executive vice president of retail banking. Coben also provided consulting services to Barclays UK and Guaranty Bank. Alterra Home Loans brought on industry consultant Rene Rodriguez as its new chief learning officer. Rodriguez is the former CEO and founder of BetterLoanOfficers.com. Before that, he was the CEO of the first cloud-based loan origination software company for the

RODRIGUEZ

ALLISON PAREKH

The Mortgage Bankers Association named Rick Arvielo chairman of its political action committee, MORPAC. Arvielo, co-founder and CEO of New American Funding, will join MORPAC for the 2017-2018 election cycle and work with the MBA’s Mortgage Action Alliance Chairman Gene Lugat to increase participation in MAA.

mortgage industry. Rodriguez also served as an advisor to leadership teams at CocaCola, Liz Claiborne, Daimler Chrysler, FORD, Microsoft, Wells Fargo and Bank of America. The Mortgage Bankers Association named Jeffrey Taylor, Digital Risk co-founder and managing director, to its board of directors. The board, consisting of 26 elected members and one ex-officio member, is responsible for setting the association's strategic direction and oversee the management of its affairs. Woodforest National Bank added Willy Gomez as the company's regional president for commercial banking in the Florida market. Gomez previously worked for HSBC where he managed its middle market in the South. Gomez currently serves as chairman of the board for Hispanic Unity of Florida. Previously he served nine years on the board of the Make-a-Wish Foundation. CalyxSoftware announced Patrice Power as its new director of marketing. Most recently, Power worked as senior vice

president of marketing at LenderLive. Before that she served as director of marketing at CoreLogic and held positions as director of marketing at Sabre Holdings, vice president of insurance sales and marketing for Citigroup and division manager for NCH Corporation. InSellerate announced that Raj Parekh joined the company as vice president of business development. Previously, Parekh served in executive positions at LeadPoint and ActiveProspect. He also founded LeadROI, which was later acquired by MediaWhiz, now known as Matomy Media Group. New American Funding announced Kelly Allison as its new Southeast divisional vice president. Previously, she worked with a national mortgage lender where she was responsible for the oversight of one of its home divisions. She also managed a region in the Southeast for over 13 years. U.S. Bancorp promoted its current COO, Andrew Cecere, to CEO. Cecere was also elected to the company’s board of directors. Cecere had served as the bank's chief operating officer since January 2015. Prior to joining U.S. Bank, Cecere served in various roles, such as vice chairman, chief financial officer and vice chairman of wealth management. Ellie Mae added John Abel as senior vice president and chief information officer. Abel joins Ellie Mae from Hitachi Data Systems, where he served as senior vice president of IT. Abel brings more than 20 years of technology experience to Ellie Mae. Earlier in his career, Abel held roles at Symantec, JDS Uniphase, KPMG Consulting, and British Nuclear Fuels.

EVENT CALENDAR

MBA’S MID-WINTER HOUSING FINANCE CONFERENCE MARCH 1-4, 2017 Host: Mortgage Bankers Association Location: Ritz-Carlton, Bachelor Gulch Cost: $1,400-$1,600 On the agenda: Senior executives from across the country will gather to address today's most pressing issues in real estate finance at the Mid-Winter Housing Finance Conference. Sessions will be held on key issues such as the impact of President Trump's administration on lending and the future of Fannie Mae and Freddie Mac housing reform.

AVON, COLORADO What do you do in a town known for its skiing and scenery? You go out, of course! And why not try something just a little different from the normal skiing and snowboarding activities? APEX Mountain School offers courses on ice climbing, with classes ranging from beginner to more intermediate levels. Learn the technique as well as what gear to use and how to shift your weight for the best climbing. www.apexmountainschool.com/courses/

2017 NAHREP HOUSING POLICY & HISPANIC LENDING CONFERENCE MARCH 27-29, 2017 Host: National Association of Hispanic Real Estate Professionals Location: Four Seasons Hotel Cost: $299-$599 On the agenda: The conference holds educational sessions and town halls that educate attendees on important housing policy changes, the future of lending, credit access and diversity in the industry. At the conference, NAHREP will also release its annual State of Hispanic Homeownership report, which highlights the economic growth of Latinos in the U.S.

WASHINGTON D.C. The capital is home to a plethora of museums showcasing the country’s history. The newest museum on the National Mall is the highly popular Smithsonian National Museum of African American History and Culture, which opened in Sept. 2016. Entry to the 14 HOUSINGWIRE ❱ MARCH 2017

museum is free but does require a timed pass, which can be ordered online the same day of your visit, in advance online, or picked up after 1 p.m. on weekdays. Due to high visitation, walk-up passes are not available during weekends. Home to nearly 3,000 objects, 12 exhibitions, 13 interactive exhibits and 183 videos, the museum’s collection is spread over 85,000 square feet and five floors. The museum is open daily, 10 a.m. to 5:30 p.m. //nmaahc.si.edu/visit/passes

ON THE SHELF “Keep Chopping Wood: A Preacher's Son Who Had It All, Lost It All, and Then Regained True Wealth” MIKE HARDWICK, DAVA GUERIN WESTBOW PRESS

Mike Hardwick's unusual upbringing as a preacher's son presaged a successful career in commercial real estate and investment banking. His endeavors include growing one of the largest condo conversion companies in the nation in the 1980s and founding Churchill Mortgage Corp. in 1992. In this book Hardwick shows readers how to build a corporate culture based on excellence, compassion and giving, how to successfully incorporate family members into a business and how to plan and execute a philanthropy strategy for the long term.

“Working with the Emotional Investor: Financial Psychology for Wealth Managers” CHRIS WHITE PRAEGER

Money is a complicated topic for many people, and understanding the emotions that drive investor behavior is critical for wealth managers. This book offers guidance on building stronger, more enduring relationships with all types of clients and highlights effective strategies for advising clients in high-stakes situations of market volatility or economic uncertainty. With more than 20 years of experience in wealth management, White explores the human psychology behind investor decisions.

SPONSORED CONTENT

INNOVATORS

Hudson & Marshall: creating a dynamic real estate marketplace Old fashioned, high quality customer care meets innovative technology

The real estate marketplace has seen its share of transformation over the years. The advancement of online-based technology has led e-commerce to become one of the most influential developments of the internet age. To date, one of real estate’s biggest shifts has been in the online auction marketplace. Online real estate auctions are a result of the demand for a more effective way to dispose of distressed properties during the financial crises. But this method is no longer reserved for foreclosures. The shift in the industry towards online purchasing makes online auctions a strategic approach for buying and selling residential and commercial real estate for all sectors of the market. This method provides a quicker turnaround of property, more exposure, and maximum response which culminates to create additional demand. It is a more efficient and cost effective way to sell property and thus can generate higher sales prices compared to conventional methods. In business for over 52 years, Hudson & Marshall is the most seasoned real estate auction company in the country. They have generated trust in the marketplace, 22 HOUSINGWIRE ❱ MARCH 2017

have experience that is unmatched by any competitor, and have framed their strategy around the customer experience. Hudson & Marshall built its exceptional reputation over the years through loyal partnerships with local listing agents and brokers, as these professionals have a direct pulse on the local market dynamics. In 2015, owner Dave Webb merged Hudson & Marshall with the leading innovative technology-driven real estate asset disposition platform, Genesis Auctions. Genesis Auctions was founded by Trixy Castro (formerly Weiss), now co-owner and CEO of Hudson & Marshall. The union of these two powerful entities blends traditional real estate business with groundbreaking technology. As a combined force, Hudson & Marshall has a strong foundation with an extensive online database, bringing together borrowers, investors, servicing technology and processes. Hudson & Marshall now offers a full suite of technology driven, high performance auction solutions for both traditional and new programs well ahead of industry trends. Hudson & Marshall’s clients range from first-time home buyers

to high-net worth investors, as well as individual sellers to the nation’s leading servicers, banks, credit unions, government-sponsored enterprises, government agencies, and private equity/hedge funds. Since 2015, Hudson & Marshall has made considerable investments in its internal and external technological advances. This includes a new online auction platform with program-specific marketing strategies. The website content has been enhanced and H&M Gateway blog was launched. Educational webinar programs were introduced as a way to increase consumer awareness of different auction programs, in addition to other campaigns. As a result of these advancements, there has been significant growth in online auction sales. New auction registrations increased by 183% and new online offers increased by 186%. The number of offers increased by more than 200% per asset in 2016 alone. Hudson & Marshall strives to expand access to real estate across the US through its marketplace, allowing consumers to purchase properties that used to be out of reach. Online auctions provide transparency which helps to establish true market value of the property. This is beneficial for both buyer and seller. As the trend of “going online” continues, every capacity of the real estate transaction marketplace changes with it. Technology allows consumers to participate from anywhere, at any time. Although technology has drastically changed the way that real estate is transacted, Hudson & Marshall keeps at its core the central foundation of the real estate industry - the human element. “We are ONE company now, stronger and better because of the merger, a true real estate marketplace, and we are very excited for what is happening in 2017,” Castro said.

VIEWPOINTS

Colin Mease

The three technology trends that will transform mortgage lending And what your company can do to get ready for them

I‘m a self-professed techie. I love technology and I’ve spent the better part of my career looking to see how I can incorporate tech advancements into my day-to-day life, both personal and professional. And as a product manager at Alight, a fast-growing tech company that works with mortgage banks, I find this a particularly exciting time for mortgage lending. Why? Because the mortgage industry is at a critical inflection point technology-wise. Mortgage banks have traditionally been slow to embrace new technologies, and while the technology that has improved efficiency, security and customer experience in a multitude of other industries (transportation, education and retail, to name a few) is finding its way into the loan production process, a lot of opportunity still exists in other stages of the mortgage life cycle. And now that cloud-based technology is 24 HOUSINGWIRE ❱ MARCH 2017

widely accepted and as individuals we’re all using technology all the time in other parts of our lives, the time has come to accelerate the pace of tech adoption across the mortgage banking enterprise or risk seeing the cost of doing business (both on the production side and the back office) continue to rise — dramatically. Worse still, without an end-to-end process that is quick, easy and accessible from anywhere at any time, lenders risk alienating the single largest, growing and untapped home buying demographic— Millennials. Millennials are looking for a user experience similar to what they’ve become accustomed to in managing other

areas of their personal lives and finances: ease, security and accessibility. Brick-andmortar banks with processes facilitated through paperwork and fax machines are barriers many simply will not cross. Today’s technology will transform mortgage lending from a commoditized business to one where originators differentiate themselves in the eyes of the customer through the borrower experience. And with companies like Blend and Roostify streamlining and digitizing the consumer loan process, we are well on our way. Loan production is not the only stage of the loan life cycle that needs technological advancement. Just attend any mortgage industry conference today — like the MBA’s Independent Mortgage Bankers Conference I attended in late January — to see how the business of mortgage banking has changed from even one year ago.

Colin Mease is a product manager at Alight Mortgage Solutions, a division of Alight, Inc.

Topics dominating the agenda now include Modernizing for Success in the Digital Era, Overcoming the Final Hurdles to Digital Mortgage, Blockchain Basics, and — my favorite — TechLive: Live Demonstrations of Technology Products Representing the Mortgage Lifecycle (a session I presented Alight’s technology at). There is clearly a growing need and significant opportunity for technology to bring new efficiencies and security to other areas like servicing, secondary marketing and warehouse lending. So as I see it, three hot tech trends that are shaping other industries will be adopted and embraced by the mortgage industry within the next 12 to 18 months: AUTOMATION: MACHINES CAN DO MANY THINGS (THAT WE DON’T WANT TO DO) Artificial Intelligence, or AI, is one of the hottest topics in Silicon Valley. But in truth, AI has been around for a long time. One of the most common ways we are already benefiting from AI is in autonomy, the ability for software to make decisions on behalf of the user without human intervention. Current autonomous technology applications span from your media player choosing the next song based on your established taste, to a loan pre-approval or business expense program auto-filling forms from a captured image, to more complex technologies and processes used in “smart” thermostats or self-driving cars. As for the mortgage industry, there are endless everyday decisions that can — and, I predict, in relatively short order, will — be automated. In warehousing, lending decisions could be automatically made based on up-to-date financials imported by the borrowing bank. Or in servicing, options for loan modifications could automatically be offered based on the borrower’s payment history and financial standing. And lastly, via autonomous trading platforms, MSR pools could be automatically bought or sold based on predetermined parameters once the correct trade exists. There are a multitude of examples in mortgage, but when you consider servicing, the automation of different points of

contact with the borrower could quickly change the economics of the process and make it a more appealing and feasible part of the business for banks with limited capital. Because there are developments already in use, it’s important to become aware of the current offerings and to stay apprised of future ones as well. BLOCKCHAIN: THE UNBREAKABLE DISTRIBUTED LEDGER Blockchain, popularized by Bitcoin and other cryptocurrencies, actually has many uses beyond facilitating unregulated currency. Blockchain is a distributed ledger, which you can think of as a database with two key characteristics: it’s extremely secure and unfailingly true. This means that it is a form of record that no one can hack or interfere with. There are companies that have already developed the technology to make it available to any organization that wants to incorporate it into their system architecture. As you can imagine, there are many uses for this type of security, but the mortgage industry is one that can benefit in a huge way. • Secondary marketing trades (with confirmations that currently take three days to clear) could be automatically cleared, removing the necessity of clearing houses and other third parties. • In servicing, tracking of a borrower’s monthly mortgage payments could be quickly automated. • For warehouse lending, with large volume funds being transferred back and forth, a form of record with this level of certainty could remove a lot of pain. • And fraud could be dramatically reduced — or eliminated — with blockchain identity verification. DATA SCIENCE: PREDICTING RATE CHANGES Heaps of data that have been captured over several decades hold the key to valuable insights into the future. Many researchers and analysts have made high-level use of this data, but there are nuances that exist within the data that is valuable, but over-

looked. As a result of the advances made in processing power, we are finally able to capture the depth of detail necessary to make much more intelligent decisions based on history. One of the most widely-known applications of data science is Google’s search algorithm that brings you the most applicable results for each search string. In mortgage, the greatest potential for big data lies in macroeconomic forecasting. In an industry as volatile as mortgage and as dependent on the direction of interest rates, a lot could be gained from predicting — with greater reliability — where interest rates will be three or 12 months out. Exciting, right? Having this insight would enhance many aspects of your business, for example forecasting your MSR value to determine whether or not to sell some of your portfolio. But beyond the macroeconomic aspect of it, if you are a servicer or warehouse lender, you could also analyze borrower behavior (individual- or bank-level) to understand the likelihood of repayment. OK, YOU’RE READY. WHAT NEXT? In today’s environment, mortgages are a commodity market for borrowers, and under the current constructs it’s very difficult for lenders to differentiate themselves. But an infusion of new technology into antiquated aspects of your loan life cycle can not only differentiate you and help you deliver a customer experience that is in demand, but will also provide opportunity for increased efficiencies — and profits. This is a pivotal moment for the industry and I believe that in as little as five years, many of the business models that define our industry today will no longer exist. But the onus to change is on you. Be proactive in incorporating existing technology into your operations, stay current on new technology that offers opportunities for greater differentiation and as technology continues to evolve, consider being an early adopter to give you a leg up on the competition. And who knows? Maybe you’ll find out that you’re a techie, too. HOUSINGWIRE ❱ MARCH 2017 25

VIEWPOINTS

John Vong

What’s next in mortgage compliance? It’s not just fintech — it’s regtech

The fintech revolution has captured the imagination of consumers and investors, as well as the attention of traditional financial institutions. The promise of fintech, of course, is that big data and technology will eventually eliminate time-consuming, perplexing and burdensome elements of the consumer experience in banking, payments and investing. Now a subset of fintech — aptly named regtech — is poised to transform compliance and underwriting aspects of banking and mortgage lending by leveraging deep domain knowledge with advanced technology. Recently, Bain & Company issued a report on the regtech market that concluded: “Banks could realize substantial benefits from working with regtech firms, including an enhanced experience for custom26 HOUSINGWIRE ❱ MARCH 2017

ers, more effective regulatory compliance and greater cost efficiency.” To be clear, the consulting firm was talking about all aspects of banking, not just lending, and many early entrants that it discussed were

focused on core banking challenges, such as on-boarding, know your customer and anti-money laundering regulations. But, as our industry knows all too well, compliance, in its many forms, is a signifi-

John Vong, CMB, CMT, is president of ComplianceEase.

cant source of friction, delay, cost and risk for mortgage originators and frustration for borrowers. According to Don Lampe, a partner in the Washington, D.C. office of Morrison & Foerster LLP and longtime fintech attorney, “Today, regtech discussions often are centered on crunching big data for risk management in customer intake, such as under anti-money laundering (AML) laws. While the mortgage industry for many years has benefitted from technology solutions to compliance challenges, today solutions providers are focused more than ever on the acquisition, integrity and analysis of large amounts of data.” Today, compliance solutions come from a variety of sources: loan origination systems, document providers, product and pricing engines, as well as firms, like ours, that specialize in compliance. Often, they address only part of the issue, and still rely heavily on manual intervention, usually by knowledgeable, higher-paid compliance professionals. Even when they work seamlessly, at best they prevent errors by stopping the process: for example, not allowing a loan officer to print an application in a state that he or she is not licensed in or preventing a loan from being locked, if the rates and fees are too high. What if, instead of acting as an emergency brake and grinding the assembly line to a halt, technology could optimize the mortgage process? That’s the potential of regtech. WHERE WE ARE… AND WHERE WE’RE GOING Ever since the mortgage crisis, our industry has been running at full speed just to keep up with the changing regulatory landscape. The goal over the past few years has been to move compliance from a manual to an automated process, and more specifically moving from the post-close sampling process to the point of origination process. But, as we’ve discussed, the level of automation has been relatively basic, and more focused on preventing errors than taking

friction and delays out of the underwriting and review processes. Much of what current technology “tests” for are thresholds: APR, amount financed, DTI for QM, total fees and points for state, federal and GSEs’ high cost rules, etc. Similarly, TRID requires tracking the timeliness of disclosures and whether fee variances between loan estimates and closing documents exceeded certain variances. The first generation of compliance technology shows originators that something is wrong, but not necessarily what or how to fix the issues. Instead, today’s technology generates reports and scores that require compliance professionals to interpret and direct corrective action. As a result, underlying issues go uncorrected, common defects keep reoccurring, and loans keep failing their initial tests. How big a problem is it? One large national lender recently told us that their compliance system routinely kicks out 400 to 500 loans per week for further review. Debbie Hoffman, chief legal officer at Digital Risk, LLC, commented: “When banking executives review their internal regulatory infrastructure, there are obviously concerns about the cost of compliance. “However, accompanying the spend is an opportunity to embrace the latest technology and reinvent processes which, in turn, lead to more efficiencies, enhanced business strategies and ultimately lowering costs. For example, Digital Risk offers a governance risk and compliance technology-based solution suite which enables real-time tracking of compliance and servicing data. “Utilizing this solution suite, financial institutions can mitigate operational risks associated with non-compliance of regulatory requirements at the federal and state level, which leads to more efficient operations enterprise wide.” By combining domain expertise with loan data and business rules, machine learning and artificial intelligence as well as predictive analytics technology,

regtech solutions go to the root cause of the problem and correct cookie-cutter defects at the threshold level. Our company is already doing this to some extent today with our ComplianceAnalyzer software. But in the future, regtech software will analyze and learn from the loan level data that it is reviewing, adhere to client-contributed policies and procedures, and apply automated solutions. Instead of identifying common errors, the technology will automatically guide the user to correct them to expedite the origination and closing process. To be clear, no one is suggesting that regtech will obviate the need for in-house compliance and legal staff, but rather it will alleviate the need for trained professionals to deal with every mundane issue. It will show underwriters and processors the steps they need to take to correct these defects, and it will alert decision makers of the need for policy, procedure and workflow adjustments. The systems will also capture the steps that were taken to correct loan defects and share them with due diligence reviewers and investors, providing significant levels of collaboration and reducing the number of loans that end up in suspension. This in turn will take time and cost out of the back-end of the mortgage cycle, and reduce the time that loans spend on warehouse lines. Lampe added, “We can’t underestimate the potential impact of machine learning, which over the years has been called artificial intelligence. As online tools iterate through more and more transactions, results not only become more accurate but are more tailored to solving sophisticated compliance and risk management problems.” In recent years, compliance, at best, has been viewed as a ‘necessary evil’, a set of guardrails to prevent the mortgage business from going off track—again. Regtech has the potential to transform compliance from the role of emergency brake to an optimizing partner: adding safety without sacrificing speed and efficiency. HOUSINGWIRE ❱ MARCH 2017 27

VIEWPOINTS

Fred Holstein

Paving the way to timely tax payments Cooperation among tax service vendors, lenders and tax collectors eliminates pitfalls

Ensuring proper transactions related to the payment of real estate taxes is critical. For this to happen, all parties (lenders, tax service vendors and tax collectors) must work together to ensure information is accurate, mitigate payment issues and establish an overall smooth tax cycle process. Unfortunately, when this sequence is disturbed and communication breaks down, the consequences can be far reaching. This can include incorrect payments, upset homeowners and tax collectors as well as the potential for costly fees. To avoid these, there are several areas in the tax payment process that lenders should review to minimize portfolio discrepancies and maximize the opportunities for clear communication. 28 HOUSINGWIRE â?ą MARCH 2017

BILL REQUESTS One common area of miscommunication that can be easily rectified is in the notification of satisfied loans. When lenders advise tax service vendors of a satisfied

loan status, they can avoid duplicate bill requests, and consequently, duplicate bill payments. It is common for tax service vendors to receive emails and phone calls from homeowners regarding tax bills. The homeowners who did not receive a bill from the tax office indicate there is no longer a mortgage on the property; it has been paid. Most often, the lender has not notified the tax vendor of the loan satisfaction. One way to address this discrepancy is for lenders to run regular audits, which can prevent tax service vendors from requesting tax bills for satisfied mortgages. Duplicate bill requests are frustrating and inefficient for everyone involved, especially municipalities. In Clackamas County, Oregon, when there are multiple bill requests for the same tax bill, it causes a significant backlog in the collectorâ€™s office as the bills are updated one by one each time a new bill request is made. In contrast, Pinal County, Arizona, is one of the few counties that actually communicates with tax service vendors about parcels not canceled as their bills come in with comments on them. This level of communication helps eliminate duplicate bill requests. Quite a few counties in California send out error reports that identify parcels with duplicate requests. When bills are requested by a tax service, they are flagged and the homeowner receives a post card mailer (rather than a normal tax bill) with a comment that the taxes were requested by a lender or vendor. LOANS WITH MULTIPLE SECURITIES Lenders sometimes require collateral properties to secure a loan, primarily with investment properties. It is essential that these collateral properties are correctly identified as escrow or non-escrow to eliminate possible duplicate payments. While the loan may be set up to pay taxes through an escrow account, in most cases the taxes for the collateral property are

Fred Holstein is a vice president and national tax setup manager at LERETA, a provider of tax and flood services to the mortgage industry.

handled directly by the borrower. Many times this collateral property is added after the initial loan origination. If the lender does not communicate the proper setup for the tax billing on the collateral property, there is a risk that the taxes will be procured by the tax service even though the borrower has in fact paid the taxes. For example, a borrower in South Carolina owns multiple properties; one is a residence, which is listed as the mailing address, and the other an investment property at a different address. One lender holds loans for both properties; however, the lender tied the second loan to the residential mailing address, resulting in paying toward the borrower’s residence, not the investment property tied to the loan. If there had been proper initial communication about the different property addresses on file, this situation could have been avoided altogether. This ensures that the proper parcel identification used for tax collection or verification is established for the property tied to a loan. PROPERTY PRESERVATION Typically, property management companies, attorneys, and preservation and field services companies are hired to manage and maintain foreclosed or abandoned property. Lenders typically contract with these companies to provide services such as lawn maintenance, debris removal, winterization, lock changes and general maintenance of the home. Unfortunately, the vendors’ name is not readily on file or easily obtained. Tax services vendors, more often than not, receive calls from tax offices requesting the tax service vendor to notify the lender of maintenance needs or obtain a contact name and phone number. Because these properties are considered a public nuisance, it is imperative that timely and accurate responses be administered before the issue escalates. To help promote effective communication regarding foreclosed and abandoned properties, lenders should (and many do) perform regular maintenance on their loan portfolios, especially when working with a tax service vendor. This ensures that

the portfolio is current, and it allows the lender to have access to accurate information should any issues arise. If a lender is not working with a tax service vendor, it is imperative that the lender knows the procedure in providing tax offices with the correct information that links the lender to these properties. PAYOFF When no mortgage exists on a property, in most cases, the loan should reflect paid off. There are several different reasons why tax bills might be transferred or requested by parties other than the homeowner. This occurs when an escrow account is set up on a loan that requires the lender to pay the taxes using the account monies to facilitate taxes being paid. The lender or its tax service vendor contacts that tax authority and requests that the bill is sent to them. An example is Lender ABC originated the loan but its servicing is released to another lender. The result is the tax bills for those escrow properties are not requested by the homeowner or Lender ABC but instead by the lender that is now servicing the loan. If a loan is paid off that has an escrow account tied to it, and the lender does not notify the taxing authority or tax service vendor, the bill will continue to be forwarded to the lender or tax service vendor. To ensure there is no miscommunication here, it is imperative for a lender working with a tax service vendor to regularly perform portfolio maintenance. If a lender is not using a tax service vendor, an audit with the tax authorities should occur to ensure the agencies records are accurate. RECONVEYANCES AND PARTIAL RELEASES A reconveyance is a document issued by a mortgage holder indicating that the borrower is released from the mortgage debt and transfers the property title from the lender to the borrower. Most commonly it is issued when a mortgage has been paid in full. Partial releases are issued when a portion of the collateral securing a mortgage have been transferred to another party. Reconveyances and partial releases

could become more common as the economy improves and the rate of development increases. Unfortunately, there is a cumulative lack of controls on notifications of mortgage releases in these situations. This can result in duplicate payments or tax delinquencies being reported if proper notification is not provided to the tax service companies in a timely manner. When this happens, the tax services companies will be providing incorrect information to the lender as well as the tax authorities. If all parties involved in the transaction had communicated properly, this situation could have been prevented and there would have been a lot less headaches. PROPERLY RECORDING DEEDS In the world of tax sales, it is important that agencies know who the recorded owner is. Mobile homes are particularly challenging because they are, by nature, mobile; they can be moved to other locations. If the home does changes location and is not registered, this becomes a problem between the agencies properly taxing the property and the tax service vendors that need to account for the proper taxing data. A recent instance of this happened in Henderson County, Texas. In 2014, a letter from the homeowner correctly listed the mobile home address in that county. Today, however, it is a different story. The original parcel is no longer valid; the address is not in the Henderson Country assessment file. Where did that mobile home go? An incorrect property address or legal description, for instance, can result in a misidentification of the parcel numbers needed to secure each year’s tax bill. Effectively managing risk is a hallmark of the tax servicing industry. Minimizing data integrity errors, working across lines to ensure open communication, and proactively seeking quality and resolution of data integrity problems will be a trademark of the industry going forward. In today’s world where things move very quickly, it is paramount that even the smallest details be shared so that all the aforementioned challenges can be lessened or eradicated completely. HOUSINGWIRE ❱ MARCH 2017 29

VIEWPOINTS

Casey Cunningham

The importance of recruiting new loan officers for today and the future The advantages of new energy and excitement

After 30 years in the mortgage business, I’ve spoken to countless managers about their philosophies for hiring and recruiting sales professionals into their teams. For the most part, almost all managers have the same philosophy and train of thought. They highly prefer experienced loan officers who can immediately produce with a predictable pipeline. Brand new originators, they fear, will require too much handholding and too much time to get up to speed, and there is uncertainty they will even make it. These lenders are unfortunately missing out on a huge opportunity. How do I know? I have personally been a part of success30 HOUSINGWIRE ❱ MARCH 2017

fully onboarding hundreds of new loan officers into the marketplace. Our industry is at a pivotal point as today’s average

loan officer reaches their 50s. In the next decade, approximately 200,000 of these professionals will enter retirement, leaving a massive hole in the market if the next generation does not start stepping into their shoes. As mortgage professionals, we must collectively prioritize finding brand new originators if we want our industry to prosper over the years to come. New talent is as important for business today as it is for the future. Consider, when loan officers feel comfortable or complacent, production stagnates. Results really come to those who are hungry. Nothing can bring excitement back to an office like

Casey Cunningham is the CEO and founder of Xinnix, the No. 1 mortgage academy in the nation.

new blood. Rookies enter the industry energetic and enthusiastic. They don’t know the limitations more seasoned lenders often put on themselves. They aren’t deterred by market conditions because they don’t have the experience of a good or bad market. Rookies come without a jaded attitude or bad habits. They only know what they are taught, so managers have the chance to mold them with positive practices and enthusiasm. With the right training and support, every new loan officer is a potential top producer. Investing in the success of the next generation does not have to be an all or nothing strategy! Imagine the impact if each lender new loan officers at only 5-10% of their sales force. THE PERFECT CANDIDATE Looking for new talent can seem like quite the daunting task. My passion is to make the search easier for our industry as my experience of what works and what doesn’t will minimize mis-hires. Managers can begin by seeking out people who already possess the qualities of a great originator. The ideal candidate will have a track record of success and a demonstrable, stable work history in whatever career they’ve chosen up to this point. Also, someone with direct sales experience is already geared to be much more successful when entering the industry. We have surveyed our industry and found that 84% of top loan officers have a background in sales. The product may be different, but good salesmanship speaks for itself. Ideal candidates will also have a pre-existing referral database. Managers should look for professionals who have connections and influence in their communities. These previous connections can become immediate new business. Successful loan officers build long-term relationships with customers and referral sources, so if someone has proven they are loyal, communicative and charismatic enough to form these connections, they are already headed in the right direction. New talent needs to possess certain other personal qualities that uniquely

qualify them for this industry. Patience may be a virtue, but it is not one rewarded in the mortgage business. Good loan officers want things done yesterday. Any lender knows this ambition paired with the demands of the job can lead to some long and stressful days, so the best candidates will be people who thrive when dealing with high stress or adversarial situations. Essentially, these are people who perform well under pressure. SOURCING CANDIDATES After establishing the traits of an ideal candidate, the next step is to know where to look for them. The first place lenders should go is their current database. Who do they know that would make a good loan officer? Lenders can easily seek out former customers and business associates who possess the right qualities. But every prospective loan officer does not have to come from the lender’s database. Loan officers within the lender will have business and personal relationships with individuals who fit the bill as well. Remember that the majority of us got into the industry because of someone we knew. With a whole team working toward the same recruiting goal, finding the right new talent is almost a certainty. Don’t be afraid to target great employees from other career fields! My experience has shown that some of the best professionals to seek out include stock brokers, financial planners, insurance agents and real estate agents. These positions require a high degree of organization, a commitment to customer service, and the ability to market oneself. These skills are vital for loan officers, and they give people successful in these fields excellent experience for the mortgage industry. Other professions that produce great originators include auto dealer finance managers and salespeople, IT sales professionals, school teachers and restaurant managers. RECRUITING NEW TALENT How do you recruit from these other career fields when the individual is already successful? Prepare the right messaging

for a value proposition that is compelling. The best candidates will likely be skeptical about a change in career. Thankfully, our industry has much to offer the next generation. Millennials are looking for different factors in a career than their parents or grandparents. Lenders should stress flexible work hours, a collaborative and active work environment, and the ability to make a positive difference in the community as benefits that make the mortgage industry the right choice for the next generation of professionals. Of course, the opportunity to earn a great living is a bonus but is not always the driving force for every recruit. Remember to ask a lot of questions to determine what is important to the candidate as I am confident our industry will fulfill their needs. TRAINING NEW TALENT New loan officers should not be a burden to their team. They should be a catalyst for enthusiasm and growth. However, when someone is uneducated in the skills, knowledge and practices of successful loan officers, they have the potential to seriously slow down business. Training must be intentional to include key knowledge, deal structuring, scripting and sales skills. This intentional training will produce a predictable and successful new loan officer with significantly less burden to the manager. At XINNIX, we have seen the positive impact of a newly trained loan officer on a team’s production. The combination of the right rookie with proper training produces powerful results. Graduates from our ORIGINATOR training program, designed specifically for new loan officers, average 3.1 loan applications in their first month. They are active, producing team members. We don’t have to shy away from new talent anymore. Managers from across the country are proving that with the proper sourcing, recruiting, and training, these new loan officers can energize their teams and launch their business to the next level. Are you ready to see what new talent can do for your production? HOUSINGWIRE ❱ MARCH 2017 31

MORTGAGE INNOVATION

How consumer demand is fueling a mortgage transformation

BY SARAH WHEELER

32 HOUSINGWIRE ❱ MARCH 2017

or years, companies in the mortgage space, including banks, lagged woefully behind other industries in embracing technology. But surveying the landscape in 2017, it’s obvious that the $14 trillion mortgage market is quickly making up ground as it sprints to keep up with consumer demand

for a smarter, easier mortgage process.

Ironically, the monkey on the mortgage industry’s back for the past 10 years — increasing regulation — is the very thing that forced companies to find efficiencies in every part of the process, which serves them well as they look to engage tech-savvy consumers. Even as the enforcement of some of those regulations is now in question, the long-lasting benefits of investing in automation will stand. The mortgage sector is particularly primed for transformation, having hit the critical turning point described by a Wall Street Journal article on digital disruption from April 2016: “First comes the use of IT to improve the productivity and quality of production-oriented, back-end processes. Distribution comes next, leveraging the universal reach and connectivity of the Internet over the past 20 years. The transformation then reaches a tipping point when technology radically changes the user experience – as has happened with the rise of smartphones over the past decade – leading to a fundamental disruption of the industry and its business models.” Deployed within the complex individual processes that make up lending, servicing, investing and real estate, mortgage innovation comes in many forms. THE STARTUPS In the first nine months of 2016, $18.9 billion poured into fintech startups worldwide, according to Forbes, up from $17.6 billion in the first nine months of 2015. These startups included companies in banking, payments, investing, insurance, currency, lending and financing. Venture capital firms made big investments in online lending in the first half of 2016, but cooled off after Lending Club and Prosper ran into some mid-year trouble. This year, fintechranking.com predicts that companies delivering innovations in online real estate transactions and those that find ways to lend to the underbanked will be the biggest winners of VC money in the mortgage space. Fintech startups have already sliced and diced everything from income verification to valuation to REO management to warehouse lending in their bid to remake the mortgage process.

Here are just a few examples, taken from the 2017 HW Tech100 list (see page 36): • FormFree’s Accountcheck solution consolidates, analyzes and verifies assets directly from their source, then applies thousands of proprietary algorithms to generate asset reports on demand. • Investability allows users to sort and analyze more than 1 million MLS-listed and exclusive properties by cash flow, net yield and gross yield, matching investors with properties that meet their criteria. • Land Gorilla is a cloud-based construction loan software empowering lenders to manage their construction loan pipeline to track draw requests, change order and inspection reports. Fintech companies are distinguished by their origins — they are first and foremost technology companies that apply their expertise to the mortgage space. Finding correlations between markets, their vision lets them leverage lessons learned in one industry to improve a totally different vertical. Alight, Inc., for instance, is a provider of enterprise-class applications for real-time, dynamic scenario comparison and analysis that cut its teeth in the mining industry. “In the mining industry, they do long-range strategic planning, 10, 20 and 30 years out, then build out operating plans monthly,” said CEO Michele McGovern. “They have to invest a lot of capital in equipment and all of this equipment has sensors that generate stats to help them figure out when to bring them in for maintenance, etc. As a result, mining is heavy into big data — they have millions of records every day from every part of the value chain. “We developed a set of waterfall charts for the mining industry that were very sophisticated, that we also built into our mortgage applications. Mining is susceptible to commodity price changes in things like iron ore or fuel. The mortgage industry is very dynamic and volatile in terms of interest rate changes. For both, there is the need to know how fluctuations in pricing affects cash flow considerations and financing,” McGovern said. Startups are tackling a variety of thorny problems, ranging from nuts and bolts production issues to expanding homeownership through new loan products, HOUSINGWIRE ❱ MARCH 2017 33

credit models and financing options. Sometimes, their most significant contribution is thinking outside the box. Unison, for example, pioneered a program that brings investment capital to consumers. The Unison Homebuyer program partners with consumers to invest in their home, providing up to 50% of the down payment in return for a share of the appreciation in the home’s value at the time it is sold. The program is not a low down payment assistance program where the consumer assumes more debt — it is an investment that pays when the home is sold. “Our founder, Thomas Sponholtz, used to manage portfolios for Barclays, and there was a need from certain institutional investors to diversify their portfolios, and fulfill future obligations. With pension funds, two of the biggest constraints are housing and healthcare, and the need to fund their respective liabilities,” said Michael Micheletti, director of communications at Unison. “That’s why our programs are long term — 30 years — to align with both the consumer need and the investors’ long-term strategies.” Unison recently expanded the program, which had been available only in combination with jumbo loans, to conventional loans, and now operates in 13 states. The velocity of change in the mortgage industry toward efficiency and automation is only going to gain momentum, propelled by the newest and largest generation of potential homebuyers, the Millennials. And this is where fintech has a distinct advantage over traditional companies. In their Global Fintech Report from March 2016, PricewaterhouseCoopers states: “Millennials seem to be bringing a higher degree of customer centricity to the entire financial system, a shift that is being crystallized in the DNA of fintech companies. While 53% of financial institutions believe that they are fully customer-centric, this share exceeds 80% for fintech respondents. In this respect, 75% of our respondents confirmed that the most important impact fintech will have on their businesses is an increased focus on the customer.” WHAT ABOUT TRADITIONAL COMPANIES? But startups aren’t the only ones harnessing innovation. A number of traditional companies are reimagining the mortgage process and forming partnerships that make the most of old and new. The best example? The long-promised, ever-elusive eMortgage, which was finally achieved in 2016 by Radius Financial Group, which partnered with DocMagic, the MERS loan registry, Fannie Mae and Santander Bank. The group closed six loans in a completely paperless process, utilizing both lender and closing/settlement agent documentation, eNotarization, eWarehousing and eNote 34 HOUSINGWIRE ❱ MARCH 2017

acceptance through DocMagic’s eClosing solution. Linking disparate parts of the mortgage process into a seamless experience is a hallmark of mortgage disruption, and a place where traditional companies have a better chance of success. As an article in TechCrunch by Aaron LaRue pointed out, a scalable mortgage company needs a lot of infrastructure, including a way to create consistent access to capital, a reporting infrastructure for compliance and robust operating procedures. These are things traditional companies have been working on for decades. “When faced with the realities of originating a mortgage, many of these technology companies will pivot,” LaRue writes. “Instead of producing the actual loans, they’ll become sales and marketing vehicles that capture the customer, take the application then serve as a broker for an established mortgage company that can do the heavy lifting.” For LaRue, true mortgage innovation would be realized from a hybrid of startup and legacy companies. “Ideally, an innovative mortgage company would combine a customer-focused, experience-driven product team with a group of seasoned mortgage professionals. This super-team would come together, surrounded by the infrastructure required to grow and fed with capital to invest in building a platform, and they could fundamentally change the way home loans are done.” Some of these hybrids already exist. Last year BBVA bought Simple, giving BBVA about 100,000 new customers while giving Simple more resources to grow. Santander partnered with other financial institutions to invest $135 million in fintech lender Kabbage in 2015, providing small business loans. And SoFi, a student refinance lender that is itself a fintech company, recently acquired Zenbanx, a fintech mobile bank. This kind of collaboration has huge potential, since for all the talk of disruption, the effect of fintech on the overall mortgage market is still very small. The Wall Street Journal reported in April of 2016, “Greg Baxter, Citi’s global head of digital strategy, notes that in the U.S. and other developed markets ‘We are not even at the end of the beginning.’ While really difficult to forecast this early in the cycle, his Citi team estimates that ‘currently only about 1% of North American consumer banking revenue has migrated to new digital business models (either at new entrants or incumbents) but that this will increase to about 10% by 2020 and 17% by 2023.’” If other disrupted industries are any guide for the future, the mortgage industry will see a frenzied pace of innovation in the next five to 10 years. Startups and legacy companies alike should heed the advice of computer visionary Alan Kay: “The best way to predict the future is to invent it.”

UNFAIR ADVANTAGE? Fintech startups received a strategic boost from the Office of the Comptroller of the Currency in December when the regulatory agency announced that it would offer a new type of banking license for fintech companies. The goal of the special purpose national bank charter, according to the OCC, is to “expand financial inclusion, reach unbanked and underserved populations, make products and services safer and more efficient, and accelerate their delivery.” The new charters are available to fintech firms that conduct at least one of three core banking activities: receiving deposits, paying checks or lending money. In explaining its decision, the OCC outlined three compelling reasons for the new charters: 1. Fintechs can potentially deliver banking products and services in a safer and more efficient manner than traditional banks. 2. They should have the choice to become national banks if they want to do so. 3. For fintechs that want to become banks, it’s safer for them to enter through a “clearly marked front gate” of expectations and compliance. The big question, of course, is whether these new charters are fair to traditional banking institutions. The OCC heard plenty of comments related to “regulatory fairness and supervisory rigor” and responded with this statement: “The worry here is that by providing a special purpose national bank charter we are somehow tipping the balance of competition by allowing special purpose banks to compete with full-service banks without assuming any of the responsibility. “But, the reality today is that the 4,000 fintech companies out there are already competing with national and state banks, without regard to any of the national bank responsibilities and under a patchwork of supervision. Granting national charters to the companies who desire and warrant one doesn’t weaken the competitive position of existing banks or the dual banking system. In some ways, it levels the playing field because statutes that by their terms apply to national banks would apply to all special purpose national banks, even uninsured ones.

From PricewaterhouseCoopers’ global survey of 544 leaders of financial institutions:

75% 83% 20%

think the most important impact fintech will have is increased focus on the customer believe that part of their business is at risk of being lost to stand-alone fintech companies or more of financial services business is at risk to fintechs by 2020

Source: PricewaterhouseCoopers’ Global Fintech Report, March 2016

“This would include, for example, statutes and regulations on legal lending limits and limits on real estate holdings. And as far as providing ‘lighter touch’ supervision, I have made it clear that if the OCC grants a national charter in this area, the institution will be examined regularly and held to the high standards the OCC has established for all federally chartered institutions.” Indeed, during the comment period, some of the feedback was not from traditional banks complaining about an unfair advantage, but from fintech companies who don’t welcome the regulatory infringement. Timothy Li, founder and CEO of Kuber Financial and creator of Fluid App, summarized that sentiment in a blog on Crowdfund Insider. “Fintech entrepreneurs have dedicated most of their careers to solving some of the most complex issues in our financial system; we don’t have the time, energy or resources to be bogged down by getting a nod from a century old risk committee.” With the new emphasis on deregulation by the Trump administration, it will be interesting to see how the OCC’s new charter system fares, and how it is received by the industry.

HOUSINGWIRE ❱ MARCH 2017 35

36 HOUSINGWIRE â?ą MARCH 2017

The mortgage industry is leveraging technology like never before, streamlining processes across the spectrum of lending, servicing, investing and real estate. The combination of regulatory pressure and consumer expectations have set a high standard for efficiency and transparency, requiring a significant investment of time, money and talent to hit the right notes for both.

Four years ago, HousingWire created the Tech100 to recognize the increasingly important role of technology companies serving the mortgage space. Every year has seen an increase not only in the number of companies who apply for the award, but also the breadth of their innovation. There is hardly a corner of the mortgage space left that hasnâ€™t been transformed in some way, either by fintech startups focusing on a specific software need or legacy companies evolving to compete in the new environment.

The challenges and opportunities in the housing economy are both greater than ever in 2017. Fortunately, so are the solutions. HousingWire is proud to honor these 100 companies as the most innovative companies in housing. Their work is propelling our industry to a new level of excellence in doing our most important job: supporting the American Dream.

HOUSINGWIRE â?ą MARCH 2017 37

2 0 1 7 H W T E C H 1 0 0 TM

39 40 41 42 43 44 45 46 47

Accenture Advanced Data Advantage Systems

Alight Arch MI ARMCO

assure360 Auction.com Benutech BK Global

Blend Bradford Technologies Buffini & Co.

BuildFax Built CalyxSoftware

Capsilon Corp. Chronos Solutions Clarifire

Clarocity Class Appraisal Clear Capital

ClosingCorp Cogent QC Systems ComplianceEase

CoreLogic Credit Plus D+H

DocMagic Down Payment Resource

Ellie Mae Equator Ernst Publishing Co. Essent Guaranty

FICS First American Data & Mortgage Solutions

FirstClose Floify FormFree

FotoNotes Freddie Mac Global DMS

Guaranteed Rate Homesnap housecanary

Housing Tides Hubzu iEmergent

Indecomm Global Services InHouseUSA IDS

Investability Land Gorilla

38 HOUSINGWIRE â?ą MARCH 2017

48 49 50 51 52 53 54 55

LBA Ware Lender Price LendingHome

LendingQB LoanLogics LodeStar Software Solutions

Maxwell Mercury Network MetaSource

Mortech Mortgage Cadence

Mortgage Capital Trading MortgageFlex Systems Morty

Nexsys OpenClose Optimal Blue

Pavaso PCLender Pruvan

Qualia Quandis QuestSoft

Quicken Loans Rate Reset Realty Pilot

Redhawk Research Rekon Technologies RES.NET

ReverseVision RiskSpan Roostify

Sapiens DECISION Scrypt, Inc. Simplifile

Sperlonga Data SS&C Street Resource Group

Street Solutions Tavant Technologies Vantage Productions

Velocify Veros Real Estate Solutions VirPack

Whiteboard Mortgage Software Wipro Gallagher Solutions XINNIX

Accenture

Alight

Lending accenture.com/MCaaS

Lending, Servicing alightinc.com/mortgage

Accenture’s Mortgage & Compliance as-a-Service (MCaaS) is an end-to-end, product-rich mortgage manufacturing solution offered through LoanSequence, the company’s proprietary loan origination platform. MCaaS addresses the most significant concerns of today’s lenders and is the industry’s first solution that provides a robust warranty framework for regulatory compliance, vendor and investor guidelines management, as well as data integrity. MCaaS provides lenders with a premium service that works in tandem with the company’s compliance infrastructure to produce loans which stand up to regulatory scrutiny and investor guidelines, while delivering superior customer satisfaction. With the MCaaS model, lenders reduce overall cycle times for mortgage and home equity, improve regulatory compliance and reduce repurchase risk potential, all at an agreed cost.

Alight provides the only enterprise-class application for real-time, dynamic scenario comparison and what-if analysis for mortgage banks. With Alight, CEOs, firm owners, CFOs and their teams are able to run multiple scenarios simultaneously to see the impact changing market conditions and business decisions will have on enterprise financials—including P&L, balance sheet and cash flow. Alight is cloud-based and accessible on any device, anywhere and at any time. The company’s customer base doubled in 2016 and more than $80 billion in loan originations ran on Alight’s solution.

Arch MI Servicing archmi.com

Advanced Data Lending, Servicing advanceddata.com

Advanced Data offers a verification of employment platform that enables employers to sign and complete a 1005 form electronically through its eDocument Solutions portal. The company enhanced its technology so that eVOEs cannot be submitted unless they are 100% completed. Advanced Data also feature breakthroughs in forms for self-employed borrowers, for whom it automatically populates the form required to complete a mortgage transaction. Its partnership with Ellie Mae Encompass also allows users to order VOE, income tax verification form 4506-T, Social Security number verification and verification of deposit through the company’s user interface.

RateStar by ArchMI is an innovative, proprietary risk-based pricing program that matches the company’s most competitive mortgage insurance rates to individual loan risk. By using the same data attributes found in traditional rate sheets, RateStar analyzes the data to identify unique combinations and ranges of differences within those attributes to determine pricing. RateStar, which is available on all devices, provides greater precision in MI pricing, enabling lenders to compete more effectively and offer more affordable mortgages to eligible borrowers. For borrowers, RateStar can mean lower monthly payments. The platform also educates the lender, providing a personalized evaluation of the risk represented by their individual loan scenarios.

ARMCO Lending, Servicing armco.us

Advantage Systems Lending, Servicing mortgageaccounting.com

At the push of a button, the company’s accounting system, Accounting for Mortgage Bankers, can present which loans comprise any account balance at any time. Among the products offerings is the ability to track transactions on a loan by loan basis. It also offers general ledger, accounts payable and report writing capabilities. AMB also comes equipped with a commissions calculator, which enables loan officers to calculate commissions, commission adjustments, bonuses and overrides. Additionally, AMB shows transactions that have occurred on a loan, allowing for more profitability analysis.

ARMCO’s flagship product, ACES Audit Technology, allows QC professionals to manage the audit process through the entire loan lifecycle, from pre-funding to post-closing to servicing. In 2016, ARMCO launched ACESXPRESS, an implementation and service package for ACES designed specifically for small to midsized lenders. One of the key functions in the ACES platform is Sampling, which uses the Automated Loan Selection module. The module enables users to automate the auditing process by selecting loans for audit using a variety of sampling methodologies. The ALS module helps reduce risk by facilitating discretionary reviews based on multiple criteria to ensure a comprehensive audit while minimizing the number of selected loans.

HOUSINGWIRE ❱ MARCH 2017 39

assure360 Servicing assure360.com

The company’s newest solution offering, ProAudit, supports mortgage and law firm clients, and is designed to help standardize the non-standard process of audits. The solution is designed to reduce overall effort to complete audits by 46% after full implementation. It offers 81% question matching for questions with 15 or more words, and has a 63% first response acceptance rate for questions matched at 80% or higher. It is completely customizable and has no limits on the number of questions per audit.

Auction.com Real Estate auction.com

Auction.com’s team has doubled its focus on the distressed market to continually innovate on foreclosure and REO sales. Auction.com launched AuctionSync in 2016 to eliminate paperwork for foreclosure auctions by bringing parts of the sale online and enabling auction staff to conduct in-person foreclosure sales with ease. The app enables the auctioneer to conduct the sale and update with the latest real-time information on each asset throughout the auction. After the property sells, the auction team can use the app to verify proof of funds, notify attorneys to prepare the receipt of funds or transfer of ownership and execute the certificate of sale.

properties for sale. The technology allows real estate professionals to search for properties associated with bankruptcy cases where they are categorized as either in review, coming soon or for sale. Real estate agents can then submit offers online in real time. Every property associated with a bankruptcy case is analyzed using a proprietary algorithm that takes into account several data points that impact the salability of the asset.

Blend Lending blendlabs.com

Blend’s approach to mortgages is simple: a clean and fluid process that upholds the caliber of information needed when applying for a mortgage. The user experience is separated into labeled workflows, giving a borrower a path to filling out his or her application. Instead of a stressful, confusing pile of paper forms, the borrower sees tailored and valuable information to easily complete the application process. The borrower application imports documents seamlessly from financial institutions. Instead of requiring the borrower to find hard copies of 60 days’ worth of statements for each account, the app’s design allows borrowers to provide those files directly from commonly used institutions with the click of a button.

Bradford Technologies Real Estate bradfordsoftware.com

Benutech Lending, Real Estate rebogateway.com

Designed for real estate agents and lenders, this company created a solution that identifies the reasons why homeowners sell, or life events, and matches those events to a specific property. This allows real estate agents to identify homeowners that may have a reason to sell, allowing agents to market to that home. The solution, ReboGateway, adds new life events, including bankruptcies, affidavits of death and evictions, to its current events: divorce, probate, mortgage default, tax default, for sale by owner, estate sales, empty nester and notices of lis pendens.

Inspect-a-Lot from Bradford Technologies is an app focused on making an appraiser’s property inspection a structured and highly efficient process. Inspect-a-Lot takes a new approach to appraiser mobile technology by removing the traditional form interface and replacing it with a single-scrolling interface that keeps fields on one screen, providing a streamlined and structured workflow. The appraiser doesn’t have to constantly click around to find the field they need. The app allows appraisers to concentrate on field inspection data capture rather than awkwardly working their way through forms.

Buffini & Co. Real Estate buffiniandcompany.com

BK Global Real Estate bkginc.com

This company’s technology platform assists federal Chapter 7 bankruptcy trustees in identifying, analyzing and marketing 40 HOUSINGWIRE ❱ MARCH 2017

This company boasts that its product, Referral Maker CRM, is built “by Realtors for Realtors.” This technology allows real estate agents to manage the activities performance of the team. The product’s new dashboard displays the team’s sales and lead pipeline, along with real-time performance data for the entire team

and the individuals within it. This allows leaders to understand their team’s productivity, transaction data and lead progress. The team also has the ability to assign leads and monitor contacts, transactions and overall goals.

secure, centralized database that features remote access options; audit trails; customizable forms and templates and a robust business rules engine needed for workflow and compliance.

Capsilon Corp. BuildFax Lending, Servicing, Investments, Real Estate buildfax.com

BuildFax leverages more than 23 billion data points on residential and commercial structures and covers more than 70% of the U.S. population to provide access to the wealth of property history and condition information contained in permit data. The company receives 1,000 new property insights per minute on its robust technology platform. BuildFax has learned a lot about how building permit data predicts loss and tells the story of property history, improvements, structural risks and changes over time. Due to mass adoption of data from the BuildFax platform, the company’s revenue has nearly doubled in the last 24 months. The company is on pace to double again in the next 18 months.

Lending, Servicing, Investments capsilon.com

The Capsilon DocVelocity document and data management platform is a cloud-based solution for document imaging and data capture. DocVelocity provides patented automated document recognition, data extraction and rules-based validation capabilities that enable straight-through processing with exception handling to increase productivity and lower costs for mortgage companies. In 2016, Capsilon introduced a new version of DocVelocity that, among other new capabilities, included the Capsilon Collaborative Closing Center, a secure electronic collaboration workspace that speeds the mortgage closing process by enabling lenders and their settlement partners to review, validate and finalize the fee data required to prepare compliant Closing Disclosures as required under TRID.

Built Lending, Servicing

Chronos Solutions

getbuilt.com This company, as its name implies, caters to the construction loan market, and designed a web and mobile application that allows for greater organization for construction loans. It allows lenders increase profitability, attract and retain the best borrowers, reduce risk, and simplify compliance. The app allows real-time visibility into any given construction loan or portfolio and users to take action based on their customized role permissions. It can operate completely independently or plug into a lender’s existing legacy systems through integration.

Lending, Servicing, Investments, Real Estate chronossolutions.com

CalyxSoftware Lending calyxsoftware.com

CalyxSoftware is a mortgage software solutions provider for banks, credit unions, mortgage bankers and brokers. The company’s LOS aims to streamline, integrate and optimize all phases of the loan process through reliable, innovative technologies. CalyxSoftware’s offerings include Point, which automates the origination process and integrates with more than 200 vendors inside the software, including disclosure, credit, valuation, title and verification providers; and provides electronic document management, and PointCentral, an enhanced server-based version of Point, which combines the functionality of Point with a

Funding Suite is an advanced Software-as-a-Service platform by Chronos Solutions for purchasing credit reports and analyzing credit data that improves efficiency, cutting costs and helping applicants improve their qualifying power. By analyzing credit data, the suite provides lenders real-time reporting and management oversight as it identifies potential credit inaccuracies and underwriting conditions that could cause an applicant to be disqualified or get a less favorable interest rate. The technology suite is also a full-origination platform that allows customers order credit and more, including soft-pull credit for quality initiative analysis and servicing; SSN and employment verification; flood zone determinations; AVMs and property history reports; and Taxdoor effortless tax transcripts.

Clarifire Servicing eclarifire.com

This small, woman-owned company delivers workflow solutions across the industry through business process automation. The application organizes and modernizes processes by providing automated workflow that systematically distributes tasks, information and documents to users or groups. The app is a dynamicalHOUSINGWIRE ❱ MARCH 2017 41

ly data-driven configurable, and is easy to use and change. This Software-as-a-Service company prides itself in the app’s workflows, dashboards, business rules and interoperability. Since its founding in 2000, the company grew to nearly 100 employees, and serves about 10,000 users through its app.

faced with long turnaround times on home loans. Additionally, the valuation process often lacks supporting data tools to help make quicker and accurate decisions. ClearProp addresses these concerns by providing the data and analytics in one comprehensive property report with market insights that could affect property value, such as owner and transaction history, local sold and listing comparables, maps, aerial imagery and FEMA disaster checks.

Clarocity Lending, Servicing, Investments clarocity.com

Clarocity designs and develops the next-generation of real estate valuation and reports. Clarocity serves GSEs, lenders and MBS purchasers/managers with cost-effective and data-driven valuation products. Clarocity platform users are able to manage and produce proprietary valuation products that are setting new standards in performance. MarketValue Pro™ (MVP) is an appraisal product that leverages Clarocity’s proprietary platform that was originally developed for generating BPOs. MVP was designed from the ground up to lead the appraiser to successfully complete a report from the moment they log in and features integrated public record data, hundreds of field-level validations, and real-time best practices rules.

ClosingCorp Lending closing.com

ClosingCorp introduced its SmartFees service to help lenders comply with TRID rules. Formerly known as its Loan Estimate and SmartGFE services, SmartFees integrates loan file information, transfer tax and recording data, service provider fees and lender business rules and requirements into a single, seamless process and platform. SmartFees produces fee data from more than 70,000 rate cards through the ClosingCorp Network. The network delivers nationwide coverage and is comprised of 20,000 individual service providers covering more than 30 service categories such as title, settlement, appraisal, inspections and engineering.

Class Appraisal Lending, Servicing, Investments, Real Estate classappraisal.com

Class Appraisal offers a County-by-County Pricing Calculator. This technology combines current and historical market data to create fair, customary and reasonable fees for the company’s partners nationwide. Combining this data with a web portal allows them to give the most accurate pricing information for both their Loan Estimates and Closing Documents while remaining TRID compliant. Class Appraisal also offers Lead Time Calculator, a web-based interface that allows users to check what a lead time would be for an appraisal in a certain area after entering a state and county. The information is based on collected historical data and provides a snapshot of what is happening in a particular area.

Clear Capital

Cogent QC Systems Lending, Servicing cogentqc.com

Cogent QC Systems provide lenders and servicers with a complete quality control solution, including robust data management, highly efficient statistical and non-statistical sampling, easy-touse auditing workflow, extensive reporting and a secure online QC feedback portal (for streamlined resolution of findings.) The award-winning software is continually updated and highly customizable to client needs. Deployed by more than 100 clients, including some of the top lenders and servicers in the United States, Cogent QC Systems have guided the loan quality control of millions of servicing records. The company’s software uses an industry-pioneering statistical sampling methodology that meets agency and investor requirements. This technology reduces the number of loans audited by emphasizing risk-based sampling to improve risk management.

Lending, Servicing, Investments, Real Estate clearcapital.com

ClearProp by Clear Capital is a quick, data-rich report used as an initial assessment tool before additional valuations are ordered and as a next-step review for higher risk valuations. This tool is arming valuation consumers with information to make their process and analysis more efficient and effective. This solution addresses a problem seen across the industry, as lenders are 42 HOUSINGWIRE ❱ MARCH 2017

ComplianceEase Lending complianceease.com

ComplianceEase provides a suite of automated compliance products and services, including its flagship ComplianceAnalyzer

with TRID Monitor. The platform provides flexible TRID rule compliance for different origination channels and workflows, offering the choice to audit loan terms at each point in the loan origination lifecycle. The company also offers ClosingXpress, a document-generation platform offering TRID compliant disclosures, as well as required federal, state, and secondary market investor origination, closing, and modification document sets with integrated compliance monitoring through ComplianceAnalyzer.

CoreLogic Lending, Servicing, Investments, Real Estate corelogic.com

CoreLogic has developed the largest proprietary public records database, and the largest databases for fraud and mortgage securities and servicing. The company is a major provider of data, technology and analytics-based solutions used by the real estate, mortgage and securities markets and serves more than one million users. Today, CoreLogic tracks more than 4.5 billion property and financial records, spanning more than 50 years. In the risk management and workflow division, CoreLogic leads the industry in innovative escrow and non-escrow property tax solutions. With its national network of service centers and local government specialists, CoreLogic helps ensure fast and accurate property tax data exchange between mortgage companies, taxing agencies and borrowers.

Credit Plus Lending, Servicing creditplus.com

Over the past 20 years, Credit Plus has grown from a regional credit information supplier to a national third-party verification provider. During that time, it expanded its product line from 10 to more than 160 verification solutions, becoming an industry leader in technology, with services available via mobile and online. Credit Plus has doubled its market share for two consecutive years, is projecting another year of record growth ahead; and it has achieved 400% revenue growth over the last four years. Core to the company’s success are two of Credit Plus’ new flagship products: FraudPlus and QC Review. FraudPlus’ annual revenue has grown by 200% and QC Review’s monthly revenue has doubled – just in the last year.

“At the core of Silicon Valley is a passion for ‘yes’” — Steven Levy

D+H Lending, Servicing dh.com

D+H offers the Mortgagebot suite, a comprehensive, end-to-end solution for mortgage lending delivered via the cloud. The suite includes MortgagebotPOS, a web-based solution that allows lenders to receive accurate, qualified applications through every point-of-sale channel, MortgagebotLOS, an all-in-one origination system that supports retail, wholesale and correspondent lending, and MortgagebotMobile, a mobile loan application solution that lenders can customize. D+H works with some of the world’s largest financial institutions, with clients ranging in size from local community lenders, to financial institutions greater than $100 billion in asset size. MortgagebotLOS has seen 20% YoY growth the last two years and MortgagebotMobile garnered more than 100 sign-ups in the first month after its launch in 2016.

DocMagic Lending docmagic.com

The company is a leading provider of fully-compliant loan document preparation, compliance, eSign and eDelivery solutions for the mortgage industry. DocMagic, based in California, develops software, mobile apps, processes and web-based systems for the production and delivery of compliant loan document packages. In 2016, the company launched Total eClose, allowing lenders to complete a full, true paperless eClosing from start to finish. The company also has a team of compliance experts and in-house legal staff that consistently monitor legal and regulatory changes at both the federal and state levels to ensure accuracy.

Down Payment Resource Lending, Real Estate downpaymentresource.com

Down Payment Resource automates the process of matching buyers and properties to available homebuyer programs. DPR works with more than 1,000 housing agencies to find and update information about local, state and national homebuyer programs. DPR’s proprietary rules engine executes against this database and automates the process of matching buyers, properties and homeownership programs by evaluating where and how the programs can be applied. DPR places eligibility criteria and benefits information at the fingertips of real estate professionals and lenders and it’s updated monthly for accuracy and reliability. In 2016, visitors to DownPaymentResource.com increased by 122% and down payment program searches completed increased 39%.

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Ellie Mae Servicing elliemae.com

Ellie Mae’s Encompass Connect solutions provide a unique user interface and functionality to improve the efficiency and collaboration of the various parties involved in the loan process. The suite of applications includes Encompass TPO Connect, a third-party organizer which offers wholesale and correspondent lenders a modern and collaborative web experience for their TPO partners that promotes compliance, data integrity, and easy sharing of data and documents. It also offers Encompass Loan Officer Connect, which provides a fast and easy way for loan officers to originate and track the progress of loans securely and instantly from any device, including mobile phones and Encompass Consumer Connect, which enables lenders to create and control a state-of-the-art, self-service online loan origination experience for homebuyers.

knowing when their fees have been quoted and the lender has the security of knowing the fees they quoted are accurate and comprehensive based upon property location, type of loan and more. The borrower is no longer faced with fees that don’t match when the LE is produced.

Essent Guaranty Lending essent.us

Essent recently launched a new tool, Essent IQ, that real estate and mortgage professionals can use to educate consumers on the economics of home-buying and the financial benefits of ownership. The tool is designed to help real estate and mortgage professionals simplify conversations around mortgages and show clients the economic benefits of homeownership. As a mortgage insurer, Essent risks private capital to protect lenders and investors against credit losses, enabling creditworthy borrowers to buy homes with down payments of less than 20%.

Equator Servicing equator.com

Equator, an Altisource business unit, provides SaaS solutions to the largest servicers and real estate asset managers in the country, including four of the top five largest servicers and a leading GSE. Equator’s scalable technology enables net execution efficiency, reduction of operational and capital requirements, increased transparency and implementation of client compliance rules. Launched in 2016, Equator’s latest services include the unique Equator Agent Elite and Equator PRO Foreclosure and Bankruptcy Workflow Solution. With Equator Agent Elite, users receive a monthly market insights report showing REO activity, inventory and performance down to the county level. Equator PRO is a highly customizable workflow automation tool offering a streamlined way to manage default portfolios.

FICS Lending, Servicing fics.com

Financial Industry Computer Systems, Inc. provides comprehensive and flexible in-house mortgage loan origination, servicing, and commercial mortgage loan servicing solutions. FICS’ loan origination system, Loan Producer, servicing system, Mortgage Servicer, and commercial mortgage servicing system, Commercial Servicer, are designed to operate on Microsoft Windows platforms. The FICS applications also incorporate innovative digital document management and web-based capabilities, providing lenders with a full software solution. In 2015, FICS introduced the Mortgage Servicer API solution. FICS keeps customers happy for the long term: 62% have been continual customers for more than 10 years, 44 customers have been using FICS systems for more than 25 years. and eight customers for more than 30 years.

Ernst Publishing Co. Lending ernstpublishing.com

Ernst provides access to custom guaranteed government and third-party vendor fee solutions for Loan Estimates and integrates fees directly into the Closing Disclosure for most closing services. These solutions are available in different forms, from small web programs to custom designed complex fee engines. To meet industry challenges post-TRID, Ernst created a solution for local settlement agents to enter, manage and certify the accuracy of individual settlement fees, enabling lenders to quote with nearly 100% accuracy on every loan. Settlement agents benefit from 44 HOUSINGWIRE ❱ MARCH 2017

First American Data & Mortgage Solutions Lending, Servicing, Real Estate firstam.com/mortgagesolutions

The First American family of companies offers technology- and data-driven products and solutions that are focused on helping lenders maintain compliance, turn fixed costs into variable costs and eliminate risk while covering the entire loan origination process. These offerings include title and settlement services, which features automated title production and centralized and local services, and DataTree with FlexSearch, an advanced real estate re-

search platform trusted by banks to make better decisions based on real estate data from nearly six billion recorded document images and 100% U.S. coverage for property ownership data.

verification app consolidates, analyzes and verify assets and deposits from virtually any financial institution, providing a peace of mind and greater purchase certainty.

FirstClose

FotoNotes

Lending firstclose.com

Servicing, Real Estate fotonotes.com

The company’s patent-pending flagship product, The FirstClose Report, instantly provides all the data that is required for home equity lenders in all 50 states. By tapping multiple data sources and using proprietary algorithms, the company says the FirstClose Report can reduce turn-times by as much as 80%, from 14 days down to 2.8 days. In addition, its client base, comprised of 60% credit unions and 40% banks, save an average of 40% on the cost of settlement services, according to the company. FirstClose has grown its client base by 70% in the last 18 months and expects to double the amount of revenue generated in 2016.

FotoNotes is a mobile and cloud field service management software system for the real estate industry. Property management and field service organizations use FotoNotes for work order management, appraisals, inspections, repair and maintenance, renovation and rehab. The company provides a unique mobile-first approach to the management of real estate field service operations. Its SaaS solution transforms the way companies operate by providing them new levels of communication, visibility, and efficiency to improve the service they provide their customers and opportunities to scale their business.

Floify

Freddie Mac

Lending, Real Estate floify.com

Investments freddiemac.com

Launched in 2012, Floify has grown to more than 90,000 registered users, has a 98% annual customer renewal rate, and releases a new feature or update on average of every two weeks. More than 2 million loan documents have been securely managed through the mortgage automation platform as well as over 25 million individual communications between lender and borrower all tracked within compliance standards. Floify streamlines the mortgage process by providing a secure communication and document portal between lenders, borrowers, referral partners and other mortgage stakeholders. Loan originators and their teams license the platform to quickly and securely collect documents, verify borrower assets, and track the entire loan process.

Loan Advisor Suite features several tools and capabilities to help lenders achieve new operational efficiencies and improve loan quality. The solutions suite includes Loan Product Advisor, an automated underwriting system; Loan Collateral Advisor, an appraisal quality and valuation risk tool and Loan Quality Advisor, which assesses loan data to help determine sale eligibility. The suite also features tools such as Loan Closing Advisor, which helps lenders close loans confidently and reduces repurchase risk related to closing data; Loan Coverage Advisor, which tracks the representation and warranty obligations of loans sold to Freddie Mac and Business Intelligence, a solution that monitors detailed data to help lenders produce high-quality loans.

FormFree

Global DMS

Lending formfree.com

Lending globaldms.com

FormFree provides cloud-based, mobile-friendly technologies that help financial institutions determine the ability of their customers to pay back loans. In seconds, FormFree collects, analyzes and certifies the data lenders need to make safer and smarter lending decisions. The company’s customers include mortgage bankers, auto and subprime financial services firms, credit card companies, payroll service companies and crowd-funding service providers. FormFree’s AccountChek brings relief to the hassle of gathering documents for loans. By using secure data, this asset

Global DMS’ core platform, eTrac, enables clients to effectively manage the entire valuation process. Through eTrac, thousands of lenders, AMCs and appraisers are able to compliantly order, track, review, and deliver appraisals every day, while the Global Kinex solution provides seamless integration to the UCDP and can be used by any lender or AMC. In late 2016, the company launched Global Delivery, a new solution which automates the compliant delivery of hard copy appraisals to borrowers and eliminates the labor intensive and costly manual process. HOUSINGWIRE ❱ MARCH 2017 45

Guaranteed Rate

Housing Tides

Lending, Servicing rate.com

Lending, Servicing, Investments, Real Estate housingtides.com

Gateless is a free coaching tool from Guaranteed Rate that’s designed for real estate agents, with more than 72,000 registered to date. Users have access to a large, curated library of video education tools to build a better business and improve their skill sets in marketing, The platform offers a resource center with upto-date documents for compliance, state guidelines, and credit and underwriting. Registration for the site is optional and the site can be accessed via any mobile device or desktop. Gateless features a Loan Summary dashboard that allows agents to track their clients progress through each step of the mortgage process with Guaranteed Rate.

Housing Tides uses machine learning to comprehensively aggregate and analyze the housing media. As an IBM Watson partner, Housing Tides uses a mix of natural language processing, natural language classification and sentiment analysis to gain insight into the overall direction and sentiment of housing media. Using IBM Watson tools, Housing Tides not only captures all relevant news flow, but analyzes it for sentiment on a positive to negative scale. This enables Housing Tides to discern overall sentiment movement as well as sentiment by media source, author and other perspectives. Additionally, Housing Tides uses machine learning to identify and capture forecasts made across the media sources it aggregates.

Homesnap Real Estate homesnap.com

Homesnap was introduced in 2012 and is now used by millions of consumers to search for and share homes. Homesnap Pro was introduced in 2014 as a mobile offering for agents. Both platforms are powered by a specialized homes database that combines MLS data, property tax records, census data, geographic boundaries and more. Homesnap is now available to over 400,000 agents in more than 40 MLS markets, and the company expects even more coverage after introducing the Broker Public Portal. The app incorporates real-time MLS data, updating every five minutes, and in-app messaging, which allows agents to see all of the messages they’ve shared with a client or about a property in one glance, with photos and links to the property.

Hubzu Servicing, Real Estate hubzu.com

Hubzu, an Altisource business unit, is an online real estate marketplace that provides a consumer-friendly, secure platform for buying and selling residential properties. The platform attracts buyers through syndication to over 200 partner websites, premium advertising, SEO and SEM strategies, social media campaigns, and customized local marketing efforts. It offers attractive features to aid owner-occupant and investor buyers, including an average of 20 to 25 professional photos for each property. In 2016, Hubzu marketed approximately 50% of active online residential auctions in the default mortgage industry and sold over 23,000 homes by mid-2016. The platform increased its user base by 15% in 2016 and currently has over 1 million active registered users.

HouseCanary Lending, Investments, Real Estate housecanary.com

HouseCanary indexes comprehensive data from hundreds of local-market, macroeconomic, and consumer data points going back 40+ years and provides insights for all 381 Metropolitan Statistical Areas. The company’s predictive algorithms calculate the most accurate home values today and up to 36 months into the future. The price indices HouseCanary builds are not subject to the three to five month lag present in other traditional home price indices and forecasts are built upon modern machine learning-based algorithms. These algorithms extract signal and capture high-level interactions among thousands of inputs, yielding highly accurate forecasts, and as of Dec. 2016, 15.4% more accurate than leading competitors.

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iEmergent Lending iemergent.com

iEmergent is a forecasting and advisory firm for the lending industry. Two of the company’s key innovative technologies include forward-looking analytics and Mortgage MarketSmart. Its analytics include mortgage opportunity forecasts that both extend five years out and drill-down from state to MSA to county and to census tracts. Mortgage MarketSmart is a cloud-based, SaaS visualization tool that combines iEmergent’s forecasts with dynamic maps and simple tools. By mid-2016, without the execution of any targeted marketing campaigns, iEmergent experienced a 66% increase in the number of clients and users and a 57% increase in year-over-year revenue growth from 2015 to 2016.

Indecomm Global Services Lending indecomm.net

Indecomm provides a variety of solutions with the goal of making its clients more efficient. IncomeGenius provides accurate and compliant income calculations by electronically reading and analyzing borrower documents, extracting income data using OCR, calculating qualifying income for the loan, and providing alerts about underwriting conditions and errors. The company’s Kaizen is a complete risk management system used both internally by Indecomm and its clients. It handles all aspects of loan reviews and audits, and provides transparency and in-depth reporting of the quality of loans being originated by the lender. Indecomm’s ViewPoint provides real-time tracking of final document submissions from title agents and correspondent lenders and its Inteledoc Direct with Recopedia, Indecomm’s national recording toolkit, provides current county specific requirements and fee calculation for all real estate document recordings.

InHouseUSA Lending, Servicing, Investments, Real Estate inhouseusa.com

InHouseUSA is a financial services technology company supporting lenders nationwide by enabling the management of quality in-sourced or outsourced commercial and residential appraisals. InHouseUSA offers fully customizable products that allow the lender to set up a standardized business process throughout the valuation life cycle. The company’s key technologies include Connexions, an Appraisal Management System, Solutions, a tech-based Appraisal Management Company, Insights, a data analytics suite, and mobile apps and portals for appraisers, brokers and lenders. Founded in 2002, the company saw phenomenal growth in 2016, growing its client base by 31%, and seeing a 548% increase in app downloads. In a pilot study, an appraiser incentive program using InHouseUSA’s technology demonstrated 20% improvement in appraisal turn times.

International Document Services Lending idsdoc.com

In September 2016, IDS completed its first acquisition, purchasing eMortgage solutions provider Encomia. The integrated eMortgage solution suite from IDS and Encomia is designed to streamline the loan origination process from the Loan Estimate through eNote storage. Encomia’s eClosing platform and tools, which are used by major mortgage lenders, provide for secure electronic document storage (eVault), enterprise eSign and asset and income

verification services. Combined with IDS’s automated compliance audits and eDisclosure, eDelivery, eSignature, eFulfillment and customized document capabilities, this integrated product suite delivers a broad complement of electronic mortgage origination and closing services to the mortgage industry.

Investability Real Estate investability.com

Investability is an online real estate marketplace. The platform allows users to sort and analyze more than one million MLSlisted and exclusive properties by cash flow, net yield and gross yield, matching investors with properties that meet their financial criteria. Powered by RentRange, Investability provides investors with three things that have historically been difficult to access outside of their local market: information, resources and properties. Real estate investors can access proprietary data and analytics to evaluate markets and listings around the country based on key metrics like school score, area income and rental rate trends. In addition to the platform’s industry-leading property and rental data, Investability gives customers access to an array of due diligence documents. These include Home Inspection reports, Home Disclosure reports and RentRange Rental Property Analysis reports.

Land Gorilla Lending, Servicing, Investments landgorilla.com

The Construction Loan Manager by Land Gorilla is a cloud-based construction loan software empowering lenders to manage their construction loan pipeline up to three times more efficiently. Postclosing administration features enable lenders to receive, review, and track draw requests, change orders, and inspection reports while monitoring budgets, organizing documents and building custom reports to measure performance. Compliance tools are also built into the software preventing lenders from managing their loans outside of industry best practices, maintaining 100% compliance based on their specific loan programs. Ordering services have been streamlined with the Order Management System allowing lenders to order appraisals, construction underwriting, contractor reviews, progress inspections, and other products directly from a single interface without leaving the Construction Loan Manager.

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LBA Ware Lending lbaware.com

Lending & Banking Automation Software’s CompenSafe is a cloud-based, all-in-one suite of solutions which cover the entire loan lifecycle and provides an accessible and centralized system of record for lenders. CompenSafe extracts all loan level data from the client’s core database – typically their LOS. Since 2008, the 100% woman-owned technology firm has bootstrapped and grown organically without any outside funding. With a leadership team consisting of industry veterans with a combined total of 100 years of mortgage lending and retail banking experience, LBA Ware has transitioned from a services provider to a product company and market influencer while remaining committed to providing clients with integrated systems and automated processes while eliminating inefficiencies.

Lender Price Lending lenderprice.com

Lender Price is a California-based big data technology innovator and developer of a real-time, competitive mortgage analytics and product, pricing, and eligibility (PPE) platform complete with full mobile functionality and business intelligence. With Lender Price, wholesale and correspondent lenders, banks, and credit unions can manage product pricing for all mortgage types: conforming, non-conforming, non-QM, portfolio, and boutique loan programs. The company delivers innovative features including built-in compliance checks, secondary marketing tools, margin management, pricing tier and compensation management, a wholesale and correspondent client portal, customized workflows and mobile functionality. Its advanced analytics report on product search scenarios and usage by originators, including which products are being locked and which are being overlooked.

LendingHome Lending, Servicing, Investments lendinghome.com

LendingHome focuses on providing short-term loans to property investors who buy, rehabilitate and sell residential homes. After submitting basic information to the company’s online platform, borrowers can receive their rate in 60 seconds, complete their application in 20 minutes, and close in under 15 days. Investors can access LendingHome’s marketplace with a minimum opening balance of $50,000 and a minimum investment of $5,000. Investors benefit from fractional notes backed by mortgages that yield upwards of 9% on average. Investors can either browse the marketplace and select individual investments or set criteria and 48 HOUSINGWIRE ❱ MARCH 2017

diversify automatically through an auto-invest feature. Since it launched in April of 2014, the company has funded nearly $1 billion in mortgage loans and has returned over $410 million in principal and $35 million in interest to investors.

LendingQB Lending lendingqb.com

The LendingQB LOS is a fully web-based platform that centralizes the lender’s IT infrastructure. The platform’s service-oriented architecture (SOA) gives lenders the flexibility to connect to external services that are accessed inside the platform and provides lenders the control they need to best address their specific needs. In addition to the core technology platform, LendingQB also provides Lean Lending Playbooks that provide detailed strategies on utilizing the system in an optimal manner. LendingQB grew more than 30% in 2016 and according to the latest results of The STRATMOR Group’s LOS Technology Insight survey, LendingQB is ranked second only to Ellie Mae in market share and rates the highest in customer satisfaction.

LoanLogics Lending, Servicing, Investments loanlogics.com

LoanLogics provides solutions to lenders, servicers, insurers, and investors that want to improve the loan quality, performance, and reliability during the loan lifecycle. The LoanHD Loan Quality Management platform provides real-time, highly automated mortgage quality control, reducing costs and potentially doubling productivity when compared to manual internal audits or other third party audit services. Another offering, the LoanHD Loan Performance Management platform is an intuitive loan portfolio management tool d aggregates data services and analytic models to gauge and monitor portfolio performance, including analyzing borrower credit and collateral health. LoanHD incorporates dashboards and visual data displays to assess exposure to risk or surface opportunity, starting at the portfolio level with access to loan-level details.

LodeStar Software Solutions Lending lodestarss.com

LodeStar Software Solutions provides innovative technology for the mortgage industry by enabling mortgage professionals

to accurately disclose fees required by TRID regulations. With LodeStar’s fee quoting solution, companies can accurately quote fees for the Loan Estimate form for any property in the country, across any provider that they work with. The company has experienced more than 300% year-over-year growth in the mortgage space and are now utilized by more than 500 mortgage companies, credit unions and banks across the country. In 2016, LodeStar launched integrations with two leading LOS software providers, Ellie Mae and CalyxSoftware, allowing them to further expand its network of clients.

reconciling MERS data against the Member Reconciliation Extract (MRE) report with a user-friendly, workflow-based interface for the remediation of data discrepancies. MERS QA compliant and scalable to handle the smallest portfolios to millions of MINs, mintrak2 provides quick data implementation, including data mapping and data normalization as needed. The mintrak2 Total service pairs mintrak2 and MERS QA audit services, providing a comprehensive and cost-effective solution for managing MERS compliance. To date, more than 19 million MINs have been reconciled through mintrak2 and the company has seen a 23% growth in users since the platform’s 2014 release.

Maxwell

Mortech

Lending himaxwell.com

Lending, Investments mortech.com

Maxwell is a Silicon Valley-based point-of-sale and workflow automation tool built for loan officers and their borrowers. The system empowers loan officers by intelligently automating their collaboration with borrowers and their real estate agents. Features include the ability to connect to more than 15,000 financial institutions to generate verified financial account statements, automated borrower follow-ups by text and email, builtin LOE tools and libraries, and a customizable loan application. Automation has reduced document collection time by 45% and enables lenders to close in weeks, not months. Loan officers on Maxwell, particularly high producers, report saving upwards of 20% of their time by relying on Maxwell.

Mortech, a Zillow Group business, provides mortgage specific tools to help streamline operations and reduce hardware costs for its thousands of users. Tools include Mortech’s Marksman solution, which equips loan officers with company-branded marketing materials to keep their brand and pricing quotes in front of the prospect until closing, and Secondary Desk solution, which is designed to automate a mortgage institution’s secondary desk and increase the efficiency of the desk manager’s day-to-day operations, providing features such as LOS integration, a detailed view of lock pipelines and historical pricing data of locked loans. Mortech’s software is used by thousands of loan officers and the company processes millions of loan pricing requests each year.

Mortgage Cadence Mercury Network Lending, Servicing, Investments, Real Estate mercuryVMP.com

Mercury Network stayed busy in 2016, delivering more than 40 new features, including services like commercial appraisal management and new quality control integrated solutions. The company’s integrations with other third party technology providers have expanded and its entire network has grown to connect to more than 23,000 appraisal vendors and more than 265 appraisal management company vendors. In addition to the technological growth, Mercury has expanded its user base to now serve more than 800 lenders and appraisal management companies.

MetaSource Lending, Servicing mortgage.metasource.com

Lending mortgagecadence.com

Mortgage Cadence is a one-stop shop mortgage technology solution designed for point-of-sale through post-closing. Mortgage Cadence’s full array of enterprise-grade loan origination technology allows every lender the ability to manage compliance and to close more loans efficiently. Solutions offered by the company include the Loan Fulfillment Center, which targets out-of-the-box retail mortgage lending; the Enterprise Lending Center, which is built on ACE, Mortgage Cadence’s proprietary, mortgage-specific rules engine; Borrower Center, an intuitive online origination tool that gives prospective homebuyers a step-by-step walk through of the mortgage application process; Document Center, an automated dynamic document preparation and delivery solution; and Imaging Center, an electronic document imaging and management system which collects, classifies, organizes, and distributes loan-related documents.

MetaSource’s mintrak2 platform provides a turnkey solution for HOUSINGWIRE ❱ MARCH 2017 49

Mortgage Capital Trading

Nexsys

Lending mct-trading.com

Lending, Servicing, Real Estate nexsysdatasolutions.com

MCT developed MCTlive!, a successful browser-based technology platform for entire secondary marketing departments to reside on. MCTlive! provides lenders with online tools, trading functionality, and real-time analytics for secondary marketing departments which maximizes profitability and minimizes risk. The platform can be used as a standalone solution but is also capable of LOS integration. Over the years, MCT has transformed, offering both advisory services and leading secondary marketing technology. The MCTlive! secondary marketing technology platform has been instrumental in the company’s hyper-growth over the last four years, with more than 100 lenders gravitating to the company as a result of its technology-driven transition.

Established in response to industry demand for a real-time transaction management platform, Nexsys Clear Path allows users to manage millions of mortgage-related transactions across thousands of service providers in one system. Clear Path is a real-time solution for the management of mortgage-related transactions, orders, provider performance, and service allocations, which is critical in the changing regulatory environment. The platform operates through interactive tools, including: Mission Control, which manages order allocations in real time; Fee Point, to dynamically calculate settlement services and governmental fees; and Metrix, for visibility into provider performance.

OpenClose MortgageFlex Systems Lending mortgageflex.com

MortgageFlex provides its clients with a gamut of services, including LOS support through its LoanQuest loan origination system, which supports all lending functions from lead management and prequalification to closing, funding, post-closing and secondary marketing function. Other offerings include the Origination Branch Portal, enabling branch employees to start a loan application, check its status and give updates to borrowers; the Web Consumer Portal acts as a virtual loan officer for potential borrowers and provides 24/7 access to apply for a loan; TPO Portal, a point-of-sale application that allows third-party originators to upload a loan file or enter a loan application, and Servicing and REO systems, which provide real-time access to data and are available as standalone products or as part of the LoanQuest platform.

Lending openclose.com

Multi-channel LOS provider OpenClose offers a variety of 100% browser-based solutions for lenders, banks and credit unions. The company’s solution set includes LenderAssist, an end-to-end, browser-based LOS platform which is offered on a SaaS basis. OpenClose also offers DecisionAssist PPE that accompanies LenderAssist; OC Correspondent, a standalone browser-based platform which automates the correspondent lending channel, OC Optics, a powerful data analytics and reporting application that provides companies with newfound visibility and reporting over revenue-generating and departmental performance and activities. The company continues to grow at a rapid pace, seeing 101% compounded growth over three years.

Optimal Blue Lending, Servicing, Investments optimalblue.com

Morty Lending morty.co

Morty is reimagining how consumers get a mortgage by going beyond and originating loans at a fraction of the time and cost. Morty uses an online broker model that provides home buyers with a Kayak-like shopping experience across a vast network of lenders. A buyer’s financial snapshot is created instantly and then used in an algorithm to match the buyer with lenders and loan products. Morty works directly with the lender to originate the loan, automating the underwriting process and controlling the experience from start to finish.

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Optimal Blue’s offerings include an enterprise product and pricing engine, sophisticated secondary marketing workflow tools, a real-time hedging platform, and data analytics. Optimal Blue operates the largest SaaS-based network for investors and lenders and surrounds its network with solutions for best execution, loan quoting to 99.99% accuracy, pricing distribution, profitability and compensation administration, pipeline risk management, and competitive analysis. Optimal Blue Banker provides lenders with improved workflow efficiencies delivered through strategic pricing, distribution and workflow tools. The customizable platform can be tailored to fit any lender’s business model and features competitive tools such as dynamic mark-ups, private label or custom products and loan originator compensation.

Pavaso

Qualia

Lending, Investments, Real Estate pavaso.com

Lending qualia.com

The Pavaso Platform is a set of applications used by lenders, consumers, title companies, real estate agents and investors to communicate, collaborate, and deliver information, documents or processes necessary to the overall mortgage transaction. The platform streamlines and digitizes the closing process, and eliminates redundancies between business partners. Apps included in Pavaso’s platform include Digital Close, an eClosing solution that enables businesses to completely digitize the pre-closing process; select a closing in paper, hybrid or fully digital and transparently document the process step by step along the way. The app also offers Electronic Closing Platforms, which allows the closing table to be anywhere without compromising the quality of the transaction. Pavaso has increased their customer base by 30% in 2016 as more digital processes are adopted in the industry.

Qualia is a cloud-based title and closing software that unifies every part of the closing process with modern technology. Qualia brings title and escrow production, advanced reporting, document preparation and storage, secure email, accounting, task management, customer relationship management, and vendor management into a single intelligent platform. Qualia enables title agents to easily automate redundant, low-value activities, and gain a leg up on their competition through a host of advanced business management features, including: extensive integrations, intelligent tasking, comprehensive business reporting, connected banking, and secure email and chat.

Quandis Lending, Servicing, Investments, Real Estate quandis.com

PCLender Lending home.pclender.com

PCLender’s scalable, enterprise-class system provides automation solutions to streamline all stages of the mortgage banking process, including loan origination, application processing, approval, closing, and delivery of loans to the secondary market for any lender. The company’s loan origination and mortgage loan application software product suites capture all consumer entry points, simplifying the process for consumers, not just lenders. PCLender’s systems are an all-inclusive solution with software, hardware, vendor interfaces, and table/data management to facilitate the implementation of “Best Business Practices” for mortgage lending and data security solutions.

California-based Quandis is an enterprise-class default management software company which specializes in web-based default servicing solutions for mortgage bankers. Quandis’ solutions include Quandis Default Management, an all-in-one, browser-based default management platform. QDM enables servicers and their vendor networks to efficiently and compliantly automate the lifecycle of loans that are in default. The company also offers Quandis Business Objects, an extremely powerful and easy-touse rules engine that places the management of rules in the hands of the business user, not IT.

QuestSoft Lending questsoft.com

Pruvan Servicing pruvan.com

Pruvan is a customizable software and mobile app solution that delivers real-time field visibility to better manage quality, costs, and work crews. Companies that use Pruvan receive payments faster by providing clients with third-party certified and tamper-proof photos, videos, and mobile forms that validate work. Pruvan provides businesses with an open API to easily integrate to its solution. Pruvan’s tamper-proof field data has led the transition to smart phones as a way to reduce fraud and provide accurate, trusted results. Field results are securely transferred to an office or client, reducing the number of hours needed to organize field data and complete paperwork.

QuestSoft is a provider of automated compliance review software and specializes in mortgage compliance, including the Home Mortgage Disclosure Act, Community Reinvestment Act, fair lending, automated compliance rules and other settlement services to more than 2,200 banks, credit unions and mortgage companies nationwide. QuestSoft technology offerings include Compliance EAGLE software, which uses automated rule sets to identify regulatory exceptions and Compliance RELIEF, which combines the company’s best-selling products including HMDA RELIEF and CRA RELIEF, as well as tools for automating other supported regulations including NMLS Call Reporting, Fair Lending, geocoding and electronic mapping, all-in-one platform. QuestSoft also develops and maintains a census-based geocoding product, Instant Geocoder, for address verification.

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QuickenLoans

Redhawk Research

Lending rocket.quickenloans.com

Investments jonahfcm.com

Rocket Mortgage by Quicken Loans is the first end-to-end completely online and on-demand mortgage experience. Rocket Mortgage gives consumers the ability to electronically import their asset, property and income information, fully customize their mortgage, and be approved in minutes. Rocket Mortgage is the first mortgage process that allows users to get home financing without speaking to a banker, if they so choose. An average of eight days is cut off from the closing time if clients import their income and asset information to Rocket Mortgage. By reducing loan approval time, clients have an advantage in competitive housing markets.

Redhawk’s Jonah is a hosted web application that offers market-leading visualization tools to streamline and simplify the management of distressed residential mortgage portfolios. The tool combines portfolio level tools with data-driven, asset-level clarity into the foreclosure and bankruptcy processes. Jonah consumes and analyzes data from existing default platforms to identify the current step of foreclosure and measure timeline performance at a state-specific process level. Jonah simplifies foreclosure process exception management and makes it more effective, saving organizations time and money through timeline reduction and increased labor productivity. Jonah’s feature set now offers expanded analytics including servicer timeline performance benchmarking, loan level percentile risk scoring, and other portfolio level and operationally actionable data analytics.

Rate Reset Lending ratereset.com

Rate Reset offers portfolio mortgage retention software which can save a loan from pre-payment even if it’s three days before closing with another lender. The company’s Payoff Deflector software is a SaaS solution which can be implemented in less than seven days with very limited IT resources required by the lender and no online banking integration required. Rate Reset produces an encrypted data URL, which will display the customer’s current loan information and an offer/offers from their bank to change the terms on their existing loan. The borrower can proceed with the offer and Loan Deflector will display proper disclosure forms and sign electronically. Once signed, the software updates the core servicing system with the new terms.

Rekon Technologies Servicing Rekon.com

Rekon’s leading software is the most widely adopted lien release and assignment technology in the mortgage industry and is used by the majority of the top 10 mortgage servicers. The software leverages automation to prepare lien releases and assignments according to the unique standards of each of the country’s recording offices. The tool significantly increases efficiency while reducing recording errors and penalties, streamlining the lien release and assignment recording process to minutes instead of a days- or weeks-long process. Rekon maintains constant contact with the country’s 3,600-plus recorder’s offices, enabling the company to stay up-to-date of all changes in recording requirements.

Realty Pilot Servicing, Investment, Real Estate realtypilot.com

Realty Pilot is a cloud-based enterprise solution acting as a back-office system for agents, brokers, institutions and third parties. It also offers a public-facing offer management system that automates the process, eliminating the need for email. Its back-office solution virtualizes an individual’s business or converts an entire brokerage to a paperless operation by providing processes such as transaction management, document management, tasking, contractor bid and work orders, CRM solution, commission tracking, accounting, mobile smartphone app, messaging, date stamp and digital signatures. The company expects to launch a new decisioning tool that helps servicers and asset management companies determine best execution at every stage of default. In 2016, Realty Pilot saw its revenue increase by 25% and its user base grow by 125%. 52 HOUSINGWIRE ❱ MARCH 2017

RES.NET Lending, Servicing, Real Estate res.net

RES.NET is a technology platform comprised of four unique and distinct portals for mortgage servicers, real estate agents, vendors and homeowners. The Loss Mitigation portal houses the Short Sale portal and Deed in Lieu module; the REO portal allows servicers to manage the entire REO disposition process; the Valuations portal allows clients to order, route, track and complete valuation orders, and the PropertyCure data portal provides solutions for claims processing, violation and bid oversight and property registration. All four portals also feature a customizable workflow and robust reporting functions, allowing customers to maximize efficiency.

ReverseVision

Sapiens DECISION

Lending, Servicing, Investments reversevision.com

Lending, Servicing, Investments sapiensdecision.com

ReverseVision’s RV Exchange serves as an exchange connecting brokers, lenders, investors and service providers in one platform. Users are able to share documents and information for each part of the loan process within the same loan file, reducing or eliminating errors and redundancies throughout the lifecycle of a reverse mortgage. RVX enables lenders to issue closing documents, pay insurance premiums, schedule and conduct closings, and deliver the same reverse mortgage package to investor partners without needing to use third-party systems. RVX connects users to vendor services and provides loan cycle updates in real time.

The Sapiens DECISION Suite is comprised of several components to manage and translate business logic into operational code. It features several products, including DECISION Manager, which use interactive modeling software and methodology to help organizations manage the business logic that drives their automated business decisions. Its DECISION Deployment Adapters transform business logic into fully deployable modules targeting specific execution environments. Performed by adapters, the transformation supports a wide range of business rules and procedural languages. Additionally, DECISION Deployment Adapters enable users to develop their own adapters for unsupported languages.

RiskSpan Investments riskspan.com

RiskSpan offers a highly secure, fast, and fully scalable platform that, when combined with sophisticated predictive models and analytics, provides the tools to gain powerful insights and a competitive advantage. RS Edge is a data analytic software that supports analysis of historical loan data while allowing users to leverage predictive analytics to analyze forecasts under a range of economic scenarios. RiskSpan hosts a range of commercial data and loan performance data offering users access to current and historical data on Ginnie Mae, Fannie Mae, and Freddie Mac loans and pools. RiskSpan also offers RS Risk Service, a secure, fast, scalable, risk analytics platform which enables portfolio managers to monitor and act on risk information.

Scrypt Lending, Servicing, Investments, Real Estate scrypt.com/xdoc

This company is the provider of XDOC, a cloud-based electronic document management system for mortgage lending that helps to speed up the loan process by supporting the full lifecycle of a mortgage. XDOC is designed for high performance, scalability, and full function integration with third-party applications. Lenders using XDOC shave days off of underwriting and increase the number of loans processed by an average of 28%. The demand for the product increased significantly recently, boasting XDOC sales increases of more than 50% over the past five years.

Simplifile Roostify Lending roostify.com

Roostify makes it easier for buyers and lenders to navigate the frustrating and time-consuming mortgage application process. Developed by technology, real estate, and mortgage banking experts, Roostify’s secure interface allows borrowers to easily apply for a mortgage and all parties involved to seamlessly share and track information, documents, and transactions – leading to a faster closing. Roostify is capable of processing a full mortgage application in 10 minutes and processing a full loan package in 20 minutes. In the past 12 months, Roostify has grown into a technology platform that has captured the attention of leading banks and mortgage lenders across the country, leading to strategic partnerships with Ziplogix, DocMagic, GenWorth, and others.

Lending, Servicing, Real Estate simplifile.com

Simplifile Collaboration enables lenders and settlement agents to share, receive, and validate documents and data. This independent service gives visibility and provides a platform for collaborating on fee data, documents, and transaction details. Simplifile allows users to share changes, updates, deficiencies, and statuses within one system. The company also automates the post-closing process by enabling settlement agents to electronically provide their lenders with recorded documents and data, estimated recording fees and transfer taxes, and estimated recording times, reducing follow up calls with lenders.

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Sperlonga Data

Street Solutions

Lending, Servicing, Investments, Real Estate chronossolutions.com

Lending streetsolutions.com

Sperlonga Data was introduced in 2011 as the first solution which allowed mortgage servicers and investors to deliver reliable, easily retrievable, and standardized data on existing accounts. In 2016, after proving itself with financial institutions such as Chase, Bank of America and Wells Fargo, Sperlonga rolled out the technology to the HOA industry, enabling management companies to better manage the risk associated with HOA budgets and the timely collection of assessment payments. Sperlonga delivers a potential benefit for the 27 million residents of the estimated 333,000 community associations, according to the Community Association Institute.

Street Solutions, Inc.’s loan management system (LMS) is an end-to-end platform for managing loan processes from purchase through exit, with modules for traders, credit risk managers, surveillance, operations, accounting, and more. LMS enables users to manage the secondary mortgage process from acquisition to exit bringing together status management, due diligence processing, collateral results tracking, and funding. One feature, LMSConnect, allows correspondent sellers to log in directly to a portal managed by the client. Sellers can price and lock loans against an investor’s programs, submit documentation, clear issues found during diligence, and review fundings all from one place.

SS&C Lending, Servicing, Investments ssctech.com

This company developed a product called Precision LM, a fully-integrated system that supports loan origination and acquisition, servicing and accounting with a single point of entry. The platform is designed specifically for investors and servicers in the residential loan space. Key features include automated onboarding of newly purchased or originated loans, including loans with credit deterioration, automated shadow servicing and servicing oversight of third party servicers, loan level and pool level accounting with daily interest accrual calculations on loans and much more.

Tavant Technologies Lending, Servicing, Investments, Real Estate tavant.com

Tavant Technologies provides specialized software solutions. Tavant has expertise in helping mortgage firms convert more leads, cut costs and retain borrowers by providing digital technology solutions, expertise across the loan lifecycle – from lead management, sales, processing underwriting and more. Tavant’s newest offering, Tavant VELOX, is a point solutions suite that helps cut originating loan costs by as much as 40% or more. Tavant’s latest suite of tools optimizes the back-end solutions and simplifies the front-end experience by changing the paper-saturated and time consuming loan fulfillment process into an efficient flow of data.

Street Resource Group Lending streetresource.com

As a technology and consulting company dedicated to mortgage warehouse lenders, this company created its flagship technology product, the Warehouse Loan System. The technology completely automates the entire mortgage warehousing process and improves efficiency and profits for both warehouse lenders and independent mortgage bankers. WLS enables lenders to complete a warehouse transaction that used to take two days in less than 10 minutes as it provides an electronic process for requesting and securing warehouse loan funds. WLS also provides mortgage bankers with real time access to their orders, pipeline management tools, individual loan status, reports and other tools.

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Vantage Production Lending vantageproduction.com

Vantage Production’s simplified mortgage-centric CRM tool, VIP, is a cost-effective cloud-based service. The company’s most recent data from a closed month suggests that more than 3.2 million borrowers received marketing messages from MLOs using Vantage’s product solutions. Communications like these cover the full lifecycle of the borrower from lead, to prospect, to prospect-in-process, to closed loan and beyond. Vantage users are among the nation’s top mortgage loan originators and its solutions have been developed to help nearly 1,200 lenders and thousands of individual mortgage loan originators.

Velocify

Whiteboard Mortgage Software

Lending velocify.com

Lending whiteboardmortgage.com

Velocify has established themselves as a provider of cloud-based intelligent sales automation solutions that drive more effective and efficient sales processes and improve lead conversion rates. Through lead management software, automated dialing, lead scoring and other tools, the company has helped more than 1,500 companies and 650 lenders automate and improve borrower response times and closing rates. Its newest offering, LoanEngage, is an all-in-one platform for mortgage marketing and sales that brings together automated marketing, lead management and referral partner management features. The automation enables both lenders and loan officers to create tailored, consistent and compliant marketing materials at all stages.

This company created a product whose primary goal is helping mortgage professionals close more loans, create better relationships and increase referrals by automatically staying in touch with their contacts through the entire loan origination process. The new technology allows lenders to install and leverage dynamic business strategies across their entire enterprise, maintain all sales, marketing, and follow-up campaigns while ensuring company-wide compliance. Whiteboard Mortgage CRM features daily dashboards, real-time reports, and hundreds of ready-made campaigns and templates.

Wipro Gallagher Solutions Veros Lending, Servicing, Investments veros.com

Veros is the official technology provider of the FHA’s Electronic Appraisal Delivery Portal. Veros is also the official technology provider for Fannie Mae and Freddie Mac’s Uniform Collateral Data Portal. Veros continues to support and maintain both the UCDP and EAD portals and was the first technology provider to offer both the UCDP and EAD Error Preview tool, which automates appraisal quality control checks to help mortgage professionals identify and resolve appraisal errors prior to submitting to the secondary market. More than 38 million appraisals have been delivered to both portals, creating a vast database of property data.

Lending wipro.com

This company created an end-to-end point-of-sale system and loan origination system, NetOxygen. It will guide users through the entire origination lifecycle and automates compliance at every step, maximizing productivity. NetOxgen’s flexible architecture improves customer experience by allowing lenders to define business rules and customer-driven workflow, integrate with proprietary and third-party digital extensions, and roll-out new business processes. It creates lending operations from lead management and point-of-sale through closing, post-closing and secondary marketing.

XINNIX VirPack Lending, Servicing virpack.com

The document management and delivery system at VirPack enables lenders to manage the growing number of electronic, digitally executed and paper based documents required to process, underwrite, close, sell and service a loan. It supports nine methods of capturing documents and images and automates the identification and indexing of the documents using forms recognition and OCR technology. It also features a one-click electronic loan delivery function, which offers more than 75 preconfigured delivery profiles and stacking orders enabling it to instantly prepare and deliver loan files to investors and service providers in the format they require.

Lending xinnix.com

This mortgage academy revolutionized student learning with its mobile and desktop application. The app enables users to see student’s production grow, energize and congratulate their success, scan the leaderboard to see who’s ahead of the rest and even celebrate a student of the week. The app provides different views for the loan officer in training, their manager and the XINNIX trainers. Trainers can also track how long it is taking trainees to complete the program. They can also track their communication with each student. Managers also have access to see how their loan officers are performing.

“When you innovate, you’ve got to be prepared for everyone calling you nuts.” — Larry Ellison HOUSINGWIRE ❱ MARCH 2017 55

56 HOUSINGWIRE ❱ MARCH 2017

PLAYING IT SAFE Cybersecurity remains a hot-button topic for 2017 BY CAROLINE BASILE Cybersecurity is top of mind for many following a record year where it dominated the news cycle. 2016 saw numerous security breaches, including the successful breach of the Democratic National Committee’s computer systems, where hackers were able to work for seven months, sending phishing emails that ultimately scored a huge win: the account of John Podesta, chairman of Hillary Clinton’s presidential campaign.

HOUSINGWIRE ❱ MARCH 2017 57

TYPES OF DATA BREACHES MALWARE — MALICIOUS SOFTWARE: USED TO COMPROMISE COMPUTER FUNCTIONS, STEAL DATA, BYPASS ACCESS CONTROLS AND CAUSE HARM TO HOST COMPUTERS

BUG

ADWARE

AFLAWTHATPRODUCESUNDESIREDOUTCOME.SECURITYBUGSALLOWATTACKERS TOBYPASSUSERAUTHENTICATION,OVERRIDE ACCESS PRIVILEGES, STEAL DATA

OFTEN BUNDLED WITH SPYWARE

BOTS

AUTOMATICALLY PERFORM SPECIFIC OPERATIONS

BOTNETS

RANSOMWARE

HOLDS A COMPUTER SYSTEM CAPTIVE WHILE DEMANDING A RANSOM, RESTRICTS USER ACCESS TO THE COMPUTERBYLOCKINGDOWNTHESYSTEM AND DISPLAYING MESSAGES THAT ARE INTENDED TO FORCE THE USER TO PAY THE MALWARE CREATOR TO REMOVE THE RESTRICTIONS AND REGAIN ACCESS

COLLECTIONS OF COMPUTERS TO BE CONTROLLED BY THIRD PARTIES

inancial institutions continue to battle malicious attacks from every side and even the august New York Federal Reserve proved it was vulnerable when cyber thieves walked away with $80 million in February 2016. A serious threat across the world, Lloyd’s estimated in 2015 that cyber attacks cost businesses as much as $400 billion a year, and a Forbes story from January of this year predicts that number to quadruple by 2019. Last year, the number of data breaches in the United States reached an all-time high of 1,093, a 40% spike over the 780 reported for 2015, according to a new report from the Identity Theft Resource Center and CyberScout. 2017 isn’t shaping up to be any better. One of the first notable attacks of the year occurred shortly after New Year’s Day. On January 11, London-based Lloyds Banking Group experienced a two-day-long distributed denial of service (DDoS) attack across the group’s web58 HOUSINGWIRE ❱ MARCH 2017

sites, including Halifax and Bank of Scotland. The attack made it difficult for customers across Lloyds’ brand sites to log in to their accounts. The company initially denied it was under an attack and blamed the breakdown in services to “technical issues” but it was later revealed to be a DDoS attack, a type of intrusion where the perpetrator uses thousands of unique IP addresses to assault the bandwidth or resources of a targeted system. The end result is to deny legitimate site users access to a service or website. The attackers did not get very far with Lloyd’s. IT security experts with the bank “geo-blocked” the source of the attack, effectively blocking the attackers over the server from launching the attacks. Unfortunately, the geo-blocking measure also prevents legitimate customer requests for that area, too. The attackers then move to another server, and the geo-blocking game begins again. With these growing threats, it is now critical that companies in the mortgage finance space develop an infor-

VIRUS:

ROOTKIT REMOTELY ACCESSES A COMPUTER WITHOUT BEING DETECTED BY USERS OR SECURITYPROGRAMS,HASTOBEMANUALLY REMOVED

WORM

SPYWARE

SPIES ON USER ACTIVITY WITHOUT THEIR KNOWLEDGE, CAN ALSO MODIFY SECURITY SETTING OF SOFTWARE OR BROWSERS

TROJAN HORSE

DISGUISES ITSELF AS A NORMAL FILE OR PROGRAMTOTRICKUSERINTODOWNLOADING AND INSTALLING MALWARE. GIVES REMOTEACCESSTOANINFECTEDCOMPUTER

WEB SPIDERS SCRAPE SERVER DATA

COPIES ITSELF AND SPREADS TO OTHER COMPUTERS BY ATTACHING ITSELF TO VARIOUSPROGRAMSANDEXECUTINGCODE WHENAUSERLAUNCHESTHOSEPROGRAMS

WORM: SPREAD OVER COMPUTER NETWORKSBYEXPLOITINGOPERATINGSYSTEM VULNERABILITIES, CAUSING HARM TOTHEIRHOSTNETWORKSBYCONSUMINGBANDWIDTHANDOVERLOADINGWEB SERVERS. DIFFERENT FROM REGULAR VIRUSES BECAUSE THEY HAVE THE ABILITY TO SELF-REPLICATE ANDSPREADINDEPENDENTLY,WHILEVIRUSESRELYONHUMAN ACTIVITY TO SPREAD

ZOMBIE

AFTER INFECTION, COMPUTER IS USED BY A COMMAND AND CONTROL SERVER, WHEN THOUSANDS OF COMPUTERS ARE INFECTED THEY INSTANTANEOUSLY SEND NETWORK REQUESTS TO A TARGET HOST IN A DDOS ATTACK

SOURCE:VERACODE,ALIENVAULT,PCWORLD,NORTON

mation security plan, and make sure their vendors are covered too. It’s not enough to ensure the data of one company is protected, the next step is to make sure that any third-party company involved is also serious about protecting information. ONE COMPANY’S APPROACH In the midst of this cyber war, one third-party vendor is taking serious measures to ensure its employees are handling sensitive information carefully, minimizing the risk the information could fall victim to an attempted hack. Black Knight Financial Services uses constant and consistent employee education to create an environment where each employee is held responsible for what they click. Peter Hill, chief risk officer for BKFS, explained the company’s commitment to protecting consumer data. “As a premier provider of technology to the mortgage

industry, we are committed to and laser focused on protecting our client’s data. Because opportunities for risk never stop, we continuously implement new and innovative ways to mitigate this risk.” BKFS uses a variety of methods to keep employees on their toes, including phishing training to test employees on potential phishing scams. On a monthly basis, BKFS uses the PhishMe simulator to send a potential threat email to employees as a test. There’s a built-in button that users can click to alert the IT security department of the threat, or employees may open the email, alerting the company that there’s a need for more specific training. BKFS began sending the tests to limited audiences at the end of 2014 and steadily increased to 100% of employees in 2016. Since implementing monthly testing, the success rate (the rate of employees that report the email versus opening it) of the tests has improved significantly, with recent months showing more than a 100% improvement. HOUSINGWIRE ❱ MARCH 2017 59

SOCIAL ENGINEERING SCHEME

MORE DATA BREACHES

SOCIAL ENGINEERING SCHEME — AN ATTACK WHERE THE PERPETRATORS ARM THEMSELVES WITHENOUGHINFORMATIONTOPASSTHEMSELVES OFF AS A KNOWN AND TRUSTED INDIVIDUAL OR ORGANIZATION AND CONVINCE THE VICTIM TO REVEAL VALUABLE PERSONAL INFORMATION LIKE PASSWORDS OR LOGINS.

SPEAR PHISHING SCANS SOCIAL NETWORKING SITES AND USES YOUR PERSONAL PREFERENCES TO POSE AS A FRIEND OR RETAILER YOU VISIT AND ASK FOR PASSWORD OR OTHER INFORMATION

WATERING HOLE

SCANS SOCIAL NETWORKING SITES AND CAREFULLY SELECTS THE MOST APPROPRIATE LEGITIMATE SITES TO COMPROMISE—WHEREYOUGOMOSTOFTEN, LIKE A WATERING HOLE. THIS IS A SLOW APPROACHTHAT’SHARDTODETECT.USEDWHENTHEATTACKER WANTSTOATTACKAPARTICULARGROUP(ORGANIZATION,INDUSTRY, OR REGION). THE ATTACK CONSISTS OF THREE PHASES: A GUESS(OROBSERVE)WHICHWEBSITESTHEGROUPOFTEN USES. A INFECT ONE OR MORE OF THESE WEBSITES WITH MALWARE. A EVENTUALLY, SOME MEMBER OF THE TARGETED GROUP WILL GET INFECTED. RELYING ON WEBSITES THE GROUP TRUSTS MAKES THIS STRATEGY EFFICIENT EVEN WITH GROUPS THAT ARE RESISTANT TO SPEAR PHISHING AND OTHER FORMS OF PHISHING.

SOURCE: VERACODE, ALIENVAULT, PC WORLD, NORTON

The simulator program received the 2016 award for Best IT-Security Related Training Program from the SC Awards, which celebrates the top performers in the information security field. WHAT IS PHISHING? There’s a reason BKFS decided to target emails. The annual ITRC report breaks down the 2016 breach data by type of occurrence, and for the eighth year in a row, hacking, skimming and phishing attacks were the leading cause of security breaches, making up 55.5% of attacks, a 17.7% increase since 2015. According to ITRC, many of these were a result of CEO spear phishing attempts. Better known as email compromise schemes, these attacks expose highly sensitive information, including Social Security numbers and business tax information. Taking advantage of users by email, these scams are known for tricking customers into giving out personal information such as credit card numbers, passwords, and bank account information. Phishing emails are deceptive in nature. They are made to appear like a legitimate email from someone you know or are expecting to hear from. Hill explained that an employee could get an email around Halloween, for example, about a costume dress code. The email would ask the recipient to follow a link to retrieve the document 60 HOUSINGWIRE ❱ MARCH 2017

and that link immediately creates an exploitable vulnerability in the system. Malicious emails are becoming more sophisticated and more realistic every day. Emails disguised as messages from popular services like Netflix or Gmail are tempting for anyone to open at first glance, so constant and effective training is necessary to help employees recognize a potentially threatening email. “Our employees are our first line of defense in risk and security management, which makes finding effective training and awareness techniques critical to the safety and soundness of the company,” Hill said. “Continuous education on information security is the only way to make employees aware of and teach them how to avoid the behaviors that may put a company at risk.” Hill stressed how crucial the “tone at the top” is regarding information security, because employees are more likely to understand the gravity of the issue if they understand its importance for upper-level executives. “The employees won’t get that impression unless they hear it from the top,” Hill said. Financial institutions and the vendors they hire can implement different cyber defense strategies such as white hat testing, which is where an ethical hacker or cyber security expert attempts to hack, or breach, the system to find any flaws, plus data encryption, multifactor authentication and network segmentation.

The threat landscape is evolving exponentially. Data thieves are getting bigger and better and may not only have money in mind when they hack. Hacktivists and nation-state hackers may have other motives for stealing personal data and information. The hack on the Office of Personnel Management in 2015 compromised the sensitive information of 22.1 million people, but no one knows, even now, what those records have been used for. “These are not just teens hacking into companies from the garage,” Hill said. “They don’t just break in to steal data, it’s also done to damage reputation and to damage the website.” It’s that type of reputational damage that hurts smaller financial institutions and vendors the most. Hill explained that while smaller companies may not have the budget or resources to implement a high-tech information security plan, they also don’t have the same number of customers and may not see the same number of threats that larger companies, like JPMorgan Chase and Bank of America, do. But, larger institutions are able to afford to have fully developed IT departments to oversee security and monitor for any potential vulnerabilities or threats and implement countermeasures when threats do arise. DEFENSIVE POSTURE Regulators have been warning companies in the mortgage space for years that they need to take this issue seriously. While the Federal Trade Commission has typically been the enforcer of data security policies, the Consumer Financial Protection Bureau, emboldened with its reach of authority, has also entered the data security enforcement field. In March 2016, the CFPB took action against online payment system company Dwolla, Inc. The CFPB alleged Dwolla engaged in deceptive business practices by failing to maintain adequate data security practices by not adopting and implementing reasonable and appropriate data security policies and procedures. Dwolla settled with the CFPB, agreeing to cease misrepresentation of its security measures and practices, implement comprehensive (and no doubt, costly) data security measures and policies, hire or designate a qualified person to oversee and coordinate a data security program, repair existing security weaknesses found on web and mobile applications and, of course, pay a $100,000 fine. While proponents of regulation argue the need and effectiveness of having the CFPB oversee data security, the irony is that the CFPB has its own work cut out for it in this regard. In October 2016, the Office of the Inspector General released a memorandum outlining four management challenges for the bureau. The area of most importance? Ensuring an effective information security program. “Although the CFPB has transitioned its IT infrastructure from the U.S. Department of the Treasury and continues to mature its information security program, it faces challenges in fully implementing its information

security continuous monitoring program, including a comprehensive data loss prevention system, and overseeing the security of contractor-operated information systems,” the memo read. The OIG concludes in the memo, addressed to CFPB Director Richard Cordray, that the bureau does not have a comprehensive set of policies for some areas and that its staff were not completely aware of and compliant with existing procedures and policies. In September, the New York Department of Financial Services unveiled a set of cybersecurity regulations designed to beef up security measures for banks, insurance companies and other financial services companies that operate within the state. The regulations require all institutions subject to NYDFS supervision to establish and maintain a cybersecurity program meeting “certain regulatory minimum standards” and require additional levels of security when working with third-party service providers, as most lenders do. The third-party servicers should expect these regulations to trickle down to them, as well, if they are working with sensitive financial data. Revisions made to the NYDFS regulations late in 2016 created a small business exemption for companies that have less than 10 employees, $5 million in gross annual revenue, or $10 million in year-end total assets, providing some relief to smaller banks and lenders, who are the ones who truly feel the burn from data breaches. Unlike their larger counterparts, small community banks and credit unions can’t always shoulder the cost of an attack on confidential user data. Money aside, the biggest loss for a company can be losing a consumer’s trust and business. “These are valuable assets your customers have entrusted you with,” Bill Kresse said. Kresse is an assistant professor at Governors State University in Illinois and is the former director of the Center for the Study of Fraud and Corruption at Xavier University. “Just as you wouldn’t use a cigar box to hold valuables, don’t use something basic for private information. If a company is breached, customers won’t just feel their own losses, they’ll feel betrayed.” Kresse said the costs for a company that has been breached is about $7 per consumer breached, but the costs incurred by the consumer go well beyond just money. The effects of having personal information stolen can last a lifetime, involving months of work to clean up and recover personal data and deter further use of that data for illicit activities, like signing up for credit cards, payday loans and wire transfers. “It can last until after you’re dead,” Kresse said. Financial institutions that don’t give enough attention to data security are underestimating the long-term impact that a data breach will have on their bottom line — and their reputation. Fighting on the front lines of this battle, companies in the mortgage industry have to be constantly and creatively vigilant. HOUSINGWIRE ❱ MARCH 2017 61

Inside Baseball

62 HOUSINGWIRE ❱ MARCH 2017

Inside Baseball

DODD-FR A N K ROLLBACK TRUMP SIGNED THE EXECUTIVE ORDER, BUT WHAT DOES IT MEAN? BY BEN LANE

PRESIDENT DONALD TRUMP SIGNED AN EXECUTIVE ORDER on Feb. 3 that begins to roll back the Dodd-Frank Wall Street Reform Act, the landmark legislation passed in wake of the financial crisis. The executive order laid out six “core principles” for the country’s financial regulatory system moving forward. Those principles are: u Empower Americans to make independent financial decisions and informed choices in the marketplace, save for retirement, and build individual wealth. u Prevent taxpayer-funded bailouts. u Foster economic growth and vibrant financial markets through more rigorous regulatory impact analysis that addresses systemic risk and market failures, such as moral hazard and information asymmetry. u Enable American companies to be competitive with foreign firms in domestic and foreign markets. u Advance American interests in international financial regulatory negotiations and meetings. u Restore public accountability within federal financial regulatory agencies and rationalize the federal financial regulatory framework. House Financial Services Committee Chairman Rep. Jeb Hensarling, R-Texas, who stood by Trump’s side when he signed

the order, said that the order “closely mirrors” the Financial CHOICE Act, the Republican effort to repeal and replace Dodd-Frank. As one might expect, mortgage industry reactions came in fast and furious following the executive order. And unsurprisingly, those reactions varied wildly, with left-leaning people and organizations calling the move an outrage and other assorted adjectives, and those that lean right having the polar opposite reaction. “Dodd-Frank failed to keep its promises, but President Trump is following through on his promise to the American people to dismantle Dodd-Frank,” Hensarling said. “That’s not what Wall Street wants, but it is what hardworking Americans need to have a healthy economy with more opportunities so they can achieve financial independence,” Hensarling added. “Republicans are eager to work with the president to end and replace the Dodd-Frank mistake with legislation that holds Wall Street and Washington accountable, ends taxpayer-funded bailouts forever, and unleashes America’s economic potential.” On the other end of the political spectrum is Sen. Elizabeth Warren, D-Mass., who went scorched earth in declaring her opposition to Trump’s move. “Donald Trump talked a big game about Wall Street during his campaign — but as president, we’re finding out whose side he’s really on,” Warren said in a statement. HOUSINGWIRE ❱ MARCH 2017 63

Inside Baseball

“

If a law designed to reduce the influence of big banks makes them more influential and decreases access to credit for small business owners and entrepreneurs, it deserves to be axed.”

“Today, after literally standing alongside big bank and hedge fund CEOs, he announced two new orders - one that will make it easier for investment advisors to cheat you out of your retirement savings, and another that will put two former Goldman Sachs executives in charge of gutting the rules that protect you from financial fraud and another economic meltdown,” Warren continued. “The Wall Street bankers and lobbyists whose greed and recklessness nearly destroyed this country may be toasting each other with champagne, but the American people have not forgotten the 2008 financial crisis - and they will not forget what happened today.” Tim Pawlenty, the former Republican Party presidential candidate and current CEO of the Financial Services Roundtable, said that the president’s executive order is a good first step. “Modernizing America’s financial regulatory system in ways that will grow the economy, create jobs and protect consumers as well as taxpayers is a key ingredient to boosting financial opportunities for America’s families and businesses,” Pawlenty said. And back on the left, Stephanie Taylor, co-founder of the Progressive Change Campaign Committee, said that Trump’s move shows his true colors. “Just so it’s clear, Trump is siding with Wall Street bankers once again. After holding a closed-door meeting with Wall Street CEOs to seek their blessing, Trump is rolling back Dodd-Frank’s consumer protections and a requirement for financial advisors to act in their clients’ best interests — not their own,” Taylor said. “Trump just made it easier for Wall Street to steal billions from working families — and creates the conditions for another massive financial meltdown in the future.” Dan Berger, the president and CEO of the National Association of Federally-Insured Credit Unions, welcomed the move, which could lighten the regulatory burden that credit unions face. “We welcome regulators taking a hard look at the Dodd-Frank Act for ways to lift current burdens, but we will also continue to press the CFPB to use the authority it has now to exempt credit 64 HOUSINGWIRE ❱ MARCH 2017

unions from regulations that were created to address abuses in which credit unions did not engage,” Berger said. “Ultimately, we look forward to the administration, Congress and the regulators working together to reduce regulatory burden. We will continue to advocate for credit unions’ best interests as this review moves forward.” On the other hand, John Taylor, the president and CEO of the National Community Reinvestment Coalition, said that the move shows the “worst tendencies” of the Trump administration. “The executive orders to unravel Dodd-Frank and rescind the fiduciary duty rule are an affront to families and communities across the country,” Taylor said. “The Dodd-Frank Wall Street Reform and Consumer Protection Act was enacted in 2010 to put in place sensible safeguards and protections for average, hardworking Americans and our economy and to prevent abuses by banks,” Taylor continued. “It was made law for a very good reason: to eliminate the predatory practices and risky behavior from Wall Street that led to an economic crisis that harmed the whole country and caused millions to lose their homes,” Taylor added. “President Trump’s actions today will ultimately be toxic for working families. He should reverse the orders. Rather than slashing consumer protections, the administration should be focused on ways to create jobs by requiring financial institutions to invest safely and soundly, to revitalize communities, to improve affordable homeownership opportunities for working people, and to ensure that the nation’s start-ups and small businesses have access to capital,” Taylor concluded. “Rather than just meeting with banking executives, as he did this morning, he should be holding them accountable and working to help working families that are struggling to climb the economic ladder.” Meanwhile, FreedomWorks CEO Adam Brandon said that he is “encouraged” by Trump’s executive order. “While the purported intent of supporters was to prevent another economic crisis, Dodd-Frank has centralized banking power into fewer big banks, crushing small town banks across the country. It has also made ‘too big to fail’ the law, rather than eliminating risks to taxpayers,” Brandon said. “I am encouraged that President Trump realizes that unintended consequences are just as important as other consequences. If a law designed to reduce the influence of big banks makes them more influential and decreases access to credit for small business owners and entrepreneurs, it deserves to be axed,” Brandon continued. “President Trump should make his case to the American people and congress, encourage them to pass repeal legislation, and sign it into law,” Brandon concluded. “I will be thrilled with any constitutional executive orders that begin to chop away at this

Inside Baseball

harmful law. Congress, however, must move on legislation to eliminate the harmful effects of Dodd-Frank.” Karl Frisch, the executive director of Allied Progress, said that Friday’s moves shouldn’t come as a surprise, considering who makes up the Trump administration. “If anyone thought Trump filling his administration with Goldman Sachs executives wouldn’t result in financial policy that stacks the deck against hardworking Americans, this should finally dispel that notion,” Frisch said. “America’s Swamp-Drainer-in-Chief has made it clear that his top priority is returning power to the big banks and financial institutions that helped wreck our economy and cost millions of Americans their homes and retirement savings,” Frisch added. “Because of the financial crisis they caused, millions still worry about the safety of their retirement savings. They shouldn’t have to worry about the priorities of their president too,” Frisch concluded. “It’s no surprise that former Goldman Sachs president Gary Cohn is running point for Trump on these initiatives.” However, some in the industry have argued that Trump’s ex-

ecutive order doesn’t do much by itself. Mayer Brown attorneys Laurence Platt and Joy Tsai wrote a blog that stated that the order, sets out the core principles for regulating the financial system. Despite calls that his administration would be “doing a big number on Dodd-Frank,” Platt and Tsai wrote, “His recent executive order on core principles appears to be more of a tempered call for analysis and review rather than an outright demolition of existing financial regulations, especially when read in light of the administration’s more drastic requirement that executive agencies must eliminate two existing regulations for each new one that it issues.” What the order does show, the blog explained, is where the administration’s policy is likely headed. The core principles identified in the executive order mirror key principles in the “Creating Hope and Opportunity for Investors, Consumers and Entrepreneurs” Act (CHOICE Act) by Hensarling. “A sign that the Executive and Legislative branches intend to collaborate to replace at least some Dodd-Frank provisions with CHOICE,” the blog stated.

Kudos GIVING BACK

• NEWDAY USA, a nationwide VA mortgage lender, presented children of fallen veterans with academic scholarships to distinguished military high schools. The scholarships were awarded during the halftime of the 2016 Military Bowl in Annapolis, Maryland in December. The NEWDAY USA FOUNDATION provides scholarships to children of fallen or severely wounded veterans, and those whose families have endured multiple, extended deployments. Since the inception of these scholarships in 2013, the foundation has committed approximately $1.2 million in

ING’S The Giving Network, a group of Network Funding employees and partners raised $5,000 to donate to HABITAT FOR HUMANITY and also helped build the walls to a house for a family in need. The company is based in Houston, Texas, and has been operating since 1998. scholarship funds to children attending select military high schools.

• INDEPENDENT SETTLEMENT SERVICES collected toys for 75 children during December as part of the SALVATION ARMY’S Treasures for Children program, which provides toys for families who come to their attention too late to qualify for the Angel Tree program. Based in Pittsburgh, Pennsylvania, ISS delivers real estate information solutions in all 50 states.

• Through NETWORK FUND66 HOUSINGWIRE ❱ MARCH 2017

• Twenty employees from REVERSEVISION teamed up with the SAN DIEGO FOOD BANK in January to help local residents in need. The employees spent a day of service at the food bank’s 80,000-square-foot warehouse in Miramar, California, checking expiration dates, inspecting donated food for quality, assembling 766 boxes of food for the Senior Food Program and packaging 2,500 pounds of potatoes for distribution.

Kudos

MILESTONES

AWARDS

• LEADING REAL ESTATE COMPANIES OF THE WORLD added 49 real estate firms in 21 countries to its network in 2016, increasing its coverage to more than 550 firms in 60 countries. The real estate community generates more than 30,000 referrals annuals for its members.

• LRES assisted in mitigating and preventing approximately 1,000 possible HOA foreclosures in 2016, which the company attributed to its improvements in its proprietary HOA Solutions platform, which allows LRES’ HOA Solutions department to run more efficiently and enables earlier detection of HOA liens.

2016 to pass the 50-customer mark for the first time, and has relocated to a new headquarters to accommodate additional staff. The company was founded in 2006 and is based in Greensburg, Pennsylvania.

• BESTBORN BUSINESS

• ERNST PUBLISHING CO.

SOLUTIONS, developer of Loan Vision, added 24 customers in

completed more than 250 million fee calculations in 2016, up from

150 million fee calculations the company has been providing for the past several years. The company also updated more than 6,062 data points in its patented closing cost fee engine last year, which represents almost two fee or data changes for every recording jurisdiction in the country.

LAUNCHES • ADKINS CAPITAL MANAGEMENT, a digital start-up company, launched a cloud-based residential real estate analysis software application to help prospective homebuyers. The Adkins Residential Home Valuation Analyzer is an Internet-based real estate analysis software that can help determine the level of under- or over-pricing of homes in a given community.

• For the third year in a row, Rhode Island-based SHAMROCK FINANCIAL won one of the National Best and Brightest Companies to Work For award. Handed out by the NATIONAL ASSOCIATION FOR BUSINESS RESOURCES, the competition acknowledges those businesses across the country that display their devotion to excellence in both their human resource principles and employee betterment programs. • In January, COLONIAL SAVINGS received a five-star rating from BAUERFINANCIAL for the 22nd consecutive quarter. The Fort Worth, Texas-based bank was commended for maintaining a strong capital position while fulfilling its commitment to solving the financial needs of the communities it serves.

SIGNINGS • In January, ALIGHT MORTGAGE LENDING signed GOLDEN EMPIRE MORTGAGE as a customer. HOUSINGWIRE ❱ MARCH 2017 67

Take 5

Industry leaders answer five revealing questions.

My guilty pleasure is...

playing games on my phone

LEAH FOX EVP Technology and Services Delivery, LoanLogics

After I am finished with my career I hope people remember…

that I was passionate about results

3 4

My most useful tech tool is…

Asana app

My bucket list includes…

teaching/tutoring

68 HOUSINGWIRE ❱ MARCH 2017

People would be surprised to know I...

have a black belt in Tae Kwon Do

Knowledge

Center

70 HOUSINGWIRE ❱ MARCH 2017

W H I T E PA PE R: Secur eView | SP ONSOR E D CON T E N T

Knowledge Center

Fixing the foreclosure fallout SHORTENING THE FORECLOSURE TIMELINE AND SECURING ASSETS IS KEY TO REDUCING COMMUNITY BLIGHT

THE PITFALLS OF A LONG FORECLOSURE PROCESS As the housing market continues to recover from the Great Recession, the overall number of foreclosure starts continues to fall on a nationwide basis. However, there are more than a dozen states where that trend reversed this year, and even more that saw an increase in foreclosure completions as they work through legacy inventory. In fact, according to RealtyTrac’s 2016 Midyear Foreclosure Market Report,1 26 states and the District of Columbia posted a year-over-year increase in REO activity, driving foreclosure completions up 48% above the pre-recession average. Even more troubling is that the time to foreclose in some states still tops 1,000 days. From the Midyear Foreclosure Market Report: • Foreclosures completed in the second quarter of 2016 took an average of 629 days from the first public notice of foreclosure to complete the foreclosure process, up from 625 days the previous quarter and unchanged from a year ago. • States with the longest foreclosure timelines were: • New Jersey: 1,249 days • Hawaii: 1,236 days • New York: 1,058 days • Utah: 1,025 days • Florida: 1,012 days For communities across the country and the servicers charged with protecting properties in default, long foreclosure timelines can be a nightmare. As seen above, in New Jersey and Hawaii properties could be sitting vacant for nearly three and a half years. When properties

become noticeably vacant, the property becomes a magnet for vandalism and other crime, depressing property values throughout whole neighborhoods. “Abandoned properties contribute to a self-perpetuating cycle of blight: tenants and building owners will not rehabilitate the property when fear and crime exist, and the government cannot reduce fear and crime when the neighborhood is beset by abandoned properties,” a report by the Center for Problem-Oriented Policing2 notes. One study by the U.S. Department of Housing and Urban Development3 found a specific correlation between increased crime and how long a property was vacant. HUD cited research from Philadelphia that shows that “foreclosure has no effect on crime; however, after a property becomes vacant, the rate of violent crime within 250 feet of the property is 15 percent higher than the rate in the area between 250 and 353 feet from the property. In addition, longer periods of vacancy have a greater effect on crime rates.” The study noted that “Vacant and abandoned properties have negative spillover effects that impact neighboring properties and, when concentrated, entire communities and even cities. Research links foreclosed, vacant, and abandoned properties with reduced property values, increased crime, increased risk to public health and welfare, and increased costs for municipal governments.”

To read the entire white paper,

visit the Knowledge Center on HousingWire.com at knowledge. housingwire.com. HOUSINGWIRE ❱ MARCH 2017 71

Knowledge

Center

72 HOUSINGWIRE ❱ MARCH 2017

Knowledge Center

W H I T E PA PE R: Loa nLogics | SP ONSOR E D CON T E N T

Technology blueprint to improve correspondent loan acquisition STOP DRIVING A SQUARE PEG THROUGH A ROUND HOLE

TODAY’S CORRESPONDENT LENDERS and loan aggregators are challenged with the processes, tools and technologies they use for loan acquisition. They find themselves using a combination of multiple, one-off systems and services built around a loan origination system, whose single purpose is for the manufacturing of loans not the due diligence and validation of loans that have already been closed. This piecemeal approach also requires the separate licensing and use of a product and pricing engine, document processing and document management system, due diligence review services, a loan seller portal and the list goes on. Customization and maintenance costs are hard to control, not to mention the expense associated with the use of multiple systems and the management of multiple vendors. It’s a bit like driving a square peg (loan acquisition) through a round hole (loan origination) because the only tool you have is a hammer (legacy systems). A related consequence is the strain that is put on the buyer / seller relationship. Too many manual workarounds, in what is often a fragmented process, cause lenders to perceive correspondent investors as “not easy to do business with.” It takes too long to assess the quality of loans, the defect and rebuttal process can cause funding delays and there is little transparency into defect findings to help sellers minimize adverse pricing and help investors avoid pull-through issues. Investors and correspondents need to leave behind the hammer and evaluate technology based on its ability to unify all aspects of the correspondent loan acquisition process, from seller application workflow and approval, to pricing and management of the transaction, through loan funding and servicing on-boarding. This white paper will discuss the attributes of technology that

can streamline correspondent loan acquisition while enabling consistent execution, repeatable outcomes and business intelligence for continuous process improvement.

CORRESPONDENT LOAN ACQUISITION MADE FRICTION FREE Facilitate the seller vetting process There are many moving parts in the seller application process. If information is sent piecemeal, it can become disconnected. It also can be very unproductive to chase down missing data or documentation, or worse send incomplete packages for credit or legal review. Technology can support a much more coordinated and transparent process. A secure portal can help guide sellers through the application process, capture the data needed and verify that required data and documentation has been supplied. It offers a very clear and structured way to accept seller applications and enables a single point of control to manage the application process. The seller’s progress can be monitored with descriptions and details regarding requirements made easily accessible. Exception reporting can help identify if any required data or documents are missing and stop the creation of the application package until all missing elements are complete. Integrated communication tools facilitate coordination with internal review teams and update new sellers as their application becomes approved.

To read the entire white paper,

visit the Knowledge Center on HousingWire.com at knowledge. housingwire.com. HOUSINGWIRE ❱ MARCH 2017 73