September 2010

Issue 038 September 2010 TheNicheReport.com

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CONTENTS

Issue 038

September 2010

NICHE REPORTS prime & FHA COMMERCIAL HARD MONEY & NON-PRIME ConStruction Service Providers

pg 45 pg 45 pg 46 pg 46 pg 47

FOUNDER & PRESIDENT Robert Pegg robert@thenichereport.com

18

CO-FOUNDER & PRESIDENT David Pegg david@thenichereport.com

Be a Celebrity Expert

MANAGING EDITOR Stewart Mednick stewart@thenichereport.com

When you know the rules Karen Deis

10

Eliminate Servicing Portfolio Headaches Drew Louis President Del Toro Loan Servicing, inc.

Still make money on your servicing portfolio while outsourcing work

14

Techspot: 2010 Broker/Banker Origination and Market Trends Rick Roque menlocompany.com The impact on technology and the mortgage profession.

30 42

Online Lead Generation Dennis Yu ceo blitzlocal.com How Facebook turned the mortgage industry upside down.

Center Stage with Sierra Pacific The Niche Report

6

September 2010

54

EDITORIAL / CONTENT MANAGER Kristen Moser kristen@thenichereport.com

Bringing up the Rear Martin Andelman mandelman matters ml-implode.com Senator Chris Dodd.

DEPARTMENTS

09

from the editor's desk

23

Appraiser sound off

25

Frank & BRian speak

34

voice of housing

37

RULES & REGULATIONS

40

TIP OF THE MONTH

50

LENDER & RESOURCE DIRECTORY

ACCOUNTING MANAGER Shawna Ingram shawna@thenichereport.com Advertising Director Jessica Grizzle Jessica@thenichereport.com Advertising sales Heather Bopp Heather@thenichereport.com Production Manager Henry Suchman henry@thenichereport.com Production Assistant Dawn Exner dawn@thenichereport.com COLUMNISTS & Contributing Authors Martin Andelman Lamarr Banks Karen Deis Frank Garay Drew Louis Stewart Mednick Joe Murin Rick Roque Brian Stevens Dennis Yu

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Published monthly by BODA Publishing, LLC PO Box 494, Bentonville, AR 72712 Phone: 866.964.2695 Fax: 703.991.2362 Email: info@thenichereport.com www.TheNicheReport.com

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FROM THE EDITOR'S DESK

Growing grass and growing a successful business are not so different.

Just as fast as summer entered our lives, she is about to leave. Where did the time go? I spent a good portion of my non-professional time in my backyard. I have struggled with attempting to grow a plush grassy turf in my mostly shaded backyard. I bought and installed over three hundred square feet of sod that has declined in health from day one. Weak roots and thin turf prompted me to fertilize. So I did, with two different types of fertilizer. Still, not the result I wanted. So, after I have blindly spent over $100 on sod that has failed health, and my efforts to resuscitate have failed, I turned to the internet to research. I found that there are three hardy breeds of turf for the northern climate in which I live.

Unfortunately for me, the most popular and hardy type was the sod I had purchased and laid down.

Unfortunate because what was not told to me at the time of purchase was that this grass needs sun! The definition of shade (the area where the grass will be planted) is defined by four hours of sun per day or less. I have that. So my sod is not healthy.

In my research, I found a website for a grass seed company that sells and ships custom mixes of grass seed. A good mix will have no less than five different types of seed. I selected the proper custom mix for northern, shady applications and ordered the seed. I will plant the seed in the next week and hope this will create my backyard plush carpet of turf.

Why the lecture on grass in a mortgage publication? Because all the initial steps I took and undesired results I realized are similar to the mortgage origination process. Researching grass type first could have saved me a bunch of money and time. Two commodities no one can afford to squander. Researching a best fit loan type for your client can do the same. How many clients today are in financial dire-straits because of a poor product selection three to five years ago? I found the best grass for my application; you need to find the best loan for your client’s application. Once I laid the sod and when I plant the seed, I need to water everyday, pull weeds, cut the grass when it grows, and periodically fertilize to feed the roots. The client needs cultivating as well. Feed the client updates on the loan process. Follow-up after closing to ensure all the paperwork and legal processes are completed. Stay in touch over the coming months and years because situations change and financial needs change as a result. The origination is just the start of your long term relationship with clients. Build relationships with business professionals to assist your quality of service to your customers.

Planting grass and closing a loan are the start. Cultivating and maintaining are continued into the future. The summer will end soon enough. Fall is around the corner. Soon another summer will be here and the cycle continues, so should your cultivating of customer satisfaction.

This theme of cultivating is carried on with Center Stage interviewing Jim Coffrini, CEO and founder of Sierra Pacific Mortgage Company, Inc., a mortgage banker that has become a nationwide lender serving both retail and wholesale customers for over 24 years.

It is always great to learn how successful companies have survived over the last few years.

Rick Roque, former senior management team member of Calyx Software, presently runs a leading mortgage research & consulting firm called The Menlo Company. writes about technology applications in today’s mortgage world and how the shape of mortgage has shaped the technology role.

Interested in Facebook and Facebook ads as a means to build your future business? We have the exclusive look in this issue.

What is MERS? We know it and see it and use it frequently. Joe Murin explores and answers questions about this service…or is it a company?

I have a tip this month about writing a personal mission statement to help keep your focus on cultivating success.

Karen Deis, Dennis Yu, Martin Andelman, and the rest of the cast of usual suspects all invite you to another informative issue of The Niche Report. Enjoy!

Stuart Mednick Official

MEMBER

TheNicheReport.com

9

Eliminate Servicing Portfolio Headaches Still make money on your servicing portfolio while outsourcing work

by Drew Louis

W

hile the options for distraught homeowners continue to grow and get plenty of attention, most people are not aware of the effects this shift has had on loan servicing.

The fact is: ever-changing compliance issues and a plethora of late-paying borrower requirements have ushered in a need for greater attention to detail. For a Mortgage Broker trying to juggle servicing and finding profitable investments, it could result in an important servicing matter being missed or a loss of business to outsourcing Brokers with more time to focus.

In-house servicing was very common among Mortgage Brokers during less complicated times. Mortgage Brokers wanted to keep close contact and – rightfully so - close control of their client. Brokers also enjoyed retaining the interest differential between what the borrower pays and what the lenders receive (the note rate/sold rate); this is often two or more percentage points and can add up to a nice monthly residual.

Brokers wanting that entire monthly residual in today’s market have more headaches to deal with and are at a higher risk of making a costly servicing mistake than ever before. The boom in Borrowers failing to pay their

10

September 2010

mortgage has caused an increase in workload and has created new obstacles to overcome in order to properly service a loan. As complicated regulations provide more options and rights to non-paying or late-paying Borrowers, servicers are expected to, and are responsible for, learning the ins-and-outs of the compliance issues and implement them quickly and correctly.

This means not just an increase in phone calls to Borrowers from servicers, but also a need for greater attention to what is addressed. With many Borrowers opting to walk away from their homes, reaching them via traditional means (phone, mail, fax or e-mail) has been more difficult than ever before. Many servicing companies have a specialized loss mitigation department to track down these hard-to-find Borrowers and get results, or at least answers.

Servicers have needed to add responsibilities to further protect investments. Eighteen months ago they did not worry about collecting escrow impounds because there was not such a large group of non-paying Borrowers and it was common for loans to be held for short periods.

Now servicers are dealing with a bundle of non-paying Borrowers and loans are regularly held for long periods.

In consequence, servicers are collecting impounds for taxes, insurance and HOA fees to make sure they are paid on time. This culminates in more training time with upgraded software and more time spent making sure

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