March 2020

Your tech shouldn’t control you. Find out what works for you and use it.

P.38

MARKETING SOLUTIONS Solutions from Sales Boomerang and Monster Lead Group enable success.

HOUSINGWIRE MAGAZINE ❱ MARCH 2020

P.50

2020

HOUSINGWIRE MAGAZINE ❱ MARCH 2020

OWN YOUR TECH

100 real estate and mortgage companies driving innovation

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HOUSINGWIRE MARCH 2020

EDITORIAL MANAGING EDITOR Ben Lane REAL ESTATE EDITOR Kathleen Howley REPORTER Julia Falcon DIGITAL PRODUCER Alcynna Lloyd CONTRIBUTORS Rick Bechtel, Brian Covey, Patrick Stone, Debbie Hoffman AUDIENCE DEVELOPMENT DIGITAL EDITOR Maleesa Smith DIGITAL CONTENT STRATEGIST Alyssa Stringer CONTENT SOLUTIONS MANAGING EDITOR Sarah Wheeler COMMUNITY EDITOR Brena Nath ASSOCIATE MAGAZINE EDITOR Kelsey Ramírez ASSOCIATE CONTENT EDITOR Jessica Davis

SALES VICE PRESIDENT, SALES Jennifer Watson Laws, jlaws@HousingWire.com NATIONAL SALES DIRECTOR, REAL ESTATE Mark Adams, madams@HousingWire.com CALIFORNIA Christi Humphries chumphries@HousingWire.com CENTRAL Chris Anderson canderson@HousingWire.com SOUTHEAST Tamara Wren twren@HousingWire.com GREAT LAKES Lorena Leggett lleggett@HousingWire.com NORTHEAST Vernesa Merdanovic vmerdanovic@HousingWire.com

CREATIVE GRAPHIC DESIGN Traci Cortez, Emily Carpenter

BUSINESS DEVELOPMENT Lindsley Harris lharris@HousingWire.com BUSINESS DEVELOPMENT, REAL ESTATE Amanda Luzsicza, aluzsicza@HousingWire.com

CORPORATE PRESIDENT AND CEO Clayton Collins

MARKETING MANAGER Caren Karris

CHIEF PRODUCT OFFICER Diego Sanchez

MARKETING COORDINATORS Katie

CONTROLLER Andrew Key

Galbraith, Brooke Combs

CLIENT SUCCESS MANAGER Haley Hess clientsuccess@HousingWire.com AD OPERATIONS COORDINATOR Matthew Stafford CLIENT SUCCESS COORDINATORS Talia Quigley, Layne Powers

4 HOUSINGWIRE ❱ MARCH 2020

EDITOR’S NOTE

A new world of digital transformation AS I sat down to explain what the Tech100 program is to our

to change everything. Seven years ago, we had to hand-se-

new team members, I found myself talking not only about

lect many of our winners in our search to find cutting-edge

what the program recognizes, but how much it has changed.

companies. Today, the market need and even the award itself

And there are so many reasons for those changes. The rise

have grown so large that we had to divide into two catego-

of the Millennial generation, less focus on regulation, the list

ries: mortgage and real estate. Turn to page 32 to see this

goes on. The explosion of growth to the digital mortgage

year’s list of incredible tech companies that continue to drive

just in the past four years that I’ve been at HousingWire is

innovation in housing.

astonishing to me. How can an industry come so far in so little time? And yet it has. Being a witness to that transformation has been incredible, and reminds me of why I love my job reporting on the housing industry.

This has been one of our most exciting Tech100 years yet.

To call these companies innovative doesn’t do them justice.

They are transforming the mortgage and real estate experience and tapping into data usage in a way that, even just a few years ago, we couldn’t have imagined. What started as a trickle of fintech companies when we launched the Tech100 award in 2013 has emerged from the funnel as a surge of new startups, market shakers and tech companies looking

Kelsey Ramírez Associate Editor @kels_ramirez

Tweets From The Streets Visa just announced they are buying fintech Plaid for $5.3 billion. Incumbent financial services companies are going to spend the next 3-5 years buying up various fintech startups. If they don’t, the startups will put them out of business.

125

792

3.6K

by @APompliano

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. © 2020 by HW Media, LLC • All rights reserved

HOUSINGWIRE ❱ MARCH 2020 5

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MARCH ’20 FEATURES

32

2020 TECH100 WINNERS: DRIVING INNOVATION This year’s winners capitalize on data to meet the growing demand for modernization in mortgage and real estate.

38

44

50

OWN YOUR TECH

IDENTITY

MARKETING SOLUTIONS

Your tech shouldn’t control you. Find what works for you and use it, because one size doesn’t fit all.

Blockchain offers a whole new way to look at digital identity. We explore how it is becoming the new passport.

Sales and marketing solutions from Sales Boomerang and Monster Lead Group are fueling success for mortgage lenders.

By: Patrick Stone

By: Debbie Hoffman

By: HW Content Solutions

HOUSINGWIRE ❱ MARCH 2020 7

CONTENTS MARCH

THE LINEUP

THE LINEUP

BACK DEPARTMENTS

10 PEOPLE MOVERS

24 UNIQUE SOLUTION

62 FINTECH

Move will now be run by David Doctorow, who succeeds interim CEO Tracey Fellows .

12 EVENT CALENDAR

A Q&A with DocMagic President and CEO Dominic Iannitti on the company’s AutoPrep Solution.

Plaid has gone through a fintech revolution: Here’s an inside look at its journey.

26 HOT OR NOT

66 POLITICS & MONEY

MBA Tech, the largest fintech conference for real estate and mortgage, will be held in LA on March 29.

Front loading will be the next big thing for digital mortgages, and Goldman is saying no to bro culture.

The Trump administration proposes controversial changes to the Obama-era Fair Housing rule.

13 ON THE SHELF

70 CFPB WATCH

Read this book for an inside glimpse at tech startups in the heart of Silicon Valley.

The CFPB is looking to eliminate the DTI requirement for QMs, but what would that really look like?

14 A LIST

74 BY THE NUMBERS

The most popular markets for Millennials, who will be driving originations for decades to come.

26

15 TAKE 5 Ian Wong, Opendoor chief technology officer and cofounder, reveals his most useful tech tool.

VIEWPOINTS

16 LOCAL INTEL

TD Bank’s Rick Bechtel makes the case that technology is not, in fact, replacing loan officers.

A look at what’s happening in five local markets, including California, where all new homes must have solar panels.

18 SOUNDING BOARD Here’s what experts were talking about at HousingWire’s first-ever engage.talent event.

20 STARTUP PROFILE Fleq made a splash with its alternative homeownership model, but will it bring disruption?

28 TECH VS LOS

30 TOP TALENT Are you trying to find top talent? loanDepot’s Brian Covey says they should really be searching for you.

BACK DEPARTMENTS 54 MORTGAGE Leaders at scandal-plagued Wells Fargo are battered by more punishments for their misdeeds.

22 DISPATCH

58 OPENHOUSE

How to prevent wire and title fraud with FundingShield’s fintech solutions.

The importance of a long-term flood insurance plan amid continuing and growing risk.

A quick look at the dangers of real estate fraud and how prominent it has become.

76 Q&A 1 Solidifi study shows borrowers want a more digital mortgage experience, but still prefer to close in-person.

77 Q&A 2 Waterstone Mortgage President and CEO Andy Peach says lenders must cultivate a reputable online presence.

78 Q&A 3 SoftWorks AI is delivering a clear return on investment through process automation.

80 KUDOS Woman-owned and operated brokerage Dane Real Estate saw its best year yet.

82 PARTING SHOT

54 HOUSINGWIRE ❱ MARCH 2020 9

David Doctorow move

10 HOUSINGWIRE ❱ MARCH 2020

DEMETRIOU

HIRJI GOYER

COWEN WEINBACH

A

mTrust Title Insurance named Michael Bebon its senior executive vice president of direct operations. Bebon joins the company after 32 years as a sales executive with Lawyers Title and Commonwealth Land Title.

There, he was senior vice president and CEO of Team Bebon.

Josh Hankins joined Wyndham Capital Mortgage in 2003 and will now be promoted to chief operating officer. He previously held roles such as mortgage loan officer, divisional sales manager, senior vice president of operations and senior vice president of sales and operations.

Hankins will oversee sales and operations for the company, with a critical role in reorganizing the company’s operation model.

Ben Cowen was recently promoted to president of Wyndham Capital Mortgage.

In his new role, he will focus on West Coast expansion for the company, as well as bring in an artificial intelligence aspect.

Cowen started out at Wyndham Capital Mortgage in 2017 as the chief operating officer.

G u a r a n t e e d R a t e h i re d M a r c

AACH

HANKINS SWEENEY

Move will now be run by David Doctorow, who succeeds interim CEO Tracey Fellows. Doctorow worked previously at eBay, where he served as the head of global growth since 2016. Before that, Doctorow was the chief marketing and strategy officer at Expedia.

Demetriou as vice president of mortgage lending to lead its northern New Jersey area. An industry veterna, Demetriou joined the company with nearly 15 years of industry experience.

Figure Technologies named Asiff Hirji as its new president. Previously, Hirji served as president and chief operating officer of Coinbase He also served as president and chief operating officer of TD Ameritrade.

Mor tgage i ndu st r y t rade g roup Association of Independent Mortgage Experts announced the hire of Katie Sweeney as its executive vice president of strategy, a newly created position.

Sweeney has been in the mortgage industry for four years, most recently as executive vice president of strategy at the technology startup ARIVE. Wells Fargo announced that Mike Weinbach will be joining the megabank to head up the bank's consumer lending operations. According to Wells Fargo, Weinbach will join the bank in early May and will report directly to Wells Fargo CEO Charlie Scharf.

Blue Sage hired David Aach as its new, and first, chief operating officer. Prior to joining Blue Sage, Aach was the executive vice president of mortgage tech company Docutech. Before Docutech, Aach worked at IBM for 10 years in its mortgage practice. Aach previously served as chief operating officer of Palisades Technology Partners, which was acquired by IBM in 2006.

Evergreen Home Loans named Chuck Iverson as its new executive vice president of production. He previously served as the chairman for the California Mortgage Bankers Association mortgage innovation conference, and will do so again this year. Before that, Iverson was at Sierra Pacific Mortgage for 22 years, where he served as the executive vice president of production.

Vacasa announced it appointed Jeff Flitton as its new chief technology officer. Flitton was previously the company’s vice president of engineering. Flitton, who joined Vacasa in 2017, will focus on expanding machine learning applications as the company develops new products and services to meet the needs of the company’s homeowners and guests.

Green Street Advisors, appointed Jeff Stuek as its new CEO. Stuek is replacing Craig Leupold, who will be stepping down after 12 years as president and CEO, and more than 26 years with the company. Leupold will continue to serve as a Strategic Advisor to Green Street. Before he joined Green Street, Stuek served as TravelClick president of North America.

Real estate tech company Remine named Chelsea Goyer as its chief of staff.

Goyer spent 12 years holding senior positions at Redfin.

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EVENT CALENDAR

ELLIE MAE EXPERIENCE MARCH 23 – 25, 2020 Host: Ellie Mae Location: Manchester Grand Hyatt San Diego and Marriott Marquis San Diego Marina Cost: $1,395 – $2,590 On the agenda: The Ellie Mae Experience gives thousands of industry leaders the opportunity to introduce the latest tech solutions driving the digital mortgage forward. This year’s program tracks include focuses on consumer engagement, compliance and lending standards, lending automation and industry and technology trends. Keynote speakers for this year’s conference include Tony and Grammy Award-winning performer Leslie Odom Jr., Team Rubicon Co-founder and CEO Jake Wood, and Sarah Thomas, the NFL’s first female official. experience.elliemae.com

SAN DIEGO The Ellie Mae Experience will take place in the San Diego Marina, near the historic Gaslamp Quarter, known for its dining and shopping experiences. If you’re feeling more adventurous, you can visit The Disturbance, a “Haunt Collective” in Mission Valley featuring three spooky and spirited attractions. hauntedhotel.com

MBA TECHNOLOGY SOLUTIONS CONFERENCE AND EXPO 2020 MARCH 29 – APRIL 1, 2020 Host: Mortgage Bankers Association Location: JW Marriott Los Angeles L.A. LIVE Cost: $1,050 – $3,375 On the agenda: The biggest annual conference focused on fintech solutions for mortgage and real estate finance takes place in Los Angeles this year. TECH 2020 will feature more than 75 exhibitors and 120-plus industry experts, as well as live demonstrations from top fintech providers during the Tech Showcase. The Technology Solutions Conference & Expo is a great opportunity for technology professionals, real estate tech investors and others to find the products and solutions that will take your company into the future. mba.org

LOS ANGELES The JW Marriott Los Angeles L.A. LIVE hotel is located in Downtown Los Angeles, within walking distance of a variety of restaurants, theaters and museums. The GRAMMY Museum highlights the history and cultural significance of American music through programming, interactives and exhibitions. grammymuseum.org

12 HOUSINGWIRE ❱ MARCH 2020

ON THE SHELF Uncanny Valley: A Memoir

BY ANNA WIENER MCD

For an inside glimpse at tech startups in the heart of Silicon Valley, look no further than Anna Wiener’s “Uncanny Valley: A Memoir.” Wiener writes of her own experience as she ventures into the tech world in her mid-twenties, where she headed to San Francisco for a job with a big-data startup. It’s here that her story takes place, digging deep into the culture and fast pace of Silicon Valley at the time. Wiener’s memoir gives a personal take on an era of extravagance, success and the risks and downfalls associated with all of it.

The Future of Feeling: Building Empathy in a Tech-Obsessed World

BY KAITLIN UGOLIK PHILLIPS LITTLE A

Calling on stories from doctors, entrepreneurs, teachers, journalists and scientists about embracing and moving technology forward, as well as drawing on her own experiences with technology, Kaitlin Ugolik Phillips explores how technology has impacted modern discourse. While we are seemingly always in communication, Phillips asserts that it’s also easier to shut people out. This, she writes, is potentially cutting away at humans’ ability to empathize. Join Phillips as she explores how the human brain works and how it is changing in tandem with technological advancements.

Registration is officially open for our 2020 summit!

June 11-12, 2020 Orange County, CA

Register today: www.housingwire.com/engage

HOUSINGWIRE ❱ MARCH 2020 13

 THE 

A-LIST MOST POPULAR HOUSING MARKETS FOR MILLENNIALS And the percentage of purchase requests that came from Millennials in each market

2.

1.

BUFFALO

MINNEAPOLIS

NEW YORK

MINNESOTA

56.1%

56.2%

5.

As Millennials continue to age, many are beginning to persue the American dream of homeownership. And although some of the nation’s hottest housing markets happen to be in the south, data indicates that more and more young homebuyers are relocating to the north. In order to gauge what cities are catching their eye, LendingTree analyzed new purchase mortgage requests made in the nation’s 50 largest housing markets through their online marketplace from January to November 2019.

S A LT L A K E C I T Y

UTAH

According to the company, these are the top 5 housing markets for Millennial homebuyers.

54.9% 4.

DENVER

COLORADO

55.3%

14 HOUSINGWIRE ❱ MARCH 2020

3.

SAN JOSE

CALIFORNIA

55.8%

Ian Wong Opendoor cofounder and chief technology officer Ian Wong built his career helping businesses make smarter, data-driven decisions. As the cofounder and chief technology officer of Opendoor, he leads a team of engineers and data scientists focused on modernizing the real estate industry. Wong’s goal is to make it as easy to buy and sell a home as it is to hail a ride, buy something online, or book a flight. Wong gives an inside look at his life by answering five questions:

1. If I had picked a different career path I would be a... Professor of Practical Math.

2. Relaxation means... A good book, a cup of coffee and a comfy couch.

3. My guilty pleasure is... NBA Twitter.

4. After I am finished with my career I hope people remember...

The things they can do now that they weren’t able to before. Like buying and selling a home without stress.

5. My most useful tech tool is...

Google Docs.

HOUSINGWIRE ❱ MARCH 2020 15

LOCAL INTEL

By Brena Nath

CALIFORNIA Marking one of the biggest stances that a state has taken on solar panels, the first day of 2020 ushered in the official start of California’s requirement that all new houses and multi-family residences of three stories or fewer must be built with solar panels. This also includes all major renovations.

MINNESOTA Minnesota is making its mark as the place to move to after it made several top-raking lists. Just as Experian announced that Baby Boomers in Minnesota had the highest credit scores among U.S. states and generations, WalletHub also announced that the state topped its ranking for the best state for “family-friendliness.”

16 HOUSINGWIRE ❱ MARCH 2020

AL

PITTSBURGH Potential buyers in Pittsburgh have an extra option when it comes to homeownership that can’t be found anywhere else. Fleq, a Los Angeles-based and investor-backed startup, created a new buying option that doesn’t require a mortgage. Instead, Fleq buys the home the purchaser wants and sells it back to them, bit by bit, in shares. While buyers pay rent to Fleq, they still have control of the dwelling.

LABAMA As iBuyers continue to expand across the country, this state welcomed its first iBuyer option, compared to other bustling metros that have several competitors vying for business. Real Estate Giant Keller Williams announced it’s moving into the Birmingham, A l ab a m a , hou si ng m a rke t t h i s ye a r, using its partnership with Offerpad to serve homeowners and buyers.

TEXAS & FLORIDA NOTA

RIZE

D

Nearly half the states in the country have enacted Remote Online Notarization laws.

With a lot of this progress happening over the last year, Notarize, a digital notary platform, said that the states to watch are Texas and Florida, saying they’re “where the future of homebuying is being defined. New legislation, and tech-forward real estate companies are building their growth around remote online notarization.”

HOUSINGWIRE ❱ MARCH 2020 17

Where experts and pundits sound off on a key industry issue

AT ENGAGE.TALENT “Lenders often don’t put enough people in place to execute what true culture actually means.

True culture is how we treat each other every single day.”

-Haley Parker, area business development manager, Fairway Independent Mortgage “Unless we change the way we are evaluating, bringing more people to the door just means more people will get turned away at the door.”

-Arthur Matuszewski, vice president of talent, Better.com Haley Parker, Fairway Independent Mortgage Corp.; Arthur Matuszewski, Better.com; James Hecht, Caliber Home Loan; Brena Nath, HousingWire

Anthony Casa, AIME; Tom Middleton, The Middleton Advisory Group; Phil Treadwell, Mason-McDuffie Mortgage 18 HOUSINGWIRE ❱ MARCH 2020

Matthew Turner, UWM; Randy Wheeler, Charles Schwab; Ashley Burnstad, Roostify; Diego Sanchez, HousingWire

“The housing industry needs to do a better job at matching its workforce to its customer base.”

-Marcus Cole, director of the Future Housing Leaders program, Fannie Mae

Alex Kutsishin of Sales Boomerang speaks at engage.talent lunch

Joel Epstein, bigJOEL Coaching; Clayton Collins, HousingWire; Shant BanosianGuaranteed Rate

“Being able to run my business like I’m the CEO, not just a sales person, is important to me.”

-Shant Banosian, Guaranteed Rate branch manager

Joel Epstein, bigJOEL Coaching; Jennifer Micklos, Movement Mortgage; Sean Johnson, loanDepot; Shant Banosian, Guaranteed Rate

Kristina Pool, The Middleton Advisory Group HOUSINGWIRE ❱ MARCH 2020 19

STARTUP PROFILE

Fleq was created around the idea that there are six primary barriers to homeownership: affordability, attainability, sustainability, portability, flexibility and convenience. There are some organizations that tackle pieces of the puzzle. For instance, many alternative products offer affordable down payments, but Fleq views these products as ones that facilitate affordability only at the point of purchase, saying they do nothing to ease the long-term costs of homeownership such as insurance, taxes and maintenance. Fleq says they are pioneering a new vision of homeownership with the goal of allowing consumers to reap the benefits of homeownership without the risk and without giving up the convenience and flexibility of renting.

Things to Know Attempting to disrupt: The entire residential real estate market Launch date: January 2020 Funding: Fleq is currently funded by its principals, small investors and some debt financing, and is looking to add institutional capital in the form of direct investment and additional financing in Q2 2020 Location: Pittsburgh, with a goal of nationwide availability by the end of 2021

Fast Facts EQUITY SHARE COST LOCKED IN ANNUALLY

RENTAL PARTNERSHIP DURATION INDEFINITE

FLEQ = FLEXIBILITY + EQUITY

The disruptor score, unique score and launch size were determined through interviews with and editorial research on the company.

4

9

UNIQUE SCORE:

2

LAUNCH SIZE: FUNDING: 20 HOUSINGWIRE â?ą MARCH 2020

UNDISCLOSED Pre-Seed

Seed

A

B

C

HIGH

LOW

DISRUPTOR SCORE:

FUNDINGSHIELD | SPONSORED CONTENT

Prevent wire and title fraud with FundingShield’s fintech solutions

As the mortgage and real estate finance markets continue to digitize, the focus has shifted from origination, lead generation and POS optimization (data aggregation) to focusing on inefficiencies within risk, operations, client retention and closing processes.

F

undingShield is a leading provider of risk management, fraud prevention and regulatory compliance technology solutions protecting the mortgage, real estate finance, title and legal industries during the closing and settlement process.

FundingShield’s award-winning fintech solutions deliver the highest level of control and risk mitigation against wire fraud, settlement risk, title fraud, third-party vendors and cyber fraud while improving the bottom line.

The firm’s proprietary database of title and settlement parties is the largest in the industry with real-time, verified and vetted data and no static databases that are ineffective against cyber-fraud,

22 HOUSINGWIRE ❱ MARCH 2020

wire-fraud or title fraud that exist at a transaction level.

“We are a unique and one-of-its-kind company in the country that provides real-time data to prevent wire fraud and manage risk and compliance in the mortgage closing/settlement process,” shared Ike Suri, chairman and CEO of FundingShield.

Suri draws on his 25 years of rich experience in private equity, technology and human capital management arenas to lead FundingShield to enable seamless and secure execution of the closing process and transfer of funds at the end of a mortgage loan transaction.

“The mortgage closing/settlement process is the most painful

part of the whole journey; this is where data and communication trust is an issue we come in. We create a more secure clos- due to hacking, phishing, business email ing experience for all parties involved in compromise and other types of cyber a loan, from the borrower to the investor fraud are of growing concern,” Chaudhary and all the service providers in between,” continued.

“Further, many federal and state-level Suri said.

The solutions operate like a trading ex- regulators are demanding to see an efchange, where at the time of closing, rapid fective compliance and risk management processing is carried out electronically program in place owing to the local reguthrough the company’s highly efficient lations and laws and closing conventions and time-saving algorithms and software that exist in every state and county that solutions, while also ensuring that the market participants must abide by,” he right information, documents and funds said.

“O u r s olut ion s reach t he r ight have eliminated the person.

“We are a unique and oneThat’s not all: of-its-kind company in the vulnerabilities that F u n d i n g S h i e l d country that provides real-time the mortgage closing goes a step further data to prevent wire fraud and process is exposed to to provide clients manage risk and compliance from a compliance, with up to $2 mil- in the mortgage closing/set- fraud and cyber security perspective, lion to $5 million tlement process,” and placed closings per t ra nsact ion coverage to support and protect the through real-time processing to confirm representations and data for the transactransaction.

From a consumer’s perspective, tion and the counter-parties involved are FundingShield has also delivered a prod- accurate and carry backing from insurers uct for the B2B2C market, working in close to de-risk and improve asset quality as collaboration with lenders to protect con- well,” Chaudhary said.

FundingShield’s APIs and LOS intesumer down payments and provide lenders with the option to have buyers confirm grated services allow lenders, investors, the destination of their down payment homebuyers and title companies to confunds prior to closing, thus preventing firm wired funds are going to intended recipients and that transactions are free wire fraud and other issues.

The company is currently collaborating of impact from cyber and wire fraud, with renowned names in the industry to phishing, business email compromise or deliver its B2C product — launched with title fraud.

FundingShield, which is the only premiere names in the mortgage and real estate markets — that will cater to the sell- MISMO Certified Wire Fraud Prevention ers’ needs as fraud has been picking up on tool, was named a HousingWire Tech100 those payments from escrow, settlement winner for 2019 and is also an IBM API Partner, among other industry initiatives firms and attorneys.

“Prior to FundingShield, companies had and recognition.

FundingShield has identified and prebeen dealing with closing agent and title vendor data that was static and they had vented wire and title fraud on over $560 to manually analyze and maintain it, gen- billion in U.S. real estate and mortgage erally once every year or two if they had closings where the firm investigated, corany process at all,” said Adam Chaudhary, rected and protected clients before any losses were incurred. president of FundingShield.

FundingShield saves time and money “However, this method has since become obsolete and cost-inefficient in a with ROI over 200% by reducing time world where lenders and investors have spent by compliance, vendor manageless control of closing and title agents, ment, operations and closing teams while

adding additional coverage of $2 million per residential transaction and $5 million per commercial transaction.

W hat is the risk? A sample of FundingShield’s Proprietary market analytics for the 2019 full year (Transaction means residential or commercial real estate investment or mortgage closing): 26.8 % OF TRANSACTIONS WERE NONCOMPLIANT During 2019, approximately 26.8% of all loans were unique residential or commercial transactions that were not compliant with regulations or valid with insurers, due to at least one problem with closing document, licensing, transaction data or title vendor representation / compliance.

This is a 34% increase from the last reported rate of 20% during the same period the year before.

1 OF 3 TRANSACTIONS HAD MULTIPLE ISSUES Upon further analysis, the number of non-compliant loans that had multiple defects was almost one-third of the 26.8% of loans.

INCREASED COST OF SINGLE LOSS + RELATED RECOVERY Costs associated to wire fraud related losses, losses due to defalcations and the costs to inspect and update workflows / systems, recover funds and reinstate insurance policies after external consultants perform system and process analysis can reach up to $850,000.

RECENT BREACHES DUE TO FRAUD SCHEMES AND HACKS – INCREASED FINES AND REPUTATIONAL DAMAGE: Fines from regulatory bodies, eroded shareholder value and customer trust.

Equifax recently paid $700 million and Facebook $5 billion. The Capital One breach has changed how many banks are interfacing with third parties altogether – evidence of how financial institutions are highly exposed to reputational risk. www.fundingshield.com HOUSINGWIRE ❱ MARCH 2020 23

DocMagic eEnables any third-party documents for eClosing HousingWire sat down with DocMagic President and CEO Dominic Iannitti to discuss DocMagic’s new AutoPrep Solution and the benefits of applying artificial intelligence to the closing process.

DOMINIC IANNITTI DocMagic President and CEO

Q: How does the AutoPrep Solution streamline the closing process?

From a strategic perspective, DocMagic’s AutoPrep Technology will allow any lender, utilizing documents from ANY source, direct access to our premiere eClosing solution. AutoPrep categorizes, tags, and barcodes documents, recognizing signature, initial and notary regions, and e-enables any third-party loan documents for eSignature, eNotary and eClosing processes. This opens the door for lenders to transition more quickly to an eClosing workflow, bringing efficiency, consistency and user experience enhancements.

Q: What are the benefits of leveraging artificial intelligence and machine learning technology in the closing process?

Applying AI and machine learning identification logic to DocMagic’s extensive document inventory means that our AutoPrep Solution can quickly and easily identify any document regardless of source. The technology automates fundamental labor-intensive processes, mainly the visual identification of signing regions and manual preparation required by most eClosing platforms. If your documents are not e-Enabled for eSign, eDelivery, eNotary or eClosing, this technology gives you instant access to those abilities.

Q: How does AutoPrep technology go beyond basic optical character recognition (OCR) technology?

Basic OCR technology relies primarily on reading and recognizing documents, which can be slow and error-prone. AutoPrep employs intelligent document recognition to access extensive document metadata, stored in DocMagic’s rich form database, enabling pattern and trend detection for continuously improved decisioning over time.

Q: Does the use of artificial intelligence and machine learning in this tech

AutoPrep has the ability to access allow for continuous improvement as it’s applied to more documents? deep stores of document metadata Yes, AI and machine learning allow for continuous improvements in a variety of ways over time. AutoPrep allows organizations to scale for capacity and reand is capable of testing and spond more quickly to market fluctuation. Fewer mistakes, and the resulting automation, employing intelligent fixes, lead to an improved customer experience and a faster, more efficient eClosing experience. document recognition as well as Q: How does AutoPrep integrate with other DocMagic technology? pattern and trend detection for Interoperability is a fundamental principle at DocMagic. All of our solutions and continuously improved decisions services are designed to not only work seamlessly together but offer a robust API for simple integration with other third-party systems. over time."

24 HOUSINGWIRE ❱ MARCH 2020

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2020 Special Reports Featuring: Proptech Solutions Wholesale Lenders eClosing Solutions Fintech Product Showcase Origination Platforms and Solutions Talent/HR Solutions View the full 2020 Special Report schedule at www.solutions.housingwire.com

View the full 2020 Special Report schedule at www.solutions.housingwire.com

Hot SIZZLE? Not FIZZLE? 1 1 WHY THE

WHY THE

FRONT LOADING

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Significant horsepower and investments have been used to identify, prospect and pre-qualify prospective buyers, but the next big step for digital mortgages will be more “front-loading” of the origination and funding processes enabled by predictive algorithms supported by rich, connected datasets. This is according to Daniel Kenshalo, Black Knight vice president of data science, who discussed the importance of data in the next phase of the digital mortgage. After front loading is used, only the funding and final filings with the county recorder should be left to complete.

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HOMEBUILDING The economists at Capital Economics are starting to show some optimism for single-family housing starts in 2020. Their latest report predicts single-family housing starts to average around 1 million annualized this year. “There are encouraging signs that the cost and availability of materials, lots and labor are all starting to improve,” the report stated, while also mentioning a strong new home demand and a shift toward the construction of cheaper homes. With lower material prices, builders will shift their focus to constructing less expensive properties that “are in the most short supply.”

26 HOUSINGWIRE ❱ MARCH 2020

Fair Isaac is updating the secret formula for FICO scores in a way that will make it tougher for some consumers to get credit. But it’s worth noting: It won’t have much of an impact on the $2 trillion of mortgage originations expected for this year. Lenders using the Fair Isaac score follow a “classic FICO” model required

by Fannie Mae and Freddie Mac. That can’t change without approval from the Federal Housing Finance Agency, which can take years. Think of it like a “Classic Coke” holdout.

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HACKERS AND FRAUD RealPage, a growing real estate software company, was the victim of hackers who apparently stole $10.5 million from the company. RealPage fell victim to hackers who obtained the login credentials of an employee and accessed the company’s online financial accounts. From there, the hackers sent money to “money mules,” people who were employed by the fraudsters to launder their ill-gotten gains by moving the funds into other accounts that are difficult to trace. The danger of hackers is now becoming more common in the real estate industry.

IMPACT OF FICO MODEL CHANGE

CHINA'S MILITARY The Department of Justice says it knows who was behind the 2017 hack of Equifax that exposed Social Security numbers and other personal data of almost half the U.S. population: China’s military. A grand jury in Atlanta handed down a nine-count indictment charging four members of the Chinese People’s Liberation Army – Wang Qian, Wu Zhiyong, Xu Ke and Liu Lei – with conspiring to hack Equifax, damaging the company’s computer systems, wire fraud and economic espionage. Attorney General William Barr said it was the latest in a series of Chinese hacks.

BRO CULTURE Goldman Sachs is taking a strong stand against “bro culture” on some startup boards. Speaking in January at the World Economic Forum in Davos, Switzerland, CEO David Solomon said Goldman Sachs will now refuse to take a company public unless it had at least one “diverse” board member. The new rule goes into effect on July 1 in the United States and Europe, and the initial push for diversity will start with a focus on women, but Goldman doesn't plan on stopping there.

Solomon explained that by 2021, the bank will look for two diverse board members for every new startup the company backs.

I CAME TO ACADEMY FOR...

Local control and decision-making.

I STAY AT ACADEMY...

Jennifer H., Colorado

Corp. NMLS #3113 | Equal Housing Lender

Because of opportunities to grow!

Find your reason to join the Academy Team at join.academymortgage.com or call (800) 660-8664.

VIEWPOINTS

By Rick Bechtel

No, technology is not displacing loan officers MLOs provide expert guidance and homebuyer education

The pace of innovation in residential lending has undoubtedly been slower than other areas of financial services, but in recent years the industry has taken a few massive steps forward.

We’ve digitized much of the mortgage application process, solving for many of the pain points that plagued homebuyers for years. Borrowers don’t miss the days of bringing large folders to their bank with paystubs, bank statements (even the 28 HOUSINGWIRE ❱ MARCH 2020

blank pages!), years’ worth of tax returns and other paperwork that a human would patiently photocopy before sitting down to process – sometimes for hours and days to come. And we can nearly all agree that typing our own name into a self-service

tool is more efficient than spelling it out loud for a loan officer.

But the idea that LOs are becoming less vital to the process is simply not one I can get behind. It’s true that the days of the LO functioning as a data gatherer are rapidly fading away, but their role is shifting to an even more critical one – an expert counselor for homebuyers.

Moving forward, successful LOs will take up the mantle of educator, problem solver and confidence builder. They will

Rick Bechtel is the executive vice president and head of U.S. residential lending for TD Bank. With 30 years of mortgage banking experience, Bechtel is accountable for all aspects of consumer lending across TD’s mortgage and home equity businesses.

embrace the technologies that make their jobs easier and allow them to put their skills to the best and highest uses.

EXPERT GUIDANCE AND HOMEBUYER EDUCATION It’s expected that many homebuyers will consult an online mortgage calculator to evaluate their loan options before sitting down with an LO. Yet, product selection continues to be an area where knowledgeable LOs can answer questions that buyers can’t find on Google – because they’re specific to the buyer’s personal financial situation.

For example, consider a homebuyer who has significant student loan debt but has deferred payment for two more years.

When evaluating his mortgage options, the buyer may not understand how to account for a future change in his cash flow. It takes a human to determine how the buyer’s mortgage debt will fit in with the rest of his personal balance sheet, and to recommend a product and establish a monthly payment that will be manageable for the foreseeable future.

Homebuyers also need LOs to ask the questions they don’t think to ask. Take the example of a buyer in the early stage of her medical career. An LO may take the right steps to examine her student debt burden and her earning potential and place her into a high financing physician loan product offered by many lenders today. But in the same breath, the LO should also flag that based on the borrower’s profession, she may want to consider a nontraditional method of title vesting – like a land trust – to protect her home in the case of a legal event. Asking these questions upfront and explaining the costs and processes involved is where LOs can provide irreplaceable value.

As long as homebuyers need expert guidance, LOs will have an important role to play.

NAVIGATING COMPLEXITY It’s important to remember that humans can go above and beyond the call of duty

to make things happen, in ways that machines simply can’t.

For example, through its online restaurant reservation service, OpenTable seats more than 120 million people every month, and it’s no wonder why. Diners would rather tap a few times on an app than call a restaurant, get put on hold, struggle to hear the hostess and negotiate seating times.

So when I need to make a quick reservation, I instinctively open my OpenTable app. But when I have a last-minute group dinner to schedule on a busy Friday night, I call the hostess – because I know they can look at the puzzle of reservations and figure out how to squeeze me in.

Asking these questions upfront and explaining the costs and processes involved is where LOs can provide irreplaceable value.

It can be argued that some mortgage applications are straightforward enough to be processed by digital means alone. And while I believe every mortgage applicant deserves the attention of an expert LO, it’s even more critical for those who have special circumstances or complex needs to connect with a human who can guide them through the process. For example, a high-net-worth homebuyer may need help with complex income and tax documentation to secure a jumbo loan to purchase a luxury residence.

And in an age where the gig economy and “side hustles” are prevalent and workers spend just four years in their jobs, more and more borrowers require the expertise of an LO to sort through complicated income-verification data. The old days of homebuyers having one job for 10 years and one W-2 per year to demonstrate income are truly over.

For example, if a mortgage applicant has a steady, salaried job and supplements their income as an Uber driver or Airbnb host, it takes an LO who understands how approval guidelines are written to prop-

erly evaluate the applicant’s qualifying income.

What’s more, LOs now have to consider that the borrower’s mortgage will likely outlive the job that qualified them for the loan. It’s up to LOs to ensure borrowers have thought through how a future job change could cause payment shock or stress in the future. Oftentimes, determining a borrower’s future liquidity means looking beyond the application details to learn more of their story. Are they a spender or a saver? How about their spouse? Is their car on its last legs? Does the home need a kitchen remodel?

As long as buyers continue to have complex needs, LOs will be needed to interpret them.

SERVING THE NEXT GENERATION OF HOMEBUYERS We’ve been predicting it for years, but I believe it’s finally upon us: Millennials are entering the housing market and promise to be the largest home-buying cohort in U.S. history. Last year saw the highest homeownership rate in four years among Millennials, as HousingWire previously reported.

In our industry, we hear ad nauseum about how Millennials want digital tools, and that’s true. They want to use digital channels to do research and speed up the process. But perhaps surprisingly to some, a recent TD survey found that 52% of Millennials who intend to purchase their first home in 2020 would prefer to start their mortgage application in-person with a lender. While they love to self-educate, Millennial buyers also want expert advice from people who know best. This is a generation that has popularized the TED Talk, and they want that TED Talk, so to speak, when it comes to the home-buying process.

Technology will continue to add value at nearly every stage of the mortgage process, but it doesn’t mean the best customer experience is one that is solely digitized from application to close. Borrowers will continue to need LOs to create clarity around their options and guide them through the process.

HOUSINGWIRE ❱ MARCH 2020 29

VIEWPOINTS

By Brian Covey

Top talent should be seeking you out Stop letting out-of-date recruiting methods hold you back

As we enter the next decade, it’s very clear that attracting and retaining top talent in your organization is critical to long-term success. I also believe HOW a leader or organization attracts top talent and retains key people has really shifted, and we must evolve with the trends to remain relevant.

With just one search on Google, LinkedIn, or other online platforms, mortgage leaders can access more information 30 HOUSINGWIRE ❱ MARCH 2020

than ever before on potential recruits. It should be easier than ever to find top talent, but the mortgage industry’s use of out-

dated and out-of-touch recruiting methods is holding it back.

But those that take the necessary steps to learn, grow and teach their teams how to do this and put great systems in place will have huge success. If you do your recruiting right, top talent should be knocking on your door, not the other way around. The conversations we all see are happening around the modern originator learning

Brian Covey has over 18 years’ experience as a top producer, branch, area and regional leader at Wells Fargo and Movement Mortgage prior to joining loanDepot in 2018.

Brian is currently the vice president of regional production for Tennessee, Alabama, Mississippi, Louisiana, Arizona, Virginia, Maryland and Washington D.C.

to integrate digital technology to direct to consumer and local referral partners’ experiences results in a huge pivot to the recruiting game.

The past was all about selling how great your company is or the tools and programs you offer. It was more of a “let’s see how many people we can talk with and just sell, sell and sell some more with hopes some say yes” strategy.

One of the challenges here is that you fall into the comparison game and fail to connect and build a relationship to know if you and the candidate are in alignment or a model match. These types of conversations are very transactional and typically don’t lead to someone joining or staying somewhere for very long because it never fails that someone else will come along and promise them more. There is a better way.

Providing a career environment vs. a job environment: Create Culture. But how do you do that? I believe companies and leaders need to get clear on their vision and values and share these regularly to align people with a bigger mission to instill that the work you do together has value.

Once you have this clarity, you can con-

Share testimonies from team members you have mentored. Include other departments in conversations that demonstrate how all departments collaborate and work together. The best teams are very well connected, communicate openly and have their focus on the big vision while also giving team members the tools and opportunity to grow and achieve their own personal and professional success.

In a world where people are following along in your journey on social, we have so many tools to connect; your personal brand and how you share the three points above by documenting what you are already doing will differentiate the top 10% from the 90%.

HERE ARE A FEW OF THE THINGS I SEE THE ELITE RECRUITERS IN THIS SPACE DOING: Systems matter: Author and entrepreneur James Clear shared, “You do not rise to the level of your goals. You fall to the level of your systems.”

I believe this is true and the best companies and leaders attracting top people are consistent in working and upgrading their systems. They don’t just have a system – they provide consistent training, look for ways to innovate and improve processes in order to provide a better internal and external experience for customers and team members. One key takeaway in this is every interaction, meeting and phone call should have a defined next step. Involve key partners and current team members in the process along the way. Collaboration and feedback are necessary for improving systems.

fidently share what you believe and why you believe it, and you will attract and also repel the right people. The stronger and more clear your message, the more powerful this gets. The reality is your company and team is not a perfect fit for everyone so we shouldn’t approach it that way. The best teams come together and collaborate, train, share ideas and help that team become better knowing they have a real voice and can make a difference.

Giving value and leading by example: This is key for both attracting and retaining your best people. I look at it this way – people join with hopes and dreams, and it is our responsibility to ensure we know those and support them along the way to achieve both.

Your best advocates for attracting new top talent can be found within your current team. Let your team members share their why and stories of growth and success.

Lenders and recruiters should be building their personal brand so they are viewed as a leader that talent wants to connect with — a must-have connection instead of a nice to have. Share your values clearly and give insights into what it would be like to work for your team in the process. This switches the dynamic so that lenders can stop chasing talent and start attracting it.

The attracting and retaining of top people is critical to any business and its longterm success. Collaboration is KEY! We can all learn from each other and execute our plans to fit our goals and targets.

If I can see what it would be like to work at your company, on your team, and really what the true culture is like through this process, there is a greater opportunity to attract and retain the best people that are a fit for your organization. Keep things fun, and remember: You are building relationships.

“It should be easier than ever to find top talent, but the mortgage industry’s use of outdated and out-oftouch recruiting methods is holding it back.”

HOUSINGWIRE ❱ MARCH 2020 31

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2020

WINNERS Driving innovation Companies capitalize on data to transform mortgage and real estate By: Kelsey Ramírez

HOUSINGWIRE ❱ MARCH 2020 33

Eight years ago, HousingWire recognized its first Tech100 winners in a world that was just beginning to realize the possibilities technology could offer the mortgage industry.

Five to 10 years ago, fintech was nothing more than a buzzword being floated around as a distant goal. Fintech companies were nearly unheard of. We never imagined artificial intelligence could drive lending, or that data would propel the housing and mortgage industries to new possibilities.

LESS REGULATION For years as other industries progressed in their technological approaches, the housing industry struggled under the thumb of the newly imposed Dodd-Frank Wall Street Reform Act, the newly created Consumer Financial Protection Bureau and an overall increased presence of financial regulations.

And while regulations can be good for consumer protection and preventing bad actors from creating the chaos we saw during the housing crash in 2008, they also put a burden on all companies across the housing industry.

This took focus off of innovation, and put it on the struggle to simply meet the new rules and stay out of trouble. Even updates within technology were for the purpose of aligning with TRID, not to innovate and grow companies.

Now, not only have most companies aligned their systems to comply with today’s regulation standards, but the current administration has also stepped back from creating new regulations. Since taking office, President Donald Trump has called for cutting all regulations by 75%, and signed an executive order that stated for every new regulation added, two older regulations must be cut. During his transition into presidency, Trump even declared he planned to dismantle Dodd-Frank, saying overregulation is a “big problem.”

MONEY DRIVES MORE Once one fintech company began exploring the real estate and mortgage worlds, it paved the way for many more to enter. Companies realized there was an untapped market waiting to be fed innovation, and the profit potential called more companies to the forefront. The supply of third-party technology companies went from a drip, to a trickle, to a sudden flood of new entrants.

And big money called out even bigger players. Facebook noticed the housing market was “the place to be,” and partnered with Zumper and Apartment List to add rental listings to Facebook Marketplace. Then it expanded its presence there with Rental Beast, a software-as-a-service rental listing platform that provides millions of rental listings. Amazon partnered with Realogy, the largest U.S. residential brokerage, to match homebuyers with real estate agents through a program called TurnKey. But it’s not just the big companies that have people talking. HousingWire recognized Blend as a Tech100 winner in 2015, when it was just a small startup. In 2019, the company raised $130 million in a series E funding round, and is attracting top talent such as HousingWire 2018 Rising Star Grace Qi and 34 HOUSINGWIRE ❱ MARCH 2020

former Fannie Mae CEO Tim Mayopoulos.

Success drives further success, and when companies began realizing the untapped tech regions of the housing industry, more were bound to follow.

UNDERSTANDING DATA A deeper understanding of data fueled this year’s list of Tech100 winners. Companies which have been collecting data for a number of years, many since the turn of the century, are beginning to activate it for new uses.

Servicers are utilizing technology to recognize when a borrower’s life circumstance changes, and are reaching out before the loan falls into default, when the options for mitigagtion become much more limited.

Lenders are using data in their premarketing campaigns to see when Americans are more likely to begin looking for a home, and are marketing to that segment. Did their w2 income change? Was another dependent added? New access to data provides much more information than the typical credit report, allowing lenders to get a panoramic view of the potential borrower, and know when to market loans.

Valuation tech continues to grow more efficient and precise as more properties are added to various databases. In 2016, First American announced its property ownership database now covers 100% of the U.S. It has since used that data to cut appraisal turn times by more than 20% and increase its valuation offerings as well as property report offerings giving lenders and servicers unprecedented views into individual properties.

tion. They take up 48% of the market share of originations and their mortgage debt growth is continuously outpacing all other generations.

Millennials took out a median loan amount of $242,100 in December 2019, an 8.4% increase from the year before.

What’s more, they’re watching commercials during the Superbowl that say they should be able to, “push button, get mortgage.” With so many tech solutions, lenders and real estate agents have been forced to increase their tech offerings to meet consumer needs. And where there is rising demand, supply will follow.

AI AND MACHINE LEARNING AI and machine learning are pushing the limits of possible, opening more doors than ever before. Combining the rise in AI with the surge in data activates a new world of possibilities. Not only do lenders have the data they need to act, they also have AI that will act for them, creating a well-oiled machine of efficiency.

As the possibilities increase, more startups try their hand at innovative changes and solutions. Some take root, some serve a niche market and others shine brightly only to then fade away, but the innovation continues.

In 2014, our editors considered giving out the brand new Tech100 award to the industry’s top 25 companies. Now, six years later, we struggled to narrow the selection down to 100 – for each category. That means nearly 200 companies won awards for their technology in the real estate and mortgage industries.

Read on to find out who won...

NO LONGER OPTIONAL As we move into this new era, mortgage and real estate technology is no longer optional.

Baby Boomers and even Generation X is impressed with new technology – they like the efficiencies it provides. But Millennials and now even Generation Z, which is already taking up 2% of the market share of originations, are not impressed with technology. They expect technology. They demand it. They are confused when it’s not there.

Millennials are now the largest living generaHOUSINGWIRE ❱ MARCH 2020 35

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36 HOUSINGWIRE â?ą MARCH 2020

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HOUSINGWIRE ❱ MARCH 2020 37

Do you own your or does your t own you?

38 HOUSINGWIRE ❱ MARCH 2020

tech, tech

One size doesn’t fit all By: Patrick Stone

I

remember back in 1975 when fax machines started being used. You would wait patiently for several minutes for the machine to give you a piece of paper that you couldn’t even read. And yet, we were impressed.

As long as I can remember, tech played some part in mortgage lending. Before computers, we used typewriters with a screen.

I know I’m dating myself, but in order to see how far technology has come, we have to look at where it began. Take, for example, this Nov. 1984 piece in The New York Times: Electronic typewriters come equipped with circuit boards, which contain a host of semiconductor chips, eliminating much of the machinery that drives manual and electric typewriters and providing advanced features such as memory capacity. Because electronic devices have fewer moving parts, they are generally considered more reliable than their electric counterparts.

We have seen a significant change in our technology, the amount of it, the ways in which we use it and what it can be used for. It is transforming the way we live, interact and even do business. But it’s not the technology development that moves gradually, it’s the adoption. How well are you using your tech, and are you using it in the most efficient manner possible?

HOUSINGWIRE ❱ MARCH 2020 39

FIGHTING CHANGE Where there is a potential for change, there is resistance. People are really resistant to change of any kind at any point in their life – that is just a human characteristic. And it still happens in our industry today through the unwillingness to adopt new technology. It is hard to get people to use a new system, even if it is better. You have to take time and effort to convince people that they’re going to personally gain from it, you have to make sure they’ve trained adequately and then you have to tell them to do it.

Lagging technology is not a technology issue – it’s a people issue. There’s tremendous technology out there. In fact, I’ve invested in great technology many times and couldn’t get it used. People like to have control and ownership, so they’re reluctant to use what others suggest, or let go of what they use.

And at times, even the finance industry’s regulators stand in the way of change as they fear the consequences consumers may face as fintech’s usage increases in the mortgage lending process. But that is all beginning to change.

Back in 2018, the Office of the Comptroller of the Currency and the Federal Deposit Insurance Corp. announced they were exploring granting federal bank-like licenses to tech-driven firms that offer financial services.

This was part of a broader push by the federal government to boost small businesses.

Oftentimes, lenders are willing to invest in technology, but don’t want to switch to newer technology in order to keep up with the “latest and greatest” because they have already invested significantly in their present technology. Switching would also require them to retrain. The digital mortgage is evolving, but do I think I’m going to see a widespread fully digital mortgage before the end of my career? No, I don’t.

Digital mortgages are still discussed and approached, but we continue to have problems getting online notarization. We still have a long way to go before we see uniformity in the industry due to regulatory concerns and the vast amount of technologies being used.

But even amid the struggle to get technology integrated into the mortgage process, there is still hope, and increasing potential.

A recent survey from Fannie Mae, which surveyed 184 lending firms on their interest in AI and machine learning, showed about 66% are familiar with AI, but only 27% are using it in their business now. And of those, only half are using AI on a consumer-facing front.

Other lenders, however, are making plans to begin using it. Looking ahead two years, 58% of lenders expect to be using AI and machine learning in their mortgage process. Another 22% predict they’ll be investigating AI and 19% are on a wait-and-see plan.

Only 2% of lenders stated they have no intention of using AI in their mortgage business.

40 HOUSINGWIRE ❱ MARCH 2020

THE POTENTIAL The greatest opportunity for technology and AI use in the mortgage industry is data transfer. Right now, lenders have a heavy data-entry process. At any point in this process, they could make keying errors or insert human errors that could cause problems later in the origination process. Using AI not only ensures the accuracy of the information, it cuts down on the mundane data-entry work and shortens the time to close.

As it turns out, humans aren’t that great at data entry. A study from the National Center for Biotechnology Information evaluated more than 20,000 individual pieces of data to examine the number of errors. The study showed that out of every 10,000 entries, there were 650 errors – a 6.5% error rate.

How much money are lenders losing due to that? Experts use the 1-10-100 Rule to determine what businesses are losing. If a typo is made, it could cost the lender $1 at first. But if it is not corrected, the second time it would cost them $10, and if not corrected the third time, $100.

For mortgage lenders, however, the stakes could be even higher. Data points such as Social Security numbers and dates of birth are necessary to document identity verification to comply with the Bank Secrecy Act. And data entry errors could also lead to mistakes in loan amounts. A $10,000 loan, for example, has different implications in the compliance world for reporting, documentation and pricing than a $100,000 loan. Even if the loan is funded correctly, a single zero incorrectly entered in a bank’s loan management system can lead to costly oversights.

It’s somewhat surprising to some people, but our sufficiency levels and the time it takes to close are worse now than they were before the housing crash in 2007, with days to close running at 40 to 45 days and the fallout rate is running anywhere between 25% to 35%.

The latest Ellie Mae insights report showed that the time to close all loans hovers near 45 days, in the upper 40s for purchase originations and the lower 40s for refinances. This is ridiculous for a time when, with the right technology, loans could close in 10 to 25 days, or less.

The key is focusing on AI technology where it can be the most beneficial.

AI is good for refinance transactions where you have sufficient data to issue an automated report, and that can account for over 20% of refi originations.

Also, if consumers are educated and informed throughout the origination process, the closing will be a breeze; but if they aren’t given sufficient information throughout the process, they will want an explanation of every document they sign, creating long, cumbersome closings.

AI can help lenders by pushing out notifications that give buyers and sellers automatic updates, letting them know exactly what is going on each step of the way. This allows consumers to stay in the know, and ask their questions along the way.

HOUSINGWIRE ❱ MARCH 2020 41

NOT JUST ANOTHER BUZZWORD

around that as best as we can. Because of this, the At the risk of alienating many technology experts, housing industry can’t take a “one-solution-fits-all” I don’t see blockchain as having any application in approach. Each time we begin to adopt new techour industry. One reason for its low acceptance rate nology, we have to determine if it works best in the is that it is more susceptible to fraud than any other space, and where it can best be used.

AI can’t completely take over the mortgage prosystem out there. I think the future of the digital mortgage cycle will be more about the collaboration cess, but it can help us shorten the closing process; we have to focus on the areas where AI can create between the industry’s participants.

Blockchain, AI and machine learning – we have the most of these efficiencies.

Attempts to eliminate re-keying data are already heard a number of various buzzwords come and go through the mortgage industry, each time wonder- underway and will be a game-changer for mortgage lending. ing if this will be the next best But right now, it doesn't thing. Artificial intelligence seem as though the techseems to be here to stay, but it Artificial intelligence seems to be here nology and acceptance are has a very specific usage. to stay, but it has a very specific usage. there to do it. Right now, opAI is useful for specific martical character recognition kets and products. It is not for has improved significantly. everything. And, because of In fact, accuracy is almost the different regulatory environments, it’s rare that anything developed for the 100% (much better than the previously discussed housing industry can be used nationally. For exam- human accuracy rates.) But there is one keyword ple, in some states, you have to use an attorney just there – almost.

Until we can trust a complete, 100% accuracy rate, to close a transaction. Moreover, real estate data access varies by market, with some having automat- how will lenders trust handing over their livelihood ed title plants and some depending on courthouse to the hands of a machine, without human eyes ever seeing it? It is a big step, and while it can happen, searches.

The bottom line is, there is no technology that’s especially through the new strides we are seeing in going to come along that will change the regulatory AI and machine learning, it is one I’m not sure we’re environment, and so we must continue to navigate quite ready for yet.

42 HOUSINGWIRE ❱ MARCH 2020

About the Author: Patrick Stone serves as founder and executive chairman of Williston Financial Group. Previously, Stone served as Vice-Chairman of Metrocities Mortgage, a 2005 top twenty mortgage lender, and as chairman of The Stone Group. Stone also serves on the boards of Fidelity National Financial, First American Corp., FNIS, MicroGeneral, SKLD, World Minerals, Green Street Advisors, DigitalMap, Homegain, RedVision, and Wystein Capital.

LET’S WORK TOGETHER Technology today is driving housing industry participants to work together and collaborate on a number of different fronts. Take iBuyers, for example, as many companies broaden their spectrum to include lending and real estate services. This kind of collaboration could only be brought on by technology and will continue to increase.

As it stands, there is a tremendous amount of regulatory oversight over housing that has caused the industry to evolve in the different verticals we see today, such as real estate agents, lenders, title companies, settlement agents, appraisers, inspectors and many more. And each of these verticals has worked to evolve their technology separately according to each one’s regulatory and practical needs.

But this means many different industry participants are often working to gather the exact same information multiple times. That presents one of the greatest opportunities for AI, which still hasn’t been totally realized – effective data transfer.

How do we, as separate industries, work to eliminate re-keying data, prolonging the process and risking more human errors by working together?

That will be the next problem the housing industry will look to solve, and it will be able to solve it through more integrated processes fueled by AI, machine learning and other tools that continue to

evolve as we speak.

The role AI will play in the digital mortgage process is still being determined. While it will fix many problems, it cannot be applied to every part of the process. Lenders will increasingly trust AI as its accuracy improves and technology continues to take over every part of the digital mortgage process. But lenders will soon learn that the investment is worth it as they allow AI to do the more mundane tasks and move their employees to parts of the mortgage origination process where their talents can be better utilized.

People love to talk about a mortgage that can be originated without a single human hand touching it. To be sure, today’s technology, as it’s being developed, puts us at a point where we might be reaching

"THE TRUE ADVANTAGE OF USING AI IS TO REDUCE COSTS FOR LENDERS, DECREASE TIME TO CLOSE AND MAKE THE ORIGINATION PROCESS FASTER AND EASIER TO UNDERSTAND FOR EVERYONE." close to that, but we’ll never completely get there.

The true advantage of using AI is to reduce costs for lenders, decrease time to close and make the origination process faster and easier to understand for everyone. From here, we just have to focus on learning when and where to use it.

HOUSINGWIRE ❱ MARCH 2020 43

44 HOUSINGWIRE ❱ MARCH 2020

The new passport:

Digital identity on the blockchain Many industries begin digital identity integration

By Debbie Hoffman

Tulek quickly gathered together our few identifying documents and tied them into a small bundle. My father urged restraint, wait our turn, but Tulek pushed his way through the crowd as close to the door as he could get. Then, with all his might, he threw our papers through the transom. It was a huge risk; everything could have been lost.

Fortunately the bundle landed on the floor near the desk of a person in charge. He picked them up, leafed through them, and, “Who are these people?” he asked. “Let them come through.”

We were called into the room. We were processed as displaced persons.

-Excerpt from “I Didn’t Tell them Anything” by Aleena Rieger

HOUSINGWIRE ❱ MARCH 2020 45

W

hat do people’s Facebook account, Twitter profile, driver’s license, cell phone number and email address all have in common? Collectively they form a person’s identity and are shared either by the owner or by a third party. For most people to function in society on a daily basis, it is necessary to carry at least one form of an original piece of identification, not a copy, to conduct basic transactions that require proof of identity, including details such as name, address and age. Most commonly, people present a driver’s license.

The need to present a form of identity is required in the most mundane of activities: cashing a check, obtaining tickets at will-call, retrieving medical records and almost any type of travel-related activity such as renting a car, checking in at a hotel and, of course, air travel.

Sometimes people must present additional forms of identity including a passport, driver’s license, social security card and birth certificate. These are necessary for almost any type of financial loan and access to credit, as well as obtaining government records.

In many parts of the world, identification documents may not be available to people. According to the World Bank, in 2017, 1.1 billion people across the globe lacked any form of accessible identification materials. This World Bank study notes the negative results from a lack of a valid form of identification: poverty, human trafficking, inaccessibility to health and education, inability to access and obtain the protection of gover n ment services, as well as the deprivation of other basic rights.

server, but on a distributed set of servers that can span geographically (thus the name DLT). These servers are computers, called “nodes,” and they do not all have access to the actual data that is stored on the blockchain unless such node is granted permission to see the data.

Private information can be stored and transferred securely on the blockchain, viewed only by the intended recipient, because the technology includes cryptography.

This is a method of encrypting and decrypting data through complex mathematical algorithms. In blockchain technology, the cryptography that is used turns the data into a unique string of texts, known as hashes, so that the data is not exposed to be read by unintended recipients.

Blockchain technology, however, is utilized as much more than just the underlying platform of cryptocurrencies. It is a nascent technology that is being tested across a multitude of industries, primarily for sharing information and data among unrelated (and untrusted) parties in a supply chain. Such information sharing can include many things such the properties that constitute identity and a variety of data points about individuals.

Collectively these data points form a digital identity.

A digital identity is essentially a collection of data points about an individual stored on a computer-based platform. A digital identity can be created by external platforms that collect data attributes to comprise the identity. For the most part, there is not one single owner of digital identities; pieces of such identities are collected in many places. For example, Facebook has social identities, credit agencies own attributes about creditworthiness and so on. The attributes of digital identities can also be collected by the individual owning such data attributes, in what is called self-sovereign identity. The creation and implementation of a digital identity system alleviates many inconveniences associated with the current norm of presenting paper identification documents.

Private information can be stored and transferred securely on the blockchain, viewed only by the intended recipient.

BLOCKCHAIN AND DIGITAL IDENTITY The use of blockchain technology has expanded dramatically during the past several years. Blockchain is a form of distributed ledger technology and is the underlying technology platform that was introduced about 10 years ago alongside the advent of bitcoin, the first cryptocurrency.

It has since expanded into an underlying technology platform for more than a thousand cryptocurrencies.

Essentially, blockchain provides a ledger enabling the storage and transfer of information from a variety of sources. It has been compared to workflow systems, however in blockchain technology the parties do not necessarily have all the same access controls in the system and they may have limited views as to what they need.

This allows for “untrusted” parties to utilize the same technology platform enabling them access to shared data points.

The data on a blockchain platform is not stored on one 46 HOUSINGWIRE ❱ MARCH 2020

DIGITAL IDENTITY SUBSET: SELF-SOVEREIGN IDENTITY One type of digital identity is called self-sovereign identity, in which individuals or businesses have control over how their own data is disseminated. Owners of such data store and utilize the personal data and accounts on their own devices and provide such data upon request for validation.

A benefit of SSI is that the owner of the data has control of his or her identification attributes. Management and control of such data is not dependent upon a third-party depository, including a centralized database or authority such as Google or Facebook, who collects such identity data points for their business advantage.

In SSI, the identity owner can pick and choose who sees what: providing the government access to a driver's license number, contacts to a social media account and doctors to specific medical information. Because identification attributes are distributed to other parties only with the owner’s permission, SSI is considered to empower the identity owner.

Essentially, SSI works as follows: identification data is first stored on individual devices in a machine-readable manner. With that data, an individual can request digitally signed attestations of important identification documents from authorities, such as the Department of Motor Vehicles. If the request is approved, the applicable authority executes electronic versions of the documents and provides the verifications to the individual. After receiving these authorized electronic files, the individual controls access to the digital identification documents and can share vital identification information when requested.

SSI permits an individual to have full control over with whom, what and when their personal data is shared. No single organization can improperly monetize individual information or otherwise share personal information without the individual’s express permission or authorization. Thus, for example, if SSI is implemented in the healthcare industry, individuals would own their own medical records and history.

SSI does, of course, have some downsides. These include the fact that individuals have more responsibility for security of their own identity. In a world in which individuals must remember hundreds of passwords, SSI requires increased tracking of computer applications, passwords, biometrics and the like. Further, the potential for fraud is not fully eliminated, such as where the underlying proof of data point is fake, such as a fake birth certificate.

Lastly, while blockchain technology helps in cyber security, there can still be weak access points, particularly where the technology is not properly built or adequately tested for weaknesses.

ADOPTING DIGITAL IDENTITY PLATFORMS Digital platforms are not all SSI platforms. Many are built to enable enhancements within very specific industries and with targeted purposes. Such advancements in digital identity platforms are evolving most rapidly in medical and healthcare, consumer products and financial services. Globally there are also a number of digital identity platforms enabling electronic voting for both public and private purposes.

Healthcare It is not uncommon today to have to complete pages of paperwork every time a person sees a different doctor, submits insurance paperwork, obtains a new prescription and other healthcare related benefits. The advantages of using digital identity are therefore obvious

in the healthcare industry – not just for the patient, but also for the provider. Imagine a world in which the patient had his or her identity that could be one quick scan upon each new doctor’s visit? The benefits of digital identity systems for the provider are equally as powerful, including efficiency for patient management and treatment, health insurance and benefits, credentialing of medical professionals, data collection for planning and research, pharmaceutical records, as well as tracking information in a variety of systems for both accuracy and permanency.

Consumer Products Consumers want speed and convenience when shopping online, but they also want solid security.

Merchants want to ensure that all consumer information is recorded in a secure manner for many reasons, but especially to avoid negative financial and publicity implications of a security breach of consumer information. Thus, it is clear that digital identity could enhance retail shopping for both the consumer and the merchants involved.

Financial Services Digital identity measures are being used by financial institutions in their risk prevention measures related to Anti-Money Laundering and Know Your Customer.

The technology allows institutions to enhance their compliance processes and create more effective and transparent due diligence research in their AML and KYC efforts. This is done through several different means of identity and document verification that can be completed and assessed collectively and simultaneously. Furthermore, data gathered by institutions can be shared with risk officers and regulatory bodies almost instantly, improving the process of identity management from both sides.

Voting Finally, blockchain technology can be used to verify identity and specific identification information to make the process of casting votes electronically easier, in both the public and private sector. One company, Votem, uses the technology to authenticate the identity of voters, provide for an audit trail of votes cast, and make the voting experience for the user convenient, fast and secure.

“One of the most important factors in voting is knowing that the voter is qualified to vote and that they are who they say they are,” Votem CEO Peter Martin said.

“This is not an easy problem to solve for any type of remote voting including absentee and mail-in ballots.

We are working hard on processes and technology to make voter identity almost as accurate as in-person voting, but in many cases our technical capabilities using biometrics (finger scan, facial recognition) outpaces the legislation and what is legally allowed.”

HOUSINGWIRE ❱ MARCH 2020 47

DIGITAL IDENTITY AND MORTGAGE LENDING In the mortgage process, digital identity platforms could be used early in the process, starting with the initial borrower paperwork for a loan origination and credit verification.

Digital identity platforms can be utilized for verifications along the entire process leading up to and including the closing and the platforms could eventually completely replace the need for notarization on loan documents.

The platforms could extend to have the identity attributes that may be needed in servicing a loan or in the loan’s trade to the secondary market. Looking at the greater housing ecosystem, digital identity platforms can extend to the process prior to loan origination, including the consumer’s search for houses.

Not unlike other industries, including voting as noted above, the concept of using digital identity in the mortgage process cannot be achieved for the entire mortgage lifecycle until there are regulatory changes to include the acceptance of electronic documents and closings in all states.

This includes electronic notarizations. That being said, the entire concept of a notary is not needed with implementation of digital identity platforms because it is intrinsic to the technology.

Cost and inefficiencies in the mortgage lending processes will be greatly reduced with the implementation of digital identity and the overall enablement of a complete digital mortgage. For example, there will be no need for any printing, mailing or faxing loan documents between parties.

Closings will not have to occur in person and notaries will not be necessary.

The entire process will not only be more efficient for the borrower/home purchaser, it will be what is expected in today’s digital society where all transactions have become seamless on-line user experiences.

With the implementation of blockchain technology to enable a complete digital mortgage process, including verification of digital identity related to borrower information,

Cost and inefficiencies in the mortgage lending processes will be greatly reduced with the implementation of digital identity and the overall enablement of a complete digital mortgage.

48 HOUSINGWIRE ❱ MARCH 2020

the time and costs associated with mortgage origination and servicing could be greatly reduced.

“Digital transformation continues its march in digitizing the mortgage experience,” Finicity Co-founder Nick Thomas said. “One of the next areas to be impacted is identity and verifiable data.” Today, lenders rely on third parties who maintain consumer records to verify identity and data of a potential borrower.

“As we go forward, that data will be pre-verified when provided to the consumer and that verification will be maintained until revoked by the issuer,” Thomas said. “All with the permission of the consumer. These processes, called verifiable credentials and decentralized identifiers, will dramatically simplify and speed up the process.”

Eilon Shalev, founder of Elphi, a technology company utilizing blockchain to streamline the mortgage lifecycle, notes that the critical factor with regard to identity within the boundaries of mortgage is data integrity.

“When all stakeholders are using the same ledger, or several ledgers with seamless interoperability capabilities, borrowers will have their financial information stored in one place, and they will push specific data fields to potential creditor(s); this data will populate the necessary datasets that said creditor(s) need for the specific loan type approval,” Shalev said.

He further notes that by doing this, data integrity is solved on three levels: • • •

There is no error as with manual inputs Data verification will be intrinsic to the process The entire transactional history will be time-stamped, recorded, and synchronized among all relevant parties.

While the concept of digital identity is emerging and not yet mainstream, there is no question it will enhance the mortgage lending supply chain. Similar to other industries like healthcare, in the mortgage lending ecosystem, the consumer credentials are a vital part of the process.

Despite the fact that mortgage technology development does not move at lightning speed, it is without question that the innovators in the industry will recognize that moving to implement a digital identify platform will put them front and center ahead of their competitors.

EXISTING PLATFORMS While the concept of digital identity being used in mortgage lending is extremely new and not yet mainstream, there are

Individuals can control the access to and sharing of this information when visiting different websites. When integrated into other businesses, the Civic platform enables such businesses to verify identity documents and to satisfy their necessary KYC requirements by validating consumer information.

many emerging platforms that allow the integration of digital identity systems to enhance processes across other industries.

The companies behind these identity management protocols promote the benefits of digital identity, including operational efficiencies and consumer satisfaction. The following are just a sampling of such companies: •

•

•

Mastercard and Microsoft announced in December 2018 that they were collaborating to develop a digital identity platform. The announcement touted that they want to, “unlock new and enhanced experiences for people as they interact with businesses, services providers and their community online,” including financial services, commerce, government services and digital services.

A leading company in blockchain development, ConsenSys, announced in September 2019 that it is partnering with Onfido and PwC to further develop uPort, its identity management platform, in the financial sector. These companies state that they want to improve the customer process and reduce compliance costs.

Civic is a company that focuses on digital identity using blockchain technology. The Civic platform enables the storage of individual identification information – including legal names, birth dates, e-mail addresses, social security numbers and phone numbers – in one central location.

•

Sovrin is a SSI platform from a non-profit foundation that touts an open source code so that individuals can manage their own identity. It stores personal data and credentials that are stored in digital devices, or computer applications called wallets.

•

Social Good has been working to develop a mobile application for the homeless population in New York called Fummi.

The company has noted that the goal of this application would be to allow the homeless in New York City to, “manage their digital identity, access shelters and food pantries and make use of financial services.”

•

Lastly, the United Nations Office of Drugs and Crime has been working to develop a digital documentation system which would provide refugees and other currently undocumented individuals with some control over their identification without being reliant on a government to provide them with this information.

WHAT’S NEXT? Having to keep track of personal identification documents and carrying identification cards to verify personal details is inefficient, inconvenient and simply not necessary given the digital age in which we live. The use of blockchain technology to enable digital identity platforms will allow for operational efficiencies and enhance consumer experiences. It will not be long before digital identity platforms are integrated into many industries, streamlining processes and, in some cases, enabling consumers to have more control over their own data. The mortgage ecosystem can be greatly enhanced by integrating digital identity standards into the current process.

About the Author: Debbie Hoffman is the founder and CEO of Symmetry Blockchain Advisors, working with clients in their endeavors related to education, strategy and implementation of blockchain solutions. Hoffman was previously the chief legal officer at Digital Risk and a finance attorney at Thacher Proffitt & Wood in New York.

HOUSINGWIRE ❱ MARCH 2020 49

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S AND ETING TIONS In a market where new competitors are entering the real estate and mortgage space every day, it’s critical for lenders to be proactive in connecting with potential homebuyers as early as possible in their home-buying journey. At the same time, lenders have to be vigilant about costs. Fortunately, technology companies are jumping in to help, with tools that put lenders in the driver’s seat. In this section, we profile two companies that are delivering innovative solutions that help lenders grow business while controlling costs: Monster Lead Group and Sales Boomerang.

HOUSINGWIRE ❱ MARCH 2020 51

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MONSTER LEAD GROUP monsterleadgroup.com

KEN BARTZ, FOUNDER AND CHIEF VISIONARY OFFICER:

Ken Bartz has spent 25 years in the mortgage industry, working his way from loan officer to owner of a 100-person mortgage company. In 2013, he created Monster Lead Group, a direct marketing agency for mortgage companies. Their solution, The Monster Way, combines direct mail marketing, sales training and strategic business consulting to mortgage companies looking to scale. Monster’s marketing solutions powered over $10 billion in originations for its clients in 2019.

FAST FACTS: Founded in 2013 A privately held, profitable company In 2019, Monster Lead Group’s revenues grew 89% Powered $10 billion in originations for clients in 2019

COMPANY MISSION: Monster’s mission is to be the mortgage industry’s best performing direct mail marketing agency by combining data science, technology and marketing strategy into a turn-key process that consistently delivers results our clients use to predict revenue and scale their business.

52 HOUSINGWIRE ❱ MARCH 2020

Monster Lead Group analyzes data for more consistent leads

L

enders are looking for consistent leads that maintain or lower acquisition costs, but it can be challenging when inconsistent or ineffective marketing prevents them from being able to accurately predict revenue and growth.

Many direct mail companies boast about their service, delivery metrics or pricing. But for many years, clients of Monster Lead Group have been unable to replicate the success they’ve had when switching to other vendors. In fact, in 2019, while so many mortgage lenders struggled or shuttered their doors, many of Monster Lead Group clients experienced significant growth even in down years.

To find out why this was happening, Monster analyzed all its clients over a 24-month period (01/01/2018 through 12/31/2019). Those mortgage lenders who were able to consistently increase their marketing spend and their sales revenue shared three key indicators: The right offer, the right data strategy and mailing consistency.

According to the Direct Marketing Association, direct mail consistently delivers higher response rates than any other marketing media used by the mortgage industry, which remains one of the largest industries using direct mail marketing.

A closer look revealed a fourth indicator: They followed a professional sales script and system for handling and closing inbound calls. In short, they relentlessly followed the same professional sales process used by every highly successful lender – and business – in the country.

This data supported the value of what Monster has been delivering over the years: By bringing together a data-focused direct mail marketing system, weekly tailored marketing strategies, inbound call analytics and sales coaching into one simple yet comprehensive program, lenders leverage trends and opportunities that lead to higher responses, lower acquisition costs and predictable, consistent growth over time.

Today, this combination is available in an industry-first, one of a kind program called The Monster Way. The Monster Way is an 8-week plan that combines direct marketing, call management, sales training, science-backed data and tailored mortgage marketing strategy into a scalable program with a process and system for growth, regardless of rates or market conditions.

From day one, branch managers strategize with Monster’s experts who identify data pockets with good opportunities as well as larger pools of potential borrowers based on the broker’s needs, using Monster’s exclusive borrower ranking data algorithms. Monster then executes the entire campaign, leaving the manager free to watch in real time as responses and phone calls come in and see which of their MLOs are responding and converting.

Monster Way’s 8-week road map means clients get higher results than with any other direct marketing because of Monster’s: u Specific marketing process and system for reliable, repeatable sales by every MLO u Quality data delivered consistently, over time u Meticulous attention to every campaign, looking for response anomalies and issues u Pivoting quickly where strategies need to change to improve results u Continuous improvement and coaching for MLOs requiring assistance on converting calls u Turn-key direct mail marketing for brokers and lenders whose time is better spent elsewhere u Pre-tested high converting sales scripts and mail templates designed exclusively by Monster that allow us to accurately predict the response rate for every mailing before you send u Monster Lead Machine dashboard that displays campaign results in real time, with inbound call recording and playback for easy management of leads and follow up.

Monster has invested more than $1 million and employs a full-time team of data scientists, analysts and technologists to create searchable property fields and proprietary algorithms that analyze 5 years of historical data to rank and score every borrower in the U.S. for those most likely to respond to a lender’s specific offer.

Companies who have embraced The Monster Way, applied its direct mail strategies and adopted its best sales practices consistently see reduced acquisition costs by as much as 80%, increased production with call-to-app conversion rates as much as 70%, and enjoy better hiring and talent retention.

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Sales Boomerang helps lenders rekindle old leads

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ith its Borrower Intelligence and Retention System, Sales Boomerang aims to bring relationships back to the lending experience.

A lender’s database is made up of prospects, past customers, dead deals and opportunities that didn’t come through. With Sales Boomerang’s borrower intelligence system, lenders are notified when anyone in their database is shopping for a loan or is experiencing another event that could change their loan status. The system gives lenders the information they need, pointing them in the direction of who to reach out to about this potential new prospect and what loan product they could be looking for based on what’s changed.

The Sales Boomerang system features individual alerts that lenders can toggle on or off in order to be notified when a potential client or return borrower opportunity arises.

SALES BOOMERANG salesboomerang.com

ALEX KUTSISHIN, COFOUNDER AND CEO

These alerts include: u u u u

Mortgage Inquiry Watch Credit Improvement Watch Equity Watch New Listings Watch

u Rate Watch u Debt Watch u Life Events

The system empowers lenders to offer their borrowers the best loan product for them at the right time. By tracking all relevant events that are connected to the borrower, lenders can create an experience based solely on what’s best for the borrower, confident that they will not miss an opportunity to serve their clients.

As opposed to driving lead generation, the Sales Boomerang borrower intelligence and retention system alerts lenders to their own leads and previous customers already in their database who are ready for a new loan product.

For example, the Mortgage Inquiry Watch alerts lenders when a lead, prospect, turndown or customer is shopping for a new mortgage with a competitor, allowing LOs to approach those potential customers and secure the deal themselves.

And with the Credit Improvement Watch, if a potential client doesn’t qualify for a loan due to their credit score and is entered into the lender’s CRM as unqualified, Sales Boomerang tracks them and notifies the lender as soon as their credit improves enough to qualify. The system would also send that client a firm offer of credit letter on the lender’s behalf to ensure they remain in compliance.

The system and its notifications save loan officers time and work by connecting them to the right borrower at the right time. Knowing exactly who to pursue for new business can ease lender concern about missing opportunities and increase their confidence in their own work.

Sales Boomerang’s system easily integrates with popular customer relationship management tools, requiring no extra tech to learn or install. The system aligns borrower and lender interests, drives bottom-line impact for lenders, and can reduce both loan officer and borrower churn.

In 2019, Sales Boomerang clients funded $4.1 billion from their own databases, thanks to the borrower intelligence notifications delivered by the system. On average, lenders using Sales Boomerang received 12X their return on investment, as well as 3-4X customer retention.

“We want borrowers to love the lending experience rather than dread it, and that starts with helping lenders fall in love with the experience again,” Cofounder and CEO Alex Kutsishin said.

“Sales Boomerang empowers lenders to deliver the best solutions to their borrowers at the right time with the right messaging, from deal one to 100, and every loan in between.”

Alex Kutsishin is a serial entrepreneur, and Sales Boomerang is his 7th company. In 2011, Kutsishin founded the nation’s first code-free mobile software development software, which spread to more than 100 countries before he sold his shares in 2014.

Kutsishin is now the co-founder and CEO of Sales Boomerang, the world’s first fully automated borrower intelligence company.

FAST FACTS: Founded in Owings Mills, Maryland, in 2016 Launched live to the lending industry in July 2017 Customer base has grown from 8 customers in 2017 to 26 in 2018 and 76 in 2019 Has been growing by more than 400% each year in revenue and staff

COMPANY MISSION: Our mission is to give borrowers a good reason to fall in love with the lending experience by helping lenders fall more deeply in love with lending. The way we accomplish this mission is by making it effortless for lenders to help their borrowers at the exact moment the borrower can benefit from a new or better loan.

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Wells Fargo battered by more punishments for alleged misdeeds FORMER EXECS FINED AND CHARGED, BANK SETTLES DISCRIMINATORY LENDING CHARGES

BY BEN LANE

IT’S been a busy few months of settlements and fines for Wells Fargo, the once-shining example of how one of the nation’s biggest banks was supposed to be run.

Well, it’s really been a busy few years in that regard for Wells Fargo.

But the last few months saw an uptick in punishments for Wells Fargo.

First, the bank settled with the city of Philadelphia, which sued the bank back in 2017 after accusing the bank of engaging in discriminatory lending.

Then, the Office of the Comptroller of the Currency handed out punishment and more charges against several of the bank’s former executives, on whose watch the bank’s now infamous fake account scandal took place.

The situation with Philadelphia began in 2017, when the city

accused the lender of steering minority borrowers into riskier or more expensive mortgages than they should have gotten. The bank vociferously denied the city’s “unsubstantiated accusations” and claimed it would “vigorously defend” itself against the allegations, but 18 months later, the bank settled with the city.

Under the terms of the settlement, Wells Fargo will provide $10 million for “sustainable housing-related programs to promote and preserve homeownership for low- and moderate-income residents” of Philadelphia.

The settlement ends the city’s lawsuit against Wells Fargo.

In its lawsuit, the city accused Wells Fargo of “steering AfricanAmerican and Latino borrowers towards high-cost or high-risk loans even where those borrowers’ credit permitted them to obtain more advantageous loans.”

Philadelphia’s complaint also alleged that Wells Fargo was HOUSINGWIRE ❱ MARCH 2020 55

“aware and, in fact, incentivized the marketing of the high-cost in a statement.

“This agreement brings substantial support to the very commuor high-risk loans to minorities.”

In the lawsuit, the city claimed that an analysis found that nities that most need this assistance. Philadelphia is committed to 23.3% of loans Wells Fargo made to minority customers in ensuring that no one faces additional hurdles toward homeownPhiladelphia were “high-cost or high-risk,” while only 7.6% of ership because of their race or ethnicity,” Kenney added.

“From the outset of this litigation, our focus has been on diloans made to white customers were “high-cost or high-risk.”

Throughout the lawsuit, Wells Fargo denied the allegations and recting relief to the neighborhoods that were the subject of the litigation, which were communities of color that continue to face held to its position that the claims were without merit.

And while Wells Fargo still holds that position, claiming that it challenges,” Philadelphia City Solicitor Marcel Pratt said.

“The resolution will provide much-needed benefits to the City’s does not admit liability and “vigorously” denies the allegations, low- and moderate-income residents—most significantly by enthe bank chose to settle nonetheless.

“We’re pleased that we’ve been able to resolve this matter in a abling homeownership, which is one of the most effective ways way that will provide real, tangible sustainable homeownership that families accumulate wealth in America,” Pratt continued.

“One of the advantages of this resolution is that we secured opportunities for many low- and moderate-income residents of Philadelphia,” said Joe Kirk, Wells Fargo Region Bank president, valuable benefits that would not have been available through pursuing our litigation for City government’s injuries under the Greater Philadelphia.

According to the parties, most of the money – $8.5 million to Fair Housing Act,” Pratt concluded. “As a result, we are providbe exact – will go to “provide grants for down payment and clos- ing tangible, significant benefits directly to our communities and residents.” ing cost assistance to low- and Philadelphia’s lawsuit covmoderate-income persons and ered the bank’s lending activhouseholds” to help people buy ities from 2004 through 2017, homes in Philadelphia. and during much of that time, The Philadelphia Housing Wells Fargo and the city of Wells Fargo was led by John Development Corporation will Philadelphia will also collaborate Stumpf, who also led the bank provide the grants and there is on a program called during the time when more no requirement that the buyer than 5,000 of the bank’s former use Wells Fargo as their mort“Understanding Philadelphia.” employees opened as many as gage lender in order to receive 2 million fake accounts in order the grants. to get sales bonuses.

Beyond that, $1 million will Stumpf promptly resigned be divided by up to as many as three nonprofits to implement Philadelphia’s Residential from his positions as chairman and CEO of the bank shortly after the Consumer Financial Protection Bureau, the OCC and the city Mortgage Foreclosure Prevention Program.

According to the city, the program was developed after the 2008 and county of Los Angeles fined the bank $185 million for the financial crisis as a way to mitigate the effects of the foreclosure fake accounts.

But Stumpf didn’t get off that easy. proceedings on homeowners, lenders and the city.

Earlier this year, the OCC fined Stumpf $17.5 million as part of a The settlement also stipulates that Wells Fargo provides $500,000 in grants to the city’s land care program, which is aimed consent order that also prohibits Stumpf from working for a bank at revitalizing vacant land including abandoned residential lots in any capacity without the OCC’s permission.

According to the OCC, Stumpf did not do nearly enough to adin Philadelphia.

Wells Fargo and the city of Philadelphia will also collaborate dress the fake account issue either during his time as head of the on a program called “Understanding Philadelphia.” The program, community bank section of Wells Fargo or as the bank’s CEO. “[Stumpf] was or should have been aware of the problem for Wells Fargo mortgage employees in Philadelphia, will analyze the history of the housing market in the city, the city’s neighbor- and its root cause,” the OCC said in its consent order. “During Respondent’s tenure, there was a culture in the Community hoods, and the current housing needs of city residents.

“Homeownership brings stability, security and pride — in your- Bank that resulted in systemic violations of laws and regulations, self, and in your community. Philadelphians who struggle amid breaches of fiduciary duties, and unsafe or unsound practices by poverty need assurance that they face a level playing field as they large numbers of Community Bank employees.”

According to the OCC, Stumpf’s failures were repeated and work to achieve that dream,” Philadelphia Mayor Jim Kenney said 56 HOUSINGWIRE ❱ MARCH 2020

systemic.

Beyond the punishment against Stumpf, the OCC also levied a $2.25 million fine against the bank’s former Chief Administrative Officer and Director of Corporate Human Resources Hope Hardison, who took a leave of absence from the bank in 2018 amid the fallout.

The OCC also fined former Chief Risk Officer Michael Loughlin $1.25 million for his role in the scandal.

Both Hardison and Loughlin were among the Wells Fargo execs who had their 2016 bonuses revoked as the scandal widened.

But those aren’t the only Wells Fargo execs in the OCC’s crosshairs.

The regulator also announced charges against five other execs, including Carrie Tolstedt, the head of the community bank during the bulk of the fake account creations.

According to the OCC, it is seeking a fine of $25 million against Tolstedt for her actions, or lack thereof, to prevent the fake account scandal from spreading.

Beyond that, the OCC is seeking a fine of $5 million against Claudia Russ Anderson, who was community bank group risk officer; a fine of $5 million against James Strother, who was the bank’s general counsel; a fine of $2 million against David Julian; who was the bank’s chief auditor; and a fine of $500,000 against Paul McLinko, who was the bank’s executive audit director.

Strother and Julian were also among the execs who had their 2016 bonuses revoked. Julian also took a leave of absence from the bank in 2018 along with Hardison over their roles in the fake account scandal.

Russ Anderson, meanwhile, was fired by the bank in 2017 for her actions.

And according to the OCC, the charges facing Russ Anderson go beyond the actions within the bank’s operations itself and into the realm of obstructing the regulator’s investigation.

The OCC alleges that Russ Anderson “made false and misleading statements to the OCC and actively obstructed the OCC’s examinations of the bank’s sales practices.”

As for Wells Fargo, the bank’s new CEO Charlie Scharf sent a

letter to the bank’s employees addressing the OCC’s actions.

“At the time of the sales practices issues, the Company did not have in place the appropriate people, structure, processes, controls, or culture to prevent the inappropriate conduct,” Scharf said in his letter. “This was inexcusable. Our customers and you all deserved more from the leadership of this Company.”

Despite Scharf’s comments, I think it’s likely that Wells Fargo’s dark days are far from over.

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58 HOUSINGWIRE ❱ MARCH 2020

OpenHouse POWERED BY

Flood insurance impasse puts housing market at risk TRUMP SIGNED ANOTHER LAST-MINUTE REPRIEVE, BUT IT’S SHORT TERM

BY KATHLEEN HOWLEY IF there were a contest for the most important real estate issue, flood insurance might win it. Even if it didn’t, it would certainly be a top contender. In many areas, you can’t get a government-backed mortgage without flood insurance. And, flood zones aren’t always synonymous with barrier islands.

Is there an adorable little stream behind that dream home you just looked at? Is there a river three miles away? Think: Potential flood zone.

If there were a second contest, this one for the most boring real estate issue – let’s call it the Snoozer Award – flood insurance would win hands down. No one wants to think about flood insurance. That is, not until U.S. housing markets with property values supported by federal flood insurance face the threat of losing it.

That story is below.

It was a cold December night in Washington, D.C. when President Donald Trump and his family departed the White House heading for a two-week Christmas vacation at Mar-a-Lago.

The U.S. House of Representatives had voted to impeach Trump two days earlier, but the president appeared to be in a cheerful mood. As he walked toward Marine One, the helicopter waiting on the lawn nearby, he veered toward a rope line to shake hands

with eager supporters and exchange Christmas greetings.

After a snappy salute from the U.S. Marine guard at the steps of the helicopter, the president and his family boarded the five-mile flight to Joint Base Andrews in Maryland to take Air Force One, a modified Boeing 747, for a two-hour trip to Florida.

In mid-flight, while ensconced in the plane’s presidential quarters, Trump prevented the collapse of real estate markets in the nation’s flood-prone areas by signing a package of bills authorizing $1.4 trillion of federal spending that the House of Representatives and the Senate passed days earlier.

Buried in the more than 2,300 pages of legislation that – in addition to avoiding a federal shutdown – gave us Space Force and parental leave for federal workers, there were lines that reauthorized the National Flood Insurance Program through the end of September.

The nine-month reprieve was the 13th time Congress kicked the can down the road with a short-term reauthorization of the NFIP. But, nine months is an improvement. Some of the extensions have been as brief as a few days.

The last multi-year funding period ended when the BiggertWaters Flood Insurance Reform Act expired in 2017, shortly after HOUSINGWIRE ❱ MARCH 2020 59

People who buy property with mortgages backed by the fedTrump was inaugurated.

NFIP, created in 1968, has been a controversial program since eral government – in other words, most people – can’t get their 2005’s hurricane season headlined by Katrina, Rita and Wilma loans funded without having flood insurance if maps maintained

by FEMA indicate that it’s in a overwhelmed the fund and flood zone. forced Congress to cover bilFlood damage isn’t covered lions in payouts. by a standard homeowners T he r e w e r e 5 m i l l io n The Government Accountability insurance policy. The private NFIP policies in force when Office has put the NFIP on its “highmarket for flood insurance Katrina made landfall, acrisk list” because Congress hasn’t is expensive. And, it’s in its cording to Federal Emergency infancy.

Management Agency data. In found a sustainable solution to That’s not just a problem for September of 2019, the latest keeping insurance affordable while buyers. It’s also a problem for data available, there were 5.1 maintaining the program’s solvency. sellers, because real estate valmillion policies. ues would take a hit if buyers Measured in dollars, though, can’t get mortgages. the government’s exposure is And, it’s even a problem for much higher today because of the increase in real estate values over the past 15 years. In 2005, people who have no plans to sell and who are streets away from the NFIP covered $876.7 million of homes. In September, it was a flood zone. Here’s why: Say you want to get a home equity loan to fund some reno$1.3 trillion.

Each time the NFIP program has been on the verge of lapsing vations. The lender will want an assessment of how much your over the last three years, there were families in flood-prone areas property is worth. That’s going to be based on “comparable sales,” of the country who had no idea the value of their home – proba- meaning the amount buyers have forked over to purchase similar bly the largest financial asset they owned – was about to take a homes in your neighborhood within a recent period.

That’s why you want buyers to be able to get some form of flood mortal blow.

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insurance, even if you’re a non-seller. You don’t want your prop- Some would call that wise, because FEMA maps aren’t always up to date. erty values, and by extension your net worth, to take a hit.

Climate change – or call it “extreme weather,” if you like – is Nationally, about 480,000 home sales a year would be nixed if NFIP coverage wasn’t available, according to the National making the problem worse. Areas within 100-year floodplains where owners with federally backed mortgages are required to Association of Realtors.

And, lest you think that’s only in coastal real estate markets, purchase flood insurance will grow by 40% to 45% by 2100 as remember flooding can happen where you might not expect it, weather patterns change, according to a FEMA study.

That comes as builders expand development to meet the delike in Midwestern cornfields.

The reason is obvious if you live in Illinois, Iowa and other mand for homes from a growing population. Sometimes, home Midwestern states. If you’re more of a coastal or southern per- construction is occurring in areas that even an educated guess son, look it up. There’s a separate Wikipedia entry for “2019 U.S. could tell you are likely to flood in coming years.

Both Republicans and Democrats said they wanted to negotiate Midwestern floods.”

In a September article, the New York Times dubbed it “The Great a major restructuring of the NFIP. Some of the proposed changFlood of 2019” and described it as “a slow-motion disaster” after es include measures to discourage the construction of homes in weeks of torrential rain caused the Missouri River and other wa- low-lying areas.

Others included updating the criteria that goes into designating terways to top their banks. Some of the flooded neighborhoods an area as a flood zone. were miles from the nearest river.

The Government Accountability Office has put the NFIP on The average flood insurance claim is about $43,000, according to FEMA. That shows most claims are not the result of extreme its “high-risk list” because Congress hasn’t found a sustainable flooding, because damage from just one inch of water in a home solution to keeping insurance affordable while maintaining the can top $20,000. According to FEMA, 90% of all natural disasters program’s solvency.

During a time when gridlock in Washington is at an all-time involve floods.

Even people who don’t live in high-risk areas can buy insurance high, the financial wellbeing of homeowners around the country through NFIP. More than 20% of flood claims come from prop- – many of them oblivious to the flood insurance issue – relies on erties located outside high-risk flood zones, according to FEMA. finding a solution.

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Fintech

Fintech

Visa buys fintech company Plaid for $5.3 billion A LOOK AT PLAID’S FINTECH EVOLUTION

BY BEN LANE THERE’S a new unicorn in the fintech space, and its name is Plaid.

Back in 2018, the technology platform, which connects various applications with users’ bank accounts and provides an asset verification program that can be used as part of Fannie Mae’s Day 1 Certainty program, raised $250 million in its Series C funding.

Noted venture capitalist Mary Meeker led the funding round, with participation from Andreessen Horowitz, Index Ventures, Norwest Venture Partners, and Coatue Management, along with existing investors Goldman Sachs, NEA, and Spark Capital.

When all was said and done, the company was reported to have a valuation of $2.65 billion, fueling its expansion plans exponentially.

In 2019, Plaid went on to do just that by acquiring Quovo, a fintech platform that also connects applications to customers’ accounts.

“Financial applications have historically used Plaid primarily to interact with checking and savings accounts,” Plaid founders Zach Perret and William Hockey said in a company blog post. “In acquiring Quovo, we are extending our capabilities to a wider class of assets. Our goal is to make money easier for everyone and doing so requires that we consider consumers’ financial lives

holistically. We’re excited to work with the Quovo team to enable this.”

The deal, which Plaid ended up paying around $200 million for, provided the company with even more financial data at its digital fingertips.

“Combining our platforms will create a better experience for our customers while also enabling new services to be developed that consider the full financial picture of today’s consumer,” Quovo’s management said in a statement.

“When we started talking with Plaid about what the future might look like as a combined company, it quickly became clear that we’d be stronger together,” Quovo’s management continued. “We look forward to what the future holds for our combined platform.

It is our sincere hope that it ushers in a new wave of innovation, from the smallest startups being founded today to disrupt the status quo, all the way to the largest banks in the world that are looking to supercharge their customer relationships with data.”

By the end of 2019, Plaid was positioned to do just this, thanks to the financial backing from two of the largest credit card companies in the world.

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Fintech

“We’re particularly excited about what this means for our customers and for consumers. We are well on our way to creating a consumerfirst financial ecosystem that will significantly improve the way people manage their financial lives.”

- Plaid founder Zach Perret

vestments from two notable financial titans, Visa and to deliver even more value for developers, financial institutions and consumers.”

Mastercard.

According to a release, Visa views the acquisition as Although the fintech company did not reveal at the time how much the credit card companies were investing, an entry into new businesses and “complementary” to they did say the financial institutions had made “strate- its existing businesses.

“First, Plaid’s fintech-centric business opens new margic investments” in the platform.

“We’re particularly excited about what this means for ket opportunities for Visa both in the U.S. and internaour customers and for consumers,” Perret said back in tionally,” the company said in a release. “Second, the 2019. “We are well on our way to creating a consumer-first combination of Visa and Plaid provides the opportunity financial ecosystem that will significantly improve the to deliver enhanced payment capabilities and related value-added services to fintech developers. Finally, the way people manage their financial lives.”

In January of this year, the housing industry finally acquisition will enable Visa to work more closely with findiscovered that Visa’s interest in Plaid was much more techs through all stages of their development and drive than just exploratory as the credit card giant is now set growth in Visa’s core business.”

Plaid’s products allow consumers to share their finanto buy Plaid for a for a total purchase consideration of cial information with thousands of apps and services, $5.3 billion.

This figure is exactly twice as much as Plaid’s reported including Acorns, Betterment, Chime, Transferwise and valuation in late 2018 when it raised that $250 million in Venmo.

“This acquisition is the natural evolution of Visa’s 60its Series C funding round.

“We are extreme- year journey from safely and securely connecting buyers ly excited about our and sellers to connecting consumers with digital finanacquisition of Plaid cial services,” Kelly said. “The combination of Visa and and how it enhances Plaid will put us at the epicenter of the fintech world, exthe growth trajecto- panding our total addressable market and accelerating ry of our business,” our long-term revenue growth trajectory.”

The deal is already receiving positive reviews from sevsaid Al Kelly, CEO and chairman of Visa. eral sizable financial services companies.

“We believe Visa’s acquisition of Plaid is an important “Plaid is a leader in the fast-growing fin- development in giving consumers more security and contech world with best- trol over how their financial data is used,” said Gordon in-class capabilities Smith, co-president, JPMorgan Chase and CEO of conand talent. The ac- sumer and community banking. “Protecting customer quisition, combined data and helping them share that information safely has with our many fintech long been a top priority for Chase. We look forward to efforts already under- partnering with Visa to continue building a great expeway, will position Visa rience for our shared customers.”

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Fintech

PayPal P re s ide nt and CEO Dan Schulman, meanwhile, stated: “We have strong relationships with both Visa and Plaid. The combination of Plaid’s capabilities with the security and scale of Visa’s global network will provide us with exciting opportunities to enhance our products.”

As for Plaid, the company said that the deal will allow the company to grow even more.

“Plaid’s mission is to make money easier for everyone, and we are excited for this opportunity to continue delivering on that promise at a global scale,” Perret said. “Visa is trusted by billions of consumers, businesses and financial institutions as a key part of the financial ecosystem, and together Visa and Plaid can support the rapid growth of digital financial services.”

According to a release, Visa will use cash on hand and debt issuance “at the appropriate time” to fund this deal. The companies expect the deal to close in the next three to six months.

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Politics and Money

Trump administration rolling back controversial Obama fair housing rule PROPOSES CHANGES TO AFFIRMATIVELY FURTHERING FAIR HOUSING RULE

BY BEN LANE

JUST over two years after it first began chipping away at a controversial fair housing rule issued by the Obama administration in 2015, the Trump administration announced that it is issuing a wholly new Affirmatively Furthering Fair Housing rule.

In 2017, Department of Housing and Urban Development Secretary Ben Carson said that HUD will look to “reinterpret” the Obama administration’s AFFH rule, which required cities and towns receiving federal funding to examine their local housing patterns for racial bias and to design a plan to address any measurable bias.

Since then, HUD has taken several steps to delay and/or alter the AFFH rule, including delaying the deadline for local governments to submit their fair housing evaluations by one year and killing a computer program that local governments were supposed to use to submit their relevant housing data to assure compliance with the AFFH rule.

But now, HUD is moving away from the Obama administration’s

version of the AFFH entirely and proposing its own version of the rule.

According to HUD, the newly proposed rule “offers clearer guidance to states and local governments to help them improve affordable housing choices in their community.”

In a statement, Carson indicates that the Trump administration’s new rule removes the federal mandate to address systemic housing discrimination and places control over local housing efforts with officials in those cities and towns.

“HUD’s commitment to Fair Housing remains as steadfast as ever before, and this improved rule reaffirms our mission of giving people more affordable housing options in communities across the country,” Carson said.

“By fixing the old Affirmatively Furthering Fair Housing rule, localities now have the flexibility to devise housing plans that fit their unique needs and provide families with more housing choices within their reach,” Carson continued.

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HUD efforts to change the AFFH rule were challenged in court “Mayors know their communities best, so we are empowering them to make housing decisions that meet their unique needs, not by fair housing advocates, including the National Fair Housing a mandate from the federal government,” Carson added. “Having Alliance, Texas Appleseed, and Texas Low Income Housing said that, if a community fails to improve housing choice, HUD Information Service, which asked for a judge to require HUD to stands ready to enforce the Fair Housing Act and pursue action enforce the AFFH rule as originally established.

But the judge overseeing the case eventually threw out the against any party that violates the law.”

In its proposed rule, HUD lays out its vision for how the AFFH housing groups’ case, stating that they did not prove that they were harmed by HUD’s actions. rule should function: With the court’s decision in its back pocket, HUD moved forHUD believes that fair housing choice exists when a jurisdiction can foster the broad availability of affordable housing ward with its plan to “streamline” the AFFH rule by inviting comthat is decent, safe, and sanitary and does so without housing ments from the public and industry participants on how best to discrimination. To that end, HUD is proposing to evaluate how enforce fair housing regulations.

HUD said that it received more than 700 public comments in program participants are carrying out their AFFH obligation as a threshold matter by using a series of data-based measures to response.

According to HUD, many of those expressed support for the determine whether a jurisdiction (1) is free of adjudicated fair 2015 rule and urged HUD to continue housing claims; (2) has an adequate to implement its requirements. supply of affordable housing throughout According to HUD, the newly “These commenters cited the need the jurisdiction; and (3) has an adequate proposed rule “offers clearer for a way to enforce the AFFH requiresupply of quality affordable housing. guidance to states and local ment and cited the significant use of HUD’s new rule also redefines what governments to help them resources and public input that went the phrase “Affirmatively Furthering Fair improve affordable housing into the creation of the 2015 rule,” Housing” means in the government’s choices in their community.”

HUD said in its new rule. “These view. The current regulation defines commenters found the early results AFFH as “taking meaningful actions of the rule ‘promising’ and believed that, taken together, address significant disparities in housing needs and in access to opportunity, replac- that improving the tools would ease the burdens and improve ing segregated living patterns with truly integrated and balanced the process.”

But, HUD notes that a “large number” of commenters opposed living patterns, transforming racially and ethnically concentrated areas of poverty into areas of opportunity, and fostering and the 2015 rule. “Some objected to the idea entirely, citing concerns maintaining compliance with civil rights and fair housing laws.” for local control of zoning,” HUD said. “Others felt that the reHUD proposes changing the definition of AFFH to “advancing quirements of the rule were too onerous, specifically the level of fair housing choice within the program participant’s control or public participation needed and the scope of data that program influence.” HUD is proposing a definition of “fair housing choice” participants were required to address.”

According to HUD, these new changes are necessary for a numto be allowing “individuals and families [to] have the opportunity and options to live where they choose, within their means, ber of reasons.

“Since the issuance of the 2015 final rule, HUD has determined without unlawful discrimination related to race, color, religion, that the current regulations are overly burdensome to both HUD sex, familial status, national origin or disability.”

The changes to the AFFH rule are by far the most sweeping and grantees and are ineffective in helping program participants action taken towards the AFFH rule by the Trump administration meet their reporting obligations for multiple reasons,” HUD said thus far. The efforts to change the AFFH rule began in January in the proposed rule.

“While some of the burdens are a result of the assessment tools 2018 when HUD announced that it was delaying the deadline themselves, the tools are closely tied to the regulatory language, for local governments to submit their fair housing evaluations.

But delaying the fair housing evaluations, which were required which HUD believes is too prescriptive in outcomes for jurisdicas part of the AFFH rule, essentially “gutted” the AFFH rule, ac- tions,” HUD continued. “Therefore, HUD believes it is necessary cording to former HUD Secretary Julián Castro, who oversaw to revise the codified regulation, not just the assessment tools.”

It appears that HUD is taking the carrot, not stick approach for the rule’s announcement in 2015. HUD later killed the Local Government Assessment Tool, which HUD claimed was “con- addressing fair housing, seeking to reward cities for their posifusing, difficult to use, and frequently produced unacceptable tive efforts rather than punishing them for their lack of effort to address issues. assessments.”

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From the proposed rule: The Fair Housing Act “does not decree a particular vision of urban development.� HUD aims to take this into account and allow for the flexibility and innovation necessary to best further fair housing nationwide, recognizing that fair housing is an especially difficult and complex policy area because of the competing considerations that go into promoting fair housing and other valid governmental priorities.

By proposing to reward jurisdictions that are performing well in their AFFH efforts and improving in ways that will benefit entire communities, HUD will provide incentives to both jurisdictions and the general public to find ways to help local jurisdictions improve their AFFH efforts. By increasing the number of people who benefit from an expansion of fair and affordable housing, HUD expects that a larger share of the local community will be motivated to participate in local discussions on how to AFFH and what strategies are best suited for the locality. Such incentives may encourage citizens and local businesses to participate in important local housing debates when they otherwise may have sat on the sidelines. HUD believes that having buy-in from a broad range of citizens and businesses in a community will result in a stronger AFFH effort and help reduce housing discrimination.

CFPB Watch

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CFPB Watch

What is the Ability-to-Repay rule without DTI? CFPB PROPOSES REPLACEMENT TO DEBT TO INCOME RATIO

BY KELSEY RAMÍREZ IN mid-January, the Consumer Financial Protection Bureau quietly sent a letter to Congress, stating that it planned to propose an amendment to the Qualified Mortgage rule that moves away from using the debt-to-income ratio requirement in mortgage underwriting.

The bureau determined it will move on from the DTI requirement in search of an alternative, such as a pricing threshold.

There are several options being floated as possible alternatives, but the industry has been firm in their stance against the DTI requirement. And CFPB Director Kathy Kraninger is taking the industry’s views on this issue.

What is the ability to repay rule without the DTI threshold? If originators aren’t looking at one’s income, can they truly determine if borrowers can repay their loan? The answer is simple: yes.

WHAT IS DTI? DTI has not always been a requirement for mortgage underwriting. In fact, it is a more recent evolution of the mortgage origination process, one that began with the inception of the Ability-toRepay rule.

Through the Dodd-Frank Wall Street Reform and Consumer

Protection Act, created by Congress in 2010, the Ability to Repay rule was born. The CFPB defines the rule as the reasonable and good faith determination most mortgage lenders are required to make that consumers are able to pay back the loan.

“Under the rule, lenders must generally find out, consider, and document a borrower’s income, assets, employment, credit history and monthly expenses,” the bureau states. “Lenders cannot just use an introductory or ‘teaser’ rate to figure out if a borrower can repay a loan. For example, if a mortgage has a low interest rate that goes up in later years, the lender has to make a reasonable effort to figure out if the borrower can pay the higher interest rate too.”

Part of the Ability-to-Repay rule includes, among many other factors, a review of a borrower’s debts and assets to ensure they have the ability to repay the loan, with a stipulation that their DTI ratio does not exceed 43%. But Fannie Mae and Freddie Mac are not bound to this requirement, a condition known as the QM Patch. Under the QM Patch, loans sold to Fannie Mae or Freddie Mac are allowed to exceed the 43% DTI ratio.

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CFPB Watch a lot of legal risk, they created a ‘qualified mortgage’ safe harbor for loans that should be considered properly underwritten and reasonably safe,” said Jeffrey Naimon, partner in the Washington, D.C., office of Buckley.

It was intended to be a temporary fix, to last just until Fannie Mae and Freddie Mac exited conservatorship, Naimon explained.

No one predicted that 12 years later, the mortgage giants would still be under the control of the Federal Housing Finance Agency.

An analysis from Pete Carroll, CoreLogic government affairs team executive, public policy and industry relations shows that a full $260 billion, or 16% of total loan origination volume in 2018, was QM-eligible based solely on the GSE QM Patch.

But many in the housing industry have stated that this gives the GSEs an unfair advantage. Even FHFA Director Mark Calabria stated this, saying that loans sold to them did not have to play by the same rules as everyone else.

“We welcome Director Kraninger’s announcement that CFPB’s proposed rule will not rely solely on DTI to determine whether a borrower is able to receive QM protections,” said Eric Stein, sneior vice president for Center for Responsible Lending subsidiary SelfHelp. “While DTI is relevant in assessing a borrower’s ability to repay their loan, it is by no means the only factor and thus should not be the only factor in determining whether or not loans should be considered QM.” But the QM Patch is set to expire in January 2021, and Kraninger must decide what to do when it’s gone. The CFPB is also considering extending the deadline for the expiration of the QM Patch for an undetermined period of time as it weighs various replacement options. Kraninger’s letter states that the GSE Patch will be extended either until the CFPB finds an alternative, or the GSEs exit conservatorship, but the CFPB expects to issue its new rule no later than May 2020.

And while Kraninger does suggest that legislation could better accomplish clarifying the rules on QM loans, efforts to do so have

“Our view is a standalone DTI measure is really imperfect, particularly as just a sole factor for determining what a QM and what’s not a QM.” - Pete Mills, Mortgage Bankers Association senior vice president of residential policy and member engagement.

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stalled out in Congress so far, so the CFPB is taking matters into its own hands.

“While the Bureau is moving forward expeditiously to address the upcoming expiration of the GSE Patch, we recognize that legislation could better accomplish important policy objectives, such as providing clarity on what qualifies as a QM loan, leveling the playing field among lenders and ensuring consumers continue to have access to credit,” Kraninger wrote.

ALTERNATIVE OPTIONS “The CFPB was enormously clear in all of their interactions that they aren’t going to stay with the GSE patch,” Naimon said.

“They’re going to go into something different.”

In her letter to Congress, Kraninger proposes using a pricing threshold, rather than DTI, to determine Ability to Repay – a move that many advocates in the housing industry are on board with.

“Our view is a standalone DTI measure is really imperfect, particularly as just a sole factor for determining what a QM and what’s not a QM,” said Pete Mills, Mortgage Bankers Association senior vice president of residential policy and member engagement.

In the method the CFPB is proposing and the MBA and other housing organizations also support, originators would look at the difference between the loan’s annual percentage rate and the average prime offer rate for a comparable transaction. If the prime rate, released weekly by Freddie Mac in its Primary Mortgage Market Survey, is 4%, originators could then originate a loan that is no more than 150 basis points from that rate.

Mills explained that when using this method, analysis has shown it is a much better determining factor to delinquency risk than measuring DTI. “It’s an indirect measure of repayment ability,” Mills said. “It includes other credit factors, it includes collateral risk, it includes credit risk and repayment risk. But it does serve as a good overall measure of repayment ability.”

Naimon also explained that one of the advantages advocates have stated in favor of using a pricing threshold is that the line would be clear on what is QM and what isn’t, and it would be easier for auditors to see at-a-glance if a loan should be considered QM. However, there are also concerns with this method. Naimon explained that if a borrower were close to meeting the pricing threshold, such as 15 basis points away, some have raised concerns that lenders might be able to manipulate their pricing in order to get the consumer into a QM and secure the mortgage, rather than turning away the borrower.

In comment letters to the CFPB, insurance companies pressed against the pricing threshold option. USMI suggested that the CFPB develop a single set of transparent compensating factors for loans with DTIs above 45% and up to 50% for defining QM across all markets, similar to how the GSEs, FHA and VA use compen-

sating factors in their respective markets today.

USMI also suggested that the bureau maintain the ATR and product restrictions as part of any updates to the QM definition to ensure discipline in the lending community. This would protect consumers and retain specific underwriting guardrails such as the current DTI component of the QM definition, but modifying the specific threshold to better serve consumers.

WHY LENDERS AVOID NON QM There is fear that if originators are allowed to return to the “wild west” of the pre-crisis era, borrowers will once again be placed into loans that they can’t afford. Before the housing crisis, the non-QM market had a much larger share, which even caused Fannie Mae and Freddie Mac to begin losing some of their market share. Now, the FHFA is discussing the possibility of allowing new entrants into the market to compete with Fannie Mae and Freddie Mac, that competition is not likely to come from non-QM lenders. That’s because while the rise of non-QM originators is certainly something to keep an eye on, there are several reasons why lenders often prefer to avoid the non-QM market.

One reason lenders avoid non-QM is the threat of litigation.

Because of the fact-specific findings that would be necessary to resolve this kind of case, it is expected that lenders will not be able to file for a motion to dismiss when cases are filed against them. If a borrower goes into default and takes the lender to court, citing the Ability-to-Repay rule, even a simple case could take years to work through, Naimon explained.

There has also been a drastic increase in regulation since the housing crisis began in 2008. The DTI requirement is just one of many factors lenders look at in order to determine a borrower’s eligibility for a mortgage, and according to the MBA, an unnecessary factor. While DTI might be the only factor in the Ability-toRepay rule that technically looks at income (hence, the borrower’s actual ability to repay the mortgage), other variables might be a better ways to determining if they will repay it.

There is also not a significant need for non-QM in the housing market at this point. The greatest problem in the housing market today is the shortage of homes for sale, not a shortage of credit availability. And lenders even have room to expand their credit within the QM market.

MBA’s Mortgage Credit Availability Index rose 2.1% to 188.9 in November, indicating a loosening of credit standards. However, it was close to the 11-year high of 189.5 in June, the trade group said in a recent report. November’s reading was the third-highest reading of the post-crash years.

Many housing industry experts have repeatedly asked the CFPB to do away with the QM rule’s DTI ratio requirement. The CFPB is taking steps in that direction, but it remains to be seen what new option will replace DTI. HOUSINGWIRE ❱ MARCH 2020 73

BY THE NUMBERS

REAL ESTATE WIRE FRAUD Wire fraud is an escalating problem for those in the real estate and mortgage space, and a category of crime that merits more attention. According to the Coalition to Stop Real Estate Wire Fraud, email phishing scams targeting real estate transactions increased by 1,100% between 2015 and 2017. Between 2017 and 2018, Federal Bureau of Investigation data shows a 166% increase in the amount of money lost due to real estate wire fraud in the United States – the FBI’s Internet Crime Report shows that 11,300 victims lost nearly $150 million in 2018 alone.

That’s a lot of money, much of which was taken directly from borrowers who thought they were wiring over funds to secure their dream home and instead lost, in some cases, their entire life savings. The home-buying process is attractive to fraudsters due to the amount of money involved and the many parties included in the transaction. Relatively speaking, it doesn’t take much work for cyber criminals to profit off homebuyers.

Whether criminals use email spoofing, phishing or account takeover, if they find one weak link among all the participants, they can make a great deal of money all at once.

78,617k

8,179k

BUSINESS EMAIL COMPROMISE INCREASED

70k 60k 50k 40k 30k 20k 10k

2015

2018

860%

WHAT PREVENTATIVE ACTIONS COULD HELP? Verification with phone calls and a back-and-forth to make sure you have the correct wiring instructions

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Implement payee matching on wire transfers at the financial institution level

L

47% of major financial

11,300

institutions reported a rise in wire fraud in 2019

V I C T I M S in 2018

$150 million

L O S T due to wire fraud in 2018

Work with security experts to add fraud detection and account takeover prevention to its platform logon experience

On the title and settlement side, use encrypted email protections to protect the flow of financial information and include a consumer warning about security and fraud at the bottom of every email

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SPONSORED CONTENT

Loren Cooke President of Solidifi

Borrowers want a more digital mortgage experience, but still prefer to close in-person HousingWire sat down with Loren Cooke, president of Solidifi, to discuss the results of Solidifi’s Consumer Title Survey.

HousingWire: Why did Solidifi choose to commission this survey on the closing process?

Loren Cooke: There’s so much rhetoric and misnomers out there about what the consumer actually wants during the closing process that we wanted to go directly to the consumers themselves and ask them how their own closing process went. So we reached out to a sample of 1,000 consumers who have either recently purchased or refinanced a home in the past 24 months and we asked a very simple question – How was your closing process?

Q. What were the largest pain points borrowers reported in the home buying and refinancing process?

LC: Nearly a quarter of respondents experienced delays during the closing process, and half of those were due to problems with the paperwork or the filing. Also, as I just mentioned respondents feel anxious about the process. The closing of a mortgage is usually the last human touchpoint of the loan trajectory. It’s the interaction that leaves a lasting impression and Solidifi is focused on providing the highest standards in closing and settlement services, to enable our lender clients to deliver a seamless and professional experience to their customers.

Q. In the survey Solidifi conducted, 81% of consumers reported they would still do a mortgage closing in-person versus digitally, but 70% of consumers also said they would like a more digital process when closing. That may seem contradictory to some – what do you think explains this?

LC: Indeed, we found that the majority of consumers wanted a more digital experience, which did not surprise us too much.

And that was consistent whether it was a purchase or a refinance – it made no difference. What that means is that they did not want us to come to them with a stack of papers to sign. They wanted something a little more digital, maybe an iPad, a laptop, a computer – whatever it may be – for them to be able to walk through the actual documents either ahead of time or with their notary. Yet it was still important for the majority of respondents to still have a professional walk them through the process.

Q. How does Solidifi improve the borrower experience with both digital processes and human touchpoints?

LC: Our proprietary network management platform leverages advanced technology to objectively score and recommend notaries based on factors such as knowledge, preparedness, efficiency and experience. Our unique approach has generated significant success.

Today, we are the largest provider of residential real estate appraisals, and a top-five provider of title and closing services, to more than 60 of the top 100 lenders in America. Lenders have given us an outsized share of their business because they trust that the notaries we employ will be good stewards of their reputation.

Q. What was the most surprising result of the survey?

LC: What was surprising to us and we think will be surprising to the industry is that while 70% of respondents wanted a more digital experience, fully 81% still wanted an in-person closing.

Consumers wanted a knowledgeable professional to be there, to allay their concerns, answer their questions and ensure all important details required for the closing were being handled appropriately. This is corroborated by another question in our survey where we asked how the closing process made borrowers feel – 47% said they were anxious about it while 43% said it made them nervous. So it makes sense that fully 81% said they would rather do a closing in person.

Q. How does Solidifi help lenders provide borrowers with an efficient closing experience?

LC: We consistently deliver higher performance for our lender clients through our network management platform, which delivers real-time scorecards with performance and quality metrics driving transparency and accountability and performance-based volume allocation, among other features. Our unique engagement model also enables us to assign the most efficient notary, ensuring a superior closing experience. We also have geographically dedicated region managers who support our notaries across the nation to ensure the most efficient delivery.

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SPONSORED CONTENT Andy Peach President and CEO of Waterstone Mortgage

To stay relevant, lenders must cultivate a reputable online presence HousingWire sat down with Andy Peach, president and CEO of Waterstone Mortgage, to discuss the future of mortgage lending and homebuying.

HousingWire: What do you think the future of homebuying looks like?

Andy Peach: In a word… different. We live in a world where more people have cell phones than electricity, cars and running water.

So it only makes sense that homebuying will be increasingly mobile-device enabled. According to recent survey data, 80% of Millennial and Gen X homebuyers found their new home via a mobile app. To stay competitive, mortgage lenders must have an online presence that allows them to stay in the forefront of the homebuyer’s mind – and that allows them to create an engaging, transparent and streamlined loan process for their customers.

In the near future (if not already), home financing processes and workflows will be managed by integrated databases and decision systems, with the customer giving online consent and approval. Homebuyers want information that is easy to understand and immediately available, but they also value human interaction, clear communication and the guidance of a home loan expert.

new generation with the tech-enabled convenience and communication they crave, while also promoting the “human” factor of building a relationship with a trusted and relatable loan professional. Lenders who can combine the best of old and new ways of doing business will provide the most attractive experience for homebuyers seeking mortgages.

Q. What can or should lenders be doing now to prepare themselves for the ways in which their business may change in the future?

AP: First, loan originators need to ramp up their online presence, especially via social media. Every potential customer is online, most likely using their smart phone or mobile device on a daily basis, and loan originators need to be there with them.

Second, lenders need to move quickly toward integrated data-driven processes. The early influences of data-driven processes are already shaping the business, as the GSEs are now rolling out tools, but the early adopters are doing much more.

Q. How do you anticipate borrower behavior changing as the homebuying process evolves?

AP: In the homebuying world, the order of events is shifting.

Buyers are looking online before engaging with an agent. It’s also becoming more common for buyers to research lenders online and start the pre-qualification or pre-approval process before engaging with an agent. These changes in behavior require lenders and loan originators to connect with prospective customers earlier in the process and via new methods. Cultivating a reputable online presence is essential for lenders and loan originators who want to stay relevant with tomorrow’s homebuyers.

Q. How would you recommend lenders approach technology with the future in mind?

AP: Change will happen, whether you participate in it or not.

Companies and people have to transform faster than the rate of change around them if they want to continue to be relevant.

Consequently, the first thing we need to do, as lenders, is to get comfortable with the fact that change will happen… and embrace it. Then, we need to find smart and cost-effective ways to deliver a better experience for customers, as well as more efficient ways to help our loan originators and support teams. In the best case, you can achieve both of those benefits by adding the right technology solutions.

Q. How do you think the role of the lender may change in the next 5 to 10 years?

AP: For years, we have talked about the impact we would see when a new generation of tech-savvy homebuyers entered the market. Now, with Millennials representing nearly 40% of homebuyers in 2019 – and becoming the biggest force in the marketplace – that time is here. Lenders need to provide this

Q: What excites you most about the future of mortgage lending?

AP: Mortgage lending has always been exciting to me because, at its core, this business is about helping people and families purchase a home and maximize the value of their home. The future is even more exciting, because we have the opportunity to further improve and modernize the processes that make the homebuying experience more convenient and enjoyable.

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SPONSORED CONTENT

Ari Gross SoftWorks AI CEO

SoftWorks AI delivers clear ROI through process automation HousingWire sat down with SoftWorks AI CEO Ari Gross to discuss touchless automation solutions and how SoftWorks AI plans to innovate in 2020.

HousingWire: What challenges are your clients trying to solve?

Ari Gross: The principal challenges we’re solving for clients relate to automating document-centric workflows in mortgage and other areas of digital lending. Specifically, we are looking at touchless automation of knowledge work in mortgage processing that includes pre-underwriting, underwriting, origination loan production, post-close DD and compliance, and enabling automation for secondary markets.

Q. How have client needs evolved over the past year?

AG: Initially, SoftWorks AI focused primarily on providing an automation solution for mortgage classification and data extraction. We have evolved in the past 12 months into focused solutions in two related areas: touchless automation and cross-validation.

Essentially, most of our clients need to satisfy internal or client-based performance metrics or SLAs. As such, a solution that is 95% accurate will not satisfy an SLA with 99.5% accuracy requirements. Driving real touchless automation requires an understanding of data touchpoints, analytics and feedback models, so we’ve incorporated these technologies into our Trapeze platform.

Cross-validation (a discipline in statistics) requires understanding how local instantiations of a data value need to be consistent with a global value. Specifically, variations of data elements found on different forms and within a form can either enhance our confidence in data accuracy or force manual validation.

Q. How does SoftWorks AI meet clients’ needs and challenges?

AG: Our focus in maximizing value to clients relies on a thorough understanding of client use cases. Specifically, we need to design an automation solution (per use case) that streamlines current processes and delivers a hard ROI. We’ll utilize AI technology as a “means to an end” – delivering process automation and clear ROI – not the other way around.

The pitfalls include avoiding client problems that are too large and ill-defined. A client “innovation team” may want a very 78 HOUSINGWIRE ❱ MARCH 2020

large problem solved, rather than finding the first clear automation/digital transformation win for the company.

Moving forward, clients have limited tolerance for risk and need to see the ROI associated with an automated solution within six months of going into production. So, finding a first automation win for a client is important in enabling the client’s innovation/transformation team into pursuing additional (usually larger) tasks/use cases to automate.

Typically, we’ll take a complex client problem and re-cast it as a phased-in process automation solution, with more immediate optimization goals and clear ROI wins along the way. Also, we’ll push our technology hard to deliver something very close to touchless automation. We typically look for a solution where the degree of touchless automation achieved is at least 75%.

Q. How does SoftWorks AI plan to innovate in 2020?

AG: SoftWorks AI plans to innovate in a few ways. Mostly, there are many use cases for process automation in the mortgage lifecycle. We intend to have our Trapeze solution optimize for additional mortgage processes in 2020, including complex VOI underwriting, Verification of Assets, and post-close DD and compliance.

Technical innovation takes us in two different directions: computer vision and document-centric automation. The computer vision innovation is to minimize the performance gaps between human and machine performance in converting documents to actionable data.

There are many examples where machines do not currently “see” all the available visual cues that humans do. Increasing touchless automation in the mortgage lifecycle involves closing the recognition gap between traditional OCR technology and human visual performance.

In addition, the rule that “the whole is greater than the sum of its parts” certainly applies in digital lending. Understanding the dependencies between documents that share mutual information can be utilized to drive significantly higher rates of touchless automation, in addition to ensuring that all the represented data is consistent and reliable.

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Kudos LAUNCHES • FREDDIE MAC LAUNCHES HOMEOWNERSHIP EDUCATION CURRICULUM Freddie Mac recently launched its new homeownership education curriculum – CreditSmart Homebuyer U. The course is free, and is an online resource for consumers who want to learn about home purchases and the homeownership process. It holds six educational modules focused on different key learning principles relating to money management, credit, getting a mortgage, the homebuying process and preserving homeownership.

“Becoming a homeowner is an important responsibility and Freddie Mac is committed to providing the tools and resources to ensure a successful path toward sustainable homeownership,” said Danny Gardner, Freddie Mac senior vice president of singlefamily affordable lending and access to credit. “The goal of this exceptional program is to empower those who are pursuing the dream of homeownership with knowledge to make informed, responsible decisions.”

This education tool will help reach younger homeowners.

According to a recent Freddie Mac survey of the Generation Z cohort, respondents reported that while they have received financial education at home and are at least somewhat confident in their future financial wellbeing, 65% of Gen Z respondents report they are not confident in their knowledge of the mortgage process.

• HUD LAUNCHES HOME PROGRAM TRAINING The U.S. Department of Housing and Urban Development launched its new training program for its HOME Investment Partnerships Program.

Building HOME online training is an interactive, self-paced online training which guides grantees through 12 modules, providing a foundation of the regulatory requirements of the program and practical advice for implementing all HOME activities at the state and local levels.

The training presents real-world scenarios and includes challenge questions and exams.

The HOME program provides formula grants to states and localities that communities use in partnership with local nonprofit groups to fund a wide range of affordable housing activities.

This includes building, buying, or rehabilitating affordable housing for rent or homeownership.

HOME also provides direct rental assistance to low-income people.

It’s the largest federal block grant to state and local governments designed exclusively to create affordable housing for low-income households.

The initial launch includes eight of the 12 training modules.

Four additional modules will be launched in the next few months to complete the Building HOME

MERGERS AND ACQUISITIONS • FIRST AMERICAN ACQUIRES TITLE SECURITY AGENCY First American Financial fully acquired Title Security Agency. First American had been a minority owner of the title company for five years.

Title Security Agency, which specializes in title and escrow services for residential and commercial transactions will become a part of the direct operations of First American’s largest subsidiary, First American Title Insurance Company.

“Title Security Agency is a welcome addition to the First American family. Both companies emphasize a commitment to delivering superior service and innovation,” said Chris Leavell, chief operating officer at First American Title. “The addition of Title Security Agency expands our abilities to serve customers in Arizona and enhances our expertise in the Arizona market.”

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online training series.

• KELLER WILLIAMS LAUNCHES NEW REAL ESTATE LISTINGS WEBSITE Real estate giant Keller Williams, launched a redesigned version of its website on January 1 in an effort to be centered on an improved, neighborhood-based home search experience.

“We are excited about the new responsive functionalities of KW.com. We also added content to better serve consumers on their home buying, selling, and renting journeys,” said Keller Williams spokesperson Darryl Frost.

This is powered by data feeds resulting from Keller Williams’ acquisition of Smarter Agent.

Kudos

MILESTONES • DANE REAL ESTATE SEES MOST SUCCESSFUL YEAR Dane Real Estate announced that 2019 was its most successful year to date, growing to $2.5 billion in transactions or a record of 72 deals closing.

Under the leadership of President Heidi Burkhart, Dane is the only woman-owned and operated brokerage in New York City and continues to be a leader in the affordable housing sector in the tri-state area and nationally.

Burkhart launched the firm in 2008 and has grown the agency from a small boutique to a major player in real estate.

“In 2018 and 2019, I focused on giving back to my team in creating an entrepreneurial

spirit internally,” Burkhart said. “It really paid off for everyone, especially our clients. Going into 2020, I am excited to continue supporting the team’s entrepreneurship and to focus on my three priorities; being on the forefront of technology, being an industry leader in deal making, and continuing to prioritize and deepen relationships with our clients, our peers and our partner agencies.”

• HOUSECANARY RAISES $65 MILLION IN SERIES C FUNDING ROUND HouseCanary, a provider of software and analytics for the real estate industry that specializes in valuations and appraisals, announced this week that it raised $65 million in its Series C funding round.

That amount equals the company’s previous funding total, which was raised in two rounds of funding that both took place in 2017.

In those funding rounds, the company raised $65 million total. This new funding round doubles the company’s total capital raised to $130 million.

HouseCanary was founded in 2013 and now claims that it has the “most accurate residential real estate valuations, with a 2.5% median absolute percentage error for 106 million U.S. residential properties nationwide.”

The company has also doubled its revenue in each of the last two years and states that its pace of growth is accelerating for 2020. And with this new funding in its coffers, HouseCanary is primed to continue growing.

The company’s Series C funding round was led by Morpheus Ventures, Alpha Edison, and PSP Growth.

Morpheus Managing Partner Joseph Miller said the firm invested in HouseCanary because the company has shown that it can simplify and automate the appraisal process.

AWARDS • RESWARE NAMED 2020 BEST PLACE TO WORK Built In Colorado named title and escrow production platform ResWare a 2020 Best Place to Work for the second year in a row.

Founded in 2003, Adeptive provides a casual, but committed work environment to enable our employees’ and customers’ success in the title and real estate industry.

The company explained it focuses on these core values: Do the Right Thing, Gets It, Really Gives a Sh!t, and Work/Life Balance to drive its culture and recruiting.

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PARTING SHOT ❱ TOP LOAN ORIGINATORS

Photo credit: Kelsey Ramírez

HousingWire hosted its first engage.talent event to spotlight what revolutionary companies are doing to attract top talent. In one panel, top performing loan officers Jennifer Micklos of Movement Mortgage, Sean Johnson of loanDepot and Shant Banosian of Guaranteed Rate shared what they want to see from recruiters. They spoke on what their companies are doing to help empower them, and propel them to success.

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