O AUGUST 2012
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OHIO MORTGAGE PROFESSIONAL MAGAZINE AUGUST 2012
The delinquency rate for mortgage loans on residential properties in Ohio was 8.43 percent at the end of the second quarter of 2012, an increase of 65 basis points from the first quarter of 2012, according to the Mortgage Bankers Association (MBA). The delinquency rate excludes loans in the process of foreclosure. The percentage of loans in Ohio on which foreclosure was started during the quarter rose six basis points to 1.09 percent, while the percentage of loans in the foreclosure process at the end of the quarter fell 14 basis points to 4.87 percent. The delinquency rate for prime adjustable rate mortgages (ARMs) increased 55 basis points to 8.14 percent and the rate for prime fixed rate mortgages increased 46 basis points to 4.67 percent. The delinquency rate for sub-prime ARMs increased 168 basis points to 23.27 percent, while the rate for sub-prime fixed rate loans increased 153 basis points to 20.81 percent. The delinquency rates for FHA and VA loans were 11.74 percent and 7.70 percent, respectivelyâ€”up 52 basis points for FHA loans and up 100 basis points for VA loans. The foreclosure starts rate for prime ARMs in Ohio decreased 14 basis points to 1.20 percent, while the rate for prime fixed rates decreased 11 basis points to 0.60 percent. The foreclosure starts rate for sub-prime ARMs decreased four basis points to 2.65 percent, while the rate for sub-prime fixed rate loans increased eight basis points to 1.84 percent. The percentage of prime ARMs in foreclosure decreased 72 basis points to 6.05 percent and decreased 25 basis points to three percent for prime fixed rate loans. The rate for sub-prime ARMs decreased 68 basis points to 18.17 percent, while the rate for subprime fixed rate loans decreased 34 basis points to 9.04 percent. The percentage of FHA loans in foreclosure increased 45 basis points to 6.21 percent. The percentage of VA loans in foreclosure decreased 45 basis points to 4.15 percent. Among the 50 states and the District of Columbia, Ohio ranked 10th in delinquencies and 10th in foreclosures started. Mississippi ranked first in delinquencies with a rate of 11.78 percent and Maryland ranked first in foreclosure starts with a rate of 1.95 percent. On a national level, the delinquency rate for mortgage loans on one- to four-unit residential properties was 7.35 percent on a nonseasonally adjusted basis, up 41 basis points from 6.94 percent in the first quarter of 2012. The seasonally adjusted delinquency rate on residential properties was 7.58 percent in the second quarter, up 18 basis points from last quarterâ€™s seasonally adjusted rate. The non-seasonally adjusted percentage of loans on which foreclosure was started during the quarter remained unchanged at 0.96 percent, while the non-seasonally adjusted percentage of loans in the foreclosure process at the end of the quarter decreased 12 basis points to 4.27 percent.
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OHIO MORTGAGE PROFESSIONAL MAGAZINE
OHIO MORTGAGE PROFESSIONAL MAGAZINE
National Mortgage Professional Magazine
TABLE OF CONTENTS
Volume 4, Number 8
A Special Look at “Wholesale & Correspondent”
America’s Choice Home Loans .......................... www.achlonline.com ............................................9 Calyx Software ................................................ www.calyxsoftware.com ......................................19
The Rationality of the Wholesale Lending Market By Mark Greco ....................................................................36 Look for a Focus on Customer Service to Grow Your Business By Mat Ishbia ..............................................37 Building a Better Wholesale Mortgage Banking Channel By John Walsh ........................................38 The Future of the Mortgage Broker and Correspondent Markets (Part III) By Andy W. Harris, CRMS
CBC National Bank .......................................... www.cbconnex.com ......................Inside Back Cover Document Systems, Inc./DocMagic .................... www.docmagic.com ............................................21 FindMortgageJobs.com .................................... www.findmortgagejobs.com ..........................31 & 40 First Guaranty Mortgage Corp. .......................... www.fgmcwholesale.com ......................................17 Frost Mortgage Lending Group .......................... www.frostmortgage.com/nmp ..............................42
Guaranteed Home Mortgage Company .............. www.joinGHMC.com ............................................27
Wake Up Mortgage Wholesalers—Revisited By Dave Hershman ................................................................41
Hometown Lenders .......................................... www.whotookmybacon.com ................................29
Jumbo Lending in Today’s Environment By Brian Swanson ....42
Icon Residential Lenders, LLC ............................ www.iconwholesale.com ......................................11
Who’s Who in the 2012 Wholesale Marketplace ..........44
LoanMarq ........................................................ www.loanmarq.com ............................................15
Features Marketing in 2012: September Brings in More Loans! The Mortgage Business is Back! ....................................4 Lenders Who Confuse Credit Rescoring and Credit Repair Could be Violating Consumer Rights Under FCRA By Terry W. Clemans ..............................4 Never Miss an Opportunity to Impress By Mike Cox ..........6 The Federal Government’s Search for Mortgage Industry Whistleblowers By Brian M. Feldman Esq. ................8
Meadowbrook Financial Mortgage Bankers Corp..... www.mortgagesalesjob.com ..................................43 Menlo Park Funding ........................................ www.menloparkfunding.com ................................31 Mortgage Brokers Network Corp, Inc. ................ mortgagebrokersnetwork.com ..............................25 NAPMW .......................................................... www.napmw.org ..................................................20 NAMB NATIONAL ................................................................................................................OH4 & 35 NRMLA ............................................................ www.nrmlaonline.org ..........................................47 PB Financial Group Corp. .................................. www.pbfinancialgrp.com ......................................19
CFPB Proposes Rule on High-Cost Mortgages and Homeownership Counseling By Melanie A. Feliciano Esq. ....................................................10
REMN (Real Estate Mortgage Network)................ www.remnwholesale.com ......................................7
NAMB Perspective ..........................................................12
TagQuest ........................................................ www.tagquest.com ................................................5
What I Learned Through Social Media By Ken Pederson....14
United Wholesale Mortgage .............................. www.uwm.com ........................................Back Cover
A Lending Institution’s Important Ally in a Challenging Market By Tom Delaney ..................................16
Veros .............................................................. veros.com ..........................................................19
Anti-Money Laundering Program: Preparation is Protection By Jonathan Foxx ......................22 NMP Mortgage Professional of the Month: Jonny Fowler, Director of National Production, America’s Choice Home Loans By David J. Coster ............26 Planting Our Flag By Al Crisanty ..........................................28
Q&A With HTL ..................................................................32 Regulatory Compliance Outlook: Elder Financial Abuse By Jonathan Foxx ............................46 Don’t Answer Your Customer’s Questions! By Douglas Arnett..................................................................48
Columns Heard on the Street..........................................................6 New to Market ................................................................30 NMP Mortgage Professional Resource Registry ..........49 NMP Calendar of Events ................................................52
NMP News Flash: August 2012 ......................................16
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ValueNation: Higher Standards Heighten the Integrity and Accuracy of Property Valuation By David Rasmussen ..30
Streetlinks LLC ................................................ www.streetlinks.com ....................Inside Front Cover
We Don’t Always Need to Look Elsewhere for Executive Talent By Andrew Peters ................................18
August 2012 Volume 4 • Number 8 1220 Wantagh Avenue • Wantagh, NY 11793-2202 Phone: (516) 409-5555 • Fax: (516) 409-4600 Web site: NationalMortgageProfessional.com STAFF Eric C. Peck Editor-in-Chief (516) 409-5555, ext. 312 firstname.lastname@example.org Joel M. Berman Publisher - CEO (516) 409-5555, ext. 310 email@example.com David Coster Senior Editor firstname.lastname@example.org Joey Arendt Art Director email@example.com Jon Blake Advertising Coordinator (516) 409-5555, ext. 301 firstname.lastname@example.org Beverly Koondel National Account Executive (516) 409-5555, ext. 316 email@example.com Tara Cook Billing Coordinator (516) 409-5555, ext. 324 firstname.lastname@example.org
From The Publisher’s Desk The stagecoach departs This month, we take a look at the wholesale and correspondent markets, and it couldn’t come at a better time. On July 13th, Wells Fargo became the latest big bank lender to no longer fund loans originated by independent mortgage brokers by announcing “it will discontinue funding mortgages that are originated, priced and sold by independent mortgage brokers ...” Abandoning wholesale brokers with one day’s notice—an origination channel that reportedly generated $3 billion per month in volume for the company—Wells claimed in the same press release that this action was taken “on its own volition” and “not part of the U.S. Department of Justice “settlement,” the subject of which was DOJ’s allegation that “borrowers … were adversely impacted by mortgages priced and sold by independent mortgage brokers through its Wholesale Channel”. I remember so clearly how Wells Fargo actively pursued the very mortgage broker originations for many years that they were now abandoning, and while not connecting the dots in the press release, the company certainly implied and questioned the pricing and credibility of the mortgage broker community. The Wells Fargo stagecoach was schlepped to many an NAMB Annual Conference and meticulously assembled their premium-placed quad exhibit booth at the entrances to the conferences. To link the DOJ settlement announcement with their fleeing the independent mortgage broker in the same press release is an insult to the mortgage brokers they once claimed to appreciate. Attempts by National Mortgage Professional Magazine and other media outlets to get documentation from Wells Fargo in support of its action have gone unanswered. The final nail in their assault on mortgage brokers was giving just a 24-hour notice from the date of the press release to the date the wholesale channel would be closed to independent mortgage brokers! This weekend, I decided to take the mini replica of the Wells Fargo stagecoach I received some years back at a NAMB National Convention and sell it at my garage sale. I hope the price I independently placed on it will not result in any repercussions from Well Fargo. It sold for .50 cents. Luckily, as the stagecoach departs, the void created continues to be filled by wholesalers that continue to appreciate and respect the role that mortgage brokers represent in residential mortgage originations. As reported in the latest employment statistics, growth in employment in the mortgage sector, especially in the mortgage broker segment, is on the rise. In this issue you will see the many wholesale lenders in our “Who’s Who in the 2012 Wholesale Marketplace?“ section on page 44. These lenders deserve the support of the mortgage origination sector for their commitment to the wholesale channel. The mortgage broker has suffered for years, wrongly blamed as the culprits of the housing crisis by the media and state and federal legislators. Fortunately, the wholesale lenders that looked past this erroneous depiction have been served well by, the mortgage brokers placing their loan originations through them, while also the multitudes of consumers have benefited by relying on those very mortgage brokers. At the end of the day, I’m glad to see the stagecoach leave town, as I watch those who remain in town show their love and respect for the hard-working independent mortgage broker. It is that very independence which gives consumers a true opportunity to experience competitive pricing!
ARTICLE SUBMISSIONS/PRESS RELEASES To submit any material, including articles and press releases, please contact Editor-in-Chief Eric C. Peck at (516) 409-5555, ext. 312 or e-mail email@example.com. The deadline for submissions is the first of the month prior to the target issue. SUBSCRIPTIONS To receive subscription information, please call (516) 409-5555, ext. 301; e-mail firstname.lastname@example.org or visit www.nationalmortgageprofessional.com. Any subscription changes may be made to the attention of “Circulation” via fax to (516) 409-4600. Statements, articles and opinions in National Mortgage Professional Magazine are the responsibility of the authors alone and do not imply the opinion or endorsement of NMP Media Corp., or the officers or members of National Association of Mortgage Brokers and its State Affiliates (NAMB), National Association of Professional Mortgage Women (NAPMW), National Credit Reporting Association (NCRA) and/or other state mortgage trade associations. Participation in NAMB, NAPMW, NCRA, and/or other state mortgage trade associations events, activities and/or publications is available on a non-discriminatory basis and does not reflect the endorsement of the product and/or services by NMP Media Corp., NAMB, NAPMW, NCRA, and other state mortgage trade associations. National Mortgage Professional Magazine, NAMB, NAPMW, NCRA, and/or other state mortgage trade associations do not make any misrepresentations or warranties concerning the regulatory and/or compliance aspects of advertisers, products or services and/or the editorial content contained in NMP Media Corp. publications. National Mortgage Professional Magazine and NMP Media Corp. reserve the right to edit, reject and/or postpone the publication of any articles, information or data.
National Mortgage Professional Magazine is published monthly by NMP Media Corp. Copyright © 2012 NMP Media Corp.
Joel M. Berman, Publisher - CEO NMP Media Corp.
Media attention recently has been directed at the “eminent domain” proposal, or as it has been titled by opponents, the “property seizure program,” being contemplated in California’s County of San Bernardino, along with the cities of Fontana and Ontario. This answer to properties that are underwater is out of a book someone must have written titled How Can You be Sure Investors Won’t Invest in Mortgage Back Securities. This concept has captured both media attention and other municipalities across the US and if it ever gathers traction, it would threaten the future of the mortgage-backed securities (MBSs), resulting in government intrusion in the marketplace, further removing underwriting decisions from the lender and relegate it to government. The plan is simple, but the potential for disaster is great. Eminent domain would be used to “condemn underwater mortgages” (not properties). The mortgages of non-agency, underwater properties would be re-set to the lower current market value and re-securitized at the lower value. This concept, added to the myriad of failed attempts to deal with underwater properties, belongs in what I call the “Hall of Shame.” Why would investors be expected to continue to invest in MBS, if their potential for loses would be so great in the event that the eminent domain concept becomes a reality. The domino effect on the counties adopting this “eminent domain” treatment of underwater mortgages would be a further “downgrade” of the counties as viable investments and further erode the willingness of investors to invest. We must hope that this use of eminent domain has not only captured the attention of the media, but also that of the decision-makers, those who hope to actually make this a reality, realize the serious outcomes their plan can cause. The unintended consequences and moral hazards of this poorly conceived concept could fill more pages than this publication would have room to enumerate. So, let’s put that “fantasy” book I referred to back into the library and then shred it! We need solutions, not more problems. Eminent domain works for government to acquire properties to build something for the benefit of the masses, not for destroying our collective futures. I hope you enjoy yet another issue of National Mortgage Professional Magazine as we prepare to depart the third quarter and enter the final months of 2012. Each month we supply the tools and ideas to take your business to another level. Are you taking advantage of these tools? If not, now is the time to refresh your knowledge base and utilize the ideas and thoughts in our pages and implement them into your day-to-day operations. Sincerely, RTGAGE PRO MO NATIONAL
ADVERTISING To receive any information regarding advertising rates, deadlines and requirements, please contact National Account Executive Beverly Koondel at (516) 409-5555, ext. 316 or e-mail email@example.com.
The Association of Mortgage Professionals
National Association of Professional Mortgage Women
2701 West 15th Street, Suite 536 Plano, TX 75075 Phone #: (703) 342-5900 Fax #: (530) 484-2906 Web site: www.namb.org
P.O. Box 451718 Garland, TX 75042 Phone #: (800) 827-3034 Fax #: (469) 524-5121 Web site: www.napmw.org
NAMB 2012-2013 Board of Directors
National Board of Directors 2012-2013
OFFICERS President—Donald J. Frommeyer, CRMS Amtrust Mortgage Funding Inc. 200 Medical Drive, Suite D Carmel, IN 46032 (317) 575-4355 firstname.lastname@example.org Vice President—Donald Fader, CRMS SMC Home Finance P.O. Box 1376 Kinston, NC 28503-1376 (252) 523-5800 email@example.com Treasurer—John Councilman, CMC, CRMS AMC Mortgage Corporation 2613 Fallston Road Fallston, MD 21047 (410) 557-6400 firstname.lastname@example.org Secretary—Olga Kucerak, CRMS Crown Lending 222 East Houston, Suite 1600 San Antonio, TX 78205 (210) 828-3384 email@example.com Past President—Jim Pair, CMC Mortgage Associates Corpus Christi 6262 Weber Road, Suite 208 Corpus Christi, TX 78413 (361) 853-9987 firstname.lastname@example.org
DIRECTORS Rocke Andrews, CMC, CRMS Lending Arizona LLC 1996 North Kolb Tucson, AZ 85715 (520) 886-7283 email@example.com Fred Arnold, CMC American Family Funding 24961 The Old Road, Suite 101 Stevenson Ranch, CA 91381 (661) 284-1150 firstname.lastname@example.org
Deb Killian, CRMS GMAC 246 Federal Road, Unit C-24 Brookfield, CT 06804 (203) 778-9999, ext. 103 email@example.com Linda McCoy Mortgage Team 1 Inc. 6336 Picadilly Square Drive Mobile, AL 36609 (251) 610-0494 firstname.lastname@example.org
Vice President—Western Region Lyman King III, CMI, CME (916) 967-4653 email@example.com
Senior Vice President Christine Pollard (607) 226-1046 firstname.lastname@example.org
Secretary Sara Vasura (703) 255-7460 email@example.com
Vice President—Central Region Kelly Hendricks (314) 398-6840 firstname.lastname@example.org
Treasurer Jeanne Evans, CME (918) 431-0155 email@example.com
Vice President—Eastern Region Katrica J. Driscoll, MML, CME, CMI (919) 877-5683 firstname.lastname@example.org
Parliamentarian Hulene Works (972) 494-2788 email@example.com
National Credit Reporting Association Inc. 701 East Irving Park Road, Suite 306 Roselle, IL 60172 Phone #: (630) 539-1525 Fax #: (630) 539-1526 Web site: www.ncrainc.org
2012 Board of Directors & Staff Donald J. Unger President (303) 670-7993, ext. 222 firstname.lastname@example.org Daphne Large Vice President & Treasurer (901) 259-5105 email@example.com Tom Conwell Ex-Officio & Legislative Chair (800) 445-4922, ext. 1010 firstname.lastname@example.org Nancy Fedich Director–Conference Chair (908) 813-8555, ext. 3010 email@example.com Judy Ryan Director-Strategic Alliance Chair (800) 929-3400, ext. 201 jryan@Kroll.com Susan Cataldo Director–Education & Compliance Chair (404) 303-8656, ext. 204 firstname.lastname@example.org
William Bower Director–Tenant Screening Chair (800) 288-4757 email@example.com Mike Brown Director–Technology Chair (800) 925-6691, ext. 4350 firstname.lastname@example.org Maureen Devine Director–Education & Compliance Co-Chair (413) 736-4511 email@example.com Renee Erickson Director–New Membership & Elections Chair (800) 311-1585, ext. 2101 firstname.lastname@example.org Terry Clemans Executive Director (630) 539-1525 email@example.com Jan Gerber Office Manager/Membership Services (630) 539-1525 firstname.lastname@example.org
John Stevens Bank of England d/b/a ENG Lending 11650 South State Street, Ste. 350 Draper, UT 84120 (801) 427-7111 email@example.com
President-Elect Jill Kinsman (206) 344-7827 firstname.lastname@example.org
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Andy W. Harris, CRMS Vantage Mortgage Group 1596 SW Boones Ferry Road, Ste. 100 Lake Oswego, OR 97035 (503) 496-0431 email@example.com
Vice President—Northwestern Region Debbie Tofte, GML (425) 483-3359 firstname.lastname@example.org
Kay A. Cleland, CMC, CRMS KC Mortgage LLC 200 South Wilcox Street #224 Castle Rock, CO 80104 (720) 810-4917 email@example.com
President Candace M. Smith, CME (512) 306-6354 firstname.lastname@example.org
Marketing in 2012: September Brings in More Loans! The Mortgage Business is Back! Things you should know going into the fall quarter of 2012 The Federal Housing Administration (FHA) and Home Affordable Refinance Program (HARP) are the two big names in the industry. Use them! They are working great and generating some big waves in the business. Mortgage rates are holding at all-time lows. Quit asking about whether they are going back up and get back to work! Make hay while the sun is shining! Mortgage rates have been dropping fairly steadily since 2002. Fact … they are going back up. We just don’t know when. So keep those files closing in the meantime. FHA delinquencies are on the rise. This means we need to get as many people refinanced as possible right now. Get them out of FHA if it makes sense. If not, do like everyone else does and streamline them. If FHA goes away, we’re going to be in a lot worse shape as a country, not just an industry. How to prepare yourself: Plan—set yourself some goals Set them with dates and actually hold yourself accountable to attaining them. The number one reason mortgage professionals fail in the business is because they stop growing when the business is booming. The big mortgage shops grow and decline with the market but their trends are always up. This is due to riding market conditions while continuing to grow despite them. Research—find other products to offer Most loan officers CAN sell a whole bunch of loan types but only DO sell FHA, HARP or some niche that they’ve been selling for years. Well … it’s time to diversify. There are plenty of loan products out there and the people that are closing more loans than you every month are offering more loan products too. Find out what your competitors are doing to beat you every month and start doing that. Then find out what they are missing and do that too! Business is often referred to as war for this reason.
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Market yourself and your business Call a marketing company to find out what is working. Marketing firms are the most under used and fantastic way to stay on top of market conditions. They always tell you what is working, and they have a good grasp on the state of the entire nation, not just your region. Lean on them, that’s what you pay them for. Spend some time and money getting your name out there. If you are not picking up five to 10 new leads per week, you are missing the boat. Many companies are supplying their loan originators with hundreds of leads per month. If you can close these leads at a rate of 10 to 15 percent, you are in for a real good month. Here are a few key reasons that successful mortgage professionals don’t make it … What no to do I Stop marketing: Don’t think you cannot market yourself because you are too small or too large. It’s basic math … you close at 10 percent with 100 leads per month. That’s 10 closed deals per month! I Stop preparing for growth: As you read this, thousands of people are thinking about turning down their marketing budget because business is booming. “I cannot handle anymore!” they say. You’ve probably said it before to someone else as you chuckle thinking of what a great month you are having. What about next month? What if rates go back up? What if HARP goes away? Plan for the worst and hope for the best. I Stop hiring: Hiring is a big part of growth in any industry. You don’t want to be processing your own files do you? Do you want to be answering the phones too? Hire people to do this for you and get back to what you do best. Help people get into the right loan product for their situation. I Stop growing: In business, there is growth and there is decline … no in-between. Medford, Ore.-based TagQuest is a full-service marketing firm created specifically for the ever-changing business world. TagQuest assists companies with their direct marketing, advertising and branding needs, and knows what it takes to generate quality customers and, most importantly, how to retain those customers for years to come. TagQuest brings forth a unique opportunity to utilize our experience and expertise in varying consumer sales and marketing environments. For more information, call (866) 376-5540 or visit Tagquest.com.
Lenders Who Confuse Credit Rescoring and Credit Repair Could be Violating Consumer Rights Under FCRA By Terry W. Clemans
Some lenders have issued restrictions regarding the use of credit rescoring by mortgage originators, confusing the service with credit repair schemes. These lenders do not have a clear understanding of the major differences in the two programs and this lack of understanding brings with it the risk of litigation, as these lenders are prohibiting a consumer from the ability to obtain an accurate credit report for their mortgage loan. There are major differences between credit rescoring and credit repair. First and foremost credit rescoring is a program developed in conjunction with and is processed through the three national credit repositories. The companies that provide rescoring are credit reporting companies as defined by the Fair Credit Reporting Act (FCRA) as “resellers” and have legal obligations to both the creditors and the consumers for the reports that they issue. That includes the reports that contain rescored credit accounts or trade lines, which they issue to the lenders and upon which the lending decisions are based. The changes on such a report are made via the rescoring process and have been verified twice for their accuracy. The changes are verified once by the reseller providing the rescoring service, and then again by the national credit repository from which the rescored trade line was originally reported. Upon the completion of the second verification, the data in question is changed at the repository level, a new credit report is accessed with new score calculations made with the new data, completing the process. This all happens in about two to three days as the rescoring process puts everything into a rush status by all involved. In contrast, credit repair firms cannot access the repository data directly, do not have the ability to interface with the bureaus directly. They file disputes via the basic consumer model and are not consumer reporting agencies that can issue a credit report with their information on it. Many credit repair firms do not even operate with their real name, as most of these firms operate in a fashion that is legally questionable. Federal Trade Commission (FTC) personnel have reported that they have never seen a legitimate credit repair firm and the Commission has a long history of actions against them. Several state attorneys general offices have taken actions against credit repair firms also for their questionable tactics. When lenders mistake these two services and take a position that credit reports that have been rescored do not qualify for underwriting, they have taken a position that may violate the consumers’ rights. Credit rescoring is one of several options provided to consumers who dispute the accuracy of an item(s) on their credit report. The FCRA requires credit reporting agencies, both the national repositories and resellers, to process these disputes, so when a lender puts limitations on a consumer’s ability to obtain a rescore, they are actually inhibiting the consumer’s ability to process a dispute in timely fashion to have accurate data considered for their mortgage loan. The lender with this position is basically telling the consumer in the mortgage process who is seeking to have an expedited processing of a dispute to correct some incorrect data on their credit report that they can’t have it corrected for that loan application. I have heard from lenders who have taken this path and they are claiming they are trying to protect themselves from consumers “gaming” the system for better rates. When rescored, credit reports have had the accuracy of the data checked twice before changing it, I am not sure who the consumer can “game” the system by requesting accurate data be evaluated. Looking at the situation from another perspective is that the lender is “gaming” the consumer, trying to deny their access to accurate data and force them into higher interest rates than they would otherwise qualify for if their report was accurate. It appears that an entity is indeed being gamed and it is the system itself; however, it is not the consumer doing the “gaming” and there should be no surprise when a legal action is filed regarding it. Terry W. Clemans is executive director of the National Credit Reporting Association Inc. (NCRA). He may be reached at (630) 539-1525 or e-mail email@example.com.
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FHA • HARP • REVERSE • VA
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Never Miss an Opportunity to Impress By Mike Cox Finding an edge for your business in today’s market usually focuses on adding a new technology, system or application. Mortgage industry participants spend hours on Webinars, conference calls or watching videos of the latest and greatest that will change your business for the better and finally allow you to take the weekend off. The fact is even with all the widgets and wadgets, gidgets and gadgets, the truly successful business models still focus on three fundamental principles: Organization, service and engagement. When the three fundamentals are working well in your business, your clients feel it, your referral partners feel it and you feel it. We felt it too, when we built LoanMarq. LoanMarq is designed by mortgage professionals for today’s marketplace as a simple engagement platform to organize and communicate with your clients and transaction participants and provide the “knock your socks off ” customer service that you only see in commercials. We love mortgage loan processors. There it is … we said it … and you know it’s true that the mortgage processor plays a key role in the mortgage transaction that in many cases make or break your deal. They work hard, stay late. They are the magic behind the scenes that gets it done when it needs to be done. We know you cannot live without them. We also know is that they need help. No matter how dedicated, organized and efficient they are, there never seems to be enough hours in a day to get it all done.
Automate the love If you had the chance to personally call every client, every day during their transaction, you would. It would be great customer service, you would almost never lose a client and all mortgage catastrophes would be avoided through constant communication. You would if you could inform every referral partner of the status of the transaction that they have entrusted to you. You would also ask for another. No, we will not pretend that LoanMarq will make those calls for you, because it will not. What it will do is send customizable status emails and text messages to everyone involved in the transaction when milestones are reached. We have a bunch of teenagers in the back room just sending out texts at 90 words per minute. Just kidding... The smartphone interface is just about complete and every angle will be covered.
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NOT one size fits all Yes, LoanMarq does come in extra medium! You can customize just about every part of the system. From the interface branding to the process configuration, emails, and text alerts LoanMarq can be reshaped to fit your business. It is not our goal to change what you do or how you do it. It is our goal to offer a tool that can automate and increase the effectiveness of your engagement. Protect your eggs You know what I mean! Your business means something to you. It takes time, effort and money to yield transactions. Not every strategy works the first time or every time. We have all lost deals to competitors and think back to the gaps in service or communication that allowed for that transaction to be taken from us. LoanMarq will help you close the gaps. Having an air-tight engagement platform will keep you in front of your clients when you need to be, answer questions before they are asked and keep competitors from exploiting a moment of doubt or indecision. Turn your business into more business We all talk about it and LoanMarq helps you do it. By engaging the client at a high level, they are more likely to send you additional business at the most optimal time (that is during the transaction). Real estate agents will naturally send you more business due to your high level of engagement. Simply put. Your level of service makes them look good. Mike Cox has been active in the mortgage industry for more than 12 years. He is currently a mortgage sales consultant and strategist working with companies across the country, films a daily video blog educating consumers called “Rates In Motion” and is also an owner and chief executive officer of Quality Lender Services (QLS). LoanMarq is a software application than was acquired and enhanced by QLS in 2012. If you would like to contact Mike, he may be reached directly by e-mail at firstname.lastname@example.org or call (800) 705-7921.
Lenders Compliance Group Integrates Risk Assessment Solution From Veros Veros Real Estate Solutions (Veros) has announced that Lenders Compliance Group will be utilizing its collateral integrity analysis (CIA) product for pre-funding and postclosing audits, early payment defaults, high default due diligence, as well as warehouse bank and portfolio reviews. One of the most comprehensive risk reports available, CIA utilizes the latest technology to analyze, detect and accurately identify high-risk transactions while minimizing costly false positives. The solution aggregates multiple data sets from an extensive range of vendors to provide the necessary information to evaluate risk exposure into a single report that is both easy to read and use. “We are pleased to integrate CIA with Lenders Compliance Group in order to give them the highest level of risk and fraud analysis for their clients,” said David Rasmussen, senior vice president of operations for Veros. “This tool enables their loan analytics group to instantly measure the various risks associated within a transaction. It will replace the need to leverage multiple data sources and immediately strengthen their level of mortgage compliance.” Lenders Compliance Group focuses exclusively on regulatory compliance issues that directly affect residential mortgage loans and actively monitors laws and regulations in the industry. Clients include mortgage bankers, mortgage brokers, mortgage REITs, banks, credit unions, correspondent and wholesale lenders, servicers, and warehouse banks, among others. “The collaboration between Veros and Lenders Compliance Group is timely for my firm, inasmuch as we have sought to implement a reliable technology that provides statistically significant data about collateral valuation,” said Jonathan Foxx, president and managing director of Lenders Compliance Group. “For instance, clients retain us to provide a better understanding about loan performance and remedial action, and Veros’ CIA solution enables us to combine unique valuation findings with our own loan analytics and regulatory reviews.” The market-proven metrics found in
CIA provide a comprehensive snapshot of market conditions and includes a subject risk score, market risk score, and collateral integrity score.
Rick Butera to Head New REMN Branch in Garden State Real Estate Mortgage Network Inc. (REMN) has announced the opening of its latest New Jersey office in Bayville, N.J. Headquartered in Edison, N.J., REMN has been in business more than 20 years and is known throughout the housing industry for its commitment to customer service and quality in the mortgage process. In conjunction with the new Bayville office, REMN has also hired mortgage veteran, Rick Butera, as the office’s branch manager. Butera is a New Jersey native and comes to REMN with 20-plus years of mortgage industry experience, including extensive familiarity with helping the self-employed navigate the detailed steps they need to take in order to secure home financing. With expertise in primary, second home mortgages and jumbo mortgages for luxury properties, Butera and his team are well suited to help buyers finance homes in and around the Jersey Shore, including areas such as Long Beach Island, Lavallette, Manasquan, as well as inland New Jersey and Pennsylvania. “REMN is one of the largest, independently owned mortgage firms in the country. They have been doing business in New Jersey for more than 20 years and truly understand the unique situations home buyers experience across our area,” said Butera. “In all of my years in the lending industry, I have never seen a company more committed to both speed and quality in the mortgage world. Whether someone is looking for a vacation home or to relocate to the area, REMN has mortgage products to suit every buyer.” REMN currently has more than 800 associates in more than 40 retail offices licensed to originate loans across the continental US, in addition to their online consumer direct division, which is doing business as FinanceMyHome.com. In 2011 alone, REMN closed more than $2.3 billion in home loans, solidifying its position as one of the largest independent non-bank lenders in the U.S.
LPS Acquires LOS Provider LendingSpace
PRMG Expands Its Wholesale Operations in Colorado Paramount Residential Mortgage Group (PRMG) has announced the recent expansion of their wholesale operations into the state of Colorado. The Colorado territory will be headed up by Cindy Broaddus who has recently been promoted to regional manager. Broaddus, who was continued on page 10
Mortech Inc. has finalized an integration with Lendage, a division of Bills.com, where Lendage will benefit from Mortech’s Product and Pricing Engine. Leads that lenders acquire through Lendage can be seamlessly imported into the Marksman lending management platform. “Successful lenders are securing mortgage leads from many sources and then counting on Marksman to sort out the deals that can close from those that
into the system and complete the prequalification and entire lock process using Marksman’s secondary desk tools.
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Mortech and Lendage Complete Integration
validate the information the consumer is providing. Our goal is to improve the quality of the leads our lender is receiving, and empower the consumer to make the smarter decision. Mortech’s PPE will help us with that.” Lendage uses Marksman’s pricing engine for a quicker turnaround time and can offer expanded loan options to customers. They power a number of Web sites across the Internet, providing mortgage loan information where consumers are most likely to search for it. When a consumer interacts with the company’s online tools, Lendage attempts to determine whether the consumer is a real mortgage borrower ready to buy a loan. Lenders that use Marksman can then pull those loans
Lender Processing Services Inc. (LPS) has announced its acquisition of LendingSpace, a provider of mortgage loan origination software solutions. The LendingSpace technology platform will augment LPS’ other origination technology solutions, which include Empower, a platform used by mortgage lenders with complex system configuration and customization needs; and PCLender, which is used by mortgage lenders, credit unions and community banks that leverage more standardized technologies. “The addition of LendingSpace’s robust capabilities expands the number of innovative origination solutions we offer lenders,” said Jerry Halbrook, LPS’ senior managing director of LPS Origination Technology Solutions. “We evaluated a number of lending platforms and LendingSpace provided the best product features with the necessary scalability to expand our product suite. More importantly, LPS and LendingSpace share a common commitment to excellence, integrity and customer dedication.” The LendingSpace product suite features a correspondent lending platform including full Web-enabled capabilities to enhance collaboration between retail originators and their correspondent lending partners. These capabilities include loan registration, data and document integration, status, condition management, funding and secondary market and investor delivery capabilities, which are critical to the success of correspondent lenders. The LendingSpace product suite also features robust lead management capabilities, reverse mortgage product capabilities and extensive third-party vendor integrations. All LPS origination systems, including the LendingSpace product suite, will also incorporate LPS’ Loan Quality Gateway to assist originators with their loan quality requirements. “LPS is deeply respected throughout the mortgage industry for its highly successful technology and expertise,” said Ravi Varma, chief executive officer of LendingSpace. “By combining the strengths of LendingSpace and LPS, we can better help mortgage professionals meet the complex challenges of today’s lending environment.”
shouldn’t even get to the LOS,” said Mortech Inc. president Don Kracl. “Lendage is a provider of quality leads that are already partially qualified. This tight integration with Marksman will complete that process, moving real borrowers through the system quickly and into the LOS, allowing loan officers to be much more effective.” Ethan Ewing, president of Bills.com, which owns and operates the Lendage platform, compares this business to that of travel industry online service Kayak. “Searching for a home loan on one lender’s website will frustrate borrowers,” said Ewing. “They want to shop like they shop for airline tickets. On the other side, we employ technology to
The Federal Government’s Search for
Mortgage Industry Whistleblowers By Brian M. Feldman Esq.
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On Aug. 5, 2011, six months before she received her $31 million reward, Sherry Hunt quietly filed a whistleblower action against her employer, CitiMortgage. Hunt had been a quality control (QC) manager at CitiMortgage since 2008, covering Federal Housing Administration (FHA)insured mortgages. She had been in the mortgage industry for nearly her entire career, spanning over three decades. In her complaint, Hunt described mortgages that CitiMortgage’s Direct Endorsement underwriters should not have certified as eligible for FHA mortgage insurance, but which the underwriters certified anyhow. She also described problems within her QC department, including CitiMortgage’s failure to review early payment defaults. Her action was immediately sealed by the Court, and remained secret until Feb. 15, 2012. According to a Reuters story, Hunt never intended to become a whistleblower, but she grew frustrated with CitiMortgage’s response to her complaints, which she made internally. Hunt said that she reported all of these problems up the chain, through human resources and ethics, and that nothing more than a cursory investigation took place. No one told her she had her facts wrong. Yet, no one told her she was right, and that things were going to change. Instead, she felt that CitiMortgage was pressuring her and her QC staff to overlook defects. She spoke with an attorney, and together, they put her story into a complaint, and brought it to the attention of the U.S. Department of Justice. In the six months
between August 2011-February 2012, the Justice Department looked into Hunt’s sealed complaint and negotiated its resolution with CitiMortgage. As a result, Hunt was completely vindicated. On Feb. 15, 2012, the Justice Department announced that CitiMortgage had admitted responsibility for improperly endorsing loans for FHA mortgage insurance and for failing to review all early payment defaults, just as Hunt had alleged. Moreover, CitiMortgage paid a very large sum of money to the Government to settle these claims. Hunt, for her part, walked away with a reward of more than $31 million in cash. Over the course of just six months, Hunt’s frustrations about her employer ignoring her concerns had transformed H u n t — a Missouri suburbanite, living just outside St. Louis— into a millionaire, 30 times over. Hunt’s story has lessons for the mortgage industry and for mortgage
professionals. For the industry, the lessons include that there is enormous exposure for errors in the mortgage underwriting process, and that it is perilous to ignore employee concerns. For mortgage professionals, the lesson is that, even if your employer is not interested in listening to your concerns, the federal government may be. And the rewards may be tremendous.
Who can be a whistleblower It is important for companies and employees to understand that nearly anyone with inside information about a company’s practices could potentially be a whistleblower. There are various federal laws and programs in place to encourage individuals (or entities) to step forward and report problems to the federal government. By far, the most significant has been a federal law dating back to the Civil War era, called the False Claims Act. Under the
False Claims Act, persons or entities may be whistleblowers if they are the first to step forward and report misconduct (that is, before the government or media discover the issues), or, even if they are not the first, if they have additional information that could help the Government make a case. These rules mean that company insiders, at almost any level, may be well positioned to become whistleblowers. In the mortgage industry, the list of potential whistleblowers is long. QC professionals, like Sherry Hunt, obviously fit the bill. Those professionals might include anyone in the QC process, whether within a mortgage lending firm or outside the firm, including contractors. Along with QC professionals, underwriters—especially direct endorsement underwriters—may also have inside information useful to the government. Executives could be great whistleblowers as well from the government’s perspective, as they may have knowledge of the financial incentives in place to encourage reckless lending practices or the extent to which a company ignored promises it made to government insurance programs, like the Federal Housing Administration (FHA). In other words, when thinking about who could become a whistleblower, it is important to brush aside any preconceived notions: In the mortgage industry, people at all levels, inside and outside of a mortgage lending firm, may have information that the government might need to bring a case, and any of those people could become a whistleblower. For this reason, it is vital that lenders seriously investigate complaints at all levels, and that em-ployees, from the executive suites in Manhattan, to the satellite offices throughout the country, recognize that they may have the power to become a whistleblower. continued on page 15
“The best thing about ACHL is Underwriting and closing department turn times. I have never had either take more than 24 hours.”
“I’m very pleased that I chose ACHL. They understand the importance of customer service and a team environment. The underwriting and closing departments are responsive and quick. With our excellent management, HR, and accounting team, we have a family working together for a common goal – to Close More Loans!!”
“I chose ACHL because of the people and service I get from everyone. Also the selection of products I have access to. I am Finally back with a great team of people.”
Steven J. Scarfo
“I really like this organization. My only regret is that I didn’t find you sooner!”
15 years in business Morristown, New Jersey
“ACHL’s has truly been a wonderful company to join. Response and turn times are great. The communication and access to anyone companywide all the way to the top is almost immediate. You are truly part of a family at ACHL.” -
“After weighing my options I decided to go with America’s Choice Home Loans. The branch compensations is one of the best in the industry. They are committed to providing extraordinary customer service. ACHL will help me grow my branch into a mortgage powerhouse by equipping me with their proven tools and systems.”
“I joined America’s Choice Home loans because I felt like I was joining a family. They just jumped through hoops to get me on board and opened. They give me the tools needed to help me run and grow my business.”
“You know the old saying ‘Your company is only as good as your employees’ Jonny and his team have proven that statement to be true! I’ve had the pleasure to work with Jonny and his team for over 10 years. Once I had the opportunity to move and work with him and his team again I took it! It’s the right move!
23 years in business East Brunswick, New Jersey
17 years in business Macon, Georgia
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15 years in business Virginia Beach, Virginia
9 years in business Houston, Texas
to learn how you can have a better, more rewarding career
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Give Jonathan Fowler, Director of National Production of America’s Choice Home Loans a call at
14 years in business Bartlett, Illinois
20+ years in business Monroe, Georgia
CFPB Proposes Rule on High-Cost Mortgages and Homeownership Counseling By Melanie A. Feliciano Esq.
On July 9, the Consumer Financial Protection Bureau (CFPB) published a proposed rule to implement Dodd-Frank Wall Street Reform and Consumer Protection Act amendments to the Truth-in-Lending Act (TILA) that expand the types of mortgage loans that are subject to the Home Ownership and Equity Protection Act of 1994 (HOEPA), revise and expand the triggers for HOEPA coverage, and impose additional restrictions on HOEPA loans. In addition, this proposed rule implements Dodd-Frank amendments to TILA and the Real Estate Settlement Procedures Act (RESPA) that impose requirements governing homeownership counseling.
HOEPA Sections 1431 through 1433 of Dodd-Frank significantly amended HOEPA to expand the types of loans that are subject to the coverage of HOEPA, to revise the triggers for HOEPA coverage, and to strengthen and expand the restrictions that HOEPA imposes on HOEPA mortgages. I Scope of HOEPA coverage Most types of mortgage loans, such as purchase money mortgage loans, refinances, closedend home equity loans and open-end loans, secured by the consumer’s principal dwelling, would be potentially subject to HOEPA.
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I Revised HOEPA thresholds HOEPA would be triggered if: O A loan’s annual percentage rate (APR) exceeds the average prime offer rate (APOR) by 6.5 percent for most first-lien mortgages and 8.5 percent for subordinate lien mortgages; O A loan’s points and fees exceed five percent of the total transaction amount or a higher threshold if the loan amount is below $20,000; or O The creditor charges a prepayment penalty more than 36 months after loan consummation or account opening (for HELOCs) or penalties exceeding more than two percent of the amount prepaid. I Restrictions on loan terms Dodd-Frank restrictions and requirements concerning loan terms and origination practices for mortgage loans subject to HOEPA include: O Prohibiting balloon loans, prepayment penalties and the financing of points and fees. O Restricting late fees to four percent of the past due payment, restricting fees on payoff statements and prohibiting fees to modify/defer a loan. O Creditors originating HELOCs would be required to assess a consumer’s ability to repay. O Creditors and mortgage brokers would be prohibited from recommending to, or encouraging, a consumer to default on a loan in order to refinance into a high-cost mortgage. O Requiring creditors to obtain confirmation that the consumer received counseling on obtaining a HOEPA loan.
Homeownership counseling The proposed rule would implement two Dodd-Frank provisions governing homeownership counseling that are unrelated to the HOEPA amendments. I Regulation X Lenders would be required to provide a list of federally-certified or approved homeownership counselors/organizations to consumers within three business days of their applying for any mortgage loan. This proposed rule would implement an amendment to RESPA made by Section 1450 of Dodd-Frank. I Regulation Z Creditors would be required to obtain confirmation that a first-time homebuyer has received homeownership counseling before making a negative amortization loan. This proposed rule would implement an amendment to TILA made by Sections 1433(e) and 1414 of Dodd-Frank. Comments regarding this proposed rule must be submitted on or before Sept. 7, 2012. Melanie A. Feliciano Esq. is DocMagic Inc.’s chief legal officer and currently serves as editor-inchief of DocMagic’s electronic compliance newsletter, The Compliance Wizard. She received her JD from the Georgetown University Law Center, and is licensed in California and Texas. She may be reached by phone at (800) 649-1362 or e-mail email@example.com.
heard on the street
continued from page 7
formerly the Las Vegas branch manager for PRMG, has been with company now for more than four years and has been actively involved with every function, from sales to operations including, underwriting and docs. Along with Sales Manager Corey Johnston, Broaddus is highly dedicated to growing the broker base, while overseeing a full service fulfillment operations center that will be underwriting and funding locally, including generating business within the state of Colorado. Broaddus is originally from Colorado and started her career in the mortgage industry back in 1974. Both she and her husband Gary have been actively involved in the broker community since the early 1980s. “We are very confident in Cindy Broaddus heading up operations in Colorado,” said PRMG CEO Paul Rozo. “Again, as part of our global vision and strategic growth plan, the recent addition of the Colorado territory complimented by the previous acquisition of the Northeast and Southeast regions will allow us to remain on course toward expanding our overall footprint across the country and ultimately position PRMG as a national player.”
LendingQB Continues Expansion With Strong Q2
among mortgage lenders to switch their LOS platforms. Dissatisfaction with service and the uncertainty of the longevity of their vendors are part of the reason. But there’s also a real desire for technology advancement; lenders are treating their business in a more sophisticated manner, especially in regards to quality control and business analytics. They want a level of technology sophistication that matches their desire to grow efficiently as the mortgage industry recovers. We’re glad that these new clients recognize the value we bring to their business.” LendingQB’s platform is comprised of LO, TPO, and consumer direct point-of-sale Web portals for all lending channels; the PriceMyLoan pricing engine and automated underwriting system (AUS); loan processing; electronic documents, closing; secondary marketing; and interim servicing. All functions are incorporated into a seamless workflow. Another unique difference is that the LendingQB LOS incorporates business intelligence (BI) and data analytics functionality along with detailed reporting that helps lenders locate and translate their data into actionable information, enabling them to make informed business decisions that establishes a competitive advantage and leads to greater profitability.
Interthinx Earns SecureInfo Recommendation for LendingQB, a provider of seamless Web- Government Certification based mortgage lending technology, has announced that it had a strong second quarter, signing 12 new clients, which are either already in production or in the midst of implementation. New clients include mortgage bankers, community banks and credit unions, illustrating the platform’s ability to serve all types of mortgage lending institutions. Customers that are in production with LendingQB’s end-to-end loan origination system (LOS) report that they have been able to immediately eliminate the need for multiple systems, cut technology costs by up to 50 percent and reduce the cost to originate loans by as much 30 percent. LendingQB has accomplished these goals by emphasizing a seamless workflow that eliminates non-value added activities through automation. Examples of this include automated underwriting, business rule automation and lights-out integrations to select third-party vendors. LendingQB unifies all mortgage lending activities on a single database of record, enabling higher level functions such as rapid generation of management reports and internal communication. The entire platform is Web-based and accessed through a common Web browser, making it highly scalable and extremely efficient to deploy. “We’re seeing a rapid growth in our pipeline since we introduced LendingQB late last year,” said Binh Dang, president of LendingQB. “There’s a real movement
Interthinx has earned a National Institute of Standards and Technology (NIST) certification recommendation from SecureInfo for two of its automated products for the residential mortgage markets. SecureInfo subjected both FraudGUARD and PredProtect to extensive review to determine that the products meet the stringent security requirements of the NIST. “We are particularly pleased that as an independent third party serving as an Agent of the Certification Authority, SecureInfo recommends that both FraudGUARD and PredProtect be issued an Authorization to Operate,” said Mike Smith, chief technology officer and chief architect for Interthinx. “Interthinx takes great pride in its security measures and stands ready to work with government agencies to help mitigate risks through improved data integrity and compliance,” said Kevin Coop, president of Interthinx.
ServiceLink Announces the Acquisition of DRI Management Systems ServiceLink has announced the acquisition of Newport Beach, Calif.-based continued on page 19
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The President’s Corner: August 2012
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want to begin this month’s President’s Corner with an update from our meeting with the Deputy Director of the Consumer Financial Protection Bureau (CFPB), Raj Date. John H.P. Hudson, NAMB Government Affairs Chair; Roy DeLoach, NAMB Lobbyist; and I went to Washington, D.C. to meet with Mr. Date at his request. This stemmed from a letter I wrote to him concerning his remarks about mortgage brokers. It was ironic that our meeting took place on the day that the CFPB released their 1,100-page document on the new Good Faith Estimate (GFE) and Truth-inLending Act (TILA) rules. Our meeting with Mr. Date at the CFPB went very well. The impression that I got was that the CFPB seems rushed to make dates that have been set up for them by the Dodd-Frank Act. The people there are very smart, however, they do not have any practical mortgage experience and this hurts when they are trying to make decisions based on what goes on in the mortgage business. We continue to work with them and address many questions that they have. Stay tuned for more information coming from our Government Affairs Committee about these items. In many of the past articles I have written, I have stated that many times on Capitol Hill, we are asked how many members we have. Our membership numbers always seem to hover around the 5,100 mark, fluctuating up and down each month. What I do not understand is why people are not joining, especially when all of this stuff is happening in D.C. and it affects all originators. NAMB—The Association of Mortgage Professionals is the only nonprofit organization that represents you, the mortgage originator, in Washington, D.C. We are constantly looking out for your best interests, and we do this as a volunteer organization. No one on the board of directors, the chairperson of any committee or any committee members receives compensation for their time, their energy and their efforts. So I ask the question … why haven’t you joined yet? It cannot be the cost because as a Platinum Member, the cost is only $120 per year. And many of you spend that much in a weekend going out on the town or to dinner. Just $10 per month gets you information, gets you involved, and gives you a voice in Washington, D.C. Just $10 per month makes you part of an organization that believes in ethical and professional behavior and makes
you part of the team. It also makes you eligible to attain the NAMB Lending Integrity Seal of Approval that can be displayed for all of your current and potential customers to see. This Seal helps homebuyers find hard-working and ethical mortgage professionals. To earn the Lending Integrity Seal of Approval, professionals must undergo a rigorous process—complete continuing education, pass a criminal background check and pledge to adhere to a strict code of ethics, best business practices, and an ethics grievance review process. In addition, you get one of the best Government Affairs teams that works to protect you, the mortgage originator. We fight for you and your business. Countless hours are put in by our team that reviews reports, rules and anything that comes out of the House, the Senate and the CFPB to name just a few of the countless items that are dealt with by our Government Affairs team. John H.P. Hudson, Government Affairs Chair; and Rick Bettencourt, Vice Chair, are two dedicated individuals who give countless hours to make sure that you, the mortgage professional, are informed and up-to-date with everything from all of the agencies. And while we are on the subject of committees, Kay Cleland and her group of regional vice chairs of the NAMB Membership Committee are working hard to put together different programs that will benefit all NAMB members. They are also calling new members to welcome them to the NAMB family and the results have been very wellreceived. And if you have any questions about your membership, please check the NAMB Web site at NAMB.org for your vice chair and reach out to them. They are capable of answering almost all of your questions on your benefits and membership with NAMB. As many of you are probably not aware, NAMB has developed a for-profit side called “NAMB PLUS.” NAMB PLUS is the side of NAMB that handles our Strategic Alliances that benefit all NAMB members in the form of programs, benefits, insurance, bonds, etc. that make your day-to-day operations and such a better experience. These benefits save you, the NAMB member, money on all kinds of things, from insurance to office supplies. There is a separate board of directors that oversees all of these aspects of this side of the business. Currently, there are three members (vice president, past president and a director) of the current NAMB board of director, including Donald Fader, NAMB PLUS president, along with John Councilman and Jim Pair. The other four positions of the NAMB PLUS board
are comprised of members from the membership ranks of NAMB, including Nathan Pierce of Utah, Kelley Hamilton of Colorado, George Burkley of Indiana, and one other member that will be named shortly. These people comprise this board and work independently of the NAMB board. These positions are a yearly position and will be elected each year. You can also see changes in the new NAMB NATIONAL Conference in December. We have contracted with a company called Agility Resources Group of West Hartford, Conn. Vincent Valvo will oversee the event planning of this year’s conference. We are currently securing some great speakers and great talent to share information, and help make each of you better originators and more productive. We are also working on having someone speak about developing a Facebook Page or Web site on the spot, and you will walk home with this completely done. The dates for this year’s inaugural NAMB NATIONAL Saturday-Monday, Dec. 8-10 at the MGM Grand in Las Vegas. Start planning your trip today and be on the lookout for those cheap fares. I have been in this position for nearly nine months, and I am hoping that many of the changes that we have made to committees, the board, the bylaws, etc., have been for the better. NAMB seems to be running smoother and at a better pace, and it seems that you, the member, are happy with these changes. We are about to make another big change and that is the NAMB Web site. As you all are aware, your User Name
changed to your e-mail address a few weeks ago in preparation of this transition. By the time you read this, we should have all of the changes made and you should be seeing these changes in your everyday life. A lot of time has been put into this by Joel M. Berman and Beverly Koondel of National Mortgage Professional Magazine. They are working with our provider to make sure that when we go live, everything is completed. So be looking for this to happen shortly after the first of August, and I hope that you are pleased with the changes. On a final note, I am making one more push for all of you to join NAMB. This is my goal to get each of you who read this magazine to become members. Membership is something that I do not take lightly and as your president, I appreciate everything that you as a member do for this organization. So why not ask your fellow originators, appraisers, title people, processors and owners to step up and become members. It is time that we all become part of the solution and stand together and make a statement. We can accomplish more things together than as individuals. Now is the time to join me and let’s show everyone that mortgage professionals will not be taken lightly. We are a group of professionals that are standing together. Now and in the future!
Donald J. Frommeyer, CRMS, President NAMB—The Association of Mortgage Professionals
Homeownership is Under Attack What is a “qualified mortgage,” how it will limit access to credit for consumers, and what can you do about it? By John H. P. Hudson
itle XIV of the Dodd-Frank Act states that a creditor may not make a mortgage loan without first determining that the borrower has a reasonable ability-torepay the loan, meaning mortgage companies may only originate a “qualified mortgage” (QM). This sounds reasonable enough … let’s make sure that consumers can afford their mortgage (the economy and housing market would not be in the shape it is had exotic loan programs such as stated income,
no-doc, pay option ARMs, and subprime not been offered to every consumer with a pulse). However, there are some facts about measuring ability-torepay and QMs, Dodd-Frank, and the Consumer Financial Protection Bureau (CFPB) that every real estate agent, mortgage professional, builder, title company and consumer needs to be aware of because the landscape of mortgage finance is about to be changed again. First of all, everyone needs to know exactly what a QM really is. The definition being put forth starts out fairly simple before things get complicated. In order to measure an ability-to-repay, a mortgage lender must consider and
American Dream. Please contact me with any questions, comments or concerns at firstname.lastname@example.org John H.P. Hudson became a residential loan officer in 1998 and has spent the past eight years serving mortgage brokers and loan officers as area manager in San Antonio and southern Texas with
Premier Nationwide Lending. Hudson also is the 2012 Government Affairs Chair for NAMB—The Association of Mortgage Professionals having volunteered many years president and other offices of the San Antonio Texas Association of Mortgage Professionals, a chapter of the NAMB. He may be reached by phone at (817) 247-4766 or e-mail email@example.com.
NAMB Government Affairs Round Up: NAMB testified before Congress on July 11 at a hearing titled, “The Impact of Dodd-Frank’s Home Mortgage Reforms: Consumer and Market Perspectives.” Please visit the House Financial Services Committee to view our testimony or contact the NAMB Government Affairs team for more info by e-mail at firstname.lastname@example.org. In the wake of a U.S. Department of Justice lawsuit settlement over “Disparate Impact, Wells Fargo Exits Wholesale,” NAMB’s Government Affairs team has been monitoring this issue and even met with the DOJ on the subject of disparate impact. NAMB will be hosting a Webinar in August to help inform members how to protect themselves from potential problems regarding disparate impact. NAMB met with the Consumer Financial Protection Bureau (CFPB) twice in July. In the beginning of the month, Government Affairs Committee Chair John H.P. Hudson and President Don Frommeyer met with Raj Date, Deputy Director of the CFPB. More recently, NAMB conferenced with the CFPB regarding the developments on the Qualified Mortgage (QM).
NAMB has been active on the issue of attorney-client privilege for nondepository mortgage companies during CFPB examinations If you have concerns or issues and would like NAMB to help, please e-mail email@example.com.
The First Annual NAMB Benefit Golf Tournament Wednesday, October 17 Coyote Ridge Golf Club 1640 W Hebron Parkway • Dallas 1:00 p.m. Tee Time Entry Fee of $100 per player/$400 per team Great prizes and giveaways including golf clubs, gift cards and the chance to win a BMW in the hole-in-one challenge. All proceeds to benefit NAMB—The Association of Mortgage Professionals.
For more information, visit www.originatorfest.com.
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potential for litigation to lenders because the legal term disparate impact could then be applied considering racial and economic demographics when applied to loan amounts and loan terms offered. The “safe harbor” vs. “rebuttable presumption” definitions for originating QMs is currently locked in a heated debate between industry and consumer groups. The mortgage industry, including the National Association of Realtors (NAR), are pushing for a “safe harbor,” meaning if a mortgage company originates a QM loan, the originator will be protected from certain liabilities and legal challenges. Consumer groups are pushing for the “rebuttable presumption” because if a lender follows the rules and originates a QM loan, the consumer can still litigate years down the road and use this as a defense of foreclosure. An example would be if a borrower were to lose their job 15 years into a 30-year mortgage, they could challenge a foreclosure proceeding by making the originating creditor prove in court they properly measured the consumer’s ability-to-repay. Under this alternative, lenders will be forced to only lend well within the realm of qualified mortgages, meaning tighter underwriting and fewer homebuyers. Keep in mind, severe financial liabilities exist for ANY lender failing to the meet the “ability-to-repay” definitions of the Dodd-Frank Act. So, what can you do about it? First and foremost, educate yourself, your colleagues and consumers on these issues. I still get too many “deer in the headlight” looks when I speak for various groups throughout the country because many housing professionals are “too busy” to pay attention to the looming regulations approaching. Second, you need to get involved and support your trade associations. If you are a mortgage professional, you need to be involved and support NAMB—The Association of Mortgage Professionals (NAMB serves both mortgage brokers and mortgage bankers). Last and certainly not least, every person employed in the real estate or housing finance industry needs to call their legislative representatives to comment on “ability-to-repay.” It doesn’t matter if you are the secretary or the chief executive officer, it takes just five minutes to pick up the phone and call your congressman. Consumers deserve protection from bad actors. Not one person I know disagrees with that. However, the unintended consequences from poorly crafted legislation are going to wind up harming the very people it is meant to protect. Homeownership is still the American Dream, and every consumer deserves the opportunity to participate in that dream without the fear of being forced into a permanent class of renters. I refuse to resign myself to mediocrity and so should you. So get involved today and let’s work together to stop this threat to the
verify eight points: Income, employment, qualify based on fully-indexed rates, payments on simultaneous loans, mortgage obligations, current debt, residual income and credit history. Again, this is pretty easy to do considering the loans originated today are arguably the safest and best performing loans ever to be made because no lender wants to be in a position to have any more foreclosures or “buy backs.” The parts of Dodd-Frank’s “ability-to-repay” that most are not aware of involved the “three percent cap” on total points and fees and the “safe harbor vs. rebuttable presumption” theories which will determine litigation risk for mortgage originators. In my honest opinion, the “three percent cap” on total points and fees will create the most havoc to our economy. As currently drafted in Dodd-Frank, the “three percent cap” will include: Affiliated title fees, loan originator (LO) compensation (which is double dipping), and last but certainly not least, amounts of insurance and taxes held in escrow. You read that correctly, escrows can be included in the three percent cap on points and fees … oh, and by the way, QMs apply to ALL types of home loans such a conventional, FHA, VA, etc. While there is no empirical evidence to suggest that mortgages with points and fees over three percent have a higher rate of default if they were to include these three items, the CFPB under their statutory authority from DoddFrank are moving forward with this rule which will be finalized in November 2012 (it was recently postponed until after the presidential election). Now, imagine what will happen to mortgage finance if every possible expense under the sun is included (Texas A6 home equity loans already have a three percent cap on points and fees, not including these items and consumers are hard pressed to find any lender willing to make these loans for less than $150,000). Include the compensation I pay my loan officer, the title fees for a company affiliated with a real estate company or builder, and the high property taxes and insurance for any home in Texas, and consumers may find themselves hard pressed to find any lender willing to lend for under $250,000. The other alternative to establishing high minimum loan amounts creates its own potential set of issues. In order to offset the costs for these items, lenders will be forced to finance these costs into the interest rates for consumers. Basically, the lower the loan amount, the higher the interest rate, which the market already sees some if this today in the form of loan level price adjustments for FNMA/FHLMC loans. In an environment where rates are hovering around four percent, offering 4.5 percent to a consumer may not sound so bad. However, this comes with its own set of consequences. Higher interest rates not only will mean less qualified buyers, but the
What I Learned Through Social Media By Ken Pederson
OHIO MORTGAGE PROFESSIONAL MAGAZINE
Early on, something told me I needed to move my business to the Internet. It was the mid-1990s, before the Web really took off, when many of my colleagues and I began using e-mail. Almost instantly, I saw this simple communication device as a means to connect with other professionals and get the word about my business. I started a Friday morning email distribution to a group of real estate agents, writing about things that were happening in real estate and in the mortgage industry—things I thought others would want to know and to keep my name out there. For the past 15 years, I have continued to send that e-mail. Over the years, as new opportunities appeared, this effort began to snowball. In 2004 or 2005, a buddy of mine who received my Friday newsletter suggested I should start blogging. So in 2005, I started a blog. I would write articles for my blog, but also set things up so that every Friday morning, my blog article would be sent to the same people who subscribed to my Friday e-mail. Then Facebook rolled around, and I began leveraging my blog into Facebook posts. Eventually, I started doing video and started tying in YouTube to my blog and Facebook page. When Twitter came along, bingo, I had another tool to use! So now my Friday e-mail has morphed into one message spread across multiple platforms. I’m no Ashton Kutcher in terms of online popularity, but I do pretty well. I have 136 followers on Twitter, more than 300 fans on my Facebook Fan Page, 1,000 friends on my personal Facebook page, and more than 500 connections on LinkedIn. These connections have enabled me to educate borrowers on their mortgage options and help our real estate agent partners grow their businesses. I should mention I’ve also gotten quite a few successful leads along the way. But I’ve also learned a few things, too.
Consistent communication is key While one might think that social media has made my life more difficult—I have all these platforms to manage—the reality is that it’s made things a lot easier. I don’t write as many blog posts as I used to, because now we’re using Facebook and video posts, too, and both are less time-consuming. What hasn’t changed is the Friday distribution. I’m probably overly religious about doing something every Friday, because my audience expects it. There are perhaps one or two weeks out of the year when I don’t do something that Friday. Otherwise, I’m very consistent with it, even if it is short. By staying consistent, I’ve been able to leverage social media to build my reputation as someone who communicates well and communicates often, which is extremely important in the mortgage business. Real estate professionals and borrowers are both inundated with information on a daily basis. There is so much happening so quickly, from changes in rates to new rules and regulations to new loan programs, that it’s impossible for any one person to keep up with it all on their own. My company in particular, Fairway Independent Mortgage, is extremely progressive when it comes to learning and sharing what is happening with the market, with our partners and in government. So every time I’m learning something, I’m sharing it so others can benefit, too.
Identify your audience Another thing social media has done for me is increase my exposure. People know me when they see me, even if we’ve never met. I certainly receive business from my social media efforts, but another benefit is that it makes communication easier when a new client has already read my post about jumbo mortgages or some other topic he or she is interested in. Likewise, there are real estate agents I’ve never met who have read a post of mine and reached out to me on LinkedIn or Facebook. But no matter what social media platform I’m using, I try not to focus too much on the mortgage busi-
ness. That might sound funny, but the fact is most people are not thinking about mortgages all day long. Over the years of using social media, I’ve gained an understanding about what people are really interested in. Real estate agents, for example, are particularly interested in sales and marketing techniques, or what I call “head medicine.” And pretty much everyone is interested in money, health, their homes and wealth building. I tend to think my clients are somewhat like me and care about those things, so I find thought-provoking information to read and share these things with them. Social media is a great tool in that sense. It is, ultimately, about sharing, and you really learn what people care about based on how many people are reading each blog, watching each video, or “Liking” a particular Facebook post.
Aim your message I’m platform-conscious with social media, and tailor my messages depending on what service I’m using. I may have one blog article, for example, but will retool it slightly depending on what platform I’m sharing it on. For example, LinkedIn has become a powerful tool for companies and business professionals to connect, so my office will use it to share a lot of business-type posts. I also participate is group discussions on LinkedIn, but again, I don’t sit there and talk about mortgages all day. I will talk about what is pertinent to that group. On Facebook, however, it’s even more social. You can’t beat people over the head by marketing your products and services every hour. We post to our business Fan Page on Facebook and my personal page only with appropriate messages. People use Facebook during their spare time, and when they do, they don’t want to be bombarded with sales pitches or even subjects that are too serious. Facebook is a great place to have fun, though. For example, I routinely give away gift certificates by holding a contest and asking people to “Like” my Facebook Page or write a comment.
It’s not too late I know there are a lot of mortgage professionals who think they don’t have the time or can’t write, and don’t even have the time for it anyway. The truth is, you don’t need to be a Pulitzer Prizewinning author—almost anyone can crank out an interesting Facebook post, and that only takes five to 10 minutes a day. You can take that same post and put it on LinkedIn. Then you can create a free blog using Google’s Blogger platform and put the same post there, and maybe expand on it. Using social media, there are all kinds of ways to leverage the same or similar content. And by the way, I don’t handle all social media by myself. I conceive and create most of the content, but we have a marketing assistant in our office who handles the distribution side of things. She’s able to take my blog and video posts and rework them for LinkedIn and Facebook. There are also services out there that will allow you to take a single article and post it simultaneously to multiple platforms. In our case, however, I prefer to push the content we create directly onto individual platforms. It’s my opinion that we get better, more focused exposure, plus we have the opportunity to customize the message based on the particular audience that will see it. Even if you are really busy—and fortunately, many of us are doing great business this summer—you should be putting some time into your marketing your business every day. The best part about social media is that all these tools are free, and each of us already have friends and spheres of influence that we already market to. You’re just trying to create a little tribe, and then keep them informed and entertained. If I can do it, anybody can! Ken Pederson is a branch manager and Certified Mortgage Planner Specialist (CMPS) at Fairway Independent Mortgage Corporation in Lancaster, Pa. Ken has 25 years of experience as a mortgage originator, branch manager and educator. He can be reached by phone at (717) 431-9299 or e-mail firstname.lastname@example.org.
meaning that the lawyer will not charge for legal advice, unless and until a whistleblower succeeds in collecting a reward. Depending on how someone presents information to the government, that person ultimately might be considered a mere witness, rather than a whistleblower. Whistleblowers are entitled to rewards; witnesses are not. An experienced lawyer should be able to protect these and other interests of a would-be whistleblower, explain the process, and work cooperatively with the government in moving a case along.
The particular process for initiating a whistleblower complaint depends on the circumstances, but the first step is always the same: Consult a qualified attorney for advice. Lawyers who practice in this area generally take whistleblower claims on contingency,
It is unlikely that Hunt’s story will be unique. Mortgage lenders and mortgage professionals need to recognize the potential for whistleblowing in the mortgage industry, so that lenders take their obliga-
mortgage industry whistleblowers What may be reported
more than $31 million. The SEC’s whistleblower program offers rewards in the range of 10-30 percent, in cases involving sanctions of more than $1 million. In the trillion-dollar mortgage industry, the financial rewards for whistleblowers can be staggering.
Brian M. Feldman Esq., is an attorney with Harter Secrest & Emery LLP, whose work includes the representation of clients in False Claims Act cases. He previously worked with the Justice Department at the United States Attorney’s Office for the Southern District of New York in Manhattan. He may be reached by phone at (585) 231-1201 or email email@example.com.
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The federal government’s most successful whistleblower programs provide handsome rewards for those who come forward with information, in order to encourage whistleblowers to step forward. Under the False Claims Act, whistleblowers are generally entitled to rewards between 15-25 percent of the government’s recovery against a defendant. For Hunt, that translated into
OHIO MORTGAGE PROFESSIONAL MAGAZINE
It is also important to recognize that federal laws reward whistleblowers for reporting not merely cases of outright fraud, but also cases of recklessness. Under the False Claims Act, true to its name, the question is whether a false statement was made in support of a claim for federal money, and if so, whether the person making the statement knew the statement was false or recklessly disregarded, or deliberately ignored, the fact that it might be false. In the FHA insurance context, False Claims Act cases have often focused on Direct Endorsement certifications, which state that a loan is qualified for FHA mortgage insurance, when it is not. Under the False Claims Act, there is no need for the government to prove that a lender lied about a certification to defraud the FHA. Instead, the law allows the government to proceed if the lender either knew the loan did not qualify or failed to do the due diligence required to figure out if the loan qualified, and then certified the loan in any event. The FHA’s Direct Endorsement lending program has generated the most False Claims Act cases in this field. Those cases have primarily focused on three areas, each of which could form the basis of a whistleblower action. First, as described above, the government has examined whether Direct Endorsement certifications were false on large sets of loans. Second, as reflected in Hunt’s complaint against CitiMortgage, the government has scrutinized QC programs, including whether or not lenders have actually reviewed all early payment defaults. Third, the government has looked at other Direct Endorsement lender rules, such as whether Direct Endorsement underwriters were actually making underwriting decisions themselves and whether lenders had properly disclosed branch locations. These are just some of the types of cases the government could bring in this field. For instance, if the government can establish fraudulent intent, the Justice Department has the power to bring actions relating to conventional mortgages, too. In addition, the Securities & Exchange Commission (SEC) has a whistleblower program which rewards whistleblowers for stepping forward with information about securities violations, such as misrepresentations in the sale of mortgage-backed securities (MBS). With so many federal programs soliciting information from whistleblowers, lenders and employees should not assume, without consulting qualified legal counsel, that any particular misconduct lies beyond the reach or interest of the federal government.
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tions and employee complaints seriously, and so that mortgage professionals understand the rewards available to them for reporting misconduct. Whistleblowing remains a new phenomenon in the mortgage industry. Yet, with ever-increasing federal scrutiny of the industry, the significance of whistleblowers is likely to continue to grow in the years ahead.
A Lending Institution’s Important Ally in a Challenging Market An important risk management tool AUGUST 2012 Wells Fargo to Cease Funding Mortgages Originated by Independent Brokers
(defined as interest in real property as security for a loan). The core element of The United States Mortgage Impairment provides coverappears to be emerg- age to a financial institution for loss to ing from a severe its Mortgage Interest caused by the lack, recession that was inadequacy, or uncollectibility of direct caused, in part, by a insurance against physical loss or damdramatic collapse of age to the collateral property caused by the U.S. housing market. While there “Required Perils” (i.e., the perils of fire, are signs of improvement in the over- extended coverage, flood in the amount all economy, and the housing market necessary to comply with the federal specifically, there are still many Flood Disaster Protection Act of 1973 obstacles to a full-fledged economic (Flood Act), or other similar direct physrecovery. Among these obstacles is ical damage perils against which the the sustained high level of U.S. mort- lender requires the borrower to obtain gage loan delinquencies that contin- insurance on the collateral property). ues to adversely impact lending insti- These Required Perils are typically covtutions across the country. An impor- ered by homeowner’s insurance, fire tant risk mitigation tool that lending and extended coverage insurance, and institutions should consider in this flood insurance policies. Mortgage time of uncertainty is Mortgage Interest can even be expanded to cover Impairment/Mortgagee’s Errors & foreclosed properties after a financial institution takes ownership. Omissions insurance (MIP). As a supplement to the Mortgage Financial institutions that benefit from MIP insurance include: Commercial Impairment component of the policy, banks, community banks, credit MIP insurance may also provide coverunions, mortgage banks, insurance age to a financial institution for loss to companies, and any other financial its Mortgage Interest caused by the lack, institution that originates, services, or inadequacy, or uncollectibility of direct insurance against physical invests in mortgage loans. loss or damage to the Essential collateral property “An important caused by a “Noncomponents risk mitigation tool that Required Perils” of coverage MIP provides lending institutions should (i.e., perils against two basic comwhich the lender consider in this time of ponents of inhas not required surance coverthe borrower to uncertainty is Mortgage age within one obtain insurance policy form: on the collateral Impairment/Mortgagee’s Mortgage Impairproperty). Examples Errors & Omissions ment and Mortof Non-Required gagee’s Errors & Perils include: insurance (MIP).” Omissions. Earthquake where the 1. Mortgage Impairment borrower was not required to purMortgage Impairment provides insurchase earthquake insurance. ance coverage to a financial institution for a loss to its “Mortgage Interest” continued on page 33 By Tom Delaney
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Wells Fargo announced that on July 13, it will discontinue funding mortgages that are originated, priced and sold by independent mortgage brokers through its wholesale channel. Mortgages sold by independent brokers through the wholesale channel currently represent five percent of the company’s home mortgage funded volume. According to Wells Fargo, mortgage brokers operate as independent businesses and are not employed by Wells Fargo. Therefore, Wells Fargo cannot set loan prices for independent mortgage brokers nor control the combined effect of the negotiations that thousands of these independent mortgage brokers conduct with their customers. “Wells Fargo takes pride in serving the homeownership needs of all of our customers, and we are fully committed to fair and responsible lending,” said Mike Heid, president of Wells Fargo Home Mortgage. “Through our separate decision to no longer fund mortgages through independent mortgage brokers, we can control how that commitment is met on every mortgage that Wells Fargo makes.” After Friday, July 13, Wells Fargo will no longer accept new applications for loans originated by independent mortgage brokers through its wholesale channel, but will work to ensure existing applications are processed and closed.
Economists and Homeowners Agree: Strategic Defaults Are Poor Option for Underwater Homeowners If faced with a deeply underwater mortgage, most economists and homeowners agree they would not strategically default, according to dual surveys from Zillow Inc. Nearly three-quarters of economists surveyed in the June 2012 Zillow Home Price Expectations Survey (71 percent) said they would not strategically default, even if they owed on their mortgage at least 40 percent more than the current value of their home. The survey, sponsored by Zillow Inc. and conducted by Pulsenomics LLC, was compiled from 114 responses from a
diverse group of economists, real estate experts and investment and market strategists. The main portion of the survey, which captures respondents‘ expectations concerning the future of home prices, was released last month. In a separate Zillow survey conducted by Ipsos, 59 percent of homeowners said they would not make the decision to strategically default if they were underwater on their home by more than 40 percent. Nearly 75 percent of homeowners in the U.S. with an underwater mortgage are underwater by 40 percent or more, according to Zillow’s first quarter Negative Equity Report. “We were initially surprised that so few economists would be willing to strategically default, since when you do the math, it can often be the best economic choice, if you leave aside moral and ethical considerations,” said Zillow Chief Economist Stan Humphries. “Of course, strategic default is not just a mathematical decision. The most common reason for avoiding strategic default cited by homeowners was that it is a moral issue. That likely comes into play with economists and analysts, as well.” Thirty-seven percent of homeowners who said they would not strategically default cited moral reasons, while 35 percent indicated it didn’t make sense given that they intended to live in their current home for a long time. The Zillow Home Price Expectation Survey additionally asked the same group of economists and housing analysts their stance on the adoption of governmentsponsored mortgage principal forgiveness initiatives for underwater borrowers. The survey found that 72 percent of respondents opposed any adoption of such programs, while 28 percent were in favor. “These survey results suggest that economic and financial considerations are not the dominant drivers of behavior for even deeply underwater borrowers,” said Pulsenomics Founder Terry Loebs. “This underscores the challenges in valuing underwater mortgages and in determining the costs and benefits of principal forgiveness initiatives.”
LexisNexis Fraud Report Shows Rise in Collusion Activity in the Mortgage Industry LexisNexis Risk Solutions has issued its 14th Annual Mortgage Fraud Report continued on page 27
When did we forget that mortgage brokers are the face of each home loan?
www.FGMCwholesale.com (800) 296-2275
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efficient lending processes possible to ensure your clients are getting into new homes ... and that you’ll be the one handing them the keys.
In our crazy world of mortgage securitization and lender portfolios, it’s sometimes easy to forget that most homebuyers buy homes from people, not logos. For decades, the mortgage broker has been the trusted advisor to millions seeking the American Dream. FGMC hasn’t forgotten that, and we’re providing our brokers the widest range of loan products and the most
We Don’t Always Need to Look Elsewhere for Executive Talent By Andrew Peters
OHIO MORTGAGE PROFESSIONAL MAGAZINE
he mortgage industry, on the whole, tends to take a “promote from without” approach when it comes to filling key positions, especially at the executive and management level. We’ve seen this recently with the demise of several major businesses, opening the flood gates for the surviving companies to recruit new talent. Is it possible, however, that we don’t do enough, as an industry, to identify and develop star performers from within our own ranks? While data specific to the mortgage lending industry is difficult to find, it’s not hard to discover the benefits of retaining and promoting our best young professionals from within. A Sasha Corporation study (http://www.sashacorp.com/turnframe.html) points out the biggest benefit: Cost reduction. According to this study, which also considered the surveys of several other consultants, keeping a “frontline employee” for 20 years can save the employer as many as 10 or even 20 “turns,” which can amount to a cost savings of $100,000 or more. The same study suggests that the average cost of losing and replacing (retraining) an $8/hour employee tends to run over $5,000. And this is just retention of one front line employee. What are the costs of replacing a manager or executive? Another huge benefit to promoting from within is familiarity. While there may be some learning curve with the new
position, it will not be compounded by the very real learning curve of a company’s culture and “realpolitik.” The new manager or executive will very likely know his or her way around, which only accelerates the time frame which he/she will need to get up to speed. Morale and loyalty are not “hard costs,” and it’s difficult to monetize the concepts. But make no mistake … they are real, and they can boost one’s business performance. Juan Rodas is AVP of secondary marketing and post production with First Guaranty Mortgage Corporation. He started with the firm years ago on the ground floor in the post-closing department. He has worked his way through the ranks, and was promoted to his current position based upon his business plan, his hard work and knowledge of Ginnie Mae securitizations. Rodas points out that others within the ranks take note when someone is promoted from within. “It increases the morale to know that I can one day move forward and take the next step here,” Rodas said. “It helps people to know that there can be a reward for the hard work.” Rodas further points out that internal development can build a stronger, more efficient team. In his case, the fact
that he has worked in several positions (which he know manages) affords him a knowledge (and empathy) for very practical situations. “In secondary, to me, it’s not just about price. I’ve been in my teammates’ shoes, and know what they do,” said Rodas. “I don’t have to go to my back office to answer every question. I already know the Ginnie Mae requirements.” John Boyce came to First Guaranty five years ago as an input specialist. He has been promoted several times, and is now AVP, wholesale production manager. He has been in the industry for approximately 14 years, and notes that promotion from within tends to be the exception, rather than the rule, in our industry. He agrees with Juan that cultivating leadership from within the ranks isn’t just cost-effective. It can boost morale and effectiveness as well. “Promoting people from within the company lets others know that there’s a real opportunity for advancement,” Boyce said. “It encourages and reinforces good work and team effort.” John has been one of the key people in First Guaranty’s wholesale lending platform, and uses the knowledge he gained working his way through the ranks on a transactional level. That
“Ours is not an industry that can afford executives who attained their positions simply because they’ve ‘put in their time.’”
knowledge makes him unique in our industry, and gives him an advantage, especially when it comes to working within the multiple regulatory requirements we face. This article is not intended to suggest that all promotions must be internal. Indeed, there can be some disadvantages. Sometimes, our top employees best serve the company in the positions they currently have. We’re all familiar with the proverbial star salesperson who struggles in the role of sales manager. Similarly, when we only promote from within, we risk building a climate of entitlement. Ours is not an industry that can afford executives who attained their positions simply because they’ve “put in their time.” Nonetheless, it seems there’s not enough internal promotion in the mortgage industry. We’ve been accused more than once of taking a very shortterm perspective when it comes to strategy and development. A failure to develop our young talent only supports that accusation. Change is coming to us whether we want it or not. While we’re revisiting our production and compliance strategies, wouldn’t it be an opportune time to revisit our approach to recruitment and retention as well? Andrew Peters is chief executive officer of McLean, Va.-based First Guaranty Mortgage Corporation. Peters has been with FGMC for over 10 years, and has been the CEO since September 2011. Before that, he served FGMC as its senior vice president, national business director. He may be reached by phone at (301) 682-8228 or e-mail firstname.lastname@example.org.
heard on the street
continued from page 10
America’s Choice Home Loans (ACHL) has named Simon Nwoke as head of the new ACHL branch in Macon, Ga.; Dante Miller as head of ACHL’s new Corpus Christi, Texas branch; David Velazquez as head of the new Virginia Beach, Va. branch; and Renee Ralls as head of its new Salem, Ore. branch. Paul Wyner has been named senior vice president of third-party origination of Stonegate Mortgage. David Robinson has joined Gateway Mortgage Group as vice president and director of alternative sales channels. MGIC has announced the promotion of Timothy J. Mattke to the position of senior vice president-controller, chief accounting officer. Interthinx has announced the expansion of its executive team with the additions of Jim Portner as head of continued on page 20
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Amalgamated Bank has announced the launch of its own full-service Home
Mortgage Professionals to Watch
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Amalgamated Bank Launches New Home Mortgage Division
Mortgage Division. The new division will be providing mortgages for single-family residences, condominiums, multifamily houses with up to four units, and cooperative apartments. Financing is also available for vacation and investment properties. Amalgamated is offering a wide range of fixed- and adjustable-rate mortgages (ARMs), as well as home equity loans and lines of credit. Applicants who apply for and have their mortgages approved during July and August will have the cost of their home appraisal refunded by Amalgamated at closing. The Bank is also offering free workshops for firsttime homebuyers to help them understand the home financing process. Amalgamated’s newest division will be directed by Senior Vice President and Director of Residential Lending Edward A. Bolmarcich, who is a veteran mortgage banker with more than 25 years of experience in the field. Prior to joining Amalgamated, Bolmarcich served for five years as vice president of residential and consumer lending for Brooklyn Federal Savings Bank, managing Brooklyn Federal’s mortgage origination operations. “As the progressive force in banking for 89 years, we will serve as the lender of choice for workers seeking to fulfill the American dream of buying a home for their family,” said Amalgamated’s President and CEO Edward Grebow. We provide a trusted and affordable alternative to the big banks and mortgage companies that have so poorly served homebuyers by engaging in predatory and other unfair lending practices. Hardworking people can count on Amalgamated for fair, honest and transparent treatment through every step of the process.”
DRI Management Systems (DRI), the terms of which were not disclosed. In conjunction with the acquisition, ServiceLink also announced the launch of ServiceLink Fusion, the company’s new servicing workflow platform, which was designed and implemented in response to specific feedback from the company’s servicing clients and incorporates technology gained through the acquisition. “In response to increasing regulatory oversight, our clients have asked for a way to successfully centralize their servicing workflow management and we listened,” said Laura MacIntyre, ServiceLink’s senior vice president of servicing solutions. “ServiceLink Fusion is truly a groundbreaking workflow platform, developed and configured in the default space and is ready to accept additional configurations across the loan servicing continuum.” ServiceLink Fusion uses the newlyacquired DRI workflow platform to provide loan servicers with the industry’s first comprehensive, end-to-end workflow management solution. For the last four years, DRI has been focused on developing and configuring an entirely new workflow and content management platform for the loan servicing industry. This platform, which uses a common database and common user interface (UI) framework, is in production and is presently configured to support eight key functional areas within default. While use of ServiceLink Fusion is not limited to default, existing configurations include loss mitigation, pre-foreclosure, foreclosure, bankruptcy, claims, third party service ordering, litigation, default administration, and real-estate owned (REO) management. ServiceLink’s Fusion platform enables clients to manage operational risk, while reducing the limitations and constraints that result from hard-coded point technology solutions, databases, and other interfaces. As a result, compliance with new regulatory mandates, such as providing a Single Point of Contact (SPOC) has become relatively simple. Integrating with ServiceLink’s existing loan origination system (LOS), Commerce Velocity’s Spectrum, the ServiceLink Fusion team now delivers solutions spanning the entire loan life cycle, from origination through servicing and disposition. “For more than two decades, DRI has led the way in defining the default technology space,” said Duke Olrich, DRI Management Systems president and CEO. “We are excited to join forces with such a forward-thinking industry leader and look forward to working with ServiceLink’s servicing solutions team to deliver new technology for the industry.”
heard on the street NMLS
continued from page 19
strategic direction and Nick Volpe as head of product development, product marketing and program management teams for loss forecasting and regulatory compliance. Sheri Ellen Schwartz has joined Hammerhouse LLC as vice president, senior strategic growth partner. Churchill Mortgage has named Kraig Spence as a home loan specialist. Pacific Residential Mortgage has welcomed Jari Barton, Alan Dierickx and Brian Patterson as senior mortgage bankers within the firm.
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NAPMW NAP MW membership membersship gives gives you you exclusive exclusive access a cess to ac to timely educaeducaaffecting career tion regarding regarding the e regulations regulations aff ecting yyour o car our eer such as a webinar FREE TO TO MEMBERSS monthly monthly w ebinar on industry ind dustry updates updates AND education class offering our 8 hour NMLS continuing continuing educa tion cla ss off ffe ering (NMLS Provider P rovider # 1400309) 140030 09)
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Net work o kiing Networking NAPMW is a ccommunity NAPMW omm munity of near nearly ly 2,000 professionals prof o essionals acr across oss the Country C ountry who eng engage age in the mor mortgage tgage / ba banking anking industr industry. y. Men Men and w women omen from from all backgrounds backgrounds have have joined joined NAPMW NAPMW because excel whatt they do do.. Emplo Employers want they want want tto oe xcel e aatt wha yers who w ant eexcelxcellence lenc e from from their employees e employees engage eng with NAPMW N NAPMW for for up-to-date up-to-date education. educa tion. B Both oth professionals p professionals and emplo emp employers yers e have have found found there there is a plac place e ffor or them in n NAPMW. NAPMW W.
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Ivan Choi of Matt Martin Real Estate Management (MMREM) has been elected chair-elect of the Asian Real Estate Association of America (AAREA).
Earle Thompson has been appointed vice president and manager of WFG National Title Insurance Company’s Louisiana and Mississippi agency groups.
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its wholesale team: Bob Accorto, Mike Berlinski, James Finch, Kimberly Gale, Rich Marfino and Anthony Sarvestani. Equator has announced the following additions to its leadership team: Mira Wolff as vice president of human resources and administration; Russell Walker as vice president of information security and compliance, John Ardy as vice president of technology, Jeff Huffman as director of technology, Stephen Kirkham as director of IT development, and Lance Hamilton as relationship manager. Andrew Bough has joined Solidifi as chief valuations officer. Lisa Hildreth has been named vice president of consulting, Sean Snook has been promoted to vice president of conventional claims and Anthony DiStaulo has been promoted to the position of vice president of client relations and marketing for Claims Recovery Financial Services LLC (CRFS).
Carrington Mortgage Services LLC has announced a few additions to its Mortgage Lending Division, including: Christopher D’Auria as director of inside sales, Eric Gertz as regional sales manager for the Los Angeles area and Christine Lacey as area sales manager. Carrington has also added six new account executives to
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Anti-Money Laundering Program
Preparation is Protection
OHIO MORTGAGE PROFESSIONAL MAGAZINE
By Jonathan Foxx
The Financial Crimes Enforcement Network (FinCEN), a bureau of the U.S. Department of the Treasury, recently finalized regulations (Final Rule) requiring nonbank Residential Mortgage Lenders and Originators (RMLOs) to establish an Anti-Money Laundering Program (AML Program) and file Suspicious Activity Reports (SARs), as FinCEN requires of other types of financial institutions.1 FinCEN issued these regulations defining non-bank residential mortgage lenders and originators as loan or finance companies for the purpose of requiring them to establish AML Programs and report suspicious activities under the Bank Secrecy Act (BSA). The effective compliance date for the Final Rule is Aug. 13, 2012.2 For additional background information, this article may be read in conjunction with my March 2012 article in this publication, entitled “Anti-Money Laundering Debuts for Non-Banks.”3 FinCEN may impose civil monetary penalties for non-compliance with its regulations, including a penalty for each suspicious activity reporting violation, so compliance with the SAR regulations should be considered mandatory on the part of responsible management.4 BSA authorizes the Treasury to issue regulations requiring financial institutions, including any “loan or finance company” to keep records and file
reports that are deemed to have “a high Finance Agency (FHFA), any federal or degree of usefulness in criminal, tax, or state agency or authority administering regulatory investigations or proceedmortgage or housing assistance, fraud ings, or in the conduct of intelligence or prevention or foreclosure prevention counterintelligence activities, including programs, or an individual employed analysis, to protect against internationby a loan or finance company or finanal terrorism.” cial institution. A loan or finance comIn the supplementary information to pany is not a financial institution as the Final Rule, the term loan or finance defined in these regulations. company “can reasonably be construed to extend to any business entity that Residential mortgage lender: The makes loans to or finances purchases on person to whom the debt arising behalf of consumers and businesses. from a residential mortgage loan is Some loan and finance companies initially payable on the face of the extend personal loans and loans secured evidence of indebtedness or, if there by real estate, mortgages and deeds of is no such evidence of indebtedness, trust, including home equity loans.” by agreement, or to whom the obliThe following constitutes these categation is initially assigned at or gorical definitions recognized by FinCEN: immediately after settlement. The term “residential mortgage lender” Loan or finance company: A person shall not include an individual who engaged in activities that take place finances the sale of the individual’s wholly or in substantial part within the own dwelling or real property. United States in one or more of the capacities listed below, whether or not Residential mortgage originator: The on a regular basis or as an organized person accepting a residential mortbusiness concern. This includes but is gage loan application, or offers or not limited to maintenance of any negotiates terms of a residential agent, agency, branch or office within mortgage loan. the United States. The term “loan or finance company” shall include a sole Residential mortgage loan: The loan proprietor acting as a loan or finance that is secured by a mortgage, deed company, and shall not include: A of trust or other equivalent consenbank, a person registered with and sual security interest on: functionally regulated or examined by A residential structure that conthe Securities & Exchange Commission tains one to four units, including (if (SEC) or the U.S. Commodity Futures used as a residence) an individual Trading Commission (CFTC), any govcondominium unit, cooperative ernment-sponsored enterprise (GSE) unit, mobile home or trailer; or regulated by the Federal Housing Residential real estate upon which
such a structure is constructed or intended to be constructed. FinCEN interprets the term “loan or finance company” under the BSA to include any non-bank residential mortgage lenders and originators (i.e., “mortgage companies,” mortgage bankers or lenders,” and “mortgage brokers”) in the residential mortgage business sector. In this article, I will provide a brief overview of but a few of the many salient features that should be expected in every AML Program. To give you an idea of the size and complexity of a well-constructed AML Program, my firm’s AML Program is well over 50 pages—which consists of a policy statement and numerous appendices for applicable procedures. This should give you some idea of the depth and detail needed for properly implementing AML compliance. The absence of or any inaccuracies in required program components may indicate a defective policy and procedures—the very tools needed to assist in detecting and preventing money laundering or other illegal activities conducted through mortgage banking conduits.
A word of caution Do not take the chance of buying an abbreviated or defective AML Program, in the hope of merely satisfying the “basic” FinCEN requirements. Obtaining a boilerplate document with your company’s name on it is regressive, and it is a tactic that
What is money laundering?
The RMLO’s management must institute procedures which are designed to detect money laundering. Management should identify high-risk accounts in the company’s loan production or portfolio, by using various methodologies, such as accessing a federal banking agency’s list, a GSE exclusionary list, or other lists of prohibited and restricted parties. In 2. Designate a BSA Officer who will particular, management should enable be responsible for ensuring that: AML due diligence procedures relating (a) The AML Program is implemented to customers who apply for a mortgage effectively, including monitoring the loan product. compliance of the company’s agents The AML Program is intended to and brokers with their obligations cover initial purchase money loans and under the program. traditional refinancing transactions (b) The AML Program is updated, as neces- facilitated or originated by RMLOs. sary. Furthermore, FinCEN expects that (c) Appropriate persons are educated RMLOs participating in transactions and trained in SAR regulation involving funds or programs under the requirements. Troubled Asset Relief Program and sim(d) Training is provided or arranged. ilar federal programs, or a state housing (e) Testing is arranged. authority or housing assistance program, will follow the AML Program and 3. Provide for on-going training of file SARs to the extent that any transacappropriate persons concerning their tions conducted by the RMLO could rearesponsibilities under the program: An sonably be considered to be extending a RMLO may satisfy this requirement with residential mortgage loan or offering or respect to its employees, agents, and negotiating the terms of a residential brokers by directly training such per- mortgage loan.7 sons or verifying that such persons have Management and the BSA Officer received training by a competent third- should create certain reports to monitor party with respect to the loan products for potential suspicious activity transacand services offered. tions. Furthermore, all affected employees ought to receive adequate internal 4. Arrange for testing to monitor and or external training on detecting money maintain an adequate program, includ- laundering and other illegal activities. ing further testing to determine compliI would advise management to ance of the company’s agents and bro- require the on-going use of certain kers with their obligations under the AML search engines and applications perProgram: The scope and frequency of the taining to all residential mortgage loan testing should be commensurate with the originations, in order to monitor for filrisks posed by the company’s loan prod- ing suspicious activity reports (i.e., such ucts and services. Such testing may be as LexisNexis, Interthinx, OFAC screenconducted by an independent third party ing through Credit Reporting Agencies, or by any officer or employee of the com- and so forth). pany, other than the BSA Officer.6
Money laundering is the criminal practice of filtering “ill-gotten gains” or “dirty” money through a maze or series of transactions, in an effort to “clean” these funds and make them appear to be proceeds from legal transactions. Money laundering does not always involve cash transactions at every stage of the money laundering process. Any transaction conducted through the RMLO has the potential to constitute money laundering. Although money laundering is a diverse and often complex process, it often involves three independent steps, which at times occur simultaneously: Placement: The process of placing, through deposits, assets, or other means, unlawful cash proceeds with traditional financial institutions. Layering: The process of separating the proceeds of criminal activity from their origin through the use of layers of complex financial transactions, such as converting cash into traveler’s checks, money orders, wire transfers, letters of credit, stocks, bonds, mortgages, or purchasing valuable assets, such as art or jewelry. Integration: The process of using an apparently legitimate transaction to disguise the illicit proceeds, allowing the laundered funds to be disbursed back to the criminal. Different types of financial transactions, such as sham loans, or through legitimate residential mortgage loan transactions, may be used to consummate the integration.
Minimum program requirements5 The following four initiatives must be
Program parameters Incorporate policies, procedures, and internal controls based upon the RMLO’s assessment of the money laundering risks associated with its products and services. Policies, procedures, and internal controls developed and implemented by a loan or finance company should include provisions for integrating the company’s agents and brokers into its AML Program, and it should obtain all relevant customer-related information necessary for an effective AML Program.
Risk profile review Management should follow all guidance offered by the RMLO’s federal regulator and/or the Financial Crimes Enforcement Network (FinCEN) concerning money laundering risks. A risk assessment should be updated and documented from time to time, but no less than every 18 months. Any changes to a company’s risk profile should be reported to management, and internal controls to identify and mitigate risk must be implemented.
Monitoring for suspicious activity
Suspicious activity reporting
RMLOs should conduct an assessment of the overall risk for money laundering. To determine such risk, the following
If any company employee becomes aware of or suspects criminal activity by either the company’s customers or
employees, the employee should promptly report the matter to the BSA Officer. The BSA Officer is then required to investigate the matter further to determine whether to report the suspicious activity to FinCEN. The investigation should be based on an objective consideration of the facts, as submitted by the employee and uncovered in the course of the BSA Officer’s review. Generally, supporting documentation may not need to be immediately filed along with the SAR when it is submitted to FinCEN, but the company should maintain all documentation that supports the facts and circumstances of the SAR review in a special SAR folder, restricted to only specific, need-to-know individuals, and also kept either in hard copy or on computer disk, CD, or on anti-money laundering software. The RMLO is not obligated to investigate or confirm the underlying crime (i.e., terrorist financing, money laundering, tax evasion, identity theft, and various types of fraud). Investigation is the responsibility of law enforcement. When evaluating suspicious activity and completing the SAR, the RMLO should endeavor to identify the characteristics of the suspicious activity to the best of its ability. After filing the SAR, all documentation related to such filing must be retained for five years from the date of the filing.
SAR disclosure— prohibition No director, officer, employee, or agent of an RMLO that reports a suspicious transaction is permitted to notify any person involved in the transaction that the transaction has been reported to FinCEN through filing the SAR. Any person subpoenaed or otherwise requested to disclose a SAR or the information contained in a SAR, except when such disclosure is requested by FinCEN or an appropriate law enforcement or federal banking agency, must decline to produce the SAR or provide any information that would disclose that a SAR has been prepared or filed.8 Many RMLOs have had some difficulty understanding this provision. The BSA Officer and any other staff aware of the possibility of a suspicious activity must keep such information confidential. Actual SARs are also to be kept confidential. Any person subpoenaed or otherwise requested to disclose a SAR or the information contained in a SAR should decline to produce the information and seek the advice of legal counsel. If the company determines it is necessary to report a suspected illegal activity to local law enforcement authorities, or has been told to do so by FinCEN, the BSA Officer should carefully review all known facts. SARs may be filed when there is a reasonable basis for believing that a specific crime has occurred, is occurring, or may occur. FinCEN and regulators should be continued on page 24
Actually, any transaction that could be or appears to be linked to a common scheme may be considered suspicious activity.
1. Establish a written policy and set of procedures Each RMLO is required to develop and implement a written anti-money laundering program that is reasonably designed to prevent it from being used to facilitate money laundering or the financing of terrorist activities. The AML Program must be approved by senior management. Be advised: An RMLO must make its written, anti-money laundering program available to the Financial Crimes Enforcement Network or its designee, upon request.
questions are important: What are the RMLO’s products and services? Who are the RMLO’s customers? What information is understood about the RMLO’s customers? Which geographic locations and locations of the customers affect the RMLOs risk profile?
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implemented on and after Aug. 13, 2012:
Examiners are now regularly criticizing in adverse findings. These days, regulators are fully aware of this ‘short cut’ to compliance. An insufficient AML Program may cause adverse examination findings. Indeed, in some cases, template-driven policy and procedures may cause Examiners to escalate their regulatory review of an RMLO’s anti-money laundering implementation. AML compliance is a specialized area of mortgage compliance, necessitating genuine, practical, hands-on, regulatory compliance and experiential knowledge, and an AML Program must reflect precise policies and procedures that not only implement the SAR regulations but also conform to a company’s way of doing business. Please take note: An AML Program is a policy statement and set of procedures where the purchase price should not be an operative consideration. Caveat Emptor!
anti-money laundering program notified of any subpoena or request to disclose the SAR, as well as the company’s response thereto. Furthermore, FinCEN and, if applicable, the company’s regulator fully expect that the RMLO’s internal controls for SAR filing have substantively minimized the risk of such disclosure. Thus, the RMLO should maintain appropriate means to protect the confidentiality of SARs. FinCEN guidance does not require an RMLO to share a SAR with a corporate affiliate other than a controlling company or head office. However, in order to manage risk across a company’s corporate structure involving corporate affiliates, the company should determine that when a SAR is filed the information underlying a SAR filing may be disclosed, under certain, narrowly defined circumstances, to the BSA Officer of its corporate affiliate.
Safe harbor from liability
Federal law9 provides protection from civil liability for all reports of suspicious transactions made to appropriate authorities, including supporting documentation, regardless of whether such reports are filed pursuant to the SAR instructions. Specifically, the law provides that a financial institution and its directors, officers, employees, and agents that make a disclosure to the appropriate authorities of any possible violation of law or regulation, including a disclosure in connection with the preparation of SARs:10
continued from page 23
If FinCEN further delegates examination authority, it has stated its commitment to work with the other relevant regulatory agencies to develop consistent examination procedures.12
Training The BSA Officer must conduct or arrange for annual meetings with all affected employees and other company personnel who handle any aspect of residential mortgage loan transactions, in order to keep them informed of any new changes to FinCEN requirements or any laws and updates that may affect the company’s AML Program. It is also the responsibility of the BSA Officer to see that all employees are trained in AML compliance at the time of their initial employment. Additional meetings or other training should be held, as necessary, to address AML news and process concerns that arise in the interim. Training may be conducted through presentations at a meeting, circulation of memoranda or other written materials, or any other suitable manner of delivery. Training may be internal or external. A copy of all training materials presented or circulated should be retained by the BSA Officer along with a written record of attendance by affected personnel. At least once per year, the BSA Officer should attend an external training session or conference relating to the Bank Secrecy Act, fraud detection, or money laundering.
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Testing “Shall not be liable to any person under any law or regulation of the United States, any constitution, law, or regulation of any State or political subdivision of any State, or under any contract or other legally enforceable agreement (including any arbitration agreement), for such disclosure or for any failure to provide notice of such disclosure to the person who is the subject of such disclosure or any other person identified in the disclosure.”11 This safe harbor protection applies to SARs filed within the required reporting risk profile thresholds of the RMLO’s AML Program, as well as to SARs filed voluntarily on any suspicious activity below those threshold parameters.
Examination and enforcement Initially, the Internal Revenue Service (IRS) has the delegated authority to examine for compliance with FinCEN’s regulations since RMLOs do not have a federal function regulator. FinCEN has announced that it will determine whether other state and federal agencies, such as the Consumer Financial Protection Bureau (CFPB) and the federal banking agencies, should also have examination authority.
The RMLO may use the services of an independent, external auditor to review its policies, procedures, and processes, and test the overall compliance with statutory and regulatory requirements for monitoring, detecting, and reporting suspicious activities. An internal auditor may conduct the testing, so long as the BSA Officer is not involved in the audit and due diligence process. The testing itself should include, but need not be limited to, certain aspects of compliance with SAR regulations, especially providing an audit scope that contains the following elements: Identification of Unusual Activity Transaction (Manual Transaction) Monitoring Surveillance (Automated Account) Monitoring Managing Alerts SAR Decision Making SAR Completing and Filing Transaction Testing
Required reporting Every RMLO must file a report with FinCEN of any suspicious transaction relevant to a possible violation of law or regulation. An RMLO may also file with FinCEN a report of any suspicious transaction that it believes is relevant to the
possible violation of any law or regulation, but whose reporting is not required. A transaction requires reporting if it is conducted or attempted by, at, or through an RMLO if the transaction involves or aggregates funds or other assets of at least $5,000, and the RMLO knows, suspects, or has reason to suspect that the transaction (or a pattern of transactions of which the transaction is a part): 1. Involves funds derived from illegal activity or is intended or conducted in order to hide or disguise funds or assets derived from illegal activity (including, without limitation, the ownership, nature, source, location or control of such funds or assets), as part of a plan to violate or evade any federal law or regulation or to avoid any transaction reporting requirement under federal law or regulation. 2. Is designed, whether through structuring13 or other means, to evade any SAR filing requirements or any other regulations promulgated under the BSA. 3. Has no business or apparent lawful purpose or is not the sort of activity in which the particular customer would normally be expected to engage, and the RMLO knows of no reasonable explanation for the transaction after examining the available facts, including the background and possible purpose of the transaction. 4. Involves the use of the RMLO to facilitate criminal activity. More than one RMLO may have an obligation to report the same transaction, and other financial institutions may have separate obligations to report suspicious activity with respect to the same transaction. In those instances, no more than one report is required to be filed by the RMLO and other financial institutions involved in the transaction. However, out of an abundance of caution, the RMLO should file a SAR when it has reached the decision to file a SAR with FinCEN.
Timing for filing SAR Reports The SAR rules require that a SAR be filed no later than 30 calendar days from the date of the initial detection of facts that may constitute a basis for filing a SAR. If no suspect can be identified, the time period for filing a SAR is extended to 60 days. The time period for filing a SAR starts when the RMLO knows or has reason to suspect that the activity or transactions under review meet one or more of the definitions of suspicious activity. The phrase “initial detection” should not be interpreted as meaning the moment a transaction is highlighted for review. There are a variety of legitimate transactions that could raise a “red flag” simply because they are inconsistent with normal account activity. The 30day (or 60-day) period does not begin until an appropriate review is conduct-
ed and a determination is made that the transaction under review is “suspicious” within the meaning of FinCEN’s SAR regulations. In any event, the review should be completed in a reasonable period of time. What constitutes a “reasonable period of time” will vary according to the facts and circumstances of the particular matter being reviewed and the effectiveness of the SAR monitoring, reporting, and decision-making process. The key factors are that the RMLO has (1) established adequate procedures for reviewing and assessing facts and circumstances identified as potentially suspicious, (2) that those procedures are documented, and (3) followed in accordance with SAR regulations and the company’s AML Program. For situations requiring immediate attention, in addition to filing a timely SAR, the company should immediately notify, by telephone, an “appropriate law enforcement authority” and, as necessary, the company’s own primary regulator or state banking department. For this initial notification, an “appropriate law enforcement authority” would generally be the local office of the IRS Criminal Investigation Division or the Federal Bureau of Investigations. However, notifying law enforcement of a suspicious activity does not relieve an RMLO of its obligation to file a SAR. For suspicious activity related to terrorist activity, an RMLO may also call FinCEN’s Financial Institutions Hotline at the toll-free number (866) 556-3974 (seven days a week, 24 hours a day) to further facilitate the immediate transmittal of relevant information to the appropriate authorities. The Hotline provides law enforcement and other authorized recipients of SARs information with details of the suspicious activity in an expedited fashion. Using the Hotline is voluntary and is not a substitute for the responsibility to file a SAR in accordance with applicable regulations.
Red flags The Federal Financial Institutions Examination Council (FFIEC) provides a Bank Secrecy Act/Anti-Money Laundering Examination Manual in which may be found a list of “Red Flags” associated with Money Laundering and Terrorist Financing.14 This list is not comprehensive and it is updated from time to time. However, many of these Red Flags are not specifically relevant to RMLO transactions. In addition, the RMLO may utilize the 26 red flags list of identity theft detection compiled by the Federal Trade Commission (FTC), and adopted through interagency guidelines, in the guidelines implementing Section 114 and Section 315 of the Fair and Accurate Credit Transactions Act of 2003 (FACTA).15 And, as indicated above, various search engines and lists are available to highlight or identify potential incidents of suspicious activity.
Using the FFIEC list, I will provide a brief sampling of the types of red flags that may be involved in RMLO transactions. Keep in mind that this list is by no means all-inclusive, but only illustrative. It offers some insights into where Examiners recognize possible money laundering and terrorist financing schemes. The mere presence of a red flag is not by itself evidence of criminal activity. Closer scrutiny should help to determine whether the activity is suspicious or one for which there does not appear to be a reasonable business or legal purpose. Insufficient or suspicious information A customer uses unusual or suspicious identification documents that cannot be readily verified. A customer provides an individual tax identification number after having previously used a social security number. A customer uses different tax identification numbers with variations of his or her name. A customer’s home or business telephone is disconnected. The customer’s background differs from that which would be expected on the basis of his or her business or employment activities. A customer makes frequent or large transactions and has no record of past or present business or employment experience that may substantiate and explain the transactions.
As mentioned above, the AML Program training may be conducted on an internal or external basis. Whatever the choice, the training should at least consist of the following topics:
SAR narrative: “The Five Ws” If I were to choose the central feature of the SAR, I would select the SAR narrative. Each SAR requires a narrative to be provided by the SAR filer. Over time, my firm has compiled numerous examples of common patterns of suspicious activities from our audit and due diligence reviews. Based on our experience, we believe that there are five interrogative categories to be considered when writing a SAR narrative: Who? what? when? where? and why? The method of operation (or how?) is also very important and should be included in the SAR narrative. Here are “The Five Ws” to the SAR narrative 1. Who is conducting the suspicious activity? 2. What instruments or mechanisms are being used to identify the suspicious activity? 3. When did the suspicious activity take place? 4. Where did the suspicious activity take place? 5. Why does the filer think the activity is suspicious? FinCEN suggests that the RMLO describe briefly its industry or business (i.e., mortgage banker, mortgage broker). Then describe, as fully as possible, why the activity or transaction is unusucontinued on page 34
What is anti-money laundering? What are the customary red flags? Which government agencies are involved in AML compliance?
Understanding money laundering and the adverse effects on mortgage professionals. Exploring the Bank Secrecy Act, including the general history, objectives, coverage, requirements, and penalties for violations. Briefly taking a look at the USA Patriot Act, specifically its coverage in relation to RMLOs. Examining the role of government agencies in the prevention of money laundering. Reviewing the requirements of an appropriate Anti-Money Laundering Program. Outlining the types, detection, and potential presence of suspicious activity. Analyzing risk management and information sharing protocol. Discussing educational opportunities hosted by FinCEN or offered through other venues.
OHIO MORTGAGE PROFESSIONAL MAGAZINE
In my view, there are certain learning objectives to a viable training format. These are the goals that my firm seeks to accomplish through our AML training:
Funds and asset transfers Many funds transfers are sent in large, round dollar amounts, without adequate explanation or verifiable sourcing. Source of funds in asset statements occurs to or from a financial secrecy haven, or to or from a higher-risk geographic location without an apparent business reason, or the activity is inconsistent with the customer’s business or employment history. Large, incoming funds transfers are received from a foreign entity, with little or no explicit reason or documentable explanation. Funds transfer activity in asset statements is unexplained, repetitive, or shows unusual patterns. Payments or receipts are evidenced with no apparent links to legitimate contracts, businesses, employment, goods, or services.
How is suspicious activity reporting implemented? What are the typical money laundering typologies? How to complete a SAR? What is a customer identification program?
Jonny Fowler, Director of National Production America’s Choice Home Loans BY DAVID J. COSTER
OHIO MORTGAGE PROFESSIONAL MAGAZINE
Each month, National Mortgage Professional Magazine focuses on one of the industry’s top players in our “Mortgage Professional of the Month” feature. This month, we had a chance to chat with Jonny Fowler, director of national production at America’s Choice Home Loans LP (ACHL), based in Houston, Texas. ACHL has been in business since 1998 and is an expanding, full-service mortgage banker with branches nationwide. Jonny Fowler is the Harley-Davidsonriding son of a Texas oil field worker, a former competitor in the mixed-martial arts contest known as the Texas Tough Man Competition and a passionate voice on behalf of the industry he cares so deeply about. We recently had a chance to catch up with Fowler and avoid a submission hold long enough to get a few questions answered. Fowler’s story is a familiar one to those of us who have been in the mortgage industry for more than 15 years. With inspiration from role models, hard work and dedication to his industry, Fowler built a successful career that has provided a life that he wasn’t sure was possible. Tell us about your background. I was born in Texarkana, Texas on August 12, 1968. My father is from Hope, Arkansas and my mother was originally born in New Orleans, La. and grew up in New Iberia, La. When I was very young, must have been two- or three-years-old, my parents moved from Texarkana to the Houston area for my father’s work. I grew up in Houston, and have been in the Houston area ever since. I followed in my father’s footsteps for a number of years in the oil field industry. What sort of activities do you take part in when away from the office? Nowadays, I’m too old for most of the hobbies I used to be into, and too beat up! I used to do different things in martial arts. I used to do what they called the Texas Tough Man Contest, competing in mixed-martial arts tournaments and things like that. I used to ride dirt bikes but now I just ride Harleys. They’re much more
“Technology cannot replace personal relationships, and technology will never replace a handshake or an eye-to-eye sit-down and visit.”
stable and slower. Now, I enjoy spending time with my family. I’m one of those guys that I’m ready for anything at a moment’s notice, all I need to do is pack my toothbrush and I’m ready to go. Why did you enter the mortgage industry to begin with? Was it planned, accidental or did you see an opportunity to make a lot of money? In 1994, I bought my first house. I had owned a condo before that was owner-financed, but I financed my first house with a traditional mortgage. I met with a loan officer, one time and never saw him again. In fact, I never heard from him again. He wouldn’t return any of my phone calls. I also talked to a processor, who bothered the heck out of me and called me at least two or three times a day for a month. She never seemed like she could get her act together. She would call every day asking for one thing at a time in piecemeal fashion and I got frustrated. Later on, I found out that a lot of people in that position get frustrated. At one point, I remember asking her, “Can’t you put all of these things on a list and give it to me at one time so I can look for everything at once?” I remember there being silence on the phone.
What specifically is it about the mortgage business that appealed to you? With the mortgage industry, you have a more intimate relationship with the people you are trying to help. Not only that, but I really enjoyed working with the first-time homebuyer. There were so many people whom I could help. That’s why I decided to get into the mortgage business fulltime and make it my life choice and career. Do you have any role models in the industry? What did they teach you? I was 17-years-old and still in high school and working at a gas station part-time. I went to work for a Greek man whose name I could never spell. He went by “Sandy.” One time, he was trying to find something that had been lost in the gas station. He looked at me told me to go jump in the dumpster and see if I could find it. I looked at him like he was crazy and he repeated it. I told him, “No, I’m not going in a dumpster.” I then watched this man that had a lot of money, a lot of friends, with everything going great in his life jump in that dumpster and search that dumpster to find what he was looking for. When he got out, instead of screaming at me, instead of firing me, any-
thing like that, he came up and he looked me in the eye and said, “I will never ask you to do something that I wouldn’t do myself.” And from that moment on, everything that that man did stuck with me. I have tried to emulate a lot of what he instilled in me. The other role model I would highlight is Sandra Wiley, former senior vice president at Allied in charge of training. I started working with Sandra when I was 30-years-old I think. Sandra has this demeanor about her. She is always calm, cool and professional. If you are willing to open your ears and close your mouth, she tries to help and teach and guide you. She is very much like a guidance counselor, a school teacher, somebody that I’m so proud to have known in my life. Whether she knows it or not, she will always be a mentor, with her management style. She is the type of human being that I would like to emulate myself. Currently, Sandra is corporate trainer and compliance manager for Service First Mortgage in Richardson, Texas. What role does technology play in the mortgage business? Effective technology that improves the efficiency and accuracy of the origination process is crucial. However, you only get one time to make a first impression. Technology cannot replace personal relationships, and technology will never replace a handshake or an eye-to-eye sit-down and visit. What do you feel is the best environment for an originator? I say a branch-type company, for me anyway, and for a lot of the people I know, would be the best place. Because originators have an advantage with the backing of a good branch company, that has their eye on compliance, has their eye on the market, has their eye on what’s going on in the industry. As part of a wellrun branch firm, the road is basically open to them to be able to bring the customers in their area the best prodcontinued on page 34
nmp news flash
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amongst buyers and sellers, saving them time and resources in investigations to detect and prevent mortgage fraud. The CII ranks states and is an analysis of deed transfers where it has been determined that there is a potential relationship between the buyer and seller—particularly when a property has been transferred at a significant loss between relatives and known associates. For 2011, Alabama, New York, Kentucky, Pennsylvania, and Indiana ranked first through fifth on the Collusion Indicator Index for properties experiencing a 20-95 percent decrease in sales price and mortgage collusion index. Also in 2011, for properties with a 50-95 percent decrease in sales price, Vermont, West Virginia, Alabama, Pennsylvania, and Louisiana are ranked one through five.
HUD Accepting Apps for the Purchase of Former FHA-Insured Distressed Loans Pools
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OHIO MORTGAGE PROFESSIONAL MAGAZINE
Qualified entities interested in purchasing pools of severely distressed loans formerly insured by the Federal Housing Administration (FHA) can now submit applications for the Distressed Asset Stabilization Program, an expansion of an FHA disposition program that sells pools of defaulted mortgages headed for foreclosure and provides the opportunity for the purchaser and borrower to avoid a costly foreclosure. According to loan pool information released, approximately 3,500 loans will be sold in four metropolitan areas that are among those hardest hit by the foreclosure crisis—Chicago, Ill.; Newark, N.J.; Phoenix, Ariz.; and Tampa, Fla.—aligning with other neighborhood stabilization efforts to help those communities recover as quickly as possible. The program is part of the Obama Administration’s broader strategy to encourage public/private partnerships to stabilize neighborhoods and home values in critical markets. Under the program, loans are sold competitively at a market-determined price generally below the outstanding principal balance. FHA then processes an insurance claim, removes the FHA insurance and transfers the loan to the investor. Once the note is purchased, foreclosure is delayed for a minimum of six additional months, giving the new servicer time to work through alternatives with the borrower, possibly finding an affordable solution to allow the borrower to remain in their home. Because the loans are generally sold for less than what the borrower currently owes, the purchaser has the ability to reduce or
that shows that while mortgage fraud rates among industry professionals were down in 2011, there is evidence of significant increases in potential collusion fraud activity in the past three years. The LexisNexis 14th Annual Mortgage Fraud Report, formerly known as the Mortgage Asset Research Institute (MARI) Report, examines the current state of subscriber-verified residential mortgage fraud and misrepresentation in the U.S. committed by industry professionals, based on data submitted by LexisNexis Mortgage Industry Data Exchange (MIDEX) subscribers. Based on incident reports submitted by MIDEX subscribers prior to 2009, evidence of collusion by professionals in the mortgage industry was relatively consistent at just below five percent of all loan originations. Seven percent of loans originated in 2009 were reported with evidence of collusion. That percentage jumped to 9.7 percent for 2010. Last year’s number was down to 6.8 percent, still slightly above historic levels. LexisNexis utilizes MIDEX submissions to develop representative statistics on a wide range of mortgage fraud and misrepresentation characteristics. The Mortgage Fraud Index (MFI) ranks states on the incidence of fraud, both in terms of investigations and loan originations. For 2011, Florida headed the list as the state with the highest MFI for investigations followed by Nevada, Arizona, Michigan and Rhode Island. In mortgage originations, New Jersey and Colorado topped the list followed by Florida, Michigan and California. In addition, closer analysis of the most reported areas for fraud and misrepresentation for loans originated in 2011 yields five Metropolitan Statistical Areas (MSAs) that combined represent 46 percent of all reports received. The top three MSAs were Los AngelesRiverside-Orange County, California with 16 percent fraud, followed by New York-Northern New Jersey-Long Island with 11 percent fraud, followed by Miami-Fort Lauderdale, Florida with seven percent. “Increased levels of fraud and misrepresentation in the foreclosure, short sale, and real estate-owned worlds have pushed the issue of collusion to the forefront,” said Tom Brown, senior vice president of financial services for LexisNexis. “Now, more than ever before, these complex schemes are coming under increased scrutiny and investigators need to pay attention to all parties and relationships in nonarm’s length transactions. Data alone is not enough to identify fraud. It’s the application of linking technologies and analysis that shines a light on collusion and fraud in general.” LexisNexis has also created the first Collusion Indicator Index (CII) to help the mortgage industry understand and pinpoint areas of potential collusion
nmp news flash Planting Our Flag
Direct approval status guarantees a market for brokers By Al Crisanty
OHIO MORTGAGE PROFESSIONAL MAGAZINE
Like many of you, I recently watched the opening ceremonies for the Olympic Games being held in London. I was particularly struck by the parade of athletes from 200-plus nations, 81 of which had never won an Olympic medal. In their sometimes attractive, sometimes gaudy, outfits they marched into the stadium led by a flag bearer who proudly waved their nation’s symbol for the world to see before planting it in the ground beside the flags of other nations. This symbolic planting of the flag made a powerful statement: “We are here … We are dedicated to our sport and loyal to our country … We will bring home the gold!” As the mortgage industry has faced relentless challenges over the past five years, the wholesale channel has been repeatedly written-off. Yet proud participants in this competition have repeatedly planted their flag, claimed the right to compete and vowed to meet any obstacle put in their path. In an expanded piece elsewhere in this edition of National Mortgage Professional Magazine, Mark Greco, president of mid-level wholesale mortgage banker 360 Mortgage Group, discusses the rationality of the wholesale mortgage market and how all of the participants have made decisions based on their individual best interests. For remaining lenders, serving this channel after the departure of the major banks, one decision has been crucial in signaling a strong commitment to the wholesale channel and fortifying broker relationships. That decision—this planting of the flag, if you will—was to obtain agency direct status with either Fannie Mae or Freddie Mac and with Ginnie Mae as well. Direct Agency Approval status is held by only a few of the mid-level mortgage banks. It is essential today for a mortgage bank to possess this status if they expect to survive. Increased net worth requirements and the lengthy and complex agency approval process, means that those mortgage bankers yet to proceed down this path have a difficult road ahead of them. What is Agency Direct Approval status and why is it so important to mortgage brokers? Agency Direct Approval status enables a wholesale mortgage banker to underwrite loan files in accordance with the standards of the government-sponsored enterprises (GSEs) that currently comprise the vast majority of the secondary market for residential loans. When a Direct Approval mortgage bank follows these guidelines in approving loans they are guaranteed that the agencies will purchase the loans. Simply put, unless a mortgage banker has Agency Direct Approval, that mortgage banker cannot guarantee a market for a loan originated by a broker. Without big banks and their Agency Direct Approval, brokers must have relationships with firms who are guaranteed market-makers for their loan files. Wholesale mortgage lending, through experienced, high integrity brokers will produce the highest quality loans in the market. Together we can march into the market place, proudly plant our flag and declare: “We are here to stay … We are committed to supporting our industry and our customers … We will succeed!” Al Crisanty is vice president of national wholesale production for 360 Mortgage Group and is responsible for overseeing regional sales managers as the company seeks to expand operations to all 50 states. Formerly the national wholesale director for Caliber Funding, Al was responsible for the development and expansion of Caliber’s wholesale production channel. Additionally, Al served as executive vice president of national production for American Home Mortgage, successfully transitioning the 500-member production team from Capital Commerce Mortgage Company. Al may be reached by phone at (916) 761-1624 or email email@example.com. SPONSORED EDITORIAL
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modify the loan terms while still making a return on the initial investment. If no viable alternatives exist, the purchaser may be able to help the borrower sell the property through a short sale and avoid the costs of foreclosure. FHA began selling distressed single family loans through what is now the Distressed Asset Stabilization Program in 2010 and has successfully sold more than 2,100 single family loans to date. An FHAapproved mortgagee can file a claim for FHA insurance benefits and assign the loan to FHA if the borrower is at least six months delinquent on their mortgage; the servicer has exhausted all steps in the FHA loss mitigation process; the servicer has initiated foreclosure proceedings; and the borrower is not in bankruptcy. These assigned loans are then pooled by FHA for resale through the Distressed Asset Stabilization Program. In addition to the standard note sales, the enhanced program features new neighborhood stabilization requirements to encourage investment in communities hit hardest by the foreclosure crisis. Approximately 40 percent of the 9,000 loans in the sale scheduled for September 2012 will be located in Chicago, Ill.; Newark, N.J.; Phoenix, Ariz.; and Tampa, Fla.—four metropolitan areas where high numbers of seriously delinquent loans could expand an already large inventory of real estate-owned (REO) properties over the coming months. Designed to help stem the flow of distressed properties hitting these markets, these neighborhood stabilization requirements provide that no more than 50 percent of the loans within a purchased neighborhood stabilization pool may be sold as REO properties. All parties seeking to bid on the sale pools must first be qualified by the U.S. Department of Housing & Urban Development (HUD). Parties seeking to bid in the neighborhood stabilization pools are required to meet several additional criteria to ensure they will comply with the program’s goal that fewer homes end up as vacant REO properties in metro areas already struggling with high numbers of foreclosures. Eligible investors must have experience in asset management and property management, as well as a proven track record in helping borrowers seriously delinquent on their loans to re-perform or to achieve an affordable alternative to foreclosure. An emphasis will be placed on experience within the metro area in which the bidder is interested.
DOJ Reaches $125 Million Settlement With Wells Fargo on Lending Discrimination Charges The U.S. Department of Justice (DOJ) has filed the second largest fair lending settlement in the Department’s history to resolve allegations that Wells Fargo Bank engaged in a pattern or practice of dis-
crimination against qualified AfricanAmerican and Hispanic borrowers in its mortgage lending from 2004 through 2009. The settlement provides $125 million in compensation for wholesale borrowers who were steered into sub-prime mortgages or who paid higher fees and rates than White borrowers due to their race or national origin. Wells Fargo will also provide $50 million in direct downpayment assistance to borrowers in communities around the country where the Department identified large numbers of discrimination victims and which were hard hit by the housing crisis. “Wells Fargo is settling this matter solely for the purpose of avoiding contested litigation with the DOJ, and to instead devote its resources to continuing to provide fair credit services and choices to eligible consumers, and important and meaningful assistance to borrowers in distressed U.S. real estate markets,” said an official statement from Wells Fargo. Additionally, Wells Fargo has agreed to conduct an internal review of its retail mortgage lending and will compensate African-American and Hispanic retail borrowers who were placed into sub-prime loans when similarly qualified White retail borrowers received prime loans. Compensation paid to any retail borrowers identified in the review process will be in addition to the $125 million to compensate wholesale borrowers who were victims of discrimination. The settlement, which is subject to court approval, was filed July 12 in the U.S. District Court for the District of Columbia in conjunction with the Department’s complaint, which alleges that between 20042008, Wells Fargo discriminated by steering approximately 4,000 African-American and Hispanic wholesale borrowers, as well as additional retail borrowers, into subprime mortgages when non-Hispanic White borrowers with similar credit profiles received prime loans. All the borrowers who were allegedly discriminated against were qualified for Wells Fargo mortgage loans according to Well Fargo’s own underwriting criteria. The U.S. also alleges that, between 2004-2009, Wells Fargo discriminated by charging approximately 30,000 AfricanAmerican and Hispanic wholesale borrowers higher fees and rates than nonHispanic white borrowers because of their race or national origin rather than the borrowers’ credit worthiness or other objective criteria related to borrower risk. “Wells Fargo is settling this matter because we believe it is in the best interest of our team members, customers, communities and investors to avoid a long and costly legal fight, and to instead devote our resources to continuing to contribute to the country’s housing recovery,” said Mike Heid, president of Wells Fargo Home Mortgage. “Wells Fargo takes pride in serving the home ownership needs of all of our customers, and we are fully committed to fair and responsible lending.”
J.D. Power Finds Overall Satisfaction With Servicers Increases
AARP: Record Number of Seniors Facing Foreclosure
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AARP’s Public Policy Institute (PPI) has released a new study measuring the progression of the mortgage crisis and its effect on people age 50 and older. Looking at nationwide loan-level data for 2007 through 2011, the analysis finds that more than 1.5 million older Americans lost their homes since 2007. The study also finds that the percentage of seriously delinquent loans—those in foreclosure and loans 90 or more days delinquent—increased from 1.1 percent in 2007 to six percent as of December 2011 for people age 50 and
OHIO MORTGAGE PROFESSIONAL MAGAZINE
Historically low interest rates, combined with proprietary and government loan modification programs, have helped reduce the number of homeowners in distress, according to the latest J.D. Power and Associates 2012 U.S. Primary Mortgage Servicer Satisfaction Study. According to the study, seven percent of homeowners indicate their loan status is “current” as a direct result of a loan modification or other payment arrangement, compared with four percent in 2011. In addition, 15 percent of customers say they have concerns keeping mortgage payments current, down from 17 percent in 2011. “Over the past few years, among the primary reasons for lower levels of satisfaction were challenges in addressing the needs of customers concerned about mak-
ing their payment or who were already delinquent,” said Craig Martin, director of the mortgage practice at J.D. Power and Associates. “Significant improvements in mortgage servicing, particularly with the method in which calls are handled, have improved customer satisfaction for the first time in three years.” Overall satisfaction with primary mortgage servicers has increased to 725 (on a 1,000-point scale) from 718 in 2011. The study measures customer satisfaction in four areas of the mortgage servicing experience: Billing and payment process; escrow account administration; Web site; and phone contact. Satisfaction in all factors has increased from 2011. Overall satisfaction among at-risk customers, those who are behind on their mortgage payments or are concerned about making future payments, improves the most, increasing by 27 points from 2011, compared with non-prime and prime customers (+3 point and -3 points, respectively). At-risk customers are the most likely to contact their mortgage servicer (75 percent), compared with nonprime (41 percent) and prime (32 percent) customers. Satisfaction among customers who contact their servicer via phone increases by 52 points from 2011. “In the past, satisfaction is typically higher when customers do not need to contact their servicer, which makes the increase in overall satisfaction among at-risk customers that much more impressive,” said Martin. “By focusing on improving the contact experience, servicers have been able to improve satisfaction among customers who are most likely to be dissatisfied.” BB&T (Branch Banking & Trust) ranked highest in customer satisfaction among primary mortgage servicers for a third consecutive year, with a score of 803, a 35-point increase from 2011. BB&T achieves the highest scores in three factors: website; escrow account administration; and billing and payment process. Regions Mortgage follows in the rankings with a score of 779, while SunTrust Mortgage ranks third with 758. The 2012 U.S. Primary Mortgage Servicer Satisfaction Study is based on responses from 5,623 customers regarding their experiences with their primary mortgage servicer and was fielded between April and May 2012.
The complaint alleges that AfricanAmerican and Hispanic wholesale borrowers paid more than non-Hispanic White wholesale borrowers, not based on borrower risk, but because of their race or national origin. Wells Fargo’s business practice allowed its loan officers and mortgage brokers to vary a loan’s interest rate and other fees from the price it set based on the borrower’s objective credit-related factors. This subjective and unguided pricing discretion resulted in African-American and Hispanic borrowers paying more. The complaint alleges that Wells Fargo was aware the fees and interest rates it was charging discriminated against AfricanAmerican and Hispanic borrowers, but the actions it took were insufficient and ineffective in stopping it. The complaint also alleges that, as a result of Wells Fargo’s policies and practices, qualified African-American and Hispanic wholesale borrowers were placed in subprime loans rather than prime loans even when similarly-qualified nonHispanic white borrowers were placed in prime loans. The discriminatory placement of wholesale borrowers in subprime loans, also known as “steering,” occurred because it was the bank’s business practice to allow mortgage brokers and employees to place a loan applicant in a sub-prime loan even when the applicant qualified for a prime loan . In addition, Wells Fargo gave mortgage brokers discretion to request exceptions to the underwriting guidelines, and Wells Fargo’s employees had discretion to grant these exceptions. The Department began its investigation into Wells Fargo’s lending practices in 2009 and received a referral in 2010 from the Office of the Comptroller of the Currency (OCC) which conducted its own parallel investigation of Wells Fargo’s lending practices in the Baltimore and Washington, D.C. metropolitan areas. The OCC found that there was reason to believe that Wells Fargo engaged in a pattern or practice of discrimination in these metro areas on the basis of race or color, in violation of the Federal Housing Administration (FHA) and the Equal Credit Opportunity Act (ECOA).
Higher Standards Heighten the Integrity and Accuracy of Property Valuation By David Rasmussen
OHIO MORTGAGE PROFESSIONAL MAGAZINE
Automated valuation model (AVM) accuracy has increased dramatically in recent years due to model enhancements, the availability of new data sources and a renewed focus on valuation precision. The concept is pretty simple—the more applicable information that is available, the more accurate the property valuation model can be. Additionally, modeling systems and techniques have also been enhanced, which has resulted in the creation of more sophisticated AVMs. This evolution, coupled with valuation-related issues that contributed to the 2008 market crash resulted in a call from industry regulators to heighten the integrity and accuracy of property valuation testing standards. As part of this effort, regulators addressed the use of AVMs in specific lending applications, and have also increased expectations around due diligence through additional regulatory insight added to the Interagency Appraisal and Evaluation Guidelines (Guidelines), initially issued in 1994. In 2010, the Office of the Comptroller of the Currency (OCC), Federal Reserve Bank, Federal Deposit Insurance Corporation (FDIC), Office of Thrift Supervision (OTS), and National Credit Union Administration (NCUA) revised the Guidelines to more properly address expectations around testing, validation and monitoring of AVMs. Specifically, the Guidelines clearly hold lenders responsible for ensuring third-party valuation services comply and are consistent with supervisory guidance, including the following: “An institution should establish policies and procedures that provide a sound process for using various methods and tools. Such policies and procedures should … ensure staff has the requisite experience and training to manage the selection, use and validation of an analytical method of technological tool. If an institution does not have the in-house expertise relative to a particular method or tool, then an institution should employ additional personnel or engage a third-party.”1 According to the Guidelines, proper testing, analyzing, documenting, implementing and monitoring of an AVM cascade are all necessary steps toward compliance. While the Guidelines are impartial as to whether an AVM user should achieve this compliance through internal or external sources, it is clear that each present specific and unique challenges. For example, from an internal perspective, many times there is a lack of technical knowledge and/or available resources from the valuation staff. Looking for outside resources is usually difficult because of tight budgets. Regardless of the approach taken, it is critical that AVM users deepen their understanding around AVMs and find an effective way to fully comply with due diligence and regulation compliancy. In my subsequent columns, I will explore the complexities in greater detail that AVM users face, as well as provide insight into approaches to help mitigate the existing pain points, such as those outlined above. This includes the use of how a properly designed AVM cascade (a solution that positions multiple valuation models according to accuracy) can provide operational efficiency and optimal compliance. David Rasmussen is senior vice president of operations at Veros Real Estate Solutions. For more information, call (714) 415-6300 or visit Veros.com.
Footnote 1—Interagency Appraisal and Evaluation Guidelines, Appendix B, page 50. December 2010.
NASN Launches New Mobile Site for Clients and Appraisers
Nationwide Appraisal & Settlement Network (NASN) has announced the release of its mobile Web site for clients and vendors on the go. The new mobile site offers no more waiting for the appraiser to get to an actual computer or to find the time to call and update files. Another added benefit for their clients on the go is instant communication with the NASN team by either logging on or by sending a message right through the mobile site. “We understand that our appraisers are busy and on the road more often than not. This mobile site gives them the opportunity to access their files and update them while out in the field going from appointment to appointment,” said Joni Pilgrim, director of sales and marketing for NASN.
LendingQB Releases White Paper on Mortgage Technology
LendingQB has announced that it has published a free White Paper designed for lenders that are considering replacing their loan origination system (LOS). The Paper addresses the challenges lenders face when evaluating mortgage technologies and outlines a strategy to assess their existing technology weaknesses, identifying areas for improvement. Entitled “The Five Steps to Making Better Technology Decisions,” the White Paper recommends conducting an Enterprise Process Assessment (EPA) of lending operations and workflows. According to the Paper, all too often, lenders buy technology predominantly based on features, failing to perform a critical deep dive analysis of their workflow to effectively model and measure process enhancements using standards and best practices. “The Five Steps to Making Better Technology Decisions” stresses that before buying technology, lenders must establish an objective, well-defined, comprehensive process in order to overcome the many challenges associated
with complex technology evaluations. Executing an EPA provides a clear understanding of and roadmap for how to select technology that reduces cost per loan, improves profitability, maximizes employee productivity and decrease the number of manual touch points throughout the workflow. Key points in the White Paper include: Overview of the mortgage technology challenges lenders face in today’s market; determining the technology lenders really need, avoiding what they don’t need; how to arrive at an evaluation readiness checklist; identifying vaporware and avoiding feature buying traps; using metrics to achieve a high ROI; the importance of a seamless workflow; and how to reduce cost per loan and increase profitability.
Fannie Mae Announces Servicer Training to Assist Struggling Homeowners
Fannie Mae has launched Know Your Options Customer Care, a customer engagement strategy and training program for servicers aimed at preventing foreclosures by developing consultative relationships with struggling homeowners. Under the program, Fannie Mae personnel conduct trainings for servicers’ call center employees, provide scripting for interactions with homeowners and help implement ongoing quality control measures. “Everybody wins when we can prevent foreclosure: The servicer, Fannie Mae, and most importantly, the homeowner and their community,” said Leslie Peeler, senior vice president, National Servicing Organization for Fannie Mae. “What we’ve learned through the housing crisis is that if everybody takes the responsibility to work together and act early, then we can prevent foreclosures and keep families in their homes in many cases. We want our servicers to be trusted counselors to their customers, from attentively collecting documents to advising them of their options and guiding them through the process.” Fannie Mae has been developing the Know Your Options Customer Care program for nearly one year and is already implementing it with 18 of its largest
servicers. One of the key elements of the program is creating a single point of contact (SPOC) in the call center for each customer to ensure that rapport is built with the homeowner, regular contact is maintained through the loss mitigation process, and that foreclosure prevention options are properly presented and pursued. Servicers that have participated in the program have typically seen 20-30 percent increases in workouts. We are now making our training available through online webinars and program materials so all servicers may participate and implement Know Your Options Customer Care. The program is available free of charge to servicers. “Helping homeowners avoid foreclosure is our top priority,” said Eric Schuppenhauer, senior vice president and head of servicing at JPMorgan Chase, which was one of the first servicers to begin participating in Know Your Options Customer Care. “When a homeowner calls Chase, they have a single point of contact to help guide them through the process, whether they’re seeking a loan modification or other assistance. We are pleased to be working with Fannie Mae to help more families stay in their homes.”
ISGN Launches Appraisal Smartphone App for Gators
Cogent Road Enhances Its Roohmz Loan Management System
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OHIO MORTGAGE PROFESSIONAL MAGAZINE
Cogent Road has introduced a unique enhancement to its Roohmz Mortgage (Enterprise) Management/Loan Production System—designed to automatically assemble loan documents in the correct stacking order to meet investors’ specific requirements. The Roohmz Document, Shipping and Insuring Module will help eliminate serious problems that lenders have faced when preparing loan files—incorrectly organized documents that result in delays and other problems. They previously have had to print and organize documents manually, a time intensive process. In addition, if investors subsequently receive the loan file with incorrect documents or in the wrong order, they have to make the correction. Using the new Roohmz Module, an underwriter or other user only needs to make one keystroke to be certain that all the appropriate documents are included in the correct order according to investors’ predetermined requirements. The system automatically adjusts to meet any additional requirements for individual loan types or state agency program guidelines. The Roohmz enhancement also helps eliminate the common problem of over and under documentation that occurs when loan officers and underwriters are uncertain about the amount of documents to be included in a closing file. The finished loan package can be ready for submittal within minutes, compared to a much longer period when done manually. It can be transmitted to investors electronically in a PDF format or printed and shipped via FedEx. “For the first time, lenders and investors can be assured that all documents will be arranged in the same correct order every time regardless of loan type or state,” said Armando Roman, director of professional services at Cogent Road. “We believe that this will provide a major time savings and improved efficiency in the overall loan process and ultimately help ensure that lenders receive a higher closing package ‘grade’ from their investors.”
ISGN Corporation has launched a new smartphone application for its Gators browser-based settlement services and vendor management system designed to assist appraisers, title abstractors and closing agents out in the field. The app soon will be available for the iPhone at the Apple Store where it can be downloaded. ISGN also plans to support apps for the Android phone, the Blackberry and other smartphone platforms. The app enables the vendor to accept, decline or update orders while out in the field providing more efficient use of their time. The smartphone app replaces multiple manual tools for appraisers, such as note pads, voice recorders and cameras. The app guides the appraiser through the necessary process required to complete a home inspection by organizing the information and photos of the interior and exterior of the home. In addition, the app also can organize the information and photos needed for the three comparable homes required for an appraisal. The Gators smartphone app can organize the appraisal report, generating significant time and cost savings for appraisers. With the app, appraisers at the end of the day can upload appraisal data for the appraisal report, including photos and voice recorded comments from their smartphones to their office computer or ISGN’s global processing facilities and the next morning receive back the completed appraisal report allowing appraisers more time out in the field.
“Gators new smartphone app can create huge time savings for appraisers. The app is very detailed and walks appraisers out in the field through what photos and information are required for the report, including comps,” said Ankush Dham, director of technology solutions for ISGN Corporation. “With the app, appraisers don’t have to come back into the office to accept or deny appraisal orders, greatly enhancing productivity in the field.”
new to market
WITH HTL First, tell us a little about Hometown Lenders. We started out over 12 years ago as just a small group of friends who wanted to originate loans together and have fun doing it. It didn’t take long before we grew to be the largest lender in our state and then to be one of the largest lenders in the South-East. As we grew, we invested in our company and in technology, and we also got very good at supporting all of our branches that were spread out all over the South. When we made the decision to become a retail branching operation, it was a logical growth progression as well as a natural extension of our abilities and expertise. During our growth, we never lost sight of the fact that we’ve always been a familyoriented business and that our people are what’s most important to us.
How has Hometown Lenders been able to thrive in a time when most of its competitors have closed up shop?
We took a different approach, and it paid off. I personally travelled to meet everyone we hired (or didn’t hire) in person to see if they were going to be a good fit with us, and to get a gut feeling regarding the quality of their loan production and personal character. Our position was that we would much rather have a branch doing less volume but one that fit well within our culture so that we didn’t lose sleep at night over their loans rather than to have big shops who might originate questionable loans. The outcome for us was that we were able to grow at a consistent, measured pace with both big and small branches and achieve a level of success that was based on a solid foundation of top quality branches and producers. From there we were able to invest and support our branches and then let them do what they do best – close loans.
We’ve noticed your company is growing at a remarkable rate – what’s your secret to success?
OHIO MORTGAGE PROFESSIONAL MAGAZINE
We strongly believe that it’s not enough to recruit good branches and then just hope they work out. We firmly believe that recruiting AND retaining is our top mission, but we also genuinely enjoy developing and growing great branches. We have been able to be a catalyst for some significant growth for our branches, and we have uncovered some amazing talent. We really enjoy the process and I think that is the real difference.
What else is Hometown doing that other companies are not? Well, I don’t know that no one else is doing this, but one thing we feel very strongly about is our company-sponsored mission to help selected villages in Guatemala. Mission Firefly (www.missionfirefly.org) is a 501C that we created to fulfill what we believe is our greater calling in life. We enjoy giving back, and our people enjoy the opportunity to be a part of a great mission. Eric Tishaw is the Chief Operating Officer of Hometown Lenders. Recognized as a leader in the mortgage industry, Mr. Tishaw was recently included in National Mortgage Professionals “Top 40 under 40” list. With over 12 successful years in the business, an MBA, and a lifetime of working in and around the mortgage business, Eric understands exactly what it takes to be successful in this industry. Eric Tishaw is committed to helping the Loan Originators and Mortgage Branch Managers at Hometown Lenders realize their fullest potential by utilizing and sharing the skills he has learned and the best practices he has observed throughout his career.
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LenderMobile Upgrades Its iPad App
LenderMobile has launched several new features for its LenderMobile+ flagship application in response to user feedback, including a new Social Invite feature enabling loan agents to invite real estate agents or borrowers who also are using the iPad app to start a loan transaction in realtime. This new feature creates a powerful lead generation tool for loan originators. Other new features just introduced include new loan prequalification tools, such as payment information, front- and back-end ratios and loan-to-value ratios (LTV) for the Form 1003, Uniform Residential Loan Application—information a loan originator needs to make a prequalification decision. The LenderMobile+ app now provides pipeline reporting from the loan agent’s loan origination system (LOS), a Good Faith Estimate (GFE) and mortgage calculators. LOs now can invite a real estate agent partner or a borrower to connect directly with them via their iPads to start a new loan transaction. On their iPads, real estate agents and borrowers can request loan prequalification forms and submit them to originators to start the process. The LenderMobile+ app also has the ability to generate prequalification data based on information entered on the 1003 application, such as the loan amount, target rate, income and expenses. From this data, the app will show critical prequalification information, including the monthly mortgage payment (principle and interest) and front-end and back-end ratios. The iPad app’s new mortgage calculators allow originators to easily enter different borrower scenarios to generate new mortgage amortization or payment information. With the iPad app, loan agent users can also retrieve pipeline information for loans from their LOS, including loan status, conditions and notes from the loan file. “Based on our users’ feedback, we realized the need to expand our LenderMobile+ app to borrowers, who will ultimately decide how they wish to transact the loan process online,“ said Lovina Worick, vice president of business development at LenderMobile. “Our new iPad app features provide loan officers all the tools for on-the-fly prequalification calculations. Before our iPad app upgrade, they had to use a separate device to run different loan scenarios for the borrower. Now all this can be done from their iPads. This is especially helpful for loan officers who do business face to face. While in front of the borrower, they can take the application, get signed disclosures and run prequalification scenarios without needing a laptop, scanner, printer or fax machine.” The LenderMobile+ iPad app uses cloud computing technology to bring
mortgage origination capabilities to the screen of any iPad user who has downloaded the mobile application. Borrowers can electronically sign the loan application directly on the iPad. Loan agents also can order vendor services from their iPads, such as credit reports and review them in real-time with borrowers.
Genworth MI Announces Site Upgrade The U.S. Mortgage Insurance (USMI) unit of Genworth Financial Inc. has announced enhancements to its customer-facing Web site that substantially reduces the number of data fields required to submit a full-service loan package and receive a mortgage insurance (MI) coverage decision. The Quick Submit option eliminates redundant data entry and provides a better customer experience, particularly for lenders that currently submit loan documents via email, or on paper using more costly facsimile transmission and overnight mail methods. The Quick Submit option is the latest in ongoing USMI enhancements that have made it easier for all customers to submit contract underwriting, Home Affordable Refinance Program (HARP) and “doc-only” full package loan submissions through its intuitive, easy-to-use Web portal, using a single user name and password. Customers using Quick Submit can perform “one-click” document uploads, even when sending multiple files, and can view and track the status of every loan, regardless of how the loan was submitted. The Quick Submit option allows a customer that sets mortgage insurance preferences to complete the data fields required to initiate submission of a loan for granting of a mortgage insurance decision in about 60 seconds, and submit the full loan package—including required documents—in minutes. USMI also has increased staffing to ensure a smooth transition for customers choosing the Quick Submit option, so customers will not experience any change in Genworth’s industry-leading mortgage insurance decision turn times.
Your turn National Mortgage Professional Magazine invites you to submit any information promoting new “niche” loan programs, new products or any other announcement related to the introduction of a new program, to the attention of:
New to Market column Phone #: (516) 409-5555 E-mail: firstname.lastname@example.org Note: Submissions sent via e-mail are preferred. The deadline for submissions is the 1st of the month prior to the target issue.
nmp news flash
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Available supplements to the Mortgage Impairment component of the policy may include coverage against loss to the Mortgage Interest caused by: (a) Seizure and sale of real property by a governmental agency as a result of the borrower’s failure to pay real estate taxes, local municipal taxes, or assessments; (b) Loss of Federal Housing Administration (FHA), U.S. Department of Veterans Affairs (VA), Small Business Administration (SBA) or private mortgage guarantee insurance. The Mortgage Impairment component of MIP is written on an occurrence basis (i.e., coverage is limited to losses to the Mortgage Interest that occur during the policy period). 2. Mortgagee’s Errors & Omissions Mortgagee’s Errors & Omissions provides liability insurance coverage to a financial institution for claims made against it arising from alleged negligent acts, errors, or omissions regarding property upon which it has a Mortgage Interest. The core element of Mortgagee’s Errors & Omissions provides coverage to a financial institution against claims alleging negligent acts, errors, and omissions in procuring and/or failing to maintain insurance for Required Perils (as detailed above). Of particular importance in today’s housing market, this liability insurance also covers claims alleging a failure to procure or maintain FHA, VA, or private mortgage insurance (PMI) on mortgaged property. Available supplements to Mortgagee’s Errors & Omissions may include coverage for claims made
against a financial institution alleging negligent acts, errors, or omissions in: (a) The payment of real estate taxes or local or municipal taxes or assessments; (b) Procuring or maintaining life or disability insurance on the life or health of the borrower; or (c) Determining whether mortgaged property should be covered by flood insurance as required by the Flood Act. The Mortgagee’s Errors & Omissions component of MIP is written on a “claims made” basis (i.e., coverage is limited to [a] claims that are made against the financial institution for losses during the policy period or [b] potential claims that are reported during the policy period.)
Claims examples We have seen two recent claims that clearly demonstrate how MIP insurance can contribute to a financial institution’s overall risk management strategy. Both of these claims have their genesis in the current U.S. housing crisis. 1. Mortgage Impairment Our insured was a medium-sized financial institution holding a mortgage loan on a large residential property. The loan was non-performing when the property was destroyed due to a fire, which the authorities attributed to an act of arson. While there were no charges filed in connection with the arson, the homeowner’s insurer refused to make any payment under its policy. As a general rule, if the fire is proved to be arson by the borrower, the homeowner’s insurer can refuse to pay any insurance proceeds under the policy to the borrower. However, the lender should always be named as the mortgagee (the creditor or lender in a mortgage agreement) under the homeowner’s policy. As mortgagee, our insured would have a separate right of action to collect under the policy for the fire damage, continued on page 35
Your turn National Mortgage Professional Magazine invites you to submit any information on regulatory changes, legislative updates, human interest stories or any other newsworthy items pertaining to the mortgage industry to the attention of:
NMP News Flash column Phone #: (516) 409-5555 E-mail: email@example.com Note: Submissions sent via e-mail are preferred. The deadline for submissions is the 1st of the month prior to the target issue.
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Rep. Jerry McNerney (D-CA) has introduced legislation, the Fast Help for Homeowners (FHFH) Act (HR 6153), to help speed up the short sale process. Rep. McNerney’s bill was met with broad bipartisan support and industry endorsements. The Fast Help for Homeowners Act requires a second mortgage lender of a federal mortgage loan to review and make a decision on a short sale agreement within 45 days. If the lender does not make a
Flood when the collateral property located outside of a designated flood zone, and the borrower is therefore not required to carry flood insurance under the Flood Act. Flood in excess of the limits required by the Flood Act.
OHIO MORTGAGE PROFESSIONAL MAGAZINE
California Rep. McNerney Introduces Bill to Speed Up Short Sale Process
decision within that time frame, the short sale will be deemed approved on the 46th day. “For far too long, the housing downturn has challenged our region,” said Rep. McNerney. “My bill is one commonsense step we can take to help shore up the housing market and provide much-needed relief for homeowners. Our region has been ground zero for the housing crisis, and I am committed to fighting for folks in our communities who have been hit hard.” The proposed legislation would establish guidelines requiring the primary lien holder to inform secondary and any subsequent lien holders of a request for short sale. The bill would also impose a deadline for subsequent lien holders to respond to both the primary lender and the consumer following a short sale request. “A strong housing market is a crucial part of getting our economy back on track. The housing crisis has affected homeowners, communities, and small business owners. Struggling homeowners have heard a lot of talk about addressing the issue and want to see real action, and my bill will do just that,” said Rep. McNerney. The Fast Help For Homeowners Act has broad industry support, receiving the endorsements of the: National Association of Realtors (NAR); California Association of Realtors (CAR); Central Valley Association of Realtors; NeighborWorks Home Ownership Center, Sacramento Region; California Association of Real Estate Brokers (CAREB); and Stockton NID Housing Counseling Agency. “As the leading advocate for homeownership, Realtors know that issues and delays with secondary lien holder remain an obstacle to streamlining the short sale process,” said NAR President Moe Veissi, broker-owner of Veissi & Associates Inc. in Miami, Fla. “Short sale negotiations are much more difficult for borrowers who have multiple servicers involved and ongoing delays continue to severely limit the number of homeowners who are approved for short sales, forcing many homeowners into foreclosure.” The Fast Help For Homeowners Act has broad bipartisan support and is cosponsored by Reps. Dennis Cardoza (D-CA), Tom Rooney (R-FL), George Miller (D-CA), Jim Costa (D-CA), Barbara Lee (D-CA) and Richard Nugent (R-FL).
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older, a more than fivefold increase. “The collapse of the housing market has been especially painful for older homeowners,” said Debra Whitman, AARP executive VP for policy. According to the report, millions of older homeowners also remain at risk. As of December 2011, more than half a million (600,000) loans were in foreclosure and a similar number (625,000) were 90 or more days delinquent. Further, as of December 2011, 16 percent of loans belonging to people age 50 and older—3.5 million loans—were underwater, meaning the amount owed on the loan is greater than the value of the property. “Older homeowners often rely on their home equity to finance their needs in retirement—things like health care, home maintenance and other unexpected needs. The fact that so many older Americans have no equity at all is troubling,” Whitman said. While the serious delinquency rates are lower for those aged 50 and older than for those under age 50, serious delinquencies went up faster for the older population over the past five years. The study also finds that people age 75 and older have a higher foreclosure rate (3.2 percent) than those age 50 to 64 (3.0 percent) or age 65 to 74 (2.6 percent). “More older Americans are carrying mortgage debt than in the past, and the amount of that debt is also increasing,” Whitman said. “Because before-tax income has decreased on average for people age 75 plus, while spending for mortgage interest, property taxes, utilities, and healthcare have increased, their economic situation is worsening.” The study also examines foreclosure rates by race/ethnicity, income bracket, and prime and sub-prime loan type. Foreclosure rates of African-American and Hispanic borrowers age 50 and older were 3.5 percent and 3.9 percent on prime loans respectively in 2011, nearly double that of white borrowers (1.9 percent). Foreclosure rates on subprime loans are markedly higher: As of 2011, among those age 50 and older, Hispanics had the highest foreclosure rate at 14.1 percent; Asians 13.9 percent, whites 12.8 percent, and African Americans 11.5 percent.
lending institution’s ally
anti-money laundering program al, considering the types of products and services that the mortgage industry or the RMLO offers, and the nature and normally expected, transactional activities of customers. Here is the “how” to the SAR narrative Always include the “How!” This is an important feature of a SAR narrative. How did the suspicious activity occur? The narrative section of the SAR should describe the modus operandi or the method of operations of the subject conducting the suspicious activity. In a concise, accurate, and logical manner, the filer should provide a description of how the suspect transaction or pattern of transactions was committed. As completely as possible, the SAR narrative should offer a full picture of the suspicious activity.
To file or not to file
OHIO MORTGAGE PROFESSIONAL MAGAZINE
After thorough research and analysis has been completed, findings are typically forwarded to a final “decisionmaker.” The RMLO’s AML Program should already have carefully outlined procedures and processes for referring unusual activity from all business lines to the personnel or department responsible for evaluating suspicious activity. Within those procedures, management must establish a clear and defined escalation process from the point of initial detection to disposition of the investigation. The decision-maker, usually the BSA Officer, should have the authority to issue the SAR filing decision. When the RMLO uses a committee, there must be a clearly defined process to resolve differences of opinion on SAR filing decisions. Be sure to document SAR decisions, including the specific reason for filing or not filing a SAR. Thorough documentation provides a record of the SAR decision-making process, including final decisions not to file a SAR. However, due to the variety of systems used to identify, track, and report suspicious activity, as well as the fact that each suspicious activity reporting decision will be based on unique facts and circumstances, no single type of documentation is required when a company decides not to file. The decision to file a SAR may be viewed as an inherently subjective judgment. During banking examinations the Examiner will focus on whether the company has a comprehensive AML policy and set of procedures, and an effective SAR decisionmaking process. Examiners may review individual SAR decisions as a means to test the effectiveness of the SAR monitoring, reporting, and decision-making process outlined in the
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AML Program. In those instances where the RMLO has an established SAR decision-making process, whereby AML policies, procedures, and processes reach the conclusion that a SAR should not be filed, the company should not expect to be criticized for the failure to file the SAR, unless the failure is at significant variance with FinCEN’s promulgated AML Program guidelines or accompanied by evidence of bad faith.
5—Financial Crimes Enforcement Network, 31 CFR Parts 1010 and 1029, Anti-Money Laundering Program and Suspicious Activity Report Filing Requirements for Residential Mortgage Lenders and Originators. 6—Failure to comply with the Program requirements of this section may constitute a violation of the Bank Secrecy Act. 7—Op. cit. 1. 8—31 CFR 103.18(e); 31 USC 5318(g)(2). 9—31 USC 5318(g)(3). 10—Safe Harbor for Banks From Civil Liability for Suspicious Activity Reporting, FFIEC BSA/AML Examination Manual, 04/29/10. 11—31 USC 5318(g)(3). 12—Op. cit. 1. 13—Structuring, also known as “smurfing,” is the practice of executing financial transactions in a specific pattern calculated to avoid the creation of certain records and reports required by law. In practice,
structuring is the breaking up of transactions for the purpose of evading the Bank Secrecy Act reporting and recordkeeping requirements. 14—Appendix F: Money Laundering and Terrorist Financing “Red Flags”, FFIEC BSA/AML Examination Manual, 04/29/10. See also the “Guidance for Financial Institutions in Detecting Terrorist Financing” provided by the Financial Action Task Force (FATF) available at www.fatf-gafi.org. The FATF is an intergovernmental body whose purpose is to develop and promote policies, both at the national and international levels, to combat money laundering and terrorist financing. 15—12 CFR, Part 41, Supplement A to Appendix J. Federal Register, 72/217, November 9, 2007, See Appendix J to Part 222 -Interagency Guidelines on Identity Theft Detection, Prevention, and Mitigation. 16—Financial institutions should immediately report any imminent threat to local-area law enforcement officials.
Contacting FinCEN There are several ways to contact FinCEN. The following list provides useful contact information, based on the nature of the inquiries. General inquiries: (703) 905-3591 (Monday through Friday, 8:30 a.m.5:00 p.m., ET). For the general public with questions about the Financial Crimes Enforcement Network, its policies and programs. Regulatory inquiries: Regulatory Toll-Free Helpline, (800) 949-2732 (Monday through Friday, 8:00 a.m.5:00 p.m., ET). For financial institutions with questions relating to Bank Secrecy Act and USA Patriot Act requirements and forms. Section 314 inquiries: (866) 3268314 (Monday through Friday, 8:30 a.m.-5:00 p.m., ET) Section 314 program office: firstname.lastname@example.org or (866) 3268314. Law enforcement inquiries: (703) 905-3591 (Monday through Friday, 8:30 a.m.-5:00 p.m., ET) Financial institutions toll-free hotline: (866) 556-3974 (seven days a week, 24 hours a day). For financial institutions wanting to report suspicious transactions that may relate to terrorist activity. The purpose of the hotline is to facilitate the advance notice of this information to law enforcement.16 Jonathan Foxx, former chief compliance officer for two of the country’s top publicly-traded residential mortgage loan originators, is the president and managing director of Lenders Compliance Group, a mortgage risk management firm devoted to providing regulatory compliance advice and counsel to the mortgage industry. He may be contacted at (516) 442-3456 or by e-mail at email@example.com.
Footnotes 1—Anti-Money Laundering Program and Suspicious Activity Report Filing Requirements for Residential Mortgage Lenders and Originators, Department of the Treasury, Financial Crimes Enforcement Network, Final Rule, 31 CFR Parts 1010 and 1029, Federal Register 77/30, February 14, 2012. 2—Ibid. 3—Foxx, Jonathan, “Anti-Money Laundering Debuts for Nonbanks,” in National Mortgage Professional Magazine, March 2012, Volume 4, Issue 3, pp. 40-43 4—See 31 C.F.R. § 1010.820.
nmp mortgage professional uct, the best pricing, the best turn times, and the best service. Because of that, an originator or branch manager is able to make a decent, or more than a decent, living. Does the size of the lender matter? Size matters. In different aspects, sometimes size matters. Size can be a great thing. Size can be a bad thing, it’s all about perspective. The one thing that I can say about it is that you need someone that’s backing you that has the same philosophies and understandings that you do as far as size goes. I will take quality over quantity any day, but that’s my personal opinion. Some people prefer quantity over quality. I prefer quality over quantity. What troubles you and keeps you up at night? Over-regulation of the industry troubles me. We’ve ended up with all of these regulators. You’ve now got the Consumer Financial Protection Bureau (CFPB) and you’ve got this complaint hotline and all of these things. The Nationwide Mortgage Licensing System (NMLS) was supposed to make our lives simpler and easier. It hasn’t. Sometimes, a person may be out of work for weeks because they’re transferring from one company to another. I know that’s not what anyone wants to happen, but it does. Do you believe that mortgage lenders have been treated fairly in the aftermath of the housing crash? I tried to explain to as many people as possible that I’ve never known a mortgage broker who has underwritten a loan. I’ve never known a mortgage broker who developed a loan product. All I ever knew was the people on Wall Street were saying, “This is what we
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want, this is what we need and this is how you do it,” and loan officers and brokers delivered that. What are you hopeful about in regards to the mortgage industry? I really think that we can return this industry to the profession that it deserves to be. I’m talking about where the mortgage banker could hold his head high … that he wasn’t afraid to say that he was a mortgage banker or a mortgage broker. The minute hand is already past six o’clock, we’re on an upswing, we are our way back up. What has been your greatest accomplishment in the industry to date? My greatest accomplishment has been helping consumers and helping mortgage professionals—when, where and how they needed it. I have helped to bring a tremendous number of people into this business. I have helped them with their lives and their decisions. I’ve helped people get into their first house … people get into income-producing properties—things like that. That’s what I’m happiest about. Is there anything else you’d like to add? I really want to take my hat off to those industry veterans that stuck it out from 2007 forward. There are a lot of good people that have lost a lot by staying in this industry just because they knew that it was the right thing to do. I take my hat off to all of those people. David J. Coster is senior editor of National Mortgage Professional Magazine. He may be reached by phone at (919) 559-2171 or e-mail firstname.lastname@example.org.
lending institution’s ally assuming there is no complicity in the crime. In this claim, however, our assured was not listed as mortgagee in the homeowner’s policy, and the claim (and separate right of action) was denied by the homeowner’s insurer. Thus, the following criteria existed for a covered claim under the Mortgage Impairment section of the MIP policy: Physical damage to property as the result of a Required Peril (i.e., fire); The lack, insufficiency, or uncollectibility of direct (homeowner’s) insurance; and A loss to the insured’s “mortgage interest” (i.e., the security for repayment of their loan that the collateral provided), resulting from the physical damage to the collateral. This claim may be emblematic of the dire circumstances the economic downturn has created for some borrowers. The circumstances suggest that the borrower may have been so desperate to get out “from under” the mortgage loan that he committed arson in order to try to obtain the homeowners insurance policy proceeds and effectively terminate his mortgage obligation. While, as described above, most often a borrower’s actions will not prejudice a lender’s rights under a direct insurance policy, in this case it may very well turn out to be the case that our Insured has no viable recourse against the homeowner’s insurer. In such a case, Mortgage Impairment insurance may provide the insured with a second level of protection against loss to its Mortgage Interest.
which amount in total to hundreds of thousands of dollars. This claim is a glaring example of the increased exposure for financial institutions due to the housing market crisis. In a healthy housing market, many of these loans would be current, and the ultimate loss to the insured would have been substantially mitigated. Additionally, if housing prices had not declined so precipitously, many of these loans would not be underwater and the borrowers would have been able to refinance. In addition,
Conclusion These claims examples demonstrate why MIP insurance is a coverage that lending institutions and servicing institutions can ill afford to forgo. In an environment of high levels of delinquency and looming foreclosures, a financial institution’s expo-
sure to Mortgage Impairment losses increases dramatically. With housing prices bottoming out, many borrowers are underwater on their mortgage loans and foreclosure levels are at an all-time high. Lending institutions need to do everything they can to manage their risk. MIP insurance can be your ally in this time of economic uncertainty. Tom Delaney is managing director of Bankers Insurance Service in Chicago, a managing general underwriter that provides insurance coverage for residential and commercial lender’s and servicer’s mortgagee or owner interest in mortgaged properties. He may be reached by phone at (312) 381-3722 or e-mail email@example.com.
OHIO MORTGAGE PROFESSIONAL MAGAZINE AUGUST 2012
2. Mortgagee’s Errors & Omissions Due to the negligence of an employee in the loan servicing unit, our Insured failed to pay the premium for PMI on several dozen loans. While the insured had collected funds from its borrowers to make the premium payments, the employee charged with the responsibility of remitting the payments to the PMI insurers failed to do so. This resulted in the cancellation of the PMI policies. Although upon discovering these failures, the insured remitted the funds to the PMI insurers and requested that coverage be reinstated, in certain cases the PMI insurers refused to do so. Due to the dramatic decline in property values, and the sustained elevated levels of unemployment, half of these loans have since gone into default. Each of the defaulted loans without proper PMI had been sold to a secondary market investor. The amount recovered on each property through foreclosure and sale has, or is likely to be, insufficient to cover the outstanding mortgage loan balance. The investors looked to our insured for recovery of the loss sustained as a result of its failure to procure PMI, and to date, the insured has agreed to reimburse the investors for their losses,
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in a healthy U.S. housing market, the investor might very well have recovered most, if not all, of the loan balance through the foreclosure process. Given the sheer number of foreclosed loans, any negligent act, error or omission can now lead to a catastrophic loss to a financial institution. Having Mortgagee’s Errors & Omissions insurance in place can insulate a financial institution from bearing the full impact of such a loss.
The Rationality of the Wholesale Lending Market By Mark Greco
OHIO MORTGAGE PROFESSIONAL MAGAZINE
The year was 2005. Nearly 80 percent of all loans originated during this peak year of the housing boom were originated by mortgage brokers. What got lost in the post-bubble chaos and finger-pointing was an explanation as to why the vast majority of Americans had sought out mortgage brokers to handle this most important of financial transactions. Historically, the reason for the dominance of mortgage brokers has been the ability to offer the best combination of expertise, experience, price and service. Could it be that American consumers in 2012 are re-embracing the mortgage broker, despite relentless vilification over the past five-plus years? Could it also be true that the recent decision by Wells Fargo, the last of the mega-banks, to leave the wholesale mortgage banking channel, is a natural step in that process? There is an ancient saying that we should examine as we consider the wouldbe re-emergence of the wholesale channel in general and mortgage brokers in particular. The ancient saying is: “A bird can no more change its feathers than a tiger can change its stripes.” Simply put, things in the natural world have to be true to their own nature. It is not all-together different in the business world. Individual consumers, workers and companies all have to be true to their own nature and interests. Whether you call this the “invisible hand “of the market like Adam Smith or social Darwinism, the truth is, that people and business organizations run by people make decisions that they believe to be in their best interests. Those who do the best job making these decisions survive and thrive, while those who don’t inevitably fail. I believe a fair examination of the mortgage origination industry over the past five years clearly supports the contention that the large banks have made decisions that are in keeping with their perceived interests as have mid-level mortgage bankers, mortgage loan originators and individual consumers. Let’s review the past five years and examine the market dynamics and the decision-making of these market participants.
2008-2009 This period was the height of the crisis. It came after the implosion of the sub-prime
market the previous year and the bankruptcy filings of dozens of mortgage lenders that served that market (or were unable to restructure given the credit crunch that developed in August of 2007). The media and the big banks, which were under substantial liquidity pressure, began to point fingers of blame at the mortgage brokers. A large part of the reason for the poor performance of loans produced through the wholesale channel was that the large retail mortgage bankers would “cherry pick” the top quality loans to fund on their warehouse lines. This would insure that their loan portfolio performance was acceptable. They certainly did not want to turn away any other business that had a viable channel for origination so they would allow their loan officers to broker the stated income and higher risk loans to the likes of Countrywide, Chase, National City, etc. When the collapse came, the statistics indicated that the “bad loans” were originated through the wholesale channel, i.e., brokers. While these loans were funded through the bank’s wholesale channel, they were not necessarily sourced originally by brokers, but by loan officers working for mortgage bankers. Now that the risky products are extinct, and many brokers have become bankers, the banks want to pat themselves on the back for cleaning up the industry. It was easy for the large banks to single out the group with the smallest voice, the mortgage broker community. The year 2008 is when most financial institutions around the world discovered their financial stability was in question due to direct or indirect holdings of sub-prime mortgage securities. Scores of small, midsized, and even larger, publically-traded lenders found their warehouse credit lines pulled by larger financial institutions and were forced to close. Tens of thousands of mortgage industry workers were out of work. Many of these out of work were new to the industry (less than five years) and were hired to support the surging loan origination volumes of the previous five years. In 2009, the cleansing of the industry continued. Foreclosure volume peaked at slightly less than four million filings. Mortgage origination volume actually
“anti-steering” and “abilityincreased, due to rate cuts by to-pay” provisions. the Federal Reserve, and Many brokers and bromany former brokers and ker-based originators conbroker-based originators tinued to migrate to bank found new homes, flocking retail lending divisions or to to either retail mortgage correspondent lenders due bankers or even big bank to the difficulties imposed retail lending divisions. For on brokers and their uncerthese originators, responding tain future. On Oct. 5, 2010, to the demonizing of mortBank of America took the gage brokers and to the restriction on third-party deepest recession since the originations all the way as Great Depression, by seeking “Now that the big they announced they were employment at “favored” banks are gone, the terminating their wholesale banks seems perfectly logical. mid-level mortgage channel. As the big banks found bankers, that exist By 2010, a group of midthemselves on the receiving solely to serve the level, non-depository mortend of billions in taxpayer wholesale gage bankers had emerged support through the marketplace, will which saw an opportunity Troubled Asset Relief grow the channel in the underserved wholeProgram (TARP), they conbased on their sale segment. These midtinued to blame brokers as traditional the source of the poor qualadvantages of better level wholesalers believed that the traditional advanity loans in their portfolios customer service, a tages of wholesale lending and to curtail their purchascommitment to (lowest variable cost of loan es of loans from this source, technological production, best product either through suspension innovation and mix for consumers, best of business (JPMorgan Chase adaptability to on Jan. 13, 2009), or the lay- changing markets and pricing options for consumers, highest service stanering-on of strict underwritregulation.” dards for consumers, most ing requirements. For example on April 6, 2009, Wells Fargo flexibility and greater income potential for imposed a minimum credit score of 720 for originators) all still held true despite the regwholesale purchases with less than a 20 ulatory changes. Their focus was to support percent downpayment. They further the remaining brokers that were largely reduced the maximum debt-to-income made up of mortgage professionals with ratio they would accept on broker-origi- long term experience. They also saw that nated business. Consumers coming to having agency-direct approval status was them through their retail lending channel essential to support the channel by guarandid not face these requirements. teeing a buyer for originated loans. This bet Consequently the dramatic drop in the on the proven advantages of the wholesale market share of originations by brokers is lending model, agency-direct status and the based on completely rational decisions by capability of experienced, successful, entrepreneurial-minded mortgage professionals consumer to use the large banks. also appears well-placed.
2010 2010 was the year of new regulation in the mortgage industry. The Dodd-Frank financial reform legislation was debated throughout the year leaving the mortgage industry in great flux. Origination volume was off by 25 percent from the previous year as the industry, particularly the wholesale segment of the industry, lobbied for a place in the new housing finance system that was being created in the halls of Congress. The Dodd-Frank legislation became law on July 10, 2010 and created great fear about the viability of the wholesale channel going forward particularly due to language relating to loan officer compensation and liability for violations of
2011 This is the year that the future of the mortgage origination industry began to take shape. The loan originator compensation (LO) rule was finalized and took effect on April 5, 2011. Origination volume fell to its lowest point in a decade, and wholesale production fell to its lowest level in 20 years in the first quarter of 2011. Mortgage industry employment fell to its lowest levels of the post-crash period, down 257,000 or 51 percent from its peak in 2006. The brokerage community was now much smaller and more experienced. A survey of mortgage brokers and broker-based originators in 2011 found that 93 percent had
been in the industry for longer than five years. Also significant was the fact that every broker-based originator was now licensed. In relative terms, it was fair to say that the most experienced, highly-trained and certified originators worked for mortgage brokers. Then something began to happen that many did not see coming. Wholesale volume and market share began to rise. From its all-time low market share in Q1 of 2011 of 6.8 percent, wholesale volume saw steady progress: Q2 numbers totaled 7.9 percent, Q3 hit 9.2 percent, and in Q4, it hit the 11.4 percent mark. Originators began migrating in some numbers back to brokerages. It had become apparent that the LO compensation rule would not eliminate the ability to function in this environment and that the product selection, service short-comings and reduced compensation available in large bank retail lending and many correspondent operations were significant. Thus, the return of licensed originators to the broker channel made perfect sense.
By Mat Ishbia
There is no question that Educational and in today’s ultra-competitraining support tive market, it is paraToday’s marketplace is mount to the success of a highly fluid and everbroker that they partner changing. To stay on top with lenders that place of their game, brokers customer service at the must be knowledgeable forefront of their busiand up-to-speed on ness models. Brokers industry happenings that need an arsenal of differcan impact their busient tools and services to ness—both positively and make them successful negatively. Without keen and help grow their busiinsight, you cannot pro“In this market, it’s ness. Those lenders that vide good, accurate difficult for lenders are dedicated to growing to grow unless they’re advice to your customers. a network of quality broNot many lenders offer taking good care kers have made investeducational services to of their most ments and have taken brokers that help them valued asset— significant measures to stay abreast of key things their customers.” make service the number such as new government one priority. And, brokers who are truly assisted programs, regulatory concerns committed to providing excellent serv- and compliance adherence, marketing ice to borrowers seek out lenders that strategies, selling tips, technology strive to provide the same service levels usage, general industry issues and that they do. more. A lender that is committed to Now, more than ever, wholesale continually educating its brokers lenders know customer service is key, should offer valuable tools like but to varying degrees. Good service is Webinars and training sessions, and something that all lenders want to pro- have knowledgeable account executives vide; some are great at it, okay at it and who are eager to answer your quessubpar or bad at it. So, what should bro- tions. It is in the lender’s best interest to kers look for in a wholesale lender with provide educational options that will great customer service? Before you start support your success. Ask what they doing business with a lender and run offer. the risk of a bad experience and possibly losing deals, make a checklist of dif- Technology tools ferent buckets that you feel would help The technology tools a lender provides your business be more successful. makes all the difference. Providing a feature-rich Web portal to brokers is a Responsiveness must. A good broker-facing portal and communication should be able to instantly return an How responsive is the lender’s overall accurate decision and price and along customer service? Ask them how acces- with the option to lock rates. Can mulsible their underwriters and processors tiple programs all be returned at once are. Are their account executives always with the click of a mouse? Key features prepared to meet your needs? What are should include an online 1003, pipeline their average turn times? They should management, file tracking, conditions obviously be rapid. How long to fund oversight, real-time status views, docuthe loan? The representations you make ment uploads, appraisal ordering, eto your customers in terms of their signing, ease of communication with Mark Greco is president of 360 Mortgage expectations is very important, and can the back-office and integrations with Group based in Austin, Texas. He may be reflect poorly on you if they aren’t met. the broker’s LOS. In addition, these reached by e-mail at firstname.lastname@example.org Peel back the onion and ask for docuor visit www.360mtg.com. continued on page 38 mented statistics.
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Five years after the crisis began there has been a complete vacation of the wholesale mortgage origination channel by the “too big to fail” banks. But this should come as no surprise. The largest banks have always dialed up and down their support for the wholesale channel based on their individual interests at a given point in time. The simple truth is that banks value their retail customers first, as they should, and never have been fully committed to wholesale customers which represent a very small percentage of their overall lending volume. The big banks have allowed their best interests to guide them. Now that the big banks are gone, the mid-level mortgage bankers, that exist solely to serve the wholesale marketplace, will grow the channel based on their traditional advantages of better customer service, a commitment to technological innovation and adaptability to changing markets and regulation. With a single focus on wholesale lending, these mid-level lenders will help produce better quality, better performing loans. The mid-level mortgage bankers have also allowed their best interests to guide them. The mortgage originators that have remained in the industry have faced a gauntlet of criticism, licensing, compensation and service challenges that have made their decision to remain in the service of consumers needing mortgage financing quite admirable. As they have sought to stay in this valuable service many have sought employment in the environment they thought was in their best interest, and in the best interest of their customers. More and more, that best interest decision of originators is to work with a mortgage broker. Consumers always have, and always will choose to get their mortgage financing from that originator who offers the best combination of expertise, price and service. As the recent trend and historical experience bears out, that best interest decision for consumers leans in the direction of mortgage brokers. The rationality of the mortgage market has resulted in its structure reflecting the best interests of its participants.
Look for a Focus on Customer Service to Grow Your Business
Wholesale origination volume has continued to increase since the second quarter of 2011. Mortgage rates have plummeted, causing a refinancing surge. Additionally, home sales and home values have seen improvement bringing new purchase loans as well. Finally, revisions to the Home Affordable Refinance Program (HARP) has opened the possibility of refinancing to many formerly non-qualifiers. On May 25, 2012, the Mortgage Bankers Association (MBA) upwardly revised its origination volume projection for the year by $200 billion. The result has been industry-wide capacity issues and dramatically increased application-to-closing time frames. While impacting all channels of loan origination, the retail lending operations of the large banks appear to be experiencing the greatest delays. On Feb. 1, 2012 Citi announced its departure from the wholesale origination channel. Then on July 13, 2012, Wells Fargo became the last of the big banks to announce its departure from the wholesale space. In the case of Wells Fargo, the decision came immediately following a settlement with the federal government over lending discrimination against minority borrowers. When viewed from the perspective of a large bank with a large retail branch presence which is experiencing capacity constraints, major customer service problems, and which has a proven history of failing to
adequately manage its broker relationships, the decision to exit this channel is clearly wise.
looking for a focus on customer service same tools should be available on smartphone and tablets for brokers to conveniently access in the field. Ask to get a walk-through of their broker portal by an account executive.
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unless they’re taking good care of their most valued asset—their customers. Look around the Web for statistics, media coverage, articles, press releases, etc. that give you a sense of their growth rate and progression. If the company shows solid growth in the marketplace and has positive industry perceptions behind their corporate brand, there’s a reason for that. Finding those lenders that offer the “above type” of benefits can be challenging in this highly fluid market. To put lender differences into perspective, create a comparison matrix of the companies you are considering doing business with and it will help you decide.
There will always be fires and various matters that need immediate attention. What are the lender’s response time and resolution time? Are they organized in terms of getting you to the right person who can quickly address the problem and provide a remedy for it? You need a responsive lender that can quickly react to your needs. Can you always reach a live person? Accessibility is a necessity when you need immediate answers. Do Opportunity knocks your research. Ask around and do not Brokers are able to offer more product hesitate to contact a lender to see how and pricing options than retail loan officers can. You have an excellent they can best service your needs. opportunity to capitalize on being more solution-oriented in working with borCorporate culture Excellence in customer service starts with rowers. It’s how well you market yourthe culture the lender fosters. Lenders self, the knowledge you have when that have a “service-first culture” and dealing with borrowers, and the level of mantra throughout the company means service you are able to provide, which is that their employees have a solid under- only as good as the trusted go-to standing of the commitment they must lenders you have developed relationmake so customers feel valued and treat- ships with. ed as a priority. Sure, you’ll hear many of Customer service is king. Your the same marketing messages from lenders that purport to be service-orient- lender(s) of choice should be intensely ed, but are they really? How do you focused on ways to provide a very posiknow? Ask what the company’s mission tive experience in dealing with them that and vision is and how they are organized. keeps you coming back. Lenders that are truly committed to a service-focused culture fully grasp that nurturing strong broReputation What are other brokers saying about the ker relationships determines their longlender’s service levels? Do your home- term sustainability and success. In this work. There are plenty of blogs, discus- market, lenders live and die by the cussion boards, LinkedIn groups, etc. that tomer service sword. Your lender’s sucopenly share information—both good cess is your success. Don’t settle for mediand bad. Use social media and the Web ocrity. Partner with a lender that proto dig up research before signing up to vides you with the tools and service that be a new broker. Additionally, look for make you their number one priority. testimonials from other brokers on the Those originators that cannot provide lender’s Web site. If brokers love the high levels of service and responsiveness service that is provided, they’ll gladly to borrowers are at a competitive disadoffer testimonials and the lender will vantage to those that can. want to aptly display them on their Web Mat Ishbia is president of Michigan-based site, literature, advertising, etc. United Wholesale Mortgage (UWM), a fastgrowing lender dedicated to the wholesale Growth The rate of a lender’s expansion in the channel with a companywide emphasis on wholesale arena can be telling as to its customer service. He can be reached by elevel of customer service. In this mar- mail at email@example.com or visit ket, it’s difficult for lenders to grow www.uwm.com.
Building a Better Wholesale Mortgage Banking Channel By John Walsh They are all gone. One by one, the major banks in the U.S. have announced their exit from wholesale mortgage banking. It began with Chase in February of 2009, continued with Bank of America/Countrywide in 2010, and finished up this year with Citi in February and Wells Fargo in July. What does it all really mean? Is wholesale mortgage lending doomed for failure if the biggest banks in the land don’t view it as important enough to continue? I contend that the future of wholesale mortgage banking is actually quite positive … let me explain.
tally changed. Wholesale mortgage banking simply doesn’t pass the test for large banks any longer.
Second: Remaining mortgage bankers will build a better wholesale industry
The remaining mid-sized mortgage bankers are far better suited for building a sustainable wholesale channel than the big banks. This is because they tend to be regionally based and treat brokers and their clients with a great sense of care, because mortgage loans are their only product. First: Banks are This regional focus and codependency between brounique financial kers and bankers will proinstitutions duce highly productive with unique and highly efficient relamotivations Wholesale mortgage lendtionships. ing was never a good fit As the “new mortgage for the big banks, and it industry” continues to has become less so over evolve, non-depository “Is wholesale time. Whether it was the mortgage bankers and mortgage lending historic focus they have their broker partners must doomed for failure placed on their retail continue to find new and if the biggest banks channel and their current innovative ways to provide need to support the retail in the land don’t view consumers with a superior it as important channel with maximum lending experience. This enough to continue?” will likely include more available resources, the need to achieve greater personalized service cross-sell results, or the desire to reduce focused on a detailed assessment of the liability, the big banks can no longer jus- consumer’s financial needs and maintetify participating in this segment of the nance of the historic advantages of maxi“new mortgage origination industry.” mum choice at minimum cost. What do I mean by “new mortgage origination industry?” Simply put, in the Third: The wholesale post-real estate bubble, post-sub-prime channel will produce collapse, post-foreclosure tsunami, post- high-quality loans financial firm bailout world, the mortgage Committed mortgage bankers, experiindustry has evolved in ways that are enced mortgage brokers and a new regreshuffling the deck of players. Whether it ulatory framework will combine to is the Basel III bank capital standards, the ensure that high quality loans will be repurchase risks of loans previously sold originated. With the removal of subto Fannie Mae, Freddie Mac and Ginnie prime and high-risk products from the Mae, or the regulatory burdens and risks market, the clarification of compensaimposed by Dodd-Frank Act and the rule- tion arrangements for loan originators making and enforcement of the and the careful vetting of mortgage Consumer Financial Protection Bureau originators and brokers, the quality of (CFPB), the evaluation that banks must loans produced in the wholesale chanmake of all their activities has fundamen- nel should equal that of those pro-
duced in other lending channels. One of the hallmark concepts of financial quality control in the financial services industry is to “know your customer.” I believe that mortgage brokers have always been in the best position to do that given their proximity to, and shared interests with the consumer. Now with closer relationships with regional mortgage bankers, who are incented to assist their broker partners to meet higher standards, quality production will improve. Of course there is much pending on the regulatory front that will impact the wholesale market going forward. In particular, the upcoming decisions related to defining what a qualified mortgage (QM) is, and what degree of safe-harbor will exist for originators and purchasers of such loans, will bear heavily on the market. Additionally, the ultimate fate of Fannie and Freddie, and the form of backing of the secondary mortgage market by the U.S. federal government, will impact the wholesale channel’s future to a significant degree. So those of us who are stakeholders in the future of the wholesale mortgage
banking channel need to remind our colleagues, clients, political representatives and regulators of the advantages our businesses continue to provide for consumers, including: Maximum selection of loan programs Competitive pricing due to multiple loan sources Ongoing process improvement due to flexible technology posture Local real estate market knowledge and expertise Relationships within the local financial services community These advantages that wholesale lending provides for consumers will ensure that politicians and regulators will preserve a position in the mortgage origination space for wholesale lending. John Walsh is president of Milford, Conn.-based Total Mortgage Services. John founded Total Mortgage Services in 1997 with a customer-centric approach and a mission of responsible lending. He may be reached by e-mail at JWalsh@TotalMortgage.com or visit TotalMortgage.com.
By Andy W. Harris, CRMS “Just because you don’t understand it doesn’t mean it isn’t so.” —Lemony Snicket
OHIO MORTGAGE PROFESSIONAL MAGAZINE AUGUST 2012
With the recent news of Wells Fargo departing wholesale and the likelihood of an annoying media response, I could not help but again voice some reason into the industry with another sequel into part three of this series. Net branch recruiters, branch managers, and wholesale naysayers, wipe that drool off your mustache for just a moment and let’s discuss the important facts that so many tend to misunderstand or not fully comprehend. Some of you may have read my prior articles on this topic that started in the first quarter of 2010 during RESPA reform and followed up on around loan originator (LO) compensation changes in 2011. Since that time and nearly three years, later my assumptions and predictions have come to
fruition from the trends and behavior in the industry. To restate my position again, I support all forms of mortgage origination on every channel, if run with integrity and strong business ethics. I feel that competition is vital for the consumer. With that said, my articles and opinions tend to lean more in support of the wholesale small business mortgage broker as someone who lives and breathes it daily. We’ve taken an unjustified beating in the media and it can get a little annoying. My passion for wholesale lending has always been driven by what it can offer to my clients and my business that other channels simply cannot. More recently, my passion for wholesale has been fueled by the deception and inaccuracies from recruiters and others in our industry motivated by a self-serving agenda, and my goals of exposing them. The problem is that these people are making invalid
The Future of the Mortgage Broker and Correspondent Markets (Part III)
assumptions on something and primarily, lack of buythey no longer understand. back risk and significant Wholesale has gone through overhead which is growing unprecedented change from under new regulatory the way it was, as have the changes. We all rely on other origination models. banks and correspondent The primary difference is lenders, and I am personthat mortgage brokers ally appreciative of their understand other operasupport partnership, but tional channels and how exposing the ignorance in they operate, but they no retail mortgage originalonger understand our chantion is important for nel after financial reform growth. “As long as and the mass exodus from Common sense is correspondent lending defined by Merriamthe wholesale marketplace. is here, wholesale We are seeing a trend Webster as, “sound and lending is here. These prudent judgment based across the nation. The newlyappointed Consumer Finan- origination channels on a simple perception of are married … until cial Protection Bureau (CFPB) the situation or facts.” has divided the industry by death do them part.” Here are a few common banks and non-banks (or sense principals that relate depositories and non-depositories) when it to retail correspondent and wholesale comes to federal regulation and the inter- lending down to the originator level in the nal departments assigned to each. Another primary market: trend has been with large depository lenders exiting the wholesale lending space. Wake up bankers, you are not a bank. This comes from the difficulty in hiring staff, You are not a “direct lender.” You’re an corporate priorities, less profit, etc. The “indirect lender.” Borrowing money from a recent departure of Wells Fargo was due to bank does not make you a bank. Think the firm facing these similar constraints and short and soft about that. Retail correno longer finding reason to continue whole- spondent lending has had an identity crisis sale operations as only five percent of their for several years using the term “mortgage business. However, the comments regarding banker,” when in reality, they don’t fall fair lending by third-party origination (TPO) within the definition of a bank at all. production alone is ludicrous from those of What’s worse is that they actually use this us who know the facts. title as a primary sales tool when promotThe departure of Wells will be similar to ing their services. As defined by a dictionother big bank departures. Sure, it’s con- ary as well as our federal regulators as a cerning based on the continued restriction “non-bank,” I would not be surprised if the of options for the consumer, but overall, it CFPB bans the use of this term for retail changes very little. There are many other correspondent originators. It’s not really a wholesale lenders that will pick up the vol- big deal until naive borrowers and real ume and see new opportunities, many of estate agents believe this false representawhich are still utilizing Wells and the oth- tion as being a benefit to them. ers through the correspondent market. I have seen more wholesale lenders enter It’s all about systems. our marketplace in 2012 than any other If you want to excel and execute your loan previous year in my career. The reason for files, you must have effective and complithis is that wholesale lending is still the ant processing systems. We are in an most cost-effective way for a creditor to agency-run world with the governmentbring their product to market. sponsored enterprises (GSEs). How you get As long as correspondent lending is from Point A to Point B means nothing if here, wholesale lending is here. These orig- you cannot execute and you’re judged by ination channels are married … until your performance and pricing, not by your death do them part. The only difference title. There are good and bad operations in between retail correspondent and whole- both retail correspondent and retail mortsale correspondent is that one employs the gage broker firms, but it’s not about the originator and the other does not (unless channel in which the loan is originated, under different departments). I feel this is but the systems that control turn-times an advantage to the mortgage broker for and defines the consumer experience. more product choice, comparison on execontinued on page 40 cution, competition and control in pricing,
the future of the mortgage broker
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We are in a transactional-based industry regarding revenue. If you don’t close loans, you don’t get paid. If the company doesn’t close loans, they go bankrupt. We don’t have the perks of residual or passive income in the mortgage industry. Fees and revenues are earned by upfront origination fees to the consumer, and/or service release premiums (SRP)/yield spread premiums (YSP) paid to the creditor through above market rates on closed and funded loans. It’s that simple. If you’re not producing as a mortgage loan originator, than chasing a comp plan or short-term base income by jumping around originating platforms will not make you successful. Five-hundred basis points of zero is still zero … you simply need to close more loans.
continued from page 39
Higher overhead means higher rates and fees. The highest fixed costs most companies face is obviously payroll. If you have processing staff, front desk staff, underwriters, compliance managers, non-producing branch managers and owners, minimum asset requirements, etc. where do you think this money come from? While we wish there was a money fairy flying around sprinkling their money dust all over our balance sheets, it’s not going to happen unless the company closes more loans directly through loan originators. Higher SRPs and higher rates and fees will always accompany higher overhead or an owners profit goals.
There are companies that need originators and companies that want originators. There is a wrong way and right way to attract talent. Recruiting can be necessary, but it can also be annoying if fear-based methods are used. The years 2008 and 2009 showed us the worst wave of fearbased and unprofessional recruiting I have ever personally seen. It was tasteless and destructive. It’s vital that mortgage originators get better educated in this business to make better choices and not be influenced by those using to choose these methods. I have seen several ruin their career and miss out on huge opportunities for taking the bait. Non-producing owners need mortgage originators to pay for their salary and the salary of any non-producing employee. Get it? Congratulations, you’re a job creator, call your Congressman and tell them you’re awesome.
Having a local presence and understanding of the marketplace and its consumers is very important for any business in our industry. Local mortgage brokers and correspondent lenders are vital to consumers in the mortgage market and we always need to protect diversity and choice for a healthy and balanced competitive environment.
Higher compensation means higher rates. Overhead is the base factor in your rate sheets, but the other major adjuster is compensation. Whether working for a correspondent and negotiating a comp plan or working for a mortgage brokerage firm negotiating comp plans with wholesalers, the compensation is built into the SRP or YSP when it comes to the rate sheet you offer to your client. If one has lower rates and the same or higher compensation plan, they simply have lower overhead or require less revenue as a company (assuming they are paying the bills and are in the black).
When rates increase and/or when volume decreases, the comments above will make more sense to those originating. Refinances account for approximately 70 percent of current loan transactions nationally, and everyone is either too busy or not paying attention to the details to put things in perspective long-term. Since 2009, we have logged the highest quality of mortgage loans in our history. I strongly believe that correspondent and wholesale lending has a bright future, but not without effort from all of us to fight bad policy and block unintended consequences of proposed regulations. Heavy regulations and changes are still to come. Much pressure is being applied to banks and creditors under the Dodd-Frank Act which can and will negatively impact all origination channels and consumers as we all know too well. Stay informed with the CFPB, get involved, and learn on your own rather than from someone else financially interested by steering your beliefs. Our industry needs more good people stepping up to represent and protect our livelihood and the consumers we serve. When a person genuinely enjoys their profession and are motivated by their passion, they tend to be more satisfied with their work and more psychologically healthy.
Up-selling rate is old school subprime thinking. I hear it all the time, non-producing managers telling loan officers to sell value and service as an answer to losing business to others. Listen, value and service is a requirement for everyone. Rate is simply determined by the bullet points above. Rate may not be everything, but you need to be a player in the market. You’re not going to sell the same Fannie Mae 30-year fixed at a 0.25 percent higher rate than another strong competitor with experience. Consumers are getting smarter, at least the type of consumers you want to attract. Why up-sell rate when it’s not necessary? Pay attention to the market and know where you sit. Local is better. In an industry involved with the largest financial decision a consumer will make, impacting their personal balance sheet considerably, being locally based matters.
The terms “banker” and “broker” are dead, at least the way we perceived them. We are simply “mortgage loan originators.” Times have changed and we all need to adapt to our new mortgage generation. These titles make absolutely no difference to anyone, including the consumer. Even our President and regulators are confused, calling bank loan officers “brokers.” No more smoke and mirrors and it’s time we work together as “non-depository mortgage professionals.”
Andy W. Harris, CRMS is president and owner of Lake Oswego, Ore.-based Vantage Mortgage Group Inc. and 2010-2011 president of the Oregon Association of Mortgage Professionals. He may be reached by phone at (877) 496-0431 or e-mail firstname.lastname@example.org or visit AndyHarrisMortgage.com.
Wake Up Mortgage Wholesalers— Revisited By Dave Hershman Well, we are in the middle of another refinance boom—unless rates went up before this article is published. That means many loan officers are feasting and it also means most wholesale companies are deluged with business. The focus is accommodating the business and not the future. They are adding reps and operations staff as fast as they can, and many are inexperienced or were not working for a company for a reason. However, this article is not about the quality of the staff … it’s about what happens when this particular boom is over.
So, what happens when the refinance boom ends?
What represents added value? For one, wholesalers should be trying to improve the careers of their targets. If they provide training, it is typically on their products and procedures. This is akin to a loan officer speaking at the office of a real estate agent and talking about their great rates, programs and doughnuts.
Wake up wholesalers.
Expert knowledge and expert marketing.
Is your company helping you with One without the other is worthless. this worthy goal? Experts who cannot market like experts will not position themselves the right way. Those who market well but are not experts will similarly fail. Those who can show loan officers how to provide value to the real estate community as well as alternative referral sources will position themselves differently within this industry. If this is not part of your business model, then you will be missing the boat when it sails without refis.
Wholesalers around the country complain that a typical broker does not know how to put together a decent
Dave Hershman is a top author in the mortgage industry with seven books published, as well as hundreds of articles. Dave has delivered hundreds of keynote speeches, seminars and schools for the industry as well. He may be reached by e-mail at Dave@HershmanGroup.com or visit OriginationPro.com.
The benefits being an expert and furthering expertise goes beyond marketing success.
Without this important component you will unfortunately be in the position of the blind leading the blind. If it leads your clients down the wrong path, the end of the refinance boom is going to be very painful. Granted it will be painful for all—but especially for those who are not in the best position to deliver value. Wake up and think about it because the clock is again ticking …
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Support efforts to improve the careers of your targets. Not just to become better salespeople, but to become experts within the industry. It is the experts who will survive. It is the experts who will thrive after the boom. Loan officers cannot service real estate agents by solely promising the best rates, as opposed to having extra value to help enhance agent So what are the business through synergistic relationships. How are you helping the loan wholesalers doing officer, your clients, deliver this about it? It appears to the neutral observer value? Certainly not by buying them that next to nothing is being done to golf or drinks. I cannot imagine how position the typical wholesaler to these things will help your clients succeed after the boom times. If a become higher quality customers. lender is focusing upon rates, they Training is one way to deliver value are likely to be attracting brokers to your customers—either by deliverwho are selling based upon rates ing this training through your compainstead of relationships. These bro- ny or supporting industry-wide kers are also more likely to be those efforts. Unfortunately, there are not who are less experienced. enough alternatives within this indusIn reality, those brokers who are exe- try for broad-based financial training cuting broad-based relationship busi- that resides well above the basic level. ness models are the ones upon which Personally, I really thought training every wholesaler should focus their would become more important in this attention. However, that strategy industry when licensing became a requires a long-range business model requirement. However, licensing just and I don’t quite see that happening covers basics and compliance. It does today. That requires the delivery of not help a loan officer succeed. More what we call “added value” instead of than 50 percent of the loan officers hawking rates, programs and service. aren’t even required to get that Not that rates, programs and service because they work for banks. Banks
package and they are reprocessing loans for them. How expensive is it to reprocess loans for brokers who are supThere are other posed to be processing loans before they are ways to provide submitted? Will you be such value, able to afford to lend including this help when the busimarketing ness is not so profitable? support. How many wholesalers Where will this leave are helping brokers focus your clients when you “In reality, those upon increasing their have to withdraw this brokers who are ability to provide purlevel of support? And executing broad-based badgering them to do a chase leads to their real estate agents or helping relationship business better job is not enough. models are the ones their business-to-busiExperts understand that upon which every ness clients such as real the job they do in appliestate agents, financial cation not only makes wholesaler should planners, CPAs, etc. focus their attention.” the process smoother expand their own sphere for all concerned and of influence? saves time, but also leads to true I have focused upon two things in opportunities for more referrals. It is my career: Helping loan officers not just about asking for referrals. It become experts in the industry so that is about putting yourself in position the can be expert mortgage advisors, to ask. and showing loan officers how to marLack of quality training is quite ket like an expert. If you think I am expensive for all the players focused upon the word “expert,” you involved—from the homeowners we are right. Experts earn more. Experts are serving to the brokers’ employers don’t sell—people come to them for and the wholesalers who service the advice. Experts become leaders and brokers. In the long run, not deliverwill survive the end of the refinance ing this training will be deadly. I boom. Wholesalers, are you experts? If should point out that it is not only the you are not, how can you teach your loan officer who needs to become an most important clients to become expert—so must the wholesaler who experts? is serving this loan officer.
No one knows when it will end—but it will end. Refinance booms always end at some point. If a particular mortgage wholesaler is focusing on delivering rates and thus serving the lower end of the broker spectrum in terms of experience and/or quality—the end of boom times is likely to hurt that much more for those companies.
are not important, but to be a great wholesale company and a leader— these factors must be a given instead of the entire focus. In other words, if you don’t have the “basic three” down pat— don’t even bother trying to become a leader.
are uneven in what they deliver and you can be sure compliance is part of the package.
Jumbo Lending in Today’s Environment By Brian Swanson Historically, the “hard to finance” borrower was one with a risk-filled profile, usually consisting of late payments, low or sporadic income, and credit indicators that suggested an unwillingness or inability to manage one’s debts. In the 1970s and 1980s, these borrowers were led to private money investors. Typically, these investors were high net worth individuals building portfolios of first and second trust deeds arranged at very low loan-to-values (LTVs) with substantially higher interest rates. The brokers who arranged these loans were later dubbed “hard money” lenders. As time evolved and credit markets became aware of the huge opportunity that existed
in this segment, the “hard money” lenders were replaced with Wall Street firms creating mortgage-backed securities (MBS) and the business was renamed the far more innocuous “sub-prime” or “non-prime.” In the current lending environment, a borrower who possesses a set of W-2s and a recent paystub more easily fits the criteria of agency or government guidelines, and therefore, is able to secure a loan at a higher LTV with little cash commitment required. However, regardless of high credit scores, lower LTVs and ample liquidity, the affluent self-employed borrower has a far more difficult time obtaining financing due to liquidity issues in the
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changes for originators secondary market for nonthat have not been favoragency loans. There are able for jumbo mortgage numerous reasons why the investors. These changes jumbo borrower faces a mandate that investors greater challenge aside pay a predetermined fixed from secondary market liqamount to the brokers uidity; they include issues and conversely brokers that surround income and typically pay their loan the ability to document it, officers a fixed amount luxury properties with valwhich may be expressed ues in a state of flux, occuin a basis point percentage pancy, the number of propof the loan amount. erties owned, acreage and “Whether it’s the Because the current focus so on. buyer who cannot remains on conforming While the players may obtain financing to balance transactions, the have switched positions, buy a home, or the commission arrangement unfortunately, the impact seller who cannot between the broker and remains the same regardobtain financing to loan officer is often a less of which end of the move up in purchase spectrum it occurs; the price, one without the greater amount than the homeownership chain is other will not assist in super jumbo lender offers in lender-paid compensaimpaired. Whether it’s the healing the housing tion. Since the take out buyer who cannot obtain market.” investor population for financing to buy a home, or the seller who cannot obtain financing to these super jumbo transactions is limited move up in purchase price, one without and there is often only a single take out the other will not assist in healing the investor for a loan with unique attribhousing market. The entry level buyer utes, the mortgage banker’s warehouse purchases the move up buyer’s home lender may not allow them to fund this using FHA financing. The move up buyer loan on their warehouse facility. The product that exists for the jumbo secures a high balance conforming loan from any number of resources, while the borrower today has a much more comluxury home buyer is faced with few moditized feel. Regardless of the investor options. The result of this dynamic contin- selected, guidelines all include similar ues to slow the growth of real estate mar- features. Most have loan amounts that kets nationwide, coupled with the current top out at $2 million, while requiring a 30 percent downpayment for purchase employment and economic conditions. Efforts to bring about a recovery thus and income used must be very traditionfar have been centered on agency and al in nature. Moving past the $2 million government loan programs. Both of which loan amount, financing anything other cater to smaller conforming loan balances than a primary residence, or a loan and fall short of true jumbo loan amounts. request that has any unique attribute will Since rates in the conforming loan mar- quickly eliminate the vast majority of kets remain at historic lows, mortgage exits for this product. While financing for originators, bankers and financial institu- this segment does exist, it can be more tions keep a razor sharp focus on produc- difficult to locate and will likely not postion with marketing efforts geared towards sess terms that are reflective of the borrefinancing conforming balance borrow- rower’s strong credit scores, liquidity and ers into lower rate mortgages and govern- overall profile. Typically, these loans are ment programs. Conforming loans work to consummated by regional banks and keep home prices at levels that allow community financial institutions seeking financing to be more easily facilitated. to expand their balance sheet or by large Therefore, it makes greater economic investment banks, to retain or attract sense for the home seller to lower their deposits from their clients. asking price to keep it within reach of the conforming borrower, providing them Brian Swanson, CMB is senior vice presiaccess to a larger population of buyers. dent, chief lending officer of residential This inadvertently creates downward pres- and warehouse lending for BofI Federal Bank. He may be reached by phone at sure on home values in this segment. In addition to the complexities of (858) 764-9988, e-mail bswanson@bofifedagency and government lending, the eralbank.com or visit www.bofifederalDodd-Frank Act outlined compensation bank.com.
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Whoâ€™s Who in the 2012 Wholesale Marketplace? Company Name
Specialty or Niche
State(s) Licensed In
Conventional, FHA, VA, HARP 2.0 (Unlimited LTV/CLTV), expanded approval Level 1, 2, & 3
30 states (see Web site for details)
FHA-accepting approved eligible findings as low as 600, 203K, and manufactured Housing. DU REFI PLUS with no max LTV and limited overlays.
Nationwide (except HI)
Jumbo/super jumbo, warehouse lending
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FHA, conventional, jumbos
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Nationwide (except for AK, HI & FL)
FHA, USDA, VA
CT, MA, RI, VT, NH, ME, FL, AL & GA
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Generation Mortgage Company
Maverick Funding Corporation
Nationwide (except AZ, ID & NV)
32 states and growing
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28 states (see Web site for details)
Whoâ€™s Who in the 2012 Wholesale Marketplace? Company Name
State(s) Licensed In
California residential and commercial hard money, 8.50% to 12.00% on residential and commercial private money financing in California
FHA, VA, USDA, conventional, jumbo and bond programs
Same day turn times since 2002
Jumbo loans, portfolio lender, condos & co-ops
Conforming, government, jumbos, state-specific programs
Conventional, FHA (including 203K), VA & USDA
22 states (see Web site for details)
FHA, government loans & jumbos
27 states (see Web site for details)
FHA & 203K
Full service! Jumbo, conventional, FHA, VA, USDA & HARP 2.0
FHA, USDA, agency, jumbo, one-day off MLS & Mortgage Assurance Program
AR, CO, TX, LA, MN, NE, NM, OK, WI & MT
Lower NY state and Fairfield County, CT
Nationwide (except for AK, MS & NY)
AL, FL, GA, IA, IL, IN, KY, MI, MN, NC, ND, OH, SC, SD, TN & WI Nationwide (except for AK, HI & NY)
OR, WA, CA & ID
WA, OR, NM, TX, AZ, UT, NV & ID
Nationwide (except MO)
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Specialty or Niche
By Jonathan Foxx
She was already in her late 90s, a renowned and beloved philanthropist, bearing a name that symbolizes wealth and status. Her son was already a senior citizen, when he schemed to rob her of her independence, her wealth, her properties, and her dignity. She was suffering from Alzheimer’s disease, chronic anemia, and other ailments that affect the elderly. Properties of great value were sold without the mother’s knowledge, or with her dubious consent, and then no record was kept of the distribution of the proceeds. Roberta Brooke Astor died on August 13, 2007, at the age of 105. On Nov. 27, 2007, indictments on criminal charges were announced against Mrs. Astor’s son, Anthony D. Marshall, and attorney Francis X. Morrissey Jr. The criminal charges were grand larceny, criminal possession of stolen property, forgery, scheming to defraud, falsifying business records, offering a false instrument for filing, and conspiracy in plundering Mrs. Astor’s $198 million estate. The trial of Marshall and Morrissey started March 30, 2009, and on Oct. 8, 2009, the jury convicted Anthony D. Marshall of one of two charges of grand larceny, the most serious of a number of charges brought against
him. The grand larceny conviction carries a mandatory prison sentence, meaning that Marshall could spend between one and 25 years in prison. Francis X. Morrissey Jr. was convicted of forgery. All the money and status did not protect Brooke Astor from the depredations of her son. If this happened to her, then, for most of the elderly, lacking the benefits of money and status, how may these seniors hope to protect their financial interests from similar scurrilous plundering, when they are old and infirm? The Consumer Financial Protection Bureau (CFPB) is involved in providing financial protection against elder abuse; indeed, it is specifically tasked with that responsibility. The CFPB‘s Office of Older Americans is charged by the DoddFrank Act with examining certifications of financial advisors who serve elderly individuals and it plans to make recommendations to Congress on how to protect older consumers. Recently, the CFPB issued an Information Request regarding Senior Financial Exploitation. In considering the challenges that the elderly must face in order to avoid financial abuse, I am providing an outline of the CFPB’s recent Information Request. I am also offering a set of questions—revised from the Information Request so as to be relevant to loan originators—the answers to which may provide new ways and
means to protect seniors from the snares of financial predators. Through proper review of procedures and a periodic self-assessment, companies should be able to train and sensitize its loan originators to the risks associated with senior financial exploitation.1
The information request Using statistics from a recent study, the CFPB noted that Americans aged 60 and up lost at least $2.9 billion to financial exploitation in 2010 and that the total increased by 12 percent between 2008 and 2010. So, to be clear: in the study period, there was a 12 percent increase in the amount of money scammed from seniors! Also, women are more likely than men to be victims, and financial exploitation is most frequently perpetrated by family members and other persons in a position of trust.2 CFPB Director Richard Cordray gave a speech at the White House on June 14, 2012, discussing the issuance of the Information Request regarding elder financial abuse. 3 Dodd-Frank includes provisions that are intended to directly address the needs of senior citizens.4 Cordray said that misusing credentials that certify a person as an advisor for elderly clients is a form of elder financial abuse, which instance he cites as but one reason for the information request. According to Mr. Cordray, based on the study, for each case of elder finan-
cial abuse that is addressed, 42 actually go unreported. That is, only one reported case for every 42 unreported cases of financial exploitation! Hubert H. (“Skip”) Humphrey, who is the Assistant Director of the Office for Older Americans, has stated that the CFPB also plans to look specifically at the needs of senior veterans.5 And Naomi Karp, a Policy Analyst in the Office of Older Americans, has addressed the difficulty that older people may experience in finding trustworthy advice when they need it, though they may be suffering from age-related cognitive impairment.6
Categories In the Information Request, the CFPB is seeking comments regarding certain areas that may affect senior financial exploitation: Evaluation of financial advisor certifications and designations. Providing financial advice and planning information to seniors. Certification and designation information sources. Financial literacy efforts. Financial exploitation of older Americans, including veterans of the Armed Forces.
Self-assessment7 1) Certifications and designations 1. What resources does the company provide to seniors for determining the legitimacy, value, and authen-
ticity of credentials held by its loan originators? 2. How effective are the company’s existing resources at maintaining the legitimacy, value, and authenticity of credentials held by its loan originators? 3. How effectively do existing accountability controls deter the misuse of loan originator credentials? Examples: Accountability controls include revoking credentials, employment, public notices of disapproval or other disciplinary actions. 2) Providing loan originator information 4. What resources are available to explain the subject matter expertise presented or implied by specific loan originator certifications and designations? 5. How effective are publicly available means or the company’s own resources at disseminating thorough, up-to-date information? 6. How effectively are seniors able to use available resources, public or institutional, to select a loan originator with appropriate knowledge to address their specific financial needs? 3) Certification and designation information sources 7. What sources of information are available on the fraudulent or misleading uses of senior certifications and designations?
Awareness Day8 activities held in June. Because there are a growing number of complaints to the CFPB regarding elder financial abuse, the CFPB will use the information it obtains to determine the various ways to prevent financial abuse of the elderly. By conducting a selfassessment similar to the one I have outlined, loan originators would demonstrate a culture of integrity and help to bring about appropriate, financial safeguards for senior citizens. Jonathan Foxx, former chief compliance officer for two of the country’s top publicly-traded residential mortgage loan originators, is the president and managing director of Lenders Compliance Group, a mortgage risk management
firm devoted to providing regulatory compliance advice and counsel to the mortgage industry. He may be contacted at (516) 442-3456 or by e-mail at email@example.com.
Footnotes 1—Request for Information Regarding Senior Financial Exploitation, Request for Information, Consumer Financial Protection Bureau, Dated: April 27, 2012, Announced June 14, 2012. 2—Consumer Financial Protection Bureau launches inquiry on elder financial abuse, Press Release, Consumer Financial Protection Bureau, June 14, 2012. 3—Cordray, Richard, Remarks by Richard Cordray at World Elder Abuse Awareness Day Event, Consumer Financial Protection Bureau Speeches, June 14, 2012. 4—Section 1013(g)(1) of the Dodd-Frank Wall Street Reform and Consumer Protection Act of
2010 requires the Bureau of Consumer Financial Protection to facilitate the financial literacy of individuals aged 62 or older, on protection from unfair, deceptive, and abusive practices and on current and future financial choices, including through dissemination of materials on such topics. 5—Humphrey, Hubert H., Protecting Older Americans from Financial Abuse, Public Statement in CFPB Blog, CFPB June 14, 2012. 6—Karp, Naomi, New Federal Efforts to Combat Elder Financial Exploitation, Webinar, Consumer Financial Protection Bureau, June 6, 2012. 7—Op. cit. 1: My outline for conducting a selfassessment is drawn from certain features contained in the Request for Information, amended appropriately to apply to the unique needs of residential mortgage loan originators. 8—World Elder Abuse Awareness Day (WEAAD) was launched on June 15, 2006 by the International Network for the Prevention of Elder Abuse and the World Health Organization at the United Nations.
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6) Financial exploitation of older veterans of the Armed Forces 11. What types of education and training are provided to loan originators to inform them of fraudulent or deceptive practices targeting older veterans and/or military retirees? 12. How does the company monitor itself regarding consumer protection measures relating to consumer financial products and services offered to, or used by, service members and their families?
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5) Financial exploitation of older Americans 10. What types of education and training are provided to loan originators to inform them of fraudulent, unfair, abusive or deceptive practices targeting Americans age 62 and over?
4) Financial literacy 8. What financial education, counseling, or personal finance management programs are tailored by the company to the unique financial needs of older Americans and their families or caregivers? 9. Among these educational programs, what are the Best Practices in providing to seniors financial literacy and robust, practical information on personal finance management?
don’t answer your
“By getting customers to talk, you find out what they know and what drives their buying decisions.” By Douglas Arnett
Sounds deceptive, doesn’t it? But it conveys a basic sales concept: The person asking the question controls the conversation. For example, how many times have customers asked you a series of questions and then hung up to continue “dialing for dollars?” They got the information they wanted while you got nothing. Perhaps, you are telling a real estate agent the benefits of your outstanding firm. You are smack-dab in the middle of your presentation when the agent asks, “Can you do an FHA 203k?” Many loan originators simply answer “yes” and continue with their pitch.
Basic sales discipline As you know, we are moving into a housing recovery, and rates are hovering at record lows. In this economic climate, you can easily forget basic sales principles in the midst of the chaos. But you can practice a standard sales discipline every day. When customers ask you a question, respond by asking them to clarify or to understand why. You can visualize this principle with the following adages: Someone throws a porcupine in your lap, what do you do? Throw it back, of course! You have two ears and one mouth, listen twice as much as you speak.
ing by asking an open-ended question beginning with who, what, when, where, why or how. By getting customers to talk, you find out what they know and what drives their buying decisions.
Close-ended questions Subsequently, you can hone in on your benefits by asking a series of closeended questions to focus on specific ways you can beat the competition. So, let’s say the customer replies, “One of your competitors quoted me three percent and no points.” Now, you might ask, “What fees did they quote you? Did they volunteer their overall turnaround time to process your transaction? Did you ask about the experience level of their originators? Did they provide references of their service?” Thus, you move from general openended questions to specific ones in order to highlight your strengths and steer away from a sole comparison of rate versus rate.
Getting the sale Back to the real estate agent who asks you, “Can you do an FHA 203k loan?” Respond with easy open-ended questions such as: “Why do you ask?” “Are you working with a customer who needs a 203k loan on a specific property?” If they say “yes,” you can ask for the details. You have taken back control and are focused on a specific transaction.
Therefore, treat every question from a client as an opportunity to gain more information and increase your odds of getting the sale.
So let’s go back to the customer “dialing for dollars” who asks, “What is your best 30-year fixed rate?” Many originators quote the lowest rate possible to undercut the competition. Instead, you should regain control of the conversation by responding, “Well, let me ask you, what rates have you been quoted?” You want to get the customer talk-
Douglas Arnett is regional sales director for Guaranteed Home Mortgage Company, a licensed mortgage investment and banking firm comprised of more than 300 mortgage professionals lending in 28 states. He may be reached by phone at (914) 696-3400 or e-mail firstname.lastname@example.org.
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Calyx Software 800-362-2599 email@example.com www.calyxsoftware.com Calyx Software, the #1 provider of mortgage solutions is dedicated to offering reliable and affordable software that streamlines, integrates and optimizes the loan process. Find out how PointCentral can streamline your business and create compliant processes today.
Direct Mail Best Rate Referrals ............................................800-811-1402 Mortgage marketing company with decades of combined experience providing quality leads, mailers, lists and dialer products. www.bestratereferrals.com & www.mortgageleads.org
TagQuest www.myharpleads.com TagQuest.com 888-717-8980 TagQuest is a full service marketing firm created specifically for the ever changing mortgage business. We have tested and proven campaigns for FHA -VA - HARP - CONVENTIONAL loan types. TagQuest knows what it takes to generate quality leads whether through direct mail marketing, telemarketing, internet leads, data lists, tracking systems, or any combination thereof. TagQuest will brand your company, prepare targeted marketing campaigns that generate interest in your company, and most importantly, show you how to turn sales leads into repeat customers.
FHA Audit and Licensing
First National Compliance Solutions Inc. 1-800-400-4134 www.firstnationalcompliance.com Bonnie Nachamie & Jonathan Pinard have assembled a team of experts to assist Mortgage Brokers, Mortgage Bankers, Federal and State Chartered Banks & Credit Unions with their mortgage compliance needs.
The Lykken on Lending RADIO PROGRAM
Sign-on weekly at
Real Estate Mortgage Network, Inc. www.remnwholesale.com 866-933-6342 REMN has FHA, USDA, 203k, VA and Conventional solutions to fit the needs of your customers. But, at REMN, our most valuable product is our people. The REMN Sales and Operations Teams give you - and your loans - the time and attention that you deserve. Even better, at REMN, same-day approvals are guaranteed.* You can rely on us to get the little, yet vital, things taken care of on time. Interested in joining our Wholesale Division? Send your resume to firstname.lastname@example.org
Retail Branch Wholesale/Residential AMX/Land Home Financial ..................800-349-4172 AMX/Land Home Financial Services Wholesale Lending Division - Great Rates, Great Programs, Great Service. Offering financing options that work in today's market.
Polaris Home Funding Corp. 616-667-9000 email@example.com www.polarishfc.com/timeforachange
CBC National Bank 3010 Royal Boulevard South, Ste. 230 Alpharetta, GA 30022 888-486-4304
We are now hiring Account Executives in AL, TN, KY, VA, & MD.
Icon Residential Lenders (888) 247-4207 www.iconwholesale.com Icon Residential, a wholly owned subsidiary of Grand Bank N.A., is one of the nation’s leading Conforming, FHA and VA wholesale lenders. Our strength, success and longevity is derived from delivering customers service that exceeds our valued business partners expectations. With deep industry knowledge, financial stability and innovative technology we provide the solutions for our business partners to fund loans while avoiding risk. Direct Access to Underwriters Competitive Pricing Innovative Technology Paperless Solution Bank Funding
Big Enough to MATTER…Small Enough to CARE
Veros Real Estate Solutions 2333 North Broadway, Suite 350 • Santa Ana, CA 92706 (866) 458-3767 www.veros.com • @verosres (Twitter) Veros Real Estate Solutions is a premier technology leader in the mortgage industry and proven leader in enterprise risk management and collateral valuation services. Veros combines the power of predictive technology and data analytics for advanced automated solutions.
Call 516-409-5555, ext. 4 to register your company.
• • • • •
Contact Stu Ehrlich in our HR department at firstname.lastname@example.org for further details.
The Resource Registry is a directory of lenders (wholesaler or retail that are recruiting), affiliated services and resources that is seen by more than 191,181 active Professionals.
NATIONAL MORTGAGE PROFESSIONAL MAGAZINE
CBC National Bank is one of the nation’s fastest growing wholesale lenders offering Conventional, FHA, VA, and USDA. The most important aspect of being a leader in today’s market is the ability to build and maintain a meaningful relationship with each customer. We understand that these meaningful relationships coupled with competitive pricing and efficient technology are the pillars of today’s lending environment.
#1 USDA RD lender in multiple states with strong FHA/VA/CONV product lines as well. Don't be held hostage by a captive branch arrangement. Bank it or broker it. Have a business name/identity you don't want to give up? We allow DBAs (subject to state rules).
If your ad was here, you would be seen by 191,181 Mortgage Professionals looking for resources to help them in their business.
NATIONAL MORTGAGE PROFESSIONAL
Calendar of Events, please e-mail the details of your event, along with contact information, to email@example.com. SEPTEMBER 2012
Monday-Wednesday, September 10-12 2012 American Mortgage Conference Raleigh Marriott Crabtree Valley 4500 Marriott Drive Raleigh, N.C. For more information, call (919) 781-7979 or visit NCBankers.org.
Wednesday-Friday, September 19-21
2012 New England Mortgage Bankers Conference Hyatt Regency Newport 1 Goat Island Newport, R.I. For more information, call (617) 570-9114 or visit MassMBA.com.
Sunday-Tuesday, September 30-October 2 Mortgage Bankers Association (MBA) 2012 Regulatory Compliance Conference Grand Hyatt Washington 1000 H Street Northwest Washington, D.C. For more information, call (800) 793-6222 or visit MortgageBankers.org. OCTOBER 2012
Friday-Saturday, October 5-6 Arizona Association of Mortgage Professionals 2012 Lenders Fair & Education Event Phoenix Convention Center 100 North Third Street Phoenix, Ariz. For more information, call (623) 972-6180 or visit AZAMP.org.
Monday-Wednesday, October 15-17 2012 National Reverse Mortgage Lenders Association (NRMLA) Annual Meeting & Expo Hyatt Regency Riverwalk 123 Losoya • San Antonio, Texas For more information, call (202) 939-1760 or visit NRMLAonline.org.
Sunday-Wednesday, October 21-24 Mortgage Bankers Association 99th Annual Convention & Expo The Hyatt Regency 151 East Wacker Drive • Chicago For more information, call (800) 793-6222 or visit MortgageBankers.org. NOVEMBER 2012
Thursday, November 1 Utah Association of Mortgage Professionals 2012 Annual Expo Location to be determined For more information, call (801) 597-2122 or visit UAMB.org.
Wednesday-Friday, November 7-9
Sunday-Wednesday, February 3-6
Sunday-Wednesday, May 5-8
2013 CREF/Multifamily Housing Convention & Expo Manchester Grand Hyatt San Diego 1 Market Place • San Diego, Calif. For more information, call (800) 793-6222 or visit MortgageBankers.org.
Mortgage Bankers Association (MBA) 2013 National Secondary Market Conference & Expo New York Marriott Marquis 1535 Broadway New York, N.Y. For more information, call (800) 793-6222 or visit MortgageBankers.org.
Tuesday-Friday, February 19-22 Mortgage Bankers Association (MBA) 2013 National Mortgage Servicing Conference & Expo Gaylord Texan Hotel & Convention Center 1501 Gaylord Trail Grapevine, Texas For more information, call (800) 793-6222 or visit MortgageBankers.org.
Sunday-Wednesday, May 19-22 Mortgage Bankers Association (MBA) 2013 Commercial/Multifamily Servicing & Technology Conference Arizona Biltmore 2400 East Missouri Avenue Phoenix, Ariz. For more information, call (800) 793-6222 or visit MortgageBankers.org.
Wednesday-Sunday, March 6-10
Sunday-Wednesday, May 19-22
Mortgage Bankers Association (MBA) 2013 Mid-Winter Housing Finance Conference The Ritz-Carlton Bachelor Gulch 130 Daybreak Ridge Avon, Colo. For more information, call (800) 793-6222 or visit MortgageBankers.org.
Mortgage Bankers Association (MBA) 2013 Legal Issues/Regulatory Compliance Conference Boca Raton Hotel 501 East Camino Real Boca Raton, Fla. For more information, call (800) 793-6222 or visit MortgageBankers.org.
Wednesday, March 13
Mortgage Bankers Association (MBA) 2012 Independent Mortgage Bankers Conference The Fairmont Dallas 1717 North Akard Street Dallas, Texas For more information, call (800) 793-6222 or visit MortgageBankers.org.
2013 Maryland Association of Mortgage Professionals Annual Conference Maritime Institute 692 Maritime Boulevard Linthicum Heights, Md. For more information, call (410) 752-6262 or visit www.mdmtgpros.org.
Wednesday-Friday, November 14-16
Mortgage Bankers Association (MBA) 2013 Accounting & Financial Management Conference The Westin Gaslamp Quarter 910 Broadway Circle San Diego, Calif. For more information, call (800) 793-6222 or visit MortgageBankers.org.
Mortgage Bankers Association (MBA) 2013 National Fraud Issues Conference Westin Diplomat 3555 South Ocean Drive Hollywood, Fla. For more information, call (800) 793-6222 or visit MortgageBankers.org.
Sunday-Wednesday, April 14-17 2013 National Technology in Mortgage Banking Conference & Expo Westin Diplomat 3555 South Ocean Drive Hollywood, Fla. For more information, call (800) 793-6222 or visit MortgageBankers.org.
2012 Asian Real Estate Association of America (AREAA) National Convention Bellagio Resort 3600 South Las Vegas Boulevard Las Vegas, Nev. For more information, call (760) 918-9162 or visit www.areaa.org.
2012 Northeast Conference of Mortgage Brokers Trump Taj Mahal Casino Resort 1000 Boardwalk Avenue Atlantic City, N.J. For more information, call (732) 596-1619 or visit NJAMB.org.
NAMB NATIONAL 2012 MGM Grand 799 South Las Vegas Boulevard Las Vegas, Nev. For more information, call (972) 758-1151 or visit NAMB.org.
Sunday-Wednesday, April 14-17
OHIO MORTGAGE PROFESSIONAL MAGAZINE
Sunday-Tuesday, September 23-25
Tuesday-Thursday, October 9-11
Friday-Monday, December 7-10
To submit your entry for inclusion in the National Mortgage Professional