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Issue 066 January 2013

For Mortgage Origination Professionals

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Real Estate Mortgage Network, Inc. d/b/a HomeBridge


Housing Market Requires Creative Approaches


FEATURE ARTICLE Outlook 2013 What's Ahead for the Market in the Coming Year.


Do The Hustle The Untold Story of the Bank of America Billion Dollar Fraud Case

Truth in 46 The Lending January is a Time of Reflection

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Issue 66

January 2013

Outlook 2013 What's ahead for the market in the coming year. Rick Sharga



private money consultant private Money Utah

executive director New York Mortgage Coalition

Saying Yes to Know! Gary opper

president approved financial corporation

Marketing 26 Realtor速 Secrets

from the editor's desk

mortgage marketing coach Secret #7: Face-to-face meetings.


online lead generation

brian mahany


man on the hill


appraiser sound off


advertiser DIRECTORY


the truth in lending

29 Do the Hustle

mahany & ertl The untold story of the Bank of America billion dollar fraud case.

How Much Money Goes Into the Economy When a Home is Sold? karen deis




Doren Aldana


Regulators to Craft New Mortgage Lending Standards Corey curwick dutton

Ken Inadomi


January 2013

prime & FHA

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Service Providers

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18 Housing Market Requires Creative Approaches to Mitigate Future Risks


Robert Pegg David Pegg MANAGING EDITOR Stewart Mednick Associate Editor Cathy Johnson ACCOUNTING MANAGER Shawna Ingram Advertising Director Jessica Grizzle Advertising sales Hilary Bateman Production Manager Henry Suchman Production Assistant Dawn Exner Cartoonist Martin Bradford COLUMNISTS & Contributing Authors Doren Aldana Karen Deis Corey Curwick Dutton Ken Inadomi Brian Mahany Gary Opper Marc Savitt Wade Schlosser Rick Sharga Dion Spiteri Glenn Stearns

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From the editor's desk

I have a good friend who is a lawyer by education. He went to law school and started a career in a large firm working his way up the corporate ladder. After a few years of lawyering, he concluded that the glitz and glamour was way over rated. Yes, the money was good, but how happy can one be if the career satisfaction is subpar. My friend had always enjoyed bicycle racing, touring and cross-country skiing. He decided to buy a shop that was closing due to issues in the owner’s life outside of the business. So, my friend gave up lawyering and became a business owner. The business was primarily for cross-country skiing, but he expanded the stock and created a specialty bike shop as well so he could have year-round business. We all have secret or personal passions classified as avocations or hobbies. We pursue these because real life as we know it is either not satisfying, or the hobbies we pursue is the true passion but cannot yield a career with a living wage. So we have a secret life. It is certainly healthy to have other creative outlets. It is equally healthy to channel energy into an event or activity that stimulates a happiness unknown in a career that is lackluster. I pursued writing as a side gig while originating loans when the mortgage industry was slow. I thought it would provide exposure for me; credibility in the industry. Eventually it became a focus for a career, yet it was my secret life. We all have a pursuit “on the side,” as a colleague calls it. Some people sell on ebay to make money. Some people play an instrument in a community band. Another good friend tends bar and leverages his exposure to the general public to promote is day job as a financial counselor. Yes, a secret life is had by many. What is the punch-line? In a word: balance. Balance is stability of mental well-being. It is morality found when morality is lost in a cut throat day job. It is a creative outlet in a vanilla, repetitive career path. It is many things to many people. Above all, it is a necessity to just be true to who you are. So brush up on those magic tricks, attend those Toastmaster meetings or start that blog on fitness. I will guarantee you will feel better about whom you are, and that will reflect in a marked improvement in how you perform in your day job. Who said keeping secrets was a bad thing?


Stewart Mednick




Housing Market Requires Creative Approaches to Mitigate Future Risks by Ken Inadomi


ince President Obama's re-election, some pundits have begun calling for sweeping federal housing policy changes, including scrapping Fannie Mae and Freddie Mac and downsizing the Federal Housing Administration's role in providing low-income mortgages. Government officials are already considering a proposal to require homebuyers to make a minimum 20% down payment to receive a qualified residential mortgage, which would severely limit lending to low-and moderate-income families. These policy changes are untested and could disrupt the recovery in the housing market, which produces $2 trillion in annual mortgage originations. Rather than make wholesale policy changes, the public and private sectors should come together to find creative ways to mitigate mortgage risks while promoting sustainable growth. One example they could draw from is a homebuyer education program that has already 10

January 2013

demonstrated success in New York. The New York Mortgage Coalition, an umbrella organization for 12 home counseling agencies, requires prospective first-time homeowners to go through an 8- to 12-hour financial education program—essentially a boot camp that teaches people the unvarnished facts about owning a home. Those who complete the program are then fully aware of how the American dream can easily become a nightmare unless a disciplined sequence of financial steps are followed before closing on their homes. Does it work? The documented foreclosure rate for program graduates is less than 2% on mortgages originated from 2000 to 2007 for low- to moderateincome families making an average down payment of only 3%. This model could be replicated across the country by nonprofit counseling agencies certified by the federal Department of Housing and Urban Development. The


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workshops could be conducted online or in person. Because many HUD-approved counseling agencies already provide similar services, the capital resources, personnel and business processes are essentially already in place. Requiring such pre-purchase education would not only be less onerous than requiring a 20% down payment, it would also remove a choke point to growth of the housing market. Granted, this strategy is not a silver bullet; poor decisions and factors outside of buyers' control will never be completely eliminated. But by combining this approach with other community-based programs aimed at improving financial planning, great progress can be made in creating a more sustainable and self-sufficient housing market. The challenge is building awareness and getting buy-in from government and industry leaders. That will not be easy with so many stakeholders vying to sway policymakers toward their own goals. Some of the proposed changes could cut off the promise of home ownership to millions of Americans. A better path would be to leverage proven strategies, such as the homebuyer education program in New York, to improve existing national mortgage lending policies. Mr. Inadomi is executive director of The New York Mortgage Coalition, a nonprofit collaboration of banks and community-based housing agencies helping low- and moderate-income New York families become first-time homeowners and avoid foreclosure through financial workshops and one-to-one counseling.

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January 2013

MRKT-7461 •

Are You Missing Out on this Proven Way of Remarketing to Customers?


f the product manager for Google Adwords says in his own blog post this is one of the best ways to improve lead acquisition…then it’s probably a good idea to place this marketing tool in your quiver. Aitan Weinberg was of course referring to one of the Google’s new ad technologies known as remarketing. Since being unveiled in 2010, remarketing has proven its effectiveness at recapturing bounced visitors as one of the best ways to develop more leads and ultimately increase conversion ratios. It has tremendous potential to positively affect the ROI for your real estate or mortgage business as well.

Here’s a quick infographic showing what remarketing looks like.

What Is Remarketing? And How Will It Work for My Niche? Remarketing is the new technology that you’ve seen all over the Internet lately. Some think it’s creepy or annoying, but quantitative data indicates it’s remarkably effective at increasing revenue. Remarketing is an expansion of Google’s Adwords program that allows companies to display to people who have previously visited their website ads that entice them to return.


Think of remarketing as a salesperson that follows people out of the store to offer customers who didn’t buy anything… extra incentive to come back in and spend some money. For you that means you have an extra sales rep attempting to bring in more qualified leads to close on all day long.

How Do You Use Remarketing for Your Mortgage Company? It’s relatively simple. The first step to setting up a campaign is to designate the audience you wish to target…or the audience you wish to exclude. This could be people looking for a reverse mortgage or people simply wishing to refinance. All you need to do is place a snippet of code (commonly referred to as a tag) on the areas of your website you wish to remarket. This is done by selecting URL’s that you wish to run campaigns on. The code then places cookies on a visitor’s browser allowing you to display targeted ads to them long after they’ve left your website. You can segment your remarketing efforts into quite a few different lists. This way you can target visitors who've been to different parts of your site and performed different actions there. You can use remarketing to increase revenue in quite a few ways: • To target people who’ve recently made a purchase from you. • To target those who’ve abandoned your shopping cart (or contact form). • To bring someone back who viewed a particular product. • To upsell a customer on an additional service. • To provide a visitor with an exclusive offer. For example: So let’s say you’re in the real estate/ financial business and you have a portion of your site devoted specifically to new home loans. A visitor comes to your site, begins to fill out a form to begin the loan process, but then abandons your site before completing the form. With a remarketing campaign you can choose to display an ad from your company with the exact service (new home loan) they viewed in the ad. You can then place within the ad an exclusive offer… such as lower fees, or a 10% discount on services offered… without sending them irrelevant or generic ads from your company. What you’ve done is targeted an interested visitor with 14

January 2013

an exclusive offer, a relevant ad, and a call to action to return to fill out the form. One of the best parts about remarketing is you can use tags so that you remarket based on actions performed (or not performed) on your site. So…if they’ve gone to your contact page but didn't contact you, a remarketing ad can be displayed on why they should contact you. If they’ve visited your blog without opting in to your e-mail list, use an ad to encourage them to opt-in so they can receive valuable updates from your company.

Is Remarketing Really That Good for Your Business? In a word… YES. There are a lot of advantages to using remarketing. It can help to: • Increase sales activity. • Improve website registration. • Improve brand recognition. • Upsell products and services. Plus much more. The reality is that when the majority of your website’s visitors land on your site, they’re probably not performing the action that you wish they would. Whether that’s filling out an e-mail opt-in, filling out a lead form, or participating in your online community, all that happened is…“they came…they saw…they left.” Here’s an examples of a company’s positive experience with remarketing.

As you can see, remarketing helped this company increase clicks and conversions dramatically in a short amount of time. Imagine what it can do for your mortgage or real estate business? With that being said...

Here's What to Avoid When You Set Up a Remarketing Campaign. Remarketing gives your company another chance or two (or ten) to bring that visitor back to your site so they will eventually perform the action you desire. However, you don’t want to be too persistent because that can appear stalkerish or just plain annoying. No one wants to see your ad about reverse mortgages on every single website they go to. That’s like watching the same commercial 10 times in a row…it can actually produce the opposite effect to what you’re trying to promote. To limit the amount of exposure users have to your ad, make sure to test with 7-12 impressions to begin with. See how that plays out. Within your Adwords account this can be accomplished by adding in a frequency cap so that you don’t over-saturate your list. Proof You Can Expect Great Remarketing Results. Since being introduced by Google, Adwords has proven to be an incredibly effective tool for companies. Brands like Bid Cactus and Yankee Candle have managed to leverage their remarketing efforts for huge gains. Bid Cactus, a penny auction site, managed to: • Reduce CPA (cost per action) by 22%. • Achieve a CPA of 77% less than other display ads they were running. • Increase view through conversion of their remarketing ads over other ads. Yankee Candle noted a: • 600% increase in conversion rates. • 50% decrease in cost per conversion. And PPChero observed that ads run on remarketing campaigns are able to reach 84% of the users on remarketing lists. This is an incredible penetration rate considering the bulk of ads run are untargeted and ineffectual – especially for the real estate, financial, and mortgage market. Highly targeted ads for big-time purchases can generate very qualified leads for your

business. Because you're able to provide highly relevant display ads to individuals who have expressed an interest in your services, you're able to capitalize in a way that other PPC methods can’t. As you prepare to set up a remarketing campaign, here are...

Some Tips on Making Remarketing Campaigns Work for You. 1. Segment your lists - Segmenting your lists allows you to run different campaigns for different visitors to your site. Segmenting your lists can be done quite easily. All you need to do is place different tags on the different URLs of your site. With the segmentation of lists, you can run multiple campaigns off one website and increase conversions, opt-ins, contact rates, etc. Laser-precise contact is the name of the game for remarketing, and segmenting your lists assures you aren’t wasting ad dollars on impressions you don’t need to make. 2. Set frequency caps - As I mentioned before, it’s important that you don’t impose too many ad impressions on your customers. Nothing is worse than overexposing your brand… mainly because it creates a negative impression of you in the customer’s mind. Frequency caps make it so that you don’t appear “clingy” or overly persistent. You can set frequency caps by the day, and by the ad group (type of ad). It’s highly recommended that you do this so that you don’t creep out your customers. Several case studies have noted that people become resistant to brands that don’t set frequency caps. 3. Use exclusive offers - The financial industry is a volatile market to predict for both you and your customers. That’s why it’s to your benefit to create exclusive offers as well as different ad groups featuring those offers to use in your remarketing efforts. If rates are set to change, let them know that you can still help them save money. If you’re running some sort of promotional offer, feature that in an ad. Many of the people who shop on the Internet are bargain hunters, so it’s to your benefit to let them know that you have great deals that you can offer them. 4. Remind users why you’re better than the competition - This crucial element to advertising is often neglected by users of PPC advertising. By featuring a testimonial or a rating that you’ve been given, you can offer proof that you’re someone they should do business with. Never overlook the fact that customers need to be prompted to do business with you. Have your remarketing


ads feature a unique or useful piece of information about your company that other companies don’t have, and that’ll provide incentive for them to business with you. 5. Create a sense of urgency - Similar to having an exclusive offer, creating a sense of urgency can promote a generous uptick in lead generation for your real estate or mortgage business. The fear of missing out is one of the greatest tools you can use to motivate customers to take action. Use this to your advantage. Use your remarketing efforts to note that the “deal” or offer that you have…won’t be around forever. This will provide some added incentive for site visitors to return to your site and do business with you. 6. Remind them why they need you - The truth is your job in the real estate industry is very necessary. But people often become overwhelmed by the burdens of life and the perceived “hassle” of acquiring loans and purchasing property. You can use your remarketing efforts to illustrate the benefit that having you on their side is to them. Tell them how you can save the time, eliminate hassle, and save them money! It’s important that prospective customers are aware of why they need you, but after they’ve left your site they might not remember. In essence, use remarketing to be

that friendly voice that says, “I’m here to help you…because I know you need it.” At the end of the day this method of advertising is an amazingly effective and useful technology. You can bet your bottom dollar you’re going to see tons of companies using remarketing to increase profits and reduce advertising costs in the future. Wade Schlosser is the CEO of Forward Leap Marketing, data-driven lead-generation experts helping financial and real estate companies increase quality leads and decrease costs through leading-edge online technologies – guaranteed. He is a frequent speaker and contributor at the leading internet conferences, associations and websites. He has led the acquisition of two companies, been a successful investor in emerging tech companies, and played a significant role in earning his last company a two-time Inc Magazine fastestgrowing privately held company award, along with the honor of being named the 11th fastest-growing company in Orange County, CA. Lastly, he is the author of the company’s popular report, Top 10 Mortgage Marketing Myths Exposed. Stay in contact with Forward Leap Marketing on Facebook, Twitter, and LinkedIn today.



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Outlook 2013 What’s Ahead for the Market in the Coming Year by Rick Sharga


ost industry watchers believe that the housing market finally turned the corner in 2012, stabilizing and beginning a sustainable recovery after a protracted, seemingly endless down cycle. The mortgage industry also prospered, with over $1.7 trillion in originations, thanks to a refinancing boom. All of this is welcome in an industry that’s been desperately in need of positive news. The question is whether that positive energy will carry over into 2013.

A Look at Housing As 2012 came to a close, virtually every meaningful metric used to measure the housing market was trending in the right direction. Pending sales were at the highest level since 2007 (except for two brief, artificial – and unfortunately temporary – spikes driven by the Obama Administration’s homebuyer tax credit stimulus programs). Sales of existing homes were up; sales of new homes were up even more. Inventory levels were incredibly low; in some parts of California, there was less than one month’s inventory available for homebuyers. Median home prices were increasing, but even at these new higher prices, affordability levels were still near the best levels they’ve ever been. Housing starts – notably those of single-family homes – were higher than they’ve been since the beginning of

the downturn. Foreclosure actions were down by 20% from the previous year, and even further from the all-time high set in 2010. And delinquencies – especially newly delinquent loans – were down significantly, indicating that the pipeline for new foreclosures was finally slowing to a relative trickle. So, all signs pointed towards a housing market that had finally stopped its downward spiral, and was now poised to begin a steady, if slow and uneven, path towards growth. But it’s also important to keep all of these positive numbers in perspective. Even with the number of home sales increasing, the year ended with around 4.8 million units changing hands – better than the 4.3 million in 2011 and the sub-4.0 million at the bottom of the market, but still a far cry from the 7.1 million sold during the peak year of the boom. Prices were improving, but had rebounded only to 2003 levels, meaning that essentially nine years of equity had vanished and not yet been recovered. Foreclosure actions amounted to about 1.5 million filings, well off the prior year’s 2.0 million, but still about three times what we’d see in a normal year, given the number of active mortgages. So the numbers, while encouraging compared to how very weak they’ve been in recent years, were still more indicative of a market in recovery than a market that had fully recovered. While housing truly is in recovery, it remains weak enough that one major economic blow could send it right back into another down cycle. The market also faces two strong headwinds. The first is the stubbornly high level of unemployment, and an even higher level of “under-employment,” where workers take on part-time work and odd jobs in an effort to just barely make ends meet. Until unemployment levels dip below 6.5%, it’s unlikely that we’ll see major movement in home sales. The second is the lack of available credit, particularly for borrowers whose credit was impaired during the Great Recession, or those who don’t meet today’s more stringent lending requirements. The most likely scenario for 2013 is that home sales inch up slightly, probably to just about 5.0 million units, and that home prices move up another 4-5%. While not breathtakingly exciting, this represents the first time that year-over-year growth in both sales volume and prices has been the consensus forecast since 2006.

Implications for the Mortgage Industry Today’s mortgage industry bears little resemblance to what the industry looked like during the boom years. In fact, in 2012 it didn’t even look very much like it did in 2011. While the Federal Reserve continued to take action ensuring that interest rates remained at or near historically low levels, origination activity didn’t experience the kind of explosive growth many had anticipated.

A big part of the reason for this is that much of the activity in 2012 was refinancing – in fact, according to the Mortgage Bankers Association, over 80% of all originations were loan refinances. A huge percentage of this business was driven, either directly or indirectly, by the government’s HARP and HARP 2.0 programs, which provided easy refinancing at market rates for borrowers who were upside down on loans owned by Fannie Mae and Freddie Mac. Unfortunately, this wave of refinancing isn’t expected to last past the first quarter of 2013, and purchase loans aren’t expected to pick up the slack, since home sales aren’t expected to increase significantly. Forecasters expect some $400 billion less in origination activity in 2013 than took place in 2012. The companies offering those loans will look very different than lenders did a few years ago too. The large retail banks, with the notable exception of Wells Fargo, appear to be in full retreat from the mortgage business. And even Wells Fargo has largely exited the wholesale or correspondent space, along with Bank of America, Citi and others. This has created opportunities for non-bank lenders (such as Carrington, the company I work for), who are filling the void created by the retreat of the large banks from this market. In turn, this realignment will probably create new opportunities for mortgage brokers, who will be well-positioned to help borrowers navigate the new lending topography, matching these customers with lenders who have the right products and services to successfully execute their transactions in a timely basis. These products, by the way, will still largely consist of conventional loans: in the continuing absence of a robust secondary market, well over 90% of all loans issued involve either the FHA, Fannie Mae or Freddie Mac. This does little to help borrowers looking for jumbo loans or deserving borrowers who need loan products outside the parameters of what the agencies will allow. While private capital will ultimately come back to the market and support these types of non-agency loans, it’s unlikely that investors will hurry back into the market until there’s more clarity about what the regulatory environment will be, and an ability to thoroughly understand what level of risk is going to be involved – putback risk, compliance risk, litigation risk, headline risk, etc. – in the purchase of whole loans or securities.

A Few Final Thoughts The elephant in the room, of course, is the Federal Government. As this is being written, there is no agreement on a plan to avoid the so-called Fiscal Cliff scenario. Going over the cliff could potentially have a devastating impact on the housing market, and by extension, on the mortgage industry. Even if the cliff is avoided, the tactics agreed


upon to come up with the needed mix of revenues and cuts may well impact the industry. Will the mortgage interest tax deduction be eliminated, or capped at a level too low to support high-cost markets like California, New York, Florida, Illinois and Connecticut? Will the Debt Forgiveness Act be allowed to expire, making short sales – and even loan modifications – problematic for cashstrapped borrowers, and leading to an unexpected wave of foreclosures? How far will the CFPB decide to push QM rules to make loans “safer” at a time when the industry has already virtually eliminated risky loans? Will down payment requirements, debt-to-income ratios and other criteria be so tight that even fewer borrowers will have an opportunity to own a home? Will there be safe harbor provisions for lenders who follow the QM rules? Or will the CFPB open the floodgates for potential litigation by borrowers later, making loans more expensive and more difficult for all borrowers to get? And are we any closer to understanding what the final disposition of the GSEs might be – what their role will be in the near-term, and what they will become once the anticipated “wind-down” is complete?

Probably more questions than answers, unfortunately. But the housing market has shown its resilience by beginning its recovery sooner – and doing it more quickly – than many industry analysts had predicted. Continued growth can only help stimulate lending, leading to a healthy mortgage industry. Perhaps, with all due respect to Triskaidekaphobics, 2013 will be a year in which luck continues to smile on both the housing and the mortgage markets. Rick Sharga, Executive Vice President, Carrington Mortgage Holdings, LLC. One of the country’s most frequently quoted sources on foreclosure, mortgage and real estate trends, Rick has appeared on NBC Nightly News, CNN, CBS, ABC World News, CNBC, FOX and NPR. Prior to joining Carrington, Rick spent eight years at RealtyTrac, where he was a Senior Vice President, responsible for marketing, business development and data operations. Rick is a member of the National Association of Real Estate Editors and the USFN, and a member of the Board of Directors of REOMAC. He is also President of the Technology Council of Southern California and on the Advisory Board of Default Servicing News.

How we see it


January 2013

Saying Yes to Know!

by gary opper

"Ignorance is the curse of God; knowledge is the wing wherewith we fly to heaven." - William Shakespeare (1564–1616), English poet and playwright


n business, there are many concepts that are important to know. You should know the policies of your company, be sure to know your employees and also know your employer. Of course, you should know the laws (state and federal) for your industry. In fact, it’s wise to know a lot on a particular topic and a little about everything. Even knowing yourself will help you make better decisions. Say yes to know!

KNOW YOUR COMPANY A company’s vision is linked with the policies and procedures of the day-to-day operations. Knowing the policies of your organization will help you to understand your role and responsibilities. Having a greater grasp on the policies and procedures of your company will provide you

with a better chance at offering strategies when issues arise and also allows you to assist with the growth of the firm. Knowing the company’s procedures and policies will offer employees a plan of action that is clear and easy to understand. By familiarizing yourself with them, you help to eliminate common misunderstandings that can come up in regards to job responsibilities. When you know the guidelines that are provided by the organization, you can perform your job with respect and dignity.

KNOW YOUR EMPLOYEES If you are management, get to know your employees. With a better understanding of your employees, you can learn their strengths and weaknesses. This information will help you understand how to bring out their best in order to better serve your organization. It also allows for you to know the best way to interact with employees that will assist in bringing out the greatest work from them. Listen to your employees. You want your employees to feel you are approachable and that you will listen to their problems and/or questions when they arise. Knowing that you are there to help, employees will feel that you have their best interest at heart and can assist them in any issues that


arise. Knowing the best motivation for your employees is also important to help them put their best efforts towards meeting and even surpassing the company’s goals. Think of different ways to offer motivation to your employees so they are sure to give 110%. Treating the department or your immediate coworkers for lunch for bringing in new accounts may be a good starting point. Greater motivation may be earning commission for files that they help to close. Find the best way to get to know your employees in order to have them working at their best.

KNOW YOUR EMPLOYER In the same breath, employees should take their time to really get to know their employer. Knowing your employer provides you with a greater understanding of how to approach them should a problem or issue arise. If your employer does not handle a crisis well, then you will need to identify and utilize the best strategy in order to explain any complications or issues that you feel are important enough to be shared. If your employer appreciates honesty above all, knowing this will allow you the comfort of being blunt about situations that come about. Knowing your employer will also help you figure out the right time to approach them with a suggestion or proposed solution to an ongoing issue. You might have figured out the best way to accomplish a task better and/ or faster; however, knowing the right time to discuss it with them is key. By familiarizing yourself with your employer, you put yourself in a more comfortable work environment. KNOW YOUR LAWS It is extremely important to follow the law when you are a part of a business. Not only will you be deemed liable for any laws that are broken, but your employer can be held responsible, as well. Keep any and all of your licenses up-to-date so that you are conducting your business under the letter of the law. Make sure each of your employees also maintain all of their certificates and educational requirements. Encourage them to read trade articles and magazines for additional knowledge. They’ll know more about their industry and will be able to better serve their clients in finding the best avenue to be pursued on their behalf. Take as many continuing education courses as you can. Knowing your industry will set you apart from others in your field. Staying informed on the rules and regulations can even earn you the right to be considered an “expert” in 22

January 2013

your industry. This will give you the opportunity to begin teaching others about what you’ve learned, which will bring greater attention to you and your firm. Make sure to stay informed of any and all law changes and of all new laws created that will apply to your industry. Share any new information you find with your coworkers to help them abide by the law and expand their knowledge. They may already be aware of the information, but there is a chance you might be teaching them something new that will be a great help. By making sure your employees have a full and wide range of knowledge of the laws, they have a greater chance to successfully and lawfully assist their clients.

KNOW ONE TOPIC DEEPLY The English historian, Dame C. V. Wedgewood declared, “An educated man should know everything about something and something about everything.” In whatever field you work, it is best to have a wealth of knowledge about one topic. Make yourself an expert at one specific area by focusing your work on a certain subject. If you’re a mortgage orginitor, maybe you want to concentrate your on first time . If you’re an archeologist, you might consider learning all you can about Mayan Indians or Egyptian rulers. A person studying to be a Mathematics professor might direct their full attention simply to perfecting the teachings of Algebra. No matter what field of work you are in, it is a smart idea to obtain a deep depth of information on one particular area. Having a vast knowledge on a certain topic will make you an invaluable asset to your company. KNOW MANY TOPICS BROADLY You never can have too much education and you can never know too much. Be sure you have at least some awareness of all different topics that relate to your industry. Should someone need advice, they will be able to count on you to at least offer an opinion on the matter. A base knowledge of various topics and notions will give you a breath of insight into the matter. Should your advice be sought, you’ll have at least an understanding of the item being discussed. A Math teacher may be terrific at teaching Algebra courses, but they should be familiar with other areas of the subject such as Calculus, Geometry, etc. An archeologist may focus their work on Mayan Indians of the Yucatan Peninsula and at the same time, they should be able to at least identify artifacts from other civilizations like the ancient Egyptians to be able to compare and contrast

cultures. Knowing a bit of everything will make you a better-rounded individual, which will help to better serve your organization.

KNOW ABOUT YOURSELF Knowing about yourself is one of the most important aspects of “being in the know.” You know yourself better than anyone. You know when you are about to run out of patience, you know if you are an analytical person and you know if you study better with the radio on. Being familiar with your own strengths and weaknesses will better prepare you for identifying the right line of work and the right place for you in a company. If you’re good at customer service, maybe you will want to pursue a sales position. If there is a conference coming for your company and you’re good at public speaking, you’ll want to volunteer to be a presenter. Knowing your best attributes will help you locate the best suited place for you in the business world and help you excel in your organization. CONCLUSION Say yes to know! Know a little about everything and a lot about one concept. Know about your boss and the people who work alongside of you. Be familiar with your

state and federal laws. Most importantly, know yourself. Knowing the person inside of you will help open the doors to your future and lead you toward a brighter tomorrow. Gary Opper is President of Approved Financial Corporation, Weston, Florida. Approved Financial Corporation is a licensed mortgage lender. Mr. Opper has been a Mortgage Lender and Note Buyer since 1984. He is the Managing Member of Levie-Opper, LLC, a mortgage fraud litigation support firm. Also, he does mortgage consulting. He has a CPA and a CFP license. Opper is Past President of the Florida Association of Mortgage Professionals - Miami Chapter and the Florida Institute of CPAs - Gold Coast Chapter. Opper is a member of the National Association of Mortgage Brokers, American Institute of CPAs, the FAMP and the FICPA. Mr. Opper was named the NAMB’s “Writer of the Year” and “Featured Writer of the Year” and the FAMP’s “Broker of the Year.” Opper is president of the FIU’s School of Accounting Alumni Affinity Council. Mr. Opper is available to speak to your group. Please contact him to arrange a speech for your event. He may be reached at (954) 384-4557, fax: (954) 384-5483, or e mail: © Gary Opper. All Rights Reserved.

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man on the hill

Whatever Happened to Due Process and Equal Protection? by marc savitt


magine a credit bureau listing derogatory credit on a consumer’s credit report, knowing the accuracy of that information may not be true. We all know the CFPB wouldn’t stand for such bad behavior. However, that’s exactly what the CFPB is doing with their Consumer Complaint Database. Earlier this year, the CFPB launched its new Consumer Complaint Database. The Database allows consumers to file complaints regarding mortgages, credit cards, bank account services, vehicle or consumer loans, student loans or credit reporting. Once a complaint is filed, the CFPB lists that complaint publicly. I’m not speaking about a complaint that’s been adjudicated or even settled outside any authority. I’m referring to mere accusations alone. Furthermore, the name of the lender is shown, but not the complainant. Even more outrageous is the CFPB’s admission about their public database. A disclaimer on the website states, “This contains data from the consumer credit card complaints received by the Consumer Financial Protection 24

January 2013

Bureau. We do not verify the accuracy of all facts alleged in these complaints, but we do take steps to confirm a commercial relationship between the consumer and the identified company.” Currently, only credit card complaints are being listed. However, mortgages and other types of financial services are slated to be publicly listed in the near future. Does the CFPB’s public disclosure of such accusations equate to denial of Due Process? The Fifth Amendment states, “No one shall be deprived of life, liberty or property without due process of law.” So what does this mean? It’s a promise that all levels of government must operate within the law and provide fair procedures. Is it fair for the CFPB to administer some degree of punishment without verifying the accuracy of all the facts in these complaints? If this isn’t enough, it also appears the CFPB is “leading” consumers who file complaints. Under the mortgage complaints section of the database, consumers are asked to describe the nature of their complaint. This is a simple procedure, which gives the CFPB a starting point in an investigation. However, the last question is troubling. “Do you believe the issue involves discrimination? (Optional).” One definition of a Leading Question is, “A leading question or suggestive interrogation is a question that

man on the hill suggests the particular answer or contains the information the examiner is looking to have confirmed.” Let’s face it, most consumers filing complaints, whether justified or not, would see this question as a way of strengthening their complaint. Moreover, as we live in a litigious society, in all likelihood this question would plant a seed to find an attorney, who would file suit against the lender based on their clients “belief.” Even if the case is later proven to be frivolous, the costs of defending yourself could easily force a small company out of business. Moreover, there’s the loss of reputation factor too. Let me be clear, discrimination of any kind should never be tolerated. However, if discrimination played any part in a consumer’s complaint, it would be revealed during an investigation. The consumer is also asked if the issue is related to applying for a loan, more specifically the “application, originator, or mortgage broker.” Why does the CFPB ask if it involves mortgage brokers? Shouldn’t the CFPB know it’s originators who are licensed under NMLS? In my opinion, this is another example of “leading” the consumer. One of the biggest problems faced by mortgage brokers is the misconception of who actually is a mortgage broker. Most consumers don’t know the difference between a broker and the MLO in a bank. By listing brokers in addition to originators, there’s more of a chance a consumer might incorrectly accuse a broker of wrongdoing. Instead, let NMLS numbers identify who originated the loan. Some have suggested the CFPB might be manufacturing statistics with these and other leading or suggestive questions. Perhaps their actions are being used to justify anti-broker rules, regulations and/or comments made by the agency. In the fall of this year, the CFPB announced the Members of their new Consumer Advisory Board. Despite the promise of a “level playing field,” the CFPB neglected to appoint a single mortgage broker, originator, mortgage banker, appraiser, credit reporting agency or settlement agent to the Board. NAIHP responded to the announcement with an Open letter to Director Cordray. Here’s part of what I wrote to Directory Cordray regarding this issue. “Recently, the CFPB announced their advisory groups, i.e., Consumer Advisory Board, Community Banks Advisory Council, Credit Union Advisory Council and Academic Research Council. After reviewing the Consumer Advisory Board’s members, I was disappointed to learn

that Mortgage Brokers, Real Estate Appraisers, Mortgage Bankers, Credit Reporting Agencies and Settlement Agents were all excluded from the Board. As you are aware, these groups are small business, Main Street housing professionals, who are involved with consumers on a dayto-day basis, with respect to the home mortgage process. These are the very groups who are currently facing an onslaught of new rules and regulations, and as licensed professionals have been denied a seat at the table. In our opinion, this does not represent a level playing field. “Instead of being a well-rounded Board as promised, it appears several of the Board’s members have ties to debatable consumer groups, including the now defunct ACORN. In fact, both the Chair and Vice Chair have direct connections to the Center for Responsible Lending (CRL) or their Self Help Credit Union. This is a major concern for small business housing professionals, as these groups have long advocated against those professions that comprise our membership. CFPB has afforded these groups a forum in which to further their agenda, while those they oppose are left without a voice.” NAIHP has been meeting with the CFPB regarding this issue. Hopefully, we will have reached a satisfactory resolution by the time this article is published. If not, we will explore other remedies. By Marc Savitt of the NAIHP, who represents independent, small business housing professionals in all 50 states and the District of Columbia. Our grassroots membership consists of mortgage brokers, loan originators, residential appraisers, real estate agents, settlement agents, small banks, credit reporting agencies and consumers. Our members are Main Street USA, who assist consumers through the difficult maze of purchasing or refinancing residential real estate. NAIHP is an all-volunteer organization with offices located in Washington, DC.

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Realtor速 Marketing Secrets Secret #7: Face-to-face Meetings by doren aldana



n my last month's article, I taught you how to follow up with your Realtors by email and phone so you can get their attention, pique their interest and invite them to a face-toface meeting. That leads us to the next step in my seven-step formula...

1. Dress for Success. This probably goes without saying but if you want to attract a top-producer, you've got to look like a topproducer. As you know, you never get a second chance to make a first impression, so make it count. Show up to your meetings looking like a million bucks -- well groomed and dressed for success!

STEP 5 - Conduct a Face-to-Face Meeting The initial face-to-face meeting with your Realtors is kind of like a "first date." Not in a romantic sense, of course, but it gives you an opportunity to connect, build rapport, feel each other out and determine if you're a good fit to work together. How you conduct yourself during this first meeting can literally make or break your chances of winning them as a referral partner. That's why it's so important to have a clear, concise, effective approach that compels your Realtors to want to work with you. Here's how you do it...

2. Be Punctual. Being late can be a major deal killer for a lot of people. Not only does it reflect poorly on you and your respect for their time, it also undermines your credibility. After all, if they can't trust you to be on time to a meeting, why would they put their business in jeopardy by trusting you to close their clients' mortgages on time? Since punctuality is one of those little things that makes a BIG difference, plan on arriving 15 minutes early, just in case you get stuck in traffic or the kids hide the keys behind the couch. You'll never regret the added peace of mind that comes from proper, proactive planning.

January 2013

3. Do Research in Advance. Before the meeting, review the Realtor's profile on Facebook and the "About Us" page on their website. A little research can go a long way toward helping you build rapport when you meet. If you find out they're interested in hockey, talk about hockey. If they're interested in kite surfing, talk about kite surfing. If they're passionate about their dogs, talk about their dogs. The point is, do a little research in advance so you can have some easy talking points when you meet. 4. Set the Stage. Before you start the meeting, it's always a good idea to address the "elephant in the room" by saying something like, "If you're anything like me, the last thing you want to do is volunteer for a sales pitch where the person just shows up and throws up, talking about how great they are and why you need to do business with them. Can you relate to that? Exactly. Let me reassure you that won't happen with me. My main objective during this initial meeting is to 'lift the hood' on your business so we can identify the

biggest holes in your marketing and uncover the hidden opportunities for breakthrough in your business. Then, based on the answers you give me, I can give you a customtailored proposal on how I can help you take your business to the next level. Fair enough?" If you address this objection upfront, you'll be amazed how quickly any pre-existing resistance and tension dissipates. Empathy is very powerful. Not only does this approach address the Realtor's fear about being "sold," it also provides them with clarity as to what they can expect from the meeting. Just the mere fact that you want to learn more about them and their business, instead of flapping your lips talking about how great you are, will come as a great relief and a breath of fresh air.

5. Diagnose First, Prescribe Second. The primary focus of this first meeting is to simply diagnose the Realtor's business frustrations, pain points and challenges using what I call the "Realtor Needs Assessment." This is a comprehensive questionnaire that allows you to identify the gaps, holes and missing links in the Realtor's business. So, instead of just giving a "data dump" with all the reasons why the Realtor should work

with you (which usually bores them to death), your goal is to simply ask questions, listen and take notes. Just like a good doctor who diagnoses his patient's pain before prescribing a cure, you're going to identify the Realtor's pain points first, before offering solutions. You see, until and unless the Realtor becomes aware of -- and even disturbed by -- the gaps in his or her business, chances are, they won't be very receptive to your recommendations. That's why your first meeting should always be dedicated towards diagnosis (where the Realtor comes to realize they suck, they need help, and you're the person to help them). Once they reach this point, it's only natural to schedule a second meeting, where you can do a "show 'n' tell" and prescribe specific solutions to what ails them.

is to invite them to a second meeting, ideally within the next week or two (the sooner the better). In other words, strike while the iron is hot. Don't give them too much time for their interest to wane before you provide them with solutions to their biggest challenges.

6. Take Notes There's an old saying, "People don't care how much you know, until they know how much you care." Studies show that we tend to give people more credence, and are more compliant to their wishes, if we believe they truly care about us as individuals. Perhaps one of the easiest ways to show that you care is to ask questions, listen intently (with eye contact, nodding gestures, etc.) and take notes. The act of taking notes shows that you aren't merely interested, but that you care enough to capture it in writing so you can review it again in the future.

Doren Aldana is considered by many to be the nation's leading Mortgage Marketing Coach. Since 2005, he has been dedicated to helping mortgage professionals attract more clients with less effort, regardless of market conditions. For a free online workshop on "How to Turn Your Realtors' Listings into a Flood of Red-Hot Mortgage Leads," visit: www.

Perhaps at this point you're wondering how the heck you're supposed to come up with these so-called "solutions." Well, hold your horses, Bessie, we'll get to that shortly. First, we need to get you trained up on how to get your Realtors to actually commit to working with you. In my next article, I'll give you four specific strategies for converting more of your Realtors into loyal, committed referral partners for life. Stay tuned‌ •

7. Strike While the Iron Is Hot By the end of the initial "discovery meeting," you should have a pretty good sense as to whether or not this is someone you want to work with. A few helpful questions to confirm this: Do you have good rapport? Do they have a positive attitude? Are they an energy-giver or an energytaker? Are they open to testing new approaches? Do they have enough listings? If they seem to respect and appreciate what you're bringing to the table, then the next logical step

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Do the Hustle The Untold Story of the Bank of America Billion Dollar Fraud Case

by brian mahany


or those who remember the disco era, Van McCoy scored a number 1 hit on the Billboard charts back in 1975 with a song called “Do the Hustle.” Decades later, federal prosecutors announced a billion dollar civil prosecution against America’s largest bank, Bank of America. Prosecutors say that BOA engaged in a scheme nicknamed “the hustle,” which disguised hundreds of millions of dollars in toxic mortgage loans and cost taxpayers millions. How did the case begin? Through a whistleblower, Edward O’Donnell. O’Donnell was a former executive vice president of Countrywide. Shortly after the financial meltdown in 2007 and 2008, Bank of America acquired Countrywide. O’Donnell says that the lender created a program named High Speed Swim Lane or “HSSL” (pronounced Hustle). On paper, the program was designed to speed up loans. The government, however, says HSSL was a “spectacularly brazen” fraud. Preet Bahara, the United States Attorney for Manhattan, did not mince his words, “Countrywide and Bank of America made disastrously bad loans and stuck taxpayers with the bill. As described, Countrywide and Bank of America systematically removed

every check in favor of its own balance – they cast aside underwriters, eliminated quality controls, incentivized unqualified personnel to cut corners, and concealed the resulting defects. These toxic products were then sold to the government-sponsored enterprises as good loans. This lawsuit should send another clear message that reckless lending practices will not be tolerated.” This marks the sixth time that Bahara has gone to battle against major lenders. Most of those claims were initiated by a whistleblower, someone inside the organization that was willing to come forward and report illegal behavior. (In the interest of fairness, Bank of America calls the charges false, although it has already settled several other claims brought by the government.) The Federal False Claims Act allows whistleblowers to receive a cash award for their inside information. To qualify, there must be a violation of federal law resulting in a loss to taxpayers. Because Freddie Mac and Fannie Mae guaranteed and ultimately paid off the bad loans, taxpayers were left footing the bill. Until the Bank of America case, the feds only pursued cases in which there was a direct loss to HUD, usually through the FHA guarantee program. Even though Fannie


Mae and Freddie Mac are private companies, because they are now in federal receivership, prosecutors are now willing to consider False Claims Act cases in which Fannie and Freddie initially guaranteed the loans. What makes this case even more disturbing is that Bank of America received about $45 billion in TARP money. At the same time it was asking Congress for bailout monies, the bank is accused of ripping off taxpayers and pushing through garbage loans. According to the original claim, O’Donnell complained several times to both Countrywide and Bank of America. As a senior bank officer, you think someone may have listened. They didn’t. Whistleblowers typically face a tough time when they come forward with information about mismanagement, fraud and corruption. Assuming the allegations in the government’s case are true, Bank of America chose greed and profit over following the law. Thankfully, someone finally came forward. Whistleblowers in False Claims Act cases often receive about 20 percent of what the government collects. That means O’Donnell could receive $200 million for his

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information. Filing a whistleblower claim under the federal False Claims Act or Financial Institutions Reform, Recovery and Enforcement Act (FIRREA) isn’t easy and requires filing a lawsuit. The payoff, however, can be huge. If you believe you have a case, consult with a knowledgeable whistleblower attorney. With the government signaling it will consider cases in which there were losses to Freddie Mac and Fannie Mae, we anticipate many claimants will come forward. To date, the other major False Claims Act cases against lenders have typically settled for a $100 million to $200 million-dollar payment. That means the whistleblowers in those cases are receiving tens of millions of dollars. There is a catch, of course. Generally only the first person to come forward with inside information gets paid. We think whistleblowers are the new generation of American heroes. If you know of fraud or waste in the lending industry, now is the time to consider coming forward. Even if you have signed a confidentiality or nondisclosure agreement, there is still hope. Every jurisdiction is different, but generally non-disclosure agreements can’t be used to cover up criminal activity or violations of federal banking rules. About the author. Brian Mahany is an attorney representing whistleblowers. His firm, Mahany & Ertl, represents the whistleblower in the largest False Claims Act case in the U.S., the government’s $2.4 billion case against Allied Home Mortgage. Brian is a frequent contributor to The Niche Report. He welcomes questions and comments and can be reached at or (414) 704-6731.

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How Much Money Goes Into the Economy When a Home Is Sold? by Karen Deis


ou’ve heard it over and over again—small businesses help grow the economy. While that may be true, there is no easy way to determine the dollar amount a small business pumps into the economy—only from a 30,000foot view that even the government economists can’t agree on. But, here’s one thing we CAN agree on. When a home gets sold, it helps so many people earn money. When a home gets sold, you CAN determine a firstlayer dollar amount on where the money is spent and who gets it. So what I did was prepare a list for you, showing who gets paid when a home is sold. I based this on a buyer getting a mortgage of $200,000 with 10% down payment. It contains a list of services and estimated dollar amounts based upon my area in Wisconsin—which totaled a whopping $32,325. This is great information to share with your real estate agents. I have left the dollar amount column blank so you can fill in those amounts that apply to your area. This would also make a great article for your local newspaper, TV and radio stations. While you may add or delete certain services on this list, I did not include the amount of equity paid to the seller – which, if they buy another home, starts the process all over again. Copy the document. Fill in the blanks. Add your logo. Distribute to your real estate agents. Be sure to use social media to get the word out, too.

(Insert your Logo, Picture or Letterhead) Home inspector Termite inspector Radon inspector Appraiser Loan officer PMI company Mortgage company staff Home warranty company Attorney Moving company Insurance company Painter Handyman Furniture store Appliance store Home improvement store Real estate commission Title company Title rep commission Notary Other

______ ______ ______ ______ ______ ______ ______ ______ ______ ______ ______ ______ ______ ______ ______ ______ ______ ______ ______ ______ ______

(Your Contact Info) Written and contributed by Karen Deis of Provided monthly by www. interpreting the Rules and Regulation Changes for loan officers, processors, underwriters, and owners/ managers. Mortgage Talking Points™ charts and checklists included.


Appraiser Sound off

Top Myths and Misconceptions in the Appraisal Process Dispelled for Clients by dione spiteri


n educated customer is your best customer,” the saying goes. As a mortgage broker, chances are you are intimately knowledgeable about the Appraisal Independence Requirement (AIR) as part of sound underwriting for financial institutions. And though you may be familiar with the provisions for gaining information to safely loan on a property, be careful not to take for granted that buyers are aware of the legislation or the purpose and process of the appraisal overall. With interest rates at all-time lows, consumers continue to consider refinancing and buying as growing options. Low rates and competitive housing prices present an opportunity for mortgage brokers to address a happy client’s needs for financing more than once, potentially, over the course of several years. But with more people getting into the market, with varying levels of education about the home buying process, opportunities 32

January 2012

for misinformation, and therefore, dissatisfaction, can be high. Consumers are likely to be disappointed if they do not understand why their appraisal amount did not come in as expected, are not made aware of the need to pay for an appraisal again in certain circumstances, or simply do not understand the process and what to expect. How can you set expectations on the appraisal process with borrowers? What myths and realities should every consumer be aware of? The following is a list of misconceptions in the industry that can be addressed early on—either directly in person with the client or through a checklist to educate them on the process. Myth: Appraisers have been appraising properties at lower than market rates because of AIR. Reality: Appraisers have been appraising properties lower because most markets are declining. Keep in mind that market value is the “most probable price that a typical buyer will pay when the property is exposed to the market for a reasonable amount of time.” Foreclosure sales, short sales and other distressed sellers have added low-cost

Appraiser Sound off inventory to the market for which every property must compete for buyers. Any buyer that could purchase the house next door in foreclosure for half the list price, would do so if given the opportunity. The appraiser’s job is to determine the most probable price, not support the existing sales contract price. The fact that appraisal values have been lower has everything to do with market trends and factors, and nothing to do with AIR. Myth: The homeowner pay for the appraisal and therefore, owns the appraisal report. Reality: If federal money is involved in the transaction – Fannie Mae, Freddie Mac, HUD, VA, or other programs – then by federal banking regulations, the lender must be the client of the appraiser. Another important fact to remember is that the person or entity who orders the appraisal is the client, not the person delivering the appraisal fee for the client. Uniform Standards of Professional Appraisal Practice (USPAP) and federal banking regulations address the issues of client/appraiser relationship, confidentiality, and who will be the client if federal money is involved in the transaction. Once the client/appraiser relationship is established, the appraiser cannot discuss or provide copies of the report to anyone without the client’s permission. A copy of the appraisal report must be obtained from the client/broker, not the appraiser. Myth: If a homeowner has an appraisal done with one lender, they should be able to use the same appraisal report with a different lender. Reality: Other lenders cannot use the report for lending purposes until they establish the client/appraiser relationship. The appraiser will need to get permission (a release) from the original client and any/all subsequent

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clients before reappraising the property for the new lender. To avoid being misleading, the appraiser must disclose to future clients that she/he has previously appraised the property. In addition, if the effective date of the appraisal has changed, the appraiser must research any new market conditions and update the existing appraisal report. In volatile market areas, this could mean drafting an entirely new appraisal. Myth: Using foreclosures and short sales as comparables when appraising a home for refinance is not correct as houses not under duress are worth more than those that are being sold in duress. Reality: If you could buy a box of Tide for $100 or buy a box of Tide for $10, which would you buy? This is the same logic that can be applied in the marketplace. When two homes in the same neighborhood are for sale and one under duress is selling for considerably less, the home that is listed higher is now overpriced for the market. Once the house under duress sells at the lower price, this now becomes the market value for competing homes in the area. Remember, appraisers’ use the principle of substitution by determining what other homes in the market area can be purchased for the same price. Myth: The homeowner put $10,000 in improvements into the home so the appraisal should be at least $10,000 higher. Reality: The cost of improvements does not necessarily equal the market value of those improvements. For example, adding another bedroom may have cost $10,000 but buyers in the market may only be willing to pay another $5,000 for homes that have an additional bedroom. You can view the Cost vs. Value Statistics for details on specifics improvements by market area. Myth: AIR requires lenders to use Appraisal Management Companies. Reality: Use of appraisal management companies is not required under AIR. Lenders may engage appraisers directly without the use of third parties. Myth: The licensing of an appraiser ensures his or her competency. Reality: Licensing does not necessarily ensure the competency of an appraiser. The Fannie Mae and Freddie Mac Selling Guides require lenders to review the appraiser’s education and experience. Specifically, the Fannie Mae Selling Guides state:

Appraiser Sound off

“A lender must not assume—simply based on the fact that an appraiser is state-licensed or state-certified—that the appraiser is qualified and knowledgeable about a market area or is aware of the appropriate market data sources for the area and will be able to obtain access to them. If an appraiser is not knowledgeable about a particular location, is not experienced in appraising a particular type of property, or is not familiar with (or does not have access to) the appropriate data sources, a lender should not give the appraiser assignments in that market area or for that particular type of property.” Being up front with consumers and educating them about the process can help to alleviate concerns and confusion. Following are top tips consumers should know about appraisals: 1. The person ordering the appraisal, not the person paying for the appraisal, owns the appraisal report. 2. Research sales in the market area and consult with local realtors. Feel free to give the information to the appraiser and understand that the appraiser will always consider the data, but may use different data in the report if it is deemed to be more relevant or recent. 3. Understand that appraisers cannot communicate values, fees, or discuss the appraisal with you at any time when the order was placed by your lender. 4. Understand that if there are foreclosures and short sales in your market area, your home may compete with them for buyers in an open market, and they can affect the value of your home. 5. Don’t expect the appraiser to give the exact same amount of dollar value to improvements in your home as what you spent on them. 6. Do expect the appraiser to have competence in your market area and access to local MLS data. 7. Do understand that a professional appraisal is a supportable opinion of value. It is not the feelings of the appraiser but rather a supportable prediction of what your home would sell for if offered on the marketplace for a reasonable amount of time. 8. The inspection portion of a real estate appraisal is just one small portion of the appraisal process. Substantial work must be done before the appraiser inspects the property to research market information and neighborhood trends. Once the inspection is complete,

the appraiser may spend hours analyzing the data to produce a credible report. 9. Educate yourself on the components that determine value in your property. Homes tend to be an extension of personal tastes, but the appraiser’s responsibility is to determine which of those tastes translate into a higher market value for your property.

Dione Spiteri founded US Appraisal Group 10 years ago on the principle that everyone deserves to have a positive appraisal experience and to increase confidence in the appraisal management industry overall. Her firm, comprised of recognized appraisers with an intimate knowledge of the industry, its regulations and complexities, has made the Inc. 500 List for the second year running and recently was recognized as the 6th fastest growing real estate company in Chicago. Spiteri is also a member of the National Association of Independent Fee Appraisers, CAR and the Employee Relocation Council. For more, please visit www.

How we see it

Regulators to Craft New Mortgage Lending Standards by corey curwick dutton


s most people in the mortgage lending industry well know, the Dodd-Frank and Consumer Protection Acts have made it even more difficult for consumers to obtain loans by trying to “protect” them. By placing new and expensive regulatory requirements on mortgage lenders, the acts have caused many mortgage companies to close up shop. The new Act has also placed new restrictions on nonbank lending that did not exist before the financial crisis. In order to protect themselves, the majority of hard money and private money lenders won’t even lend to consumers anymore, only to business entities on investment properties. For example, a homeowner who needs to refinance and can’t qualify at the bank is now also unable to obtain a loan from a hard money lender. The Consumer Financial Protection Bureau, created by Dodd Frank, is set to release a new set of mortgage lending standards by January. The Bureau’s Chief, Richard Cordray, says he is carefully weighing all factors that may undermine the housing recovery by making it more difficult for consumers to obtain credit. Mr. Cordray hit the nail on the head when he said, “It doesn’t do anybody any good for us to develop an elaborate set of protections if nobody’s going to then lend money to consumers.” But I think this may be “a day late and a dollar short,” as the old saying goes. These new regulations have already made it nearly impossible for a consumer who is about to lose his or her home to save the home by obtaining a non-bank, private or hard money loan. For example, a homeowner recently came to us for a loan on his primary residence. He had never missed one payment on the loan


January 2013

when the bank suddenly went under and was taken over by the FDIC. His note was sold to a third party for pennies. Because of the new Consumer Protection Act, he was not even able to get a private money lender to make a loan to him because the house was owner occupied. As a result of the bank going under, he lost the house, even though he had never missed a payment in his life. When you hear a story like this you may ask yourself, how are these new regulations really protecting consumers? The purpose of Dodd Frank and the Consumer Protection Act is to put an end to the risky lending practices that fueled the financial meltdown. But wasn’t it the derivatives on Wall Street that actually fueled these risky lending practices? And wasn’t it the sub-prime loans coming from the “banks” and not “private money lenders” that are the risky loans the Bureau is referring to? What is your opinion on this topic? Please leave your comments below. Corey Ann Curwick is a private money consultant for Private Money Utah, a real estate lender based in Salt Lake City, Utah. Corey is from Austin, Texas and is an MBA Graduate of the prestigious Thunderbird School of International Management. An authority in the private money lending industry, Corey provides educational resources for investors who use hard money loans in their real estate investing activities. Before she joined Private Money Utah, Corey was the President of an investment education company in Utah, Bray-Conn Investments LLC. In this role, Corey organized classes that taught investors how to invest in five asset classes. In her free time, Corey enjoys skiing, snowboarding, and mountain biking in the beautiful Utah outdoors.


Prime & FHA NEW


HomeBridge 855-729-2884

HomeBridge is a national wholesale lender offering both conventional and government products. We are committed to providing the highest value to our clients through competitive pricing, unique product offerings, superior customer service, and state-of-the-art technology.

Icon Residential

National Wholesale Lender offering a full line of Conforming and FHA products. We offer personalized customer service where our client is our primary focus.

Mission Hills Mortgage Bankers 925-849-1806

Mission Hills Mortgage, now part of PacTrust Bank, is one of the West Coast's preeminent lenders. With over 120 years of combined service to the community, Mission Hills Mortgage stands ready to provide the most comprehensive mortgage solutions in the industry.

Pacific Union Financial Correspondent

Fannie & Ginnie direct conduit offering Niche Correspondent.

United Wholesale Mortgage 800-981-8898

Discover Lending Made Easy! UWM is a Technology Leader with UW to DU indings, Superior Customer Service, and an Expert Sales Force. The ELITE program provides the Best Conventional Rates & Pricing in the Industry! Signing up is easy! Join our valued Broker network at

Commercial FundingEdge 830-331-4030 & 210-249-2111 GreenLake Real Estate Fund, LLC 310-462-4637 Windvest Corporation 877-285-0777

Commercial Real Estate Finance, Business Finance and Oil & Gas Royalty Loans.

Private direct commercial loans in CA and NV. All property types except raw land. Our latest fund was raised specifically for loans in this tough economy. We're eager to lend, so please call today!

Specializing in fix and flips, rehabs, income producing and rental investment properties throughout Southern CA. We lend on SFR residential and COMM property. Simple application process with generous broker commissions. Professional service with funding in 7 days. Call us today for a free quote or visit us online www.

Financing may not be available in all states. The above summaries are intended for Mortgage Professionals only, and not intended for distribution to consumers, as defined by Section 226.2 of Regulation Z, which implements the Truth-In-Lending Act. Information is subject to change without notice. Refer to each lender’s information on products, program, procedures, representations, and warranties for details.



HARD MONEY/Construction/Rehab NEW

Alpha Funding Solultions 732-657-2014

FundingEdge 830-331-4030 & 210-249-2111

GreenLake Real Estate Fund, LLC 310-462-4637

Rehab/Fix and flip. Foreclosure bailout. Commercial bridge. We are a direct lender. 100K to 2MM. NJ, NY & PA. All property types and deals considered. Call or email us to run a deal by us. , info@alphafundingsolutions. com FundingEdge is a correspondent for agricultural land & ranch financing and providing commercial real estate financing options through its network for private money and conventional programs. Private direct commercial loans in CA and NV. All property types except raw land. Our latest fund was raised specifically for loans in this tough economy. We're eager to lend, so please call today! Specializing in nationwide fast, creative short-term bridge loans ranging in size from $1 million to more then $50 million. Loan commitments in 24 hours. Fast closings. Loans are available for note purchases, acquisitions, land development, construction, workouts, refinancing, bankruptcies and foreclosures.

Kennedy Funding 800-342-8500

Windvest Corporation 877-285-0777

ZINC Financial

Specializing in fix and flips, rehabs, income producing and rental investment properties throughout Southern CA. We lend on SFR residential and COMM property. Simple application process with generous broker commissions. Professional service with funding in 7 days. Call us today for a free quote or visit us online www. Investment Rehab Lender. We are a direct lender for Fix and Flip loans in CA, AZ and NV. Funding in as little as 7 days. Easy online submission @


JUMBO BofI Federal Bank 888-883-9672

Jumbo and Super Jumbo Loans 5/1 - 7/1 and 10/1 options.

MULTIFAMILY Apartment Bank 877-442-4003

Apartment Bank, a division of BofI Federal Bank (NASDAQ:BOFI), is a Nationwide Direct Portfolio Lender that has solidified its standing as a premier multifamily lender in the small balance lending space. Apartment Bank’s flexible approach is key to freeing borrowers and brokers from the typical headaches and hassles of small loan transactions. Loan amounts from $250,000 to $10,000,000. Visit

Financing may not be available in all states. The above summaries are intended for Mortgage Professionals only, and not intended for distribution to consumers, as defined by Section 226.2 of Regulation Z, which implements the Truth-In-Lending Act. Information is subject to change without notice. Refer to each lender’s information on products, program, procedures, representations, and warranties for details.


January 2013


Service Provider Classifieds Branch Opportunities American Pacific Mortgage Corportation

Established Retail Mortgage Bank, providing Managers and Originators cutting edge tools and resources to make their business a success.


Guaranteed Home Mortgage Company, Inc. 888-572-3602

Hometown Lenders 888-606-8066

Mountain West Financial 888-845-4530

Residential Finance Corporation 800-785-6277


Residential Home Funding Corp. 866-319-4442

We're expanding our nationwide branch network . Join a lender who invests in YOU! 20+ years, well-capitalized, wide range of products, licensed in 28 states, immediate marketing investment in your branch, Next Day Pay(TM) to transitioning branches, on Inc. 500 list of fastest growing companies We help you grow your branch and skyrocket your income! Our recruiters put producers in your branch, and our proven marketing maps are guaranteed to help you double your income. Get connected with other branch managers who are crushing it. Call us today to find out why our branches aren’t going anywhere. Ask us about our sign-on bonus program! Consistent. Reliable. Competitive. With over 20 years of experience in Retail Branching, Mountain West Financial opens doors to limitless opportunities.

At RFC we believe the status quo simply isn’t good enough. We’re doing retail branching a little bit differently. We start out with an award winning culture and take care of our customers, both internal and external, like family. With that basic premise met, everything else falls right into place. Partner with us! We have a reputation of providing ongoing support and communication to every branch, every day - that is our #1 priority. Our branch offices enjoy the security of being associated with a natioanlly recognized mortgage banker. We are East Coast Experts.

Training & education Kaplan Real Estate Education 877-792-4473 800-231-4787

Kaplan is the nation’s leading provider of licensing and exam prep courses. We offer the SAFE Licensing Course in the classroom and live online. To help you pass the SAFE Exam, we also offer exam prep courses in the classroom and OnDemand online. Interpreting the complicated mortgage rules in plain language (Fannie, Freddie, FHA, VA, Compliance, Credit) that ONLY affect the loan origination side of the business. Help Desk. Rule Change Calendar. Automatic Face Book posts & Mortgage Talking Points™ for your real estate agents. Online e-zine published 2X month. Try for $1.



Technology The Mortgage Office 800-833-3343


The Mortgage Office™ is a powerful suite of lending solutions for private lenders. With our comprehensive core loan servicing products and robust add-on products, you can custom build the most powerful and personalized mortgage software solution for your business. From Origination, through Loan Servicing, Mortgage Pools, Investor Access, ACH, email statements, and more. Your back office needs to be automated, and The Mortgage Office™ can help your business grow and expand without increasing your staff.

Byte Software 800-695-1008

Byte Software offers a complete mortgage solution from lead generation to selling loans on the secondary market enabling lenders to close more loans in less time with a SQL database, customization, enterprise scalability, compliance and security.

Calyx 800-362-2599

Affordable software that streamlines and optimizes all phases of the loan process – from loan marketing through closing.

DocMagic 800-649-1362

The largest dedicated loan document production company in the country, delivers a fusion of solutions guaranteed to meet today's complex loan document challenges.

International Document Services, Inc. (IDS) 800-554-1872

IDS is your mortgage document preparation vendor. With 20+ years experience IDS provides customers with fully compliant closing docs, initial disclosures & fulfillment. With superior customer service, in-house compliance & LOS interfaces, IDS far exceeds our competition.

title work & insurance CRES Insurance Services, LLC 800-880-2747

As one of the largest providers of Errors & Omissions Insurance and Risk Management Services, CRES Insurance has protected more than 75,000 real estate professionals nationwide, since 1996.

Linear Title & Closing 401-841-9991

Linear Title & Closing, Ltd., is a recognized leader and national provider of Closing, REO, Title Insurance and Settlement Services. Our streamlined RESPA compliant process utilizes flexible software tools that are easily integrated with your system

Scott Bond Services 800-365-0101

A leader in providing surety license bonds, fidelity, and E&O to the mortgage industry nationwide including investor required Special Mortgage Bankers Bonds. Offering a combination of expertise, service, value, and underwriting flexibility that’s second to none.



January 2013


marketing & lead Gen Best Rate Referrals 800-811-1402

Mailer Leads 866-783-4053 ext 14


One Direct Response 800-483-5129

Right Side Marketing 800-456-4395

Stoneybrook Publishing Inc 800-736-3632

Your mortgage marketing leader with many services available from Direct Mail & List Services, Telemarketing, Internet Leads, Mobile Marketing, and more.

Leader in FICO based lead generation, will help you increase your lead volume 150%. We've taken our highly responsive Mailer Programs and incorporated Personal Websites (PURLs) and QR Codes.

As a full service marketing company with over 20 years experience, we can help in all areas of your marketing needs

Providing exceptional marketing materials for Real Estate and Mortgage professionals since 1985

Monthly client newsletters proven to generate new loans from referrals and repeat business

Appraisal & AMC StreetLinks Lender Solutions 800-778-4920

Providing lenders with a comprehensive suite of valuation solutions, including full AMC services, self-managed appraisal software, appraisal review tools and robust servicing products.

United States Appraisals 866-562-0123

World-Class Service. Nationwide Coverage. Discover Confidence in Your Appraisal Partner!



Advertiser DIRECTORY

Alpha Funding Solultions We are a direct lender. 100K to 2MM. NJ, NY & PA. All property types and deals considered

BofI Federal Bank 888-883-9672 LendingPartners@bofifederalbank. com

American Pacific Mortgage Corporation The Mortgage Bank of choice for Top Producing Originators. Established. Strategic. Strong. 800-846-8159

Best Rate Referrals Mortgage Marketing Professionals. Raymond Bartreau 800-811-1402

Apartment Bank Apartment Bank, a division of BofI Federal Bank (NASDAQ:BOFI), is a Nationwide Direct Portfolio Lender that has solidified its standing as a premier multifamily lender in the small balance lending space. 877-442-4003

Applied Business Software, Inc Loan Origination, Loan Servicing, and Mortgage Pool Software for Private Lenders. Powerful, flexible, compliant, and easy to use. 800-833-3343 42

January 2013

Byte Software End-to-end Mortgage Loan Origination Software. 800-695-1008

CRES Insurance Services, LLC Provider of Real Estate & Mortgage E&O coverage Tony Schacherbauer 800-880-2747

DocMagic The largest dedicated loan document production company in the country, delivers a fusion of solutions guaranteed to meet today's complex loan document challenges. 800-649-1362

FundingEdge Commercial Real Estate Finance, Business Finance and Oil & Gas Royalty Loans. 830-331-4030 & 210-249-2111

GreenLake Real Estate Fund Private Commercial Lender in CA & NV Kamau Coleman 310-462-4637

HomeBridge HomeBridge is a national wholesale lender offering both conventional and government products.

Advertiser DIRECTORY

Hometown Lenders WE HELP YOU GROW YOUR BRANCH AND SKYROCKET YOUR INCOME! Our recruiters put producers in your branch Scott Smith 888-606-8066

Kaplan Professional Kaplan helps busy professionals obtain in-demand certifications and designations that enable them to advance and succeed in their careers. Through live and online instruction, we help our customers gain an edge in the mortgage industry. 877�792�4473

Mailer Leads Lenders and Brokers who use our mailers are not only surviving -- they are thriving. 866-783-4053 ext 14 Interpreting the complicated mortgage rules in plain language. 800-231-4787 Icon Residential National Wholesale Lender offeringa full line of Conforming and FHA products. We offer personalized customer service where our client is our primary focus.

Kennedy Funding Nationwide. Fast creative short-term bridge loans. $1 million-$50 million +. Commitments in 24 hrs. Edwin Urrego 800-342-8500

International Document Services, Inc. (IDS) Your mortgage document preparation vendors. Providing you with compliant documents and services 800-554-1872

Linear Title & Closing Title Insurance & Settlement Services Nick Liuzza 401-841-9991

Mission Hills Mortgage (a division of PacTrust Bank) Mission Hills Mortgage, now part of PacTrust Bank, is one of the West Coast's preeminent lenders. John Connelly, Regional Manager 925.849.1806

One Direct Response As a full service marketing company with over 20 years experience, we can help in all areas of your marketing needs 800-483-5129


Advertiser DIRECTORY

RateLink Providing mortgage professionals with timely and accurate data as a means to a competitive advantage. 800-938-5193

Residential Finance Corporation Producing at least $3mm a month? Partner with Us! Expanding Now with Successful Branch Managers. Rick Pallo 800-785-6277

Residential Home Funding Corp Full Service Mortgage Banker, FHA Direct Endorsed Lender, Fannie Mae Seller Servicer, 203k Experts Frank Kuri 866-319-4442 44

January 2013

Right Side Marketing Marketing Materials for Mortgage Professionals. Jill Fleischman 800-456-4395 x10

Scott Bond Services A leader in providing surety license bonds, fidelity, and E&O to the mortgage industry nationwide. 800-365-0101 Cary McFadden

StreetLinks Lender Solutions StreetLinks offers leading valuation and servicing solutions driven by quality and service. 800-778-4920

United States Appraisals World-Class Service. Nationwide Coverage. Discover Confidence in Your Appraisal Partner! 866-562-0123

United Wholesale Mortgage Discover Lending Made Easy! Conventional, FHA, USDA, VA, Jumbo, HARP 2.0, and Correspondent Lines. Allen Beydoun 800-981-8898

Windvest Corporation Hard money lender, specializing in Rehab Loans. NMLS # 394407. Andre Jimenez John Ermin 877-285-0777

Zinc Financial, Inc. Investment Rehab Lender. Todd Pigott 559-326-2509

The Truth in lending - continued from page 46

handle large volumes? Are we aligned with business partners that will help get the loans underwritten and funded in a timely fashion? Is there financial stability to add additional resources when needed? Keeping the customer happy is vital to our success. Almost anyone can cultivate enough business to have one or two good months but the goal is customer loyalty. We need to make certain that the customers keep coming back. We do this by reviewing each aspect of the origination process to ensure that each phase flows smoothly. The quickest way to short circuit our prospecting and selling ability is to be caught up in trying to fix a part of the process flow. More than likely we will end up behind, playing defense, and setting ourselves up for failure. Planning encompasses our Prospecting, Process, and everything in between. Execution of our business model depends on how much time and thought is spent planning for the future. First, it is important to review all that happened in the prior year and congratulate ourselves for our successes. (One clap only, no need to get carried away here). Hard work with achieved results deserves recognition. But here's the critical choice. We can either sit back and enjoy our accomplishments, or we can take our business to the next level. Though hard to do, it is important to examine any failures that might inhibit us from getting to the next level. During a prior sales conference two retired Top Gun fighter pilots spoke of the importance of mission debriefing. After a mission all pilots sat together and reviewed the results of the flight. There are neither titles nor egos present during this debriefing. The mission is dissected piece by piece based upon facts. Were there things that did not go well? Were there unexpected events that we were not anticipated? Did everyone involved do what they were supposed to do? Acknowledging failures is paramount to our success. It is the reminder that there is always room for improvement. Enjoy your achievements, but realize the only constant is change. The People are what make the first three components of a business plan come together. Without the right people success is short-lived. I have been extremely fortunate to have some of the most talented individuals in the industry work with me. We each possess individual strengths and talents, but by recognizing our shortcomings, we bring those with different abilities into our business. Hire people smarter than yourself. Listen to what they have to say and back them up when they fail. If we actively listen to our people,

they will fight for us and our business. Whether it is a processor, an assistant, or any other important teammate surrounding us, quality counts. In order for business to thrive our personal lives need to be reviewed and addressed, too. Part of our business plan should entail doing a personal inventory . Regardless of our business outcome, we should remember that what is most important in life are those that we hold dear to us. Did we spend enough time with our family and friends? Are there relationships that need repairing? Did we devote enough time to charity? If our business plan is working correctly we should have more time to spend with our "People". During the holidays, my wife and I hosted a party benefitting Toys for Tots. The prospecting, processing and planning all went well. As the party was winding down, we found ourselves gathered around the piano singing songs. The most important part of the night's success was the people surrounding us. Our friends. this year I encourage all of you to prepare yourself for success. Focus on developing a plan that will allow you to find joy, impact others positively and sing along with those you find important enough to call friends. Glenn B. Stearns, Founder and Chairman, Stearns Lending, Inc.

How we see it

The truth in lending

a time of reflection by glenn stearns

January is a time of reflection. We look back at the prior year to determine what worked and what we could have done better. It is also a time to plan for the New Year to see if we are still on track for success. Moving into 2013, a cautious optimism exists amongst many mortgage bankers--the housing industry is in recovery. The interest rate market has been favorable; Builders are starting to deploy capital. Preparing for your success in 2013 will require a tremendous amount of market analysis, sustained due diligence and a little bit of luck. The question we need to ask ourselves is, "Are we prepared for the result?" The mortgage industry of late requires a great deal of time and effort being "reactive" to current market conditions. Much of the day is spent either responding to changing regulations or striving to provide a service level consequential to our business success. The saying, "Not Enough Hours in the Day", has never rang truer. It is easy to get caught up in daily routines and responsibilities, forgetting an important job as a mortgage professional-

-Business Planning. Though a full business plan can be quite complex, four key principles summarize good business plan: Prospecting, Process, Planning and People. Prospecting includes everything done to secure a customer's loyalty. Mortgage professionals need a clear vision as to the type of business they intend to produce. Is the focus on purchase market or refinance business? Do we want to specialize in a certain product? What geography is important? What companies should we be partnered with? At this point, marketing is not the focus. Clarifying the type of client one intends to target must come first. Just as one cannot do an online search for a "widget" without including enough specific criteria to successfully locate the "widget" one desires, the targeted customer must be definitive enough for effective marketing. Once a specific customer is targeted, marketing can begin. Process is everything that happens after the initial engagement of our customer. Let us assume prospecting is very successful and there are now more customers than imagined. Is there enough staff in place to handle the business? Is the origination platform robust enough to - continued on page 45


January 2013




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BODA Publishing, LLC, PO Box 494,Bentonville, AR 72712

"TheNicheReport is a national trade publication dedicated to wholesale, retail and correspondent lending."

January 2013 Loan Officer Edition  

The Niche Report - January 2013 Loan Officer Edition

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