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ALABAMA EDITION

Alabama Mortgage Brokers Association State Office 108 Windsor Lane v Pelham, AL 35124 Phone #: (205) 663-9696 v Fax #: (205) 620-1838 Web site: www.almba.org

AMBA OFFICERS & DIRECTORS Tim Wilkes Linda McCoy Jimbo King Erin Tatum Shannon Tyndall Dr. Annas Aytch Tammy Kirkland

President President-Elect Vice President Treasurer Secretary Past President Executive Director

Phone # (251) 660-5025 (251) 445-2063 (205) 879-2099 (205) 824-8787 (205) 222-1126 (256) 885-4044 (205) 663-9696

E-mail timwilkes@magmtg.com linda@mortgageteam1.com jk3@mcgowinking.net erin@chmortgagealabama.com styndall@franklinamerican.com draytch@aol.com tammykirkland@bellsouth.net

Tanner Allen Winston Ausmer Greg Balch Dee Dee Coley Sean Elliott Tony Franks John Somers

Director Director Industry Partners Committee Director Director Director Director

(256) 776-8404 (256) 940-9660 (256) 216-0202 (205) 986-6000 (256) 275-4163 (256) 503-0860 (205) 949-2790

tanner@tjcmortgage.com wausmer@nmifunding.com gbalch@mycfhl.com elrodmtg@elrodmtg.com sean@northalabamamortgage.com tony.franks@fcmpartners.com john@adventuremortgage.com

Rusty Taylor Jimmy Moore Glenda Hutson Rex Hagood Dr. Annas Aytch F. Wayne Keith Rhonda Sellers Stephanie Green

Benefits/Bylaws Committee Convention Committee Education/Certification Committee Ethics/Grievance Committee Nominating Committee Political Action Committee Public Relations Committee Sponsorship/Industry Partners Committee Technology Committee Welcome/Hospitality Committee

AMBA COMMITTEE CHAIRS

Tony Franks Vicky Stringer

(334) 215-6789 (205) 983-6441 (205) 467-9662 (850) 501-0000 (256) 885-4044 (205) 988-4202 (205) 585-1676 (256) 337-0424

rustyt@re-funding.com jimmy@jimmymooreagency.com ghutson@archwaymortgage.org rex.hagood@guarantytrust.com draytch@aol.com fwklaw@bellsouth.net rsellers@myacopia.com sgreen@platinumez.com

(256) 503-0860 (251) 454-7199

tony.franks@fcmpartners.com vstringer@ciccredit.com

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Wednesday, March 12

For information on all AMBA events, call (205) 663-9696 or visit www.almba.org.

Headlines and blogs from around the web.

n Alabama Mortgage Professional Magazine n FEBRUARY 2014

AMBA MI Business Development Day Speaker: Karen Crumpton With Radian Sponsor: Platinum Mortgage Faulkner University 4524 Southlake Parkway Hoover, Ala. 11:30 a.m.-1:30 p.m. $35 per person for renewed AMBA members/$40 for non-members

Headlines and breaking news from NationalMortgageProfessional.com.

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continued from page MO1 Twitter.com/ntlmortgagepro

facebook.com/mortgageprofessional

LinkedIn.com (search National Mortgage Professional Magazine)

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N A T I O N A L

The Industry Sends a Message: “Help Wanted” By Phil Hall

38 Longtime Industry Advocate Jumps Into Race for State Office: John G. Stevens, Broker Sector Champion Runs for Utah House By David J. Coster

F E B R U A R Y

2 0 1 4

M O R T

l

V O

A SPECIAL FOCUS ON “IT’S ALL ABOUT MARKETING”

My Marketing: Humor Me By Eric Weinstein ........................62 Customized Marketing Delivers Results By Robert Ottone ..63 Pay Per Click: Defined By Ryan Kelly ..................................64 Strike Up the Band By Mary Beth Doyle ..............................65 Five Questions That All Marketers Need to Ask Themselves By Marc Wayshak ............................................67 Mortgage Lenders and Direct Mail By Michelle B. Peel ......68

42 Creating a Culture of Compliance By Jonathan Foxx

FEATURES New Year, New Opportunities By K. Justin Restaino ..............8 The Elite Performer By Andy W. Harris, CRMS ........................8 What Is Your Effective Business Plan This Year? By Mike Lewis ......................................................................10 This is the Year … of the Consumer By Andrew Liput ..........16 AMCs and Changing State-by-State Appraisal Rules By Vladimir Bien-Aimé ............................................................18 A Message From MAA Chairwoman Amy Swaney ........18 NAMB Perspective ..........................................................20 Lykken on Leadership By David Lykken ..............................28

48 GSE Reform: Thinking Outside the Box? (Part 1) By Ryan W. Birtel

54 NMP Mortgage Professional of the Month: Brian Kent, General Manager of C2 Financial By David J. Coster

Damming Regulatory Flood With Technology By Scott K. Stucky..................................................................30 Marketing Compliance Corner By Michael J. Wallace Esq. ....32 NMP’s Economic Commentary: Predictions and Weather By Dave Hershman ................................................34

V I S I T Company

Web Site

O U R

A Page

Act-On .............................................................. www.act-on.com ............................................................66 AllRegs.............................................................. www.allregs.com ..........................................................31 American Financial Resources Inc........................ www.afrwholesale.com ............................Inside Back Cover Appraisal Nation, LLC ........................................ www.appraisal-nation.com ..............................................3 BetterLoanOfficers.com ...................................... www.betterloanofficers.com ............................25, 31 & 64 Bradford Technologies........................................ www.appraisalworld.com ..............................................43 Brokers Compliance Group.................................. www.brokerscompliancegroup.com ..................................35 CallFurst.com ...................................................... www.callfurst.com ............................................................69 Calyx Software .................................................. www.calyxsoftware.com ................................................57 Continental Home Loans, Inc. ............................ www.continentalhomeloans.com ......................................5 Document Systems, Inc./DocMagic ...................... www.docmagic.com ......................................................39 Easy Mortgage Apps............................................ www.easymortgageapps.com ..........................................68 Emerald Creek Capital ........................................ www.emeraldcreekcapital.com ......................................17 First Guaranty Mortgage Corp. ............................ www.fgmc.com ..............................................................13 Global DMS........................................................ www.amcmatch.com ......................................................11 GSF Mortgage Corp. ............................................ www.gsfsales.com ..........................................................7 Lend.com .......................................................... www.lend.com ..............................................................62 Lykken On Lending ............................................ www.lykkenonlending.com ............................................52 MAMP (Maryland Association of Mortgage Prof.) .. www.mdmtgpros.org ......................................................25


f contents

T G A G E

O L U M E

P R O F E S S I O N A L

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N U M B E R

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3210/.- ,+*012/10+3)(+ Voted By you the broker!

8 :382</8 8 $080=.>08=<.40=; 8*8?'0=.>) MORTGAGE CROSSWORD PUZZLE #

Tales From the Closing Table By Andrew Liput ..................36



 

David and Goliath: How Small Players Beat Out the Big Banks By Atri Chatterje ............................................44



NAPMW Report: February 2014 By Nikki Gilbert-Bell............45 



The Long & Short: The Business of Short Sales By Pam Marron ....................................................................46



#



Why Providing the Right Training for the Right Employees Helps Your Business By Melissa Hruza ............50

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Taking the Lead: Marketing Liberation By Jonathan Blackwell ............................................................58

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The â&#x20AC;&#x153;One Big Thingâ&#x20AC;? You Cannot Overlook When Choosing a Branch Partner By Eric Tishaw ..............56

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Credit Repair & Mortgage Lenders By Terry W. Clemans ....59 A Message From E. Robert Levy ....................................59

#

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Effective Marketing While Maintaining Compliance ......60

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Social Media Analysis in Lending By Steven J. Ramirez ......61



When Potential Neighbors Sink a Home Loan By Phil Hall ..........................................................................72 No Changes to 2014 Conventional Loan Limits By Melanie A. Feliciano Esq. ....................................................73





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NMP Resource Registry ................................................74

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NMP News Flash: February 2014 ..................................14

D V E R T I S E R S Company

Web Site

Page

Maverick Funding Corp....................................... www.maverickfunding.com ............................................27 MBA-NJ/NJAMB .................................................. www.mbanj.com ..........................................................37 Menlo Park Funding .......................................... www.mpfunding.com ....................................................15 Mortgage Matchmaker Expo................................ www.mortgage-matchmaker.com ....................................53 Mortgage News Network .................................... www.mortgagenewsnetwork.com ............Inside Front Cover NAPMW ............................................................ www.napmw.org ..........................................................29 New Penn Financial, LLC .................................... www.gonewpenn.com ....................................................51 PB Financial Group Corp..................................... www.pbfinancialgrp.com ..............................................67 Prime National Credit Repair .............................. www.primenational.com ................................................65 REMN (Real Estate Mortgage Network) ................ www.remnwholesale.com/birthday ........................40 & 41 Rushmore Loan Management Services LLC............ www.rushmorehl.com ......................................................9 Secure Settlements Inc. ...................................... www.securesettlements.com ..........................................53 Simple Nexus .................................................... www.simplenexus.com ..................................................55 TagQuest .......................................................... www.tagquest.com ........................................................33 The Bond Exchange............................................ www.thebondexchange.com ..........................................49 Titan List & Mailing Services, Inc. ........................ www.titanlists.com ........................................................19 United Northern Mortgage Bankers, Ltd. ............ www.unitednorthern.com ........................................1 & 80 United Wholesale Mortgage ................................ www.uwm.com ........................................71 & Back Cover Warehouse Lending Group .................................. www.warehouselendinggroup.com ..................................71

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NMP Calendar of Events ................................................79

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FEBRUARY 2014 Volume 6 • Number 2

FROM THE

This month, National Mortgage Professional Magazine turns its attention toward a very necessary aspect of everyone’s business plan as we take a closer look at marketing. Marketing is a facet of your business that simply cannot be overlooked. And as the refi well continues to dry up, your marketing plan to drive new business must be amped up in order to keep your pipeline running smoothly and maintaining a steady flow of business. In fact, if you are reading this column, you've actually submitted to my very own marketing campaign. I am trying to promote increased readership of NMP, and the very fact that you are viewing my column is a boost to my own marketing campaign. The question remains, however, how can you get your marketing campaign to stand out from the rest of the competition and get in the face, in a unique way, of the American consumer whom is deluged by marketing campaigns from every angle? The bottom line of any marketing campaign, no matter how small or how grandiose … one must offer a value proposition that exceeds the others. It is the hook in which you do so that will make you stand out. Now all that sounds great on paper, but in the mortgage profession, every loan originator can arm themselves with a long list of values that they provide to the consumer, but why should they choose you? Here is where the real test of marketing comes into play. Think back to the last time you went to a store to buy something and the choice you made had nothing to do with the television commercials or print or Internet ads, but because a friend told you that they liked that particular product. What overrode the millions of dollars that was spent on marketing for that product was the personal touch of a friend’s referral. All of the products on the shelf as you stood there in the aisle may have been the same on the surface, but it was that one little word-of-mouth suggestion that swayed you to go for that one product over the countless other options. Marketing is great and will continue to exist both in our face and subliminally behind disguised marketing. And by “disguised marketing,” I do not mean false practices and deceptive advertising. I mean utilizing new ways to market yourself, such as via social media, that, on the surface, may seem like a simple Tweet or Facebook posting, but in reality, is a ringing endorsement to use you among the thousands of others out there. By keeping active on social media, you keep yourself in the face of the public. News tips, sharing articles and ideas, posting blogs, exchanging posts in LinkedIn groups, are all small ways in which you can keep your name out there in the online world and in the face of the public. And the best part of it all? It’s free! Now, is there any other reason not to take advantage of this outlet as a means of marketing? At the end of the day, your marketing sets the foundation for the consumer to consider you and your services. Once the consumer is in front of you, it is the personal connection you make, whether with a new client, returning customer or referred client, that determines if your marketing was successful. So go forth and experiment with your marketing (just be sure to remain compliant) and don't be afraid to think outside of the box. Just remember … the most important tool to successful marketing is the person that holds that box, and that is you! Sincerely,

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 ericp@nmpmediacorp.com

Joel M. Berman Publisher - CEO (516) 409-5555, ext. 310 joel@nmpmediacorp.com

Joey Arendt Art Director (516) 409-5555, ext. 307 joeya@nmpmediacorp.com

Beverly Bolnick National Sales Manager (516) 409-5555, ext. 316 beverlyk@nmpmediacorp.com

Scott Koondel Operations Manager (516) 409-5555, ext. 324 scottk@nmpmediacorp.com

Robert Peter Ottone Executive Editor (516) 409-5555, ext. 314 robertpo@nmpmediacorp.com

David J. Coster Senior Editor davidc@nmpmediacorp.com

Francine Miller Advertising Coordinator (516) 409-5555, ext. 301 francinem@nmpmediacorp.com

Phil Hall Senior Editor philh@nmpmediacorp.com

Brian Coleman Business Development Coordinator (516) 409-5555, ext. 311 brianc@nmpmediacorp.com

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 beverlyk@nmpmediacorp.com.

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 ericp@nmpmediacorp.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 orders@nmpmediacorp.com or visit www.nationalmortgageprofessional.com. Any subscription changes may be made to the attention of “Circulation” via fax to (516) 409-4600.

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publisher’s desk

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 Consumer 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.

Joel M. Berman, Publisher-CEO NMP Media Corp. • joel@nmpmediacorp.com National Mortgage Professional Magazine is published monthly by NMP Media Corp. • Copyright © 2014 NMP Media Corp.

NATIONAL MORTGAGE PROFESSIONAL MAGAZINE’S

EDITORIAL CONTRIBUTORS Featured Editorial Contributors Terry W. Clemans

Dave Hershman

Vladimir Bien-Aimé

Melissa Hruza

K. Justin Restaino

Andrew Liput

Ryan W. Birtel

Ryan Kelly

Scott K. Stucky

David Lykken

Jonathan Blackwell

Mike Lewis

Eric Tishaw

Pam Marron

Atri Chatterje

E. Robert Levy

Michael J. Wallace Esq.

Amy Swaney

Mary Beth Doyle

Michelle B. Peel

Marc Wayshak

Melanie A. Feliciano Esq.

Steven J. Ramirez

Eric Weinstein

David J. Coster

Jonathan Foxx

Donald J. Frommeyer, CRMS

Phil Hall

Andy W. Harris, CRMS

Editorial Contributors Nikki Gilbert-Bell


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n Alabama Mortgage Professional Magazine n FEBRUARY 2014


NAMB The Association of Mortgage Professionals

National Association of Professional Mortgage Women

2701 West 15th Street, Suite 536 l Plano, TX 75075 Phone: (972) 758-1151 l Fax: (530) 484-2906 Web site: www.namb.org

2013-2014 NAPMW National Board of Directors and Administration President Jill Kinsman (206) 344-7827 president@napmw.org

Vice President (Western Region) Anna Mackovska (323) 331-2222 anna.napmw@gmail.com

Donald J. Frommeyer, CRMS (t/e 2014)—President Amtrust Mortgage Funding Inc. 200 Medical Drive, Suite D l Carmel, IN 46032 Phone: (317) 575-4355 l Fax: (317) 575-4360 E-mail: dfrommeyer@amtrust.net

President-Elect Christine Pollard (607) 226-1046 cpollard1046@gmail.com

Secretary Cynthia Nutter (360) 449-6408 cynthia.nutter@fnf.com

John Councilman, CMC, CRMS (t/e 2014) President-Elect AMC Mortgage Corporation 10136 Avalon Lake Circle l Fort Myers, FL 33913 Phone: (239) 267-2400 l E-mail: jlc@amcmortgage.com

Vice President (Central Region) Kelly Hendricks (314) 398-6840 khendricks@fsbfinancial.com

Treasurer Jeanne Evans, CME (918) 431-0155 drmjevans@att.net

Rocke Andrews, CMC, CRMS (t/e 2014)—Vice President Lending Arizona LLC 1996 North Kolb l Tucson, AZ 85715 Phone: (520) 886-7283 l Fax: (520) 731-3388 E-mail: randrews@lendingarizona.net

Vice President (Eastern Region) Kimberly Rozell, CME (607) 229-5008 kimrozellnapmw@gmail.com

Parliamentarian Dawn Adams, GML, CMI (607) 329-4622 dawnvadams@live.com

Kay A. Cleland, CMC, CRMS (t/e 2014)—Secretary KC Mortgage LLC 200 South Wilcox Street, #224 l Castle Rock, CO 80104 Office: (720) 810-4917 l Cell: (720) 670-0124 E-mail: kay@kcmortgagecolorado.com

Vice President (Northwestern Region) Ken Perry, CMI, CME (360) 936-3010 kenapmw@gmail.com

Administrator Hulene Works (800) 827-3034 hulene01@verizon.net

NAMB 2013-2014 Board of Directors OFFICERS

Andy W. Harris, CRMS (t/e 2014)—Treasurer Vantage Mortgage Group Inc 15962 SW Boones Ferry Road, Suite 100 l Lake Oswego, OR 97035 Direct: (503) 496-0431, ext. 302 l Cell: (503) 880-2427 E-mail: aharris@vantagemortgagegroup.com

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P.O. Box 451718 l Garland, TX 75042 Phone: (800) 827-3034 l Fax: (469) 524-5121 Web site: www.napmw.org

Jim Pair, CMC (t/e 2014)—Immediate Past President Mortgage America Corpus Christi Inc. 22800 Bulverde Road, Apt. 1402 l San Antonio, TX 78261 Phone: (361) 774-7314 l E-mail: jlpair@aol.com

National Consumer Reporting Association 701 East Irving Park Road, Suite 306 l Roselle, IL 60172 Phone: (630) 539-1525 l Fax: (630) 539-1526 Web site: www.ncrainc.org

2013-2014 Board of Directors & Staff Maureen Devine President (413) 736-4511 mdevine@strategicinfo.com

William Bower Resident Screening Committee Liaison (888) 316-4242 wbower@cicreports.com

Mike Brown Vice President/Treasurer (801) 925-6691, ext. 3777 mike.brown@ncogroup.com

Judy Ryan Strategic Alliance Committee Chair (410) 747-9551 judy.ryan@creditplus.com

Daphne Large Ex-Officio (901) 259-5105 daphnel@datafacts.com

Sharon Bieszk Director (262) 542-1700 sbieszk@wititle.com

Nancy Fedich Conference Committee Chair (908) 813-8555, ext. 3010 nancy@cisinfo.net

Mary Campbell Director (701) 239-9977 mary@advantagecreditbureau.com

Rick Bettencourt, CRMS (t/e 2014) Mortgage Network 300 Rosewood Drive l Danvers, MA 01923 Phone: (978) 777-7500 l Fax: (855) 447-4350 E-mail: rbettencourt@mortgagenetwork.com

Julie Wink Education Committee Liaison (901) 259-5105 julie@datafacts.com

Dean Wangsgard Director (801) 487-8781 dean@nacmint.com

Olga Kucerak, CRMS (t/e 2016) Crown Lending 328 West Mistletoe l San Antonio, TX 78212 Phone: (210) 828-3384 l Fax: (210) 828-3332 E-mail: olga@crownlending.com

Tom Conwell Legislative Committee Liaison (800) 445-4922, ext. 1010 tconwell@credittechnologies.com

Terry Clemans Executive Director (630) 539-1525 tclemans@ncrainc.org

Renee Erickson Membership & Elections Chair (866) 932-2715 renee.erickson@acranet.com

Jan Gerber Office Manager & Member Services (630) 539-1525 jgerber@ncrainc.org

DIRECTORS Fred Kreger, CMC (t/e2016) American Family Funding 28368 Constellation Road, Ste. 398 l Santa Clarita, CA 91350 Phone: (661) 505-4311 l E-mail: fred.kreger@affloans.com Linda McCoy, CRMS (t/e 2016) Mortgage Team 1 Inc. 6336 Piccadilly Square Drive l Mobile, AL 36609 Phone: (251) 650-0805 l Fax: (251) 650-0808 E-mail: linda@mortgageteam1.com John Stevens, CRMS (t/e 2014) ENG Lending 11650 South State Street, Suite 350 l Draper, UT 84020 Phone: (801) 477-7111 l Fax: (866) 442-9937 E-mail: jstevens@englending.com Valerie Saunders (t/e 2015) RE Financial Services 13033 West Lindburgh Avenue l Tampa, FL 33626 Phone: (866) 992-0785 l Fax: (866) 992-1024 E-mail: valsaun@gmail.com


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Contact Chad cjampedro@gogsf.com Direct: 262-901-1444

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GSF Mortgage Corp.




New Year, New Opportunities: Strategies to Improve Your Sales Efforts By K. Justin Restaino It’s a new year, which means new opportunities to get ahead in your selling environment. Take some time to reflect on strategies used last year, and evaluate what did work well and what did not work so well. Because the mortgage industry is always changing, it is important to keep your sales team ready with smart practices. To help you start the new year strong and stay ahead of the competition, we have outlined some key strategies that will help transform your sales efforts for the year. Strive for impact Recently, it seems as though sellers set themselves on cruise control and expect business to run as usual. Buyer expectations have changed drastically over the last few years, so you must focus on improving your sales skills. Challenge yourself to find more effective ways to draw in more prospects. Evaluate everything to determine what allows you to have the most impact with your prospects. Build your relationship, not a script Calling leads all day long can be a monotonous process. It’s natural to begin to sound like a robot and rattle off the same pitch during your phone calls. Hard as it may be, you must strive to build rapport during every contact with your prospects. If the consumer senses your lack of enthusiasm during a call, they could build feelings of mistrust and doubt. A relationship starts with a genuine conversation that connects with the prospect’s needs, not a “sales-type” pitch that sounds like a performance.

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Leverage data to guide your sales process With all the resources available to mine marketing data, sales leaders must be willing to look at the numbers and apply them to their sales processes. By analyzing your data, you can critique your sales process to achieve optimal results. The breakdown usually occurs when you don’t consider the data and what it’s telling you. The data can help you develop an effective process that helps you identify your buyer’s behaviors and move them through your sales funnel. Simplify your sales process One of the easiest ways to improve your sales performance is to simplify your sales process. Remember these three things: 1. Provide maximum value with every interaction. 2. Respond to every customer inquiry or request as quickly as possible. 3. Make your offer clear. If the customer has to work too hard to understand your offer, you’ve lost them. Time is money A successful salesperson will tell you that it’s just as important to know who NOT to call as it is knowing who to call. Develop a system that allows you to rule out who is hot and who is not. Once you find an ideal prospect, you can begin head hunting to other prospects that meet that mold. This will keep you focused on worthwhile leads as opposed to wasting your time on unqualified leads. The success of your 2014 lies within your ability to make changes. Take the time now to think about how the above strategies could work to your benefit and help your overall sales performance. Don’t repeat past mistakes and potentially miss out on new selling opportunities. K. Justin Restaino is vice president of Titan List & Mailing Services Inc. For more than 13 years, he has led Titan’s Mortgage Division, helping lenders of all capacities grow their businesses utilizing targeted direct mail. With a specialized focus in refinance and purchase markets, Restaino has the insight for proper data and mail application for success. He may be reached by phone at (800) 544-8060, ext. 204 or e-mail justin@titanlists.com.

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Is Your Brand Broken? By Andy W. Harris, CRMS First impressions are crucial in business and you only have about seven seconds to make your impact on potential customers. Impact is not only made by face-to-face meetings, but in all outlets available that will reflect who you are and what you do. We’re in a new generation of consumer research and expectations. Good or bad, your brand is out there and your audience is watching. In order to make a positive first impression, you must have a strong offline and online presence with a clear position of what you do different from others. A brand is defined as a name, term, design, symbol or any other feature that identifies one seller’s product or service distinct from those of other sellers. Many variables go into branding your business, but in order to be successful you must invest time and brainstorm to think about why and how you do what you do. This can take time and will require restructuring and reinvention in the future. Things can change and with change must come adaption. At times, re-branding of your original position may be relevant with minor changes, or if you find your brand unsuccessful you may need to rethink and start from scratch. So where do you start? Here are a few ideas …

Take a look The first step is to step outside, step back and look at your company, brand or service from the consumer’s position. Don’t be bias and be honest with yourself. Would you buy from you? Ask friends and colleagues and tell them to be honest with you. Constructive criticism is free and while it’s not always welcomed, it can be a valuable tool. Be open to making changes, but really have a solid foundation of what you do distinctly different than others.

Logo Build an eye-catching and powerful logo that stands out. If you own the company or work for a company, a logo should apply to you and your team. You can create your brand at the macro level if a business owner or the micro level if marketing your own brand within the company brand. Use creative color and features and get feedback. Consider getting a trademark with original ideas and use your logo in all marketing materials.

Web site and social media You must have an online presence and strong Web site with mobile features. I cannot reiterate this fact enough. All too often, I see Web sites that have no clear position, brand or call to action. Many almost look as though someone used a typewriter to type some unedited text and convert it to a Web page. Your potential customers are online and must be able to locate you and what you clearly offer and why you are unique from others.

Be consistent and get followers Use your brand and vision in all promotions and make it spread. Be excited and motivated for what you offer and influence others around you to share your message through their experience. Build a customer and business partner following and never deviate from your position. Be creative and innovative. Developing the right brand for your business can be a game-changer. Invest time in development until you believe you have perfected what makes you distinct. 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, e-mail aharris@vantagemortgagegroup.com or visit www.vantagemortgagegroup.com.


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What Is Your Effective Business Plan This Year?

By Mike Lewis The year 2014 is projected to be another chaotic year for the mortgage industry. While the U.S. economy is expected to improve, the actions of the Federal Reserve regarding interest rate movement continue to be uncertain. Unemployment remains high among middle-income earners, and those who do have jobs are unlikely to see significant increases in pay. Federal debt continues to climb to untenable heights, despite the need for massive investment in infrastructure, education, and research. The Dodd-Frank Act is unpopular among big and small bankers alike and may be amended. The costs of Obamacare to small businesses, including mortgage brokers with 50 or fewer employees, are just now becoming visible. The large mortgage banks have retrenched, cutting personnel and closing offices as refinance activity has declined. Congress is virtually at a standstill, locked in a partisan stalemate with new elections coming in the fall, which means that the future role of government in housing remains unknown. All of this uncertainty brings risk, but it also brings opportunity. How do you expect your organization to be affected by circumstances in 2014? Are you trying to build while others focus

on survival, or is retrenchment, holding cash, and sitting back the best strategy in the face of unknowns? Whatever your conclusions, one thing is certain窶馬ow is the time to plan for the future.

The value of business planning Many business owners and managers underestimate the value of a business plan, believing that complexities and chaos render such efforts futile. They regard business plans in the same way that Mike Tyson ridiculed boxing strategy: "Everyone has a plan 'till they get punched in the face." Poet Robert Burns explained the anti-planning rationale perhaps a little more eloquently when he suggested that the best-laid schemes of mice and men often go awry. Burns, Tyson and their business counterparts incorrectly equate outcomes with the values of planning, failing to see the benefits of greater preparedness and increased flexibility. It is the planning, not the plan, that separates the winners from the losers. Research by Professor Andrew Burke at the Cranfield University School of Management suggested that growth in business for new organizations with business plans was 30 percent higher than those without. The start of a new calendar year is a perfect time to review your previous year's performance, con-

firm company objectives, and adjust strategies and tactics where necessary.

A business plan defined Business plans range from extensive, elaborate productions beautifully bound for presentation to simple notes scratched out on a legal pad. Whatever their appearance, though, all business plans share certain common components: l Operational and financial objectives of the business: A valid criticism of business plans is the tendency of their authors to rely upon general, nebulous statements, rather than specifically defining tangible goals. A good business plan establishes concrete objectives such as future revenue and profit growth, percentage of market share, cost and expense reductions, and new products to be introduced or territorial expansion to be achieved. l Strategies and tactics to achieve objectives: A strategy, sometimes referred to as a "master plan" or "game plan," defines a basic approach taken to achieve a particular objective and establish a competitive position relative to other companies. For example, one company may elect to provide products with the lowest possible retail price while another may compete by offering the highest quality at elite prices. Tactics, on the other hand,

are subsets of strategies detailing specific actions to be taken by specific personnel. A mortgage broker with the goal of increasing market share may elect a strategy to close loans faster than others in the marketplace. In order to minimize cycle time, the company may employ tactics such as standardization of forms, electronic linkage between mortgage broker and lenders, and third-party services brought in-house for better coordination and control. l Measures used to gauge progress: The old business adage, "If you can't measure it, you can't manage it" is especially true in planning. Without benchmarks and measures, knowing whether you are progressing toward your objectives is impossible. A good business plan defines tangible measures such as total cost of closing a loan, labor costs per application, cycle times, and ratio of outsourced to inhouse services. To be useful, measures should be simple, easily understood, and known to all relevant participants who are affected by the objective.

The scope of an effective business plan Every business owner and manager is familiar with the term "paralysis by analysis." Defining the scope and due date of a business plan before beginning


the exercise is essential to completing a document that is easily understood, unambiguous, and actionable. The primary objectives of companies should include the following:

While improvement begins with the planning exercise, value is achieved by analyzing results continuously and making necessary adjustments. For example, a new regulation adding complicated forms or enhanced security may negate a cost or

Final thoughts Planning can be a burdensome, boring exercise for action-oriented individuals confident in their ability to quickly adjust to the unexpected. If you are tempted to forego planning for 2014, you would do well to heed business professor Andrew Burke's comment about its purpose: "A plan is not so much about trying to predict the future, but how to be adaptable, how to sustain the business, and how to develop it to exploit the market opportunity." Are you ready for 2014? Mike Lewis is a retired business executive and personal finance columnist. He may be reached by e-mail at mlewis@moneycrashers.com.

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Many companies lack the resources to implement multiple strategies simultaneously—trying to do too much too quickly invariably fails, leaving participants disillusioned, frustrated and suspicious of future planning exercises. To help ensure success, managers must correctly evaluate their companies' capacity to introduce and accept change in the midst of ongoing business demands and prioritize

The results-analysisadjustments cycle

cycle time objective forcing you to adjust the goal. An external factor such as a new regulation affects all competitors, which means that your planning effort may actually increase the expected benefit, especially if your competitors are unprepared. As a business owner or manager, you are used to reviewing monthly financial reports - income statements, balance sheets, and cash flow statements - to keep abreast of your business. The objectives and measures specified in your business plan require a similar effort if you are to achieve your 2014 goals. The quicker you can identify a variance from the plan, analyze its cause, and take corrective action, the quicker you can achieve your goals by the end of the year.

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l Growth of revenues and profits: If your intent is to grow or maintain company revenues and profits, you should define your objective clearly and specifically. For example, you might aspire to a 10 percent increase in total revenues or profits for 2014, expressed at a rate of 2.5 percent quarter-to-quarter growth. Or you could express the objective as a total dollar figure—an increase in the number of sale units, an increase in the average sale per unit, or a combination of the two. However you choose to define your objective, it should be based on your regular accounting data. l Greater financial stability: These objectives might be stated either as specific actions to be accomplished or as a financial ratio. For example, a specific action might be the addition of $100,000 of company equity by June 1 or the establishment of an accounts receivable line in the first quarter. A financial ratio objective could be a reduction in overall debt of 15 percent, a decline in accounts receivable days outstanding from 30 to 20, or an increase in accounts payable days outstanding from 10 to 15. l Reduced costs: Objectives could range from a reduction in total cost of goods to specific expense items such as attorney fees, IT costs, or printing and postage. It could also include ratios such as increased man-hours per closed mortgage, cycle times (shorter cycle times generally reduce costs if there is no increase in resources), and total costs per unit (mortgages closed). l Employee commitment: Standard measures of employee commitment include turnover, absenteeism and new hire referrals. Some companies do regular employee polling or consider participation in suggestion boxes, company blogs, and other company-sponsored events. l Determining and defining appropriate objectives is the foundation upon which any business plan rests: Objectives that are either too easily attainable or impossible to achieve can destroy any potential benefits. Whatever measures you choose should be directly related to the objective, a logical linkage that is visible and readily understood by those responsible for delivering the desired results.

multiple objectives so that maximum effort delivers maximum benefit. The one exception to this is when low-hanging fruit—quick and easy changes that deliver tangible benefits—can be taken advantage of. For example, simplifying and combining information on forms may reduce cycle time, cut employee time and expense, and improve client satisfaction while reducing storage and security costs.


United Wholesale Mortgage Rolls Out New Loan Tracking Product

New Penn Expands Into Mini Correspondent Territory to Encourage Wholesale Government Lending

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United Mortgage (UWM) has announced that it has rolled out UWM Track, designed to assist brokers in providing current status on loans to real estate agents. The efficiency and visibility the solution offers eliminates communication issues and facilitates the broker’s ability to forge stronger relationships with real estate agents, thus increasing business. “UWM is constantly looking for ways to make our brokers more successful. In 2013, we saw the early beginnings of an uptick in the purchase market and started developing UWM Track,” said Mat Ishbia, president of UWM. “One of the ways brokers can grow their business in a purchase market is to establish sound relationships with realtors. The idea behind UWM Track is to keep realtors apprised as to what stage the loan is in so they know the deal is progressing and can keep their buyer informed. This visibility that UWM Track establishes is another arsenal of tools we offer our brokers. UWM Track makes it more attractive for real estate agents to work with brokers who do business with us.” UWM Track works by brokers logging into UWM’s broker portal—EASE (Easiest Application System Ever), accessing the loan in their pipeline, and clicking on the UWM Track button, which sends an e-mail to the agent containing a secure link to the UWM Track log-in page. Once in UWM Track, the agent is able to view realtime status on their buyer’s loan. The solution provides real estate agents with detailed information on the loan such as when it was submitted to underwriting, conditions reviewed and cleared, loan approval, the closing schedule, when prep and closing documents were sent to the title company, and finally the completion of funding. UWM Track avoids a potential cat and mouse communication game and the latency of receiving and providing status updates, which ultimately translates to delivering better service.

New Penn Financial LLC has announced that it has expanded its guidelines to allow Mini Correspondent and Correspondent partners to accelerate their government loan business. New Penn is launching Federal Housing Administration (FHA) and Department of Veterans Affairs (VA) programs to its Mini Correspondent and Correspondent partners. While these products are currently offered by New Penn’s wholesale division, this is the first time the company is making them available to Mini Correspondent and Correspondent partners. Both standard and streamline products will be available. “We continue to look for new opportunities to help our clients grow their businesses and meet their borrowers’ varying needs,” said Lisa Schreiber, New Penn's VP of correspondent lending. “Our unique combination of financial stability and management experience creates an innovative environment that makes our partners at every level more competitive and successful.” New Penn’s TPO Lending Channel supports Wholesale, Mini-Correspondent and Correspondent business in which brokers, emerging bankers and lenders— utilizing New Penn loan products— originate, write and sell loans to New Penn. Through a multi-tiered platform, New Penn can meet the needs of all aspects of the TPO client community. Additionally, New Penn offers Agency and Jumbo portfolio products which expand their clients’ capabilities. “This is an important milestone for us. We now have expanded guides in all channels and can serve virtually all borrowers and all customers through all three delivery channels,” said Brian Simon, New Penn's senior vice president. “We are committed to providing quality product solutions for our customers and partners, and look forward to working together to create new opportunities.”

Credit Plus Expands Undisclosed Debt Verifications Service

Carrington Launches New 15-Day Closing Program Via Wholesale Division

Credit Plus Inc. has announced that it has expanded its Undisclosed Debt Verifications service and is now offering updates from all three repositories. Credit Plus is the first in the industry to offer debt verification updates from every bureau. Undisclosed Debt Verifications provide real-time monitoring into applicant credit activity from the initial credit file pull through closing. “Credit Plus prides itself on being at the forefront of the industry, delivering solutions that enable lenders to make sound lending decisions," said Greg Holmes, national director of sales and marketing at Credit Plus. "Undisclosed Debt Verifications from all three bureaus, provide lenders with the information they need to help ensure they are in compliance with GSE requirements." Lenders can choose to receive Undisclosed Debt Verifications from one, two or all three bureaus. These Verifications provide comprehensive information about new tradelines, inquiries, secondary reissues, bankruptcies, judgments, liens, collections, late payments, and more. By utilizing three-bureau Undisclosed Debt Verifications, lenders can move forward with closings confident that they have a clear picture of each applicant’s financial standing. The government-sponsored enterprises (GSEs) are now electronically validating 100 percent of the loans they purchase, performing reviews within 120 days. In order to meet GSE requirements, lenders must verify that an applicant hasn’t incurred new debt or liability prior to closing. Applicants who have obtained additional credit prior to closing must be re-qualified if their debt-to-income ratio has changed by more than three percent.

The Wholesale Lending Division of Carrington Mortgage Services LLC has announced that it has expanded its successful Purchase Promise Program to offer 15-day loan closings to borrowers looking to purchase or refinance properties. The new On Time Closing Promise applies to the majority of Carrington’s loan programs and offers expanded guidelines for eligibility with fewer restrictions. Carrington commits to be ready to close any qualifying loan within 15 business days of appraisal receipt or the company will apply a $500 closing cost credit to the loan at the time of closing. Carrington’s On Time Closing Promise provides consumers, brokers and their real estate partners a shorter, more predictable timeline to secure financing, giving them a competitive edge in a tight market. Having a Carrington loan provides buyers with the peace of mind that their loan can be cleared to close quickly when a seller is ready to move forward with a sale. Expedited processing allows brokers to be compensated faster and helps alleviate concern among real estate agents over sales lost due to a homebuyer’s inability to close in a timely manner. “In an increasingly service-oriented and purchase-focused lending environment, being able to close quickly or on the buyer’s timeframe is a distinct competitive advantage among agents and brokers,” said Ray Brousseau, EVP of Carrington Mortgage Services LLC’s Mortgage Lending Division. “Carrington’s On Time Closing Promise—the next evolution of Carrington’s service proposition—will allow mortgage brokers to provide a fast and predictable level of service with greater efficiency than any competitive program we’re aware of.”

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EWSFLASH l FEBRUARY 2014 l NMP NEWSFLASH l FEBRUARY 2014 l NMP NEW QM and Rise in Rates Force MBA to Drop 2014 Mortgage Origination Forecast to $1.12 Trillion

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The Mortgage Bankers Association (MBA) has lowered its forecast for mortgage originations in 2014 by $57 billion to $1.12 trillion for the year, based on declining mortgage application activity and increasing interest rates. “Despite an economic outlook of steady growth and a recovering job market, mortgage applications have been decreasing—likely due to a combination of rising rates and regulatory implementation, specifically the new Qualified Mortgage (QM) rule,” said Mike Fratantoni, chief economist for MBA. “As a result, we have lowered our expectations for both purchase and refinance originations in the first half of 2014. Purchase originations are now expected to be $677 billion for 2014, compared to $711 billion forecast previously. Compared to 2013, purchase originations are expected to increase by 3.8 percent.” Refinance originations were revised lower as well and are now expected to be $440 billion in 2014, compared to $463 billion estimated previously. The updated refinance total is around 60 percent lower than 2013 refinance originations.

REMN Wholesale to Connect With Broker Community During Cross-Country Tour

in Atlantic City, REMN Wholesale will be celebrating the company’s 25 years of success with a gala event at the Revel resort’s HQ Club on Wednesday, March 12. In an industry ripe with change, REMN Wholesale has been an unfailing resource for brokers and bankers that need a wholesale partner they can trust. With same day turn times on new files, REMN Wholesale’s commitment to customer service matches its customers’ residential lending needs. Across the country, industry events REMN Wholesale will have a major presence at will include: March 13 at the Gulf Coast 2014 Tradeshow, Tampa Bay, Fla.; March 11-13 at the MBA-NJ Regional Conference, Atlantic City, N.J.; March 12 at the REMN 25th Anniversary Celebration, HQ Club at Revel, Atlantic City, N.J.; April 3 at the MAMP 2014 Annual Conference, Edgewater, Md.; April 25 at the 2014 Texas Mortgage Roundup, San Antonio, Texas; and September 13-15 at NAMB National 2014, Las Vegas, Nev. “With e-mail marketing being such a force, it’s easy to hide behind your desk and hope for the best, but hope and email cannot be relied on for success. REMN Wholesale’s dedication to customer service requires us to get on the road to meet face-to-face with longterm colleagues and cement new relationships for a profitable future for all involved,” said Carl Markman, director of national sales for REMN Wholesale. “I look forward to connecting in person with old friends and introducing the industry to some of the great associates that have joined the REMN Wholesale team across the country.”

MBA Projecting 2014 Commercial/Multifamily Originations to Hit $300 In an effort to further support and Billion Mark connect with brokers and bankers across the country, REMN Wholesale has recently begun a tour of major mortgage industry events to meet face-to-face with industry colleagues and share ways the company can help them grow their business. Coinciding with the tour’s stop at the 31st Annual MBA-NJ Regional Conference

The Mortgage Bankers Association (MBA) is projecting originations of commercial

and multifamily mortgages will grow to $300 billion in 2014, a seven percent increase from 2013 volumes, and continue to rise to $333 billion in 2016. Originations of multifamily mortgages are forecast at $116 billion in 2014. “Early indications are that commercial and multifamily lenders increased originations by 15 percent in 2013,” said Jamie Woodwell, MBA’s vice president of commercial real estate research. “This year will once again see fewer loans coming up against their maturities. But with still low interest rates, improving property fundamentals, a rebound in property prices, and higher loan maturity volumes on the horizon, we anticipate mortgage originations will continue to increase in 2014.” Commercial/multifamily mortgage debt outstanding is expected to continue to grow in 2014, ending the year at almost $2.6 trillion, more than three percent higher than at the end of 2013. By the end of 2016, mortgage debt outstanding is forecasted to approach $2.7 trillion.

SSI’s QM Survey Finds Rising Cost of E&O and Surety Bonds Concerning Agents Secure Settlements Inc. (SSI) recently conducted its second annual confidential survey of thousands of lawyers, notaries, escrow agents and title agents to examine the status of closing professionals in the increasing regulatory environment. The survey, conducted Jan. 13-17, comes nearly one year after the previous industry survey seeking similar information. SSI uses data from confidential polling to support its mortgage industry pre-funding quality assurance risk management tools. In the age of the Qualified Mortgage (QM), data about personal experiences

relating to the closing process is a critical element to understanding consumer and enterprise risk. The poll, designed by SSI risk analysts, contained 14 carefully selected questions ranging from: level of experience, source of business referrals, satisfaction with bond and insurance coverage and pricing, fraud experienced at the closing table, and relationship with lenders and title insurance underwriters. The same questions that were asked in 2013 were asked again this year to determine any changes brought on by shifts in business and new regulatory requirements from the Consumer Financial Protection Bureau (CFPB) and other regulators. Highlights of the poll included: l Nearly 45 percent of all business is being referred by real estate agents, up from 27 percent last year, and only 15 percent is coming from loan officers as opposed to 36 percent last year. This reflects the movement away from a refinance market to a purchase market where the source of business is more directly tied to the real estate industry. l The rising cost of E&O and surety bonds are troubling many agents. More than 60 percent of agents polled are dissatisfied with the cost of their current coverage. This may be a reflection of the insurance market’s increasing concern over historical losses surrounding escrow and closing fraud. A number of insurers have recently left the market altogether for legal, title and escrow liability insurance, increasing costs. l Nearly 20 percent of those polled actually witnessed fraud at a closing last year, up from 16 percent in 2012, while 36 percent were asked to commit fraud at a closing and refused to do so, up slightly from 33 percent last year. l The increasing focus on best practices and education seemed to have an impact on the amount of hours dedicated to professional education. Whereas nearly 40 percent responded in last year’s poll


that they had five or less hours of continuing education, this year the number was reduced to 25 percent. Fully 54 percent of respondents had completed 10 or more hours of professional education in 2013, with nearly 15 percent (likely attorneys who have high CLE requirements) having completed 20 hours or more. l Lenders received only average marks from agents for communication, timely delivery of wires, closing and post-closing issues and overall levels of service, with the lowest marks given for communicating closing instructions and handling post-closing document errors. l Title underwriters received higher marks overall from agents polled, with two areas of concern being defense for errors and claims, and training. The results confirm the need for continued due diligence, third-party risk management and quality control in the area of residential mortgage closings.

MBA’s Opens Doors Foundation Announces Rental Assistance Grant Program

FHA Expands e-Signature Authority The Federal Housing Administration (FHA) has announced that it is granting expanded authority to lenders to accept electronic signatures (e-Signatures) on documents associated with mortgage loans. The new policy allows eSignatures on origination, servicing, and loss mitigation documents, as well as FHA insurance claims, real estateowned (REO) sales contracts and related addenda. Current FHA policy allows for electronic signatures only on thirdparty documents such as sales contracts and other documents not con-

trolled by the lender. “By extending our acceptance of electronic signatures on the majority of single family documents, we are bringing our requirements into alignment with common industry practices,” said FHA Commissioner Carol Galante. “This extension will not only make it easier for lenders to work with FHA, it also allows for greater efficiency in the homebuying and loss mitigation process”. Lenders choosing to employ e-signatures may begin using this policy immediately for single family forward mortgages and FHA’s reverse mortgage products, Home Equity Conversion Mortgages (HECM). Lenders are required to adhere to the Electronic

Signatures in Global and National Commerce Act (ESIGN), have specific technology and operational capabilities and controls, documented quality control processes, and the ability to adapt e-Signature to FHA’s existing record retention processes. The e-Signatures policy will help streamline the origination process and help reduce document submission timeframes for borrowers seeking options to avoid foreclosure. Initially, e-Signatures will not be accepted on the mortgage note itself. FHA plans to begin accepting e-Signatures on forward mortgage notes at the end of the year. continued on page 16

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The Mortgage Bankers Association’s (MBA) Opens Doors Foundation announced it was unveiling a rental assistance grant program to help families with critically ill or injured children maintain their living arrangements in the face of high healthcare costs. “MBA Opens Doors’ original program to provide mortgage payments to families with sick children continues to serve as a model for charitable giving within the real estate finance community,” said Debra Still, chairman of MBA Opens Doors. “I am proud to lead this laudable effort. However, missing from our first initiative were the millions of Americans who rent instead of own. Now that we have established this important additional component of Opens Doors, we have the opportunity to keep significantly more families in their homes during their time of need. We are committed to sustainable housing for both renters and owners.” The rental assistance grant program compliments a similar program instituted in 2011 that provides mortgage assistance payments for families with sick or injured children. Eligible families can qualify for a one-time rent payment of up to $2,500. Every dollar donated to the MBA Opens Doors Foundation goes directly to those in need. Families interesting in applying or those who would like to make a donation should do so online at www.mbaopensdoors.org.




This is the Year ... of the Consumer By Andrew Liput

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There is a memorable scene in the old holiday movie, “It’s A Wonderful Life,” when Jimmy Stewart as George Bailey, president of the Bailey Savings and Loan, welcomes the Martini Family to their new home which he just presumably funded for them. He makes a speech on the front steps and offers gifts of salt and wine to welcome them. Whenever I spoke to new MLO classes as a lender management consultant, I would recount this scene and explain that this is what consumers expect from our industry: Personal and caring service at an exciting yet stressful time in their lives. Somehow, I would add, our industry has forgotten to care about the consumer in the quest to sell loans at any cost. The implementation of Dodd-Frank and the birth of the Consumer Financial Protection Bureau (CFPB) were, in part, a legislative effort to make sure we never forget that the consumer is the heart of our business. This is the heart of the qualified mortgage (QM) and ability-to-repay (ATR), and the vendor management rules our company helps lenders implement and manage. This year will be the year of the consumer, and lenders need to make sure that they implement policies and procedures, or amend existing ones, to ensure that they are consumer-centric. From better quality origination and ability-to-repay safeguards, to vendor management and data privacy and security, lenders will be on the hot seat more than ever over how consumers are treated by them. It will not be long before we read about large fines and penalties against a lender for failing to heed this warning. Some of the key areas expected to face scrutiny in audits and regulatory oversight this year include: l Third-party vendor management, specifically closing agents. The CFPB is currently gathering data from the public and other interested parties about the closing table experience that will likely result in more specific guidance about managing closing risk for consumers later this year. l Affiliated business relationships. The affinity relationship between lenders and title agents, lenders and appraisers and lenders and real estate agents is being examined. The CFPB understands that almost every professional involved in the mortgage process is driven to the consumer not by free will but through referrals and steering. There is an understandable concern that these methods can drive up costs, ignore quality, and hide kickbacks. l Minority inclusiveness. Consumers get the best deal when there is fair competition, free choice, and more choices for services. Like the Home Mortgage Disclosure Act (HMDA) seeks to gather data and explore how lenders make loans to all consumers, there is a movement to ensure that lenders are doing business with vendors owned by men and women of all races and ethnicities. Expect to see some directives and guidance in hiring women and minority vendors later this year. l Title insurance costs and fees. There have been claims by consumer groups that there is not enough competition and that costs are much higher than the risks being insured, especially in the digital and computer age where property ownership, tax and lien information is readily available and losses from title claims nationwide are relatively small. The American Land Title Association (ALTA) has been doing a good job of addressing these claims; however, we may see movement in this area this year. The key takeaway for lenders is that anyone not making an effort to design their business around the consumer, rather than viewing the consumer as a means to an end, may very well being paying a price for it sometime this year. The CFPB is on a mission, as was George Bailey when he reminded Old Man Potter, “Borrowers are human beings not just cattle … they deserve better!” Andrew Liput is president and CEO of Secure Settlements Inc., a company he founded after nearly 10 years studying the problem of escrow and closing fraud and the uninsured risks associated with mortgage closing professionals. He may be reached by e-mail at aliput@securesettlements.com.

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nmp news flash continued from page 15

Significant Dip in Commercial and Multifamily Loan Maturities Forecast for 2014

The Mortgage Bankers Association (MBA) has released its 2013 Commercial Real Estate/Multifamily Survey of Loan Maturity Volumes. The survey found six percent, or $91.7 billion of the $1.5 trillion of outstanding commercial and multifamily mortgages held by non-bank lenders and investors, will mature in 2014, a 23 percent decline from the $119.5 billion that matured in 2013. Maturities will grow to $213 billion in 2016. The loan maturities vary significantly by investor group. Just three percent ($12.7 billion) of the outstanding balance of multifamily and health care mortgages held or guaranteed by Fannie Mae, Freddie Mac, FHA and Ginnie Mae will mature in 2014. Life insurance companies will see five percent ($18 billion) of their outstanding mortgage balances mature in 2014. Among loans held in CMBS, seven percent ($41.8 billion) will come due in 2014. Fifteen percent ($19.2 billion) of commercial mortgages held by credit companies and other investors will mature in 2014. “2014 will be the fourth straight year of declining commercial/multifamily mortgage maturities,” said Jamie Woodwell, MBA’s vice president of Commercial Real Estate Research. “Following 2014, we will see volumes spike—by 72 percent in 2015 and an additional 34 percent in 2016, as 10-year loans made in 2005, 2006 and 2007 begin to come due.” The dollar figures reported are the unpaid principle balances as of Dec. 31, 2013. Because most loans pay down principle, the balances at the time of maturity will generally be lower than those reported here. This survey covers $1.55 trillion of commercial and multifamily mortgages held or insured by life companies, Fannie Mae, Freddie Mac, FHA, CMBS trusts, and other non-bank lenders and investors. Banks and thrifts hold an additional $870 billion in mortgages backed by income producing properties which are not covered by this survey.

Kroll Reports QuarterOver-Quarter Rise in Mortgage Fraud Kroll Factual Data Inc. has announced a 10.41 percent average increase throughout the country of possible fraudulent activity in loan applications submitted to the company for review between the second and third quarters of

2013. The significant increase—the third consecutive quarterly uptick—adds to an already challenging time for lenders, who are faced with having to comply with stringent loan quality regulations from the Consumer Financial Protection Bureau (CFPB) starting this month. “Even with indications of the U.S. economy and the housing market gaining strength, we are seeing the threat of misrepresentation in mortgage applications rising,” said Rod Bazzani, president of Kroll Factual Data. “The call for increased vigilance and processes for mitigating this risk is at a pitch not to be discounted or ignored. Implementing the appropriate measures to combat potential fraud, be it internally or via a third-party, is of critical importance for lenders.” Kroll examined metropolitan statistical areas (MSAs) with at least 1,000 loan applications per quarter. Using its proprietary risk analysis and verification engines, Kroll Factual Data isolated certain files that may contain indicators of potential mortgage origination fraud. The top five MSAs posting quarter-over-quarter increases of potential fraud include Huntsville, Ala. (55.39 percent), Fort Collins–Loveland, Colo. (51.42 percent), Manchester, N.H. (40.95 percent), Santa Fe, N.M. (37.47 percent), and BoulderLongmont, Colo. (32.29 percent). Among the top 10 MSAs with decreases in potential fraud, Phoenix-Mesa, Ariz., posted a significant decrease of over 30 percent.

MBA Ranks Wells Fargo Top Commercial Servicer in 2013

The Mortgage Bankers Association (MBA) has released its year-end ranking of commercial and multifamily mortgage servicers’ volumes as of Dec. 31, 2013. At the top of the list of firms is Wells Fargo with $434.4 billion in U.S. master and primary servicing, followed by PNC Real Estate/Midland Loan Services with $369.6 billion, Berkadia Commercial Mortgage LLC with $235.4 billion, KeyBank National Association with $169.7 billion, and GEMSA Loan Services LP with $95.6 billion. Wells Fargo, PNC/Midland, KeyBank, and Berkadia are the largest master and primary servicers of commercial/multifamily loans in U.S. Commercial MortgageBacked Securities (CMBS), Collateral Debt Obligations (CDO) and other Asset backed Securities (ABS). Prudential Asset Resources, GEMSA, MetLife, PNC/Midland, and Northwestern Mutual are the largest servicers for life companies. PNC/Midland, Wells Fargo, KeyBank, GEMSA, and Walker & Dunlop, LLC are the largest Fannie Mae/Freddie Mac servicers. PNC/Midland ranks as the top master and primary servicer of commercial bank continued on page 78


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AMCs and Changing State-by-State Appraisal Rules By Vladimir Bien-Aimé Lenders must adhere to constantly changing federal- and statebased regulations in addition to the Consumer Financial Protection Bureau’s (CFPB) rules and Dodd-Frank Act. Depending on how lenders choose to manage their appraisal process even more burden can exist from a monitoring and compliance standpoint. There are several ways to do this which include handling the process manually, using an Appraisal Management Company (AMC), an agent of the lender, or using an appraisal management technology platform. Because of the complexity, human resources and cost, many lenders elect to engage with AMCs who own and manage the bulk of what’s become a compliance-intensive and highly involved appraisal management process. AMCs are also faced with significant challenges to keep up with rules and regulations. Currently, 38 U.S. states have already enacted AMC legislation, and with the remaining pending and the federal minimum standards being delivered on Feb. 18, 2014, it is clear that more change is on the horizon. This means in the very near future there will be 50 separate state regulations and 50 chances to miss a unique provision and be held at the mercy of the regulators. It is imperative that AMCs servicing lenders stay on top of changes in every state to ensure compliance and avoid penalties. Manually attempting to monitor and interpret every state regulation to ensure compliance is an onerous proposition with serious ramifications if something is overlooked. For example, some states require AMCs to disclose their fees, or review a certain percentage of the appraisals, while others require their license number be on the appraisal assignment form. With so many particulars, it is easy to see how a rule could be missed and create exposure for their lender clients. Ultimately, compliance violations fall back on the lender, so it’s important for lenders to be proactive in their due diligence process and ask the right questions.

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• Did my AMC provide their state license number and registration? • How is my AMC monitoring legislation? • Are they bonded? It is critical that both lenders and AMCs keep abreast of changes in state regulations to be compliant. So, how can lenders and AMCs successfully accomplish this without additional staff? Technology is the best answer. Having a comprehensive and searchable AMC regulation database that contains all the current legislation and automatically notifies users of updates provides an elegant and cost effective solution. Empowered with such tools lenders are able to ask the right questions no matter where they lend and ensure compliance. Most AMCs do use varying degrees of technology to manage the intricacies of the appraisal process and the rules for states they are licensed in. Not all valuation management platforms are created equal, especially regarding compliance. Enterprise level valuation management platforms enforce state regulations as part of the platform and often include searchable AMC regulation databases to educate staff and facilitate compliance. To best serve clients, AMCs should use an all-in-one, centralized platform that is proven to effectively automate functions from order to delivery and provide essential reporting needs to satisfy compliance audits. Lenders should only engage with AMCs that utilize technology to automate the entire valuation management process from soup-to-nuts. Online tools exist to match lenders with AMCs that utilize enterprise level technology to support compliance. There are standalone solutions and services available for monitoring these state-by-state changes to laws and regulations for the AMC. These database solutions are a powerful combination of dedicated researches and lawyers engaged to monitor, interpret and summarize these regulations to make them actionable and facilitate compliance. These standalone solutions are ideal for lenders that want to monitor regulation and vet their AMCs as part of their due diligence process. Gone are the days when lenders had the luxury to ignore the potential risk of their third-party vendors. Vladimir Bien-Aimé is president and chief executive officer of Global DMS. Since cofounding Global DMS in 1999, Bien-Aime’ has grown the company to capture a leading share of the appraisal management segment, with a client base of over 20,000 unique users and a 100 percent retention rate among lender clients. He may be reached by phone at (877) 866-2747 or visit www.globaldms.com.

SPONSORED EDITORIAL

MBA’s Mortgage Action Alliance A Healthy Industry Requires Advocacy A Message From MAA Chairwoman Amy Swaney

As the chair of the Mortgage Action Alliance (MAA), my most significant duty is to engage more real estate finance industry professionals in the legislative process and grow the industry’s voice in Washington, D.C. and state capitals nationwide. Unfortunately, for many of our colleagues, political advocacy is often an afterthought. After all, the Mortgage Bankers Association (MBA) already has a government relations staff working to represent the real estate finance industry. But what many do not realize is that we need to be our own advocates too. You can be an industry advocate by becoming an active member of MAA. MAA is completely free, simple to sign up for, and an effective tool to exact legislative and regulatory changes that will make it easier to do business and better our communities. MAA is a non-partisan source of information, and the best way to stay informed about the ever-changing political landscape that our industry has to navigate every day. I realize that the time hard-working real estate finance professionals have available is limited and taking the time to advocate might seem like time you don’t have to spend. I completely understand. In an ideal world, our elected officials would embrace the fundamental mission of our industry and lead, not stymie efforts to streamline regulations and expand access to affordable mortgages for all Americans. Unfortunately, as you know all too well, that is not the world we live in. The reality of the political landscape is that doing your job to the highest ethical and professional standards is not enough. In a vibrant representative democracy like the one in which we live, your voice is what matters to the elected officials we need to reach, and speaking up is the only way we can truly affect action by decision makers. The good news is that MAA is efficient and effective at amplifying your voice. Just last week, hundreds of MAA members answered a “Call to Action,” and, prompted by MBA’s federal lobbyists, contacted

their legislators and encouraged them to oppose an amendment by Sen. Jeff Merkley (D-OR) that would have placed limitations on force-placed insurance and prohibited insurers from providing free tracking and administration services to servicers. In response to the groundswell of opposition, a number of our members’ elected officials withdrew their support, and Sen. Merkley withdrew the amendment. Events like this happen multiple times per year, and even with a small fraction of industry professionals behind us, we are able to combat harmful legislation before the majority of our colleagues are even aware that a threat existed. Imagine what we could do with an even bigger voice. With this in mind, I invite you to join hundreds of real estate finance industry professionals in Washington, D.C. for MBA’s annual National Advocacy Conference on April 9-10. It is the one time every year when our industry takes to the Hill to speak directly with members of Congress. Last year, participants heard speakers from both the House and Senate, and were treated to a private speaking event with Secretary Shaun Donovan. I hope that you will consider joining us for this year’s National Advocacy Conference. It has never been more important to show our elected officials the faces of our industry. Real estate finance industry professionals who wish to join or learn more about MAA can do so at, www.mortgageactionalliance.org. To learn more about the 2014 National Advocacy Conference, please visit http://events.mortgagebankers.org/NAC2014, or contact MBA’s Assistant Director of Political Affairs Annie Gawkowski, at (202) 557-2816 or e-mail agawkowski@mba.org. Amy Swaney, CMB is governmental relations officer and branch manager with Scottsdale, Ariz.-based Citywide Home Loans. Amy is also chair of the Mortgage Action Alliance (MAA), a voluntary, non-partisan and free nationwide grassroots lobbying network of real estate finance industry professionals, affiliated with the Mortgage Bankers Association (MBA). Amy may be reached by phone at (480) 822-6262, ext. 2164, e-mail amy@amyswaney.com or visit http://mba.org/Advocacy/MortgageActionAlliance.


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NAMB PERSPECTIVE The President’s Corner: February 2014 f you are reading this at the NAMB 2014 Annual Legislative & Regulatory Conference, you are seeing first-hand just what NAMB—The Association of Mortgage Professionals has been doing for you in the area of Government Affairs. The team of Rick Bettencourt, Fred Kreger, Olga Kucerak and Roy DeLoach is responsible for putting this conference together. A big thank you to all four of these individuals as they have done an excellent job. The other thank you is to all of our members who are attending this conference. As you know, you have to be an NAMB member to attend this function, and I appreciate your dedication to the industry. I had asked all of you in a previous article to go out and get three new members to join NAMB. We have seen some increase in our membership numbers, and I thank you for your efforts. If you have not completed this task, please do so today. It is really important to make sure that we are growing this community of mortgage professionals to prove to Congress that we have a purpose. We will continue to work for membership opportunities that will help each of you make your lives better. I will be attending the Indiana DECA Conference in March and serve as a judge on a panel reviewing programs put together about business and sales and owning your own company. I have taken part in this event the last five years and it is truly a fine example of our young high school men and women. I can tell you that these young adults continue to

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amaze me and inspire me in everything they do. Their desire and thought process is phenomenal. They produce fourminute programs, along with written proposals on what they want to do and how they want to do it. Last year, there was a presentation on buying a hockey franchise and how they would promote it and operate it. Their ideas were great, and I think some professional teams would benefit greatly just by listening to these kids. If this is the future of our country, I am very impressed! These are the ones you want to see get into our business. They are very level-headed, professional and will be very successful. If you have a DECA Chapter near you, contact them and see if you can help out. They would love to have any professional participate and help. In the past, NAMB has been involved with DECA as a national sponsor. You can help by getting involved yourself and helping the young people of America excel to become successful adults. In an effort to answer requests for something to prove your Lending Integrity Seal of Approval, we are now going to send all of you a certificate for you to display to let everyone who comes into your office see that you are a member. We have been able to accomplish this and you will receive this when you renew your membership and your Seal of Approval. Remember, you have to renew this Seal every year after you pay your annual membership dues. After you receive your Membership Certificate, go into the NAMB Web site at www.namb.org and renew. It doesn’t cost you anything; however, you have to be an originator in order to get this Seal. So why wait? If you have

NAMB’s 2014 Legislative Conference: Let’s Get Our Lobbying On! By Richard M. Bettencourt Jr., CRMS, CMHS Before we get started and dive right into some of the issues we will be addressing in Washington, D.C., I wanted to thank each and every one of the mortgage professionals that took time out of their busy schedules to attend our annual Legislative & Regulatory Conference. There is something to be said about each of you that put aside your loan origination activities, booked your own

flights, registered for this conference, and took it upon yourselves to be part of something larger than you or your individual company. Whether you're an individual mortgage broker, loan originator, loan originator for non-depository institution, or an account executive for one of our wholesale lending partners, you all care enough about this industry to show up and put forth an effort to try to bring about change, change that will undoubtedly help consumers and small businesses across the U.S. So, from the bottom of my heart, I would like to thank each and every one

renewed lately or later last year, and you do not have the Seal, go get your Lending Integrity Seal of Approval and display the certificate with pride right alongside your NAMB Membership Certificate. I am attending the NMLS Conference in late February, and will be assuming a seat on the NMLS Industry Advisory Council. I have already been part of two calls and this Council is pretty active in making suggestions to the AARMR Board. I look forward to keeping you informed and up to date on items concerning our member. NAMB is continually looking for volunteers to make our committees more successful. We are interested in you and what you can bring to the table. We are an allvolunteer Board of Directors, and I appreciate everything that each individual person does to make us successful. The unique part of our association is that we are totally a not-for-profit and we use all of our membership funds to help in the Government Affairs arena and in membership benefits. No Board member, Committee Chair or Committee member receives any salary for what they do. I have to personally thank all of you for the great job that you do in devoting your time and efforts to making this association successful. We have made huge strides in the operations of our association over the past three years in every aspect except membership growth. So I thank you and continue to ask your fellow mortgage professional to join the ranks of NAMB. While you are in D.C. for the Legislative Conference, please take the time to attend all of the functions that we are offering to all registrants. The Compliance Symposium on Sunday will open you up to a lot of areas you thought were not affected by these CFPB’s rules. Our Delegate Council Meeting later that night will bring together all of the state affiliates of NAMB to discuss their status in NAMB

and bring to light what we are preparing to do to brace for the future. On Monday, you will be hearing from speakers that will comment on the Ability-to-Repay (ATR) rule, the Qualified Mortgage (QM) and even non-QM issues. We will have speakers from the CFPB and even hear from Raj Date, managing partner of Fenway Summer. And you will be getting all of the information that you need to go out and meet and lobby on Capitol Hill with your representatives and senators on what we are doing to help the originator going forward. And along the way, you can network with other members from across the country to pick their brain on what they are doing and how they are doing it. The sharing of ideas and networking continues to be a key to attending this conference. In closing, please make sure that you come up to me and introduce yourself. I would be honored to meet you and put a face with the name. And the most important part of this is to make sure that you have enough business cards to pass out to friends and other members, and form those relationships that can last forever. It is also important that you leave your cards with each representative that you meet with so they can also put a name and a face together. Please continue to support you state and national association each and every day. It is still a GREAT day to be in the mortgage business! Sincerely,

of you for attending! So what are we talking about here in Washington? NAMB Government Affairs Committee has come up with three main talking points. We felt these talking points had the greatest probability of securing an outcome beneficial to our industry. The talking points will come in a one-page or two-page document that will give you the opportunity to discuss these issues with your elected officials and a non-technical and easyto-understand examples. The first and most obvious is what I am now calling “Congressional QM Reform.” On Jan. 10, the Qualified Mortgage (QM) and its Ability-to-Repay (ATR) provision was implemented and is now a concrete part of our business. We have received some reports of mortgage brokers in regions of the country where their average loan size is between $100,000-$150,000. Due to the three

percent points and fees cap, they've been unable to originate some of those loans. We are working hard to collect that data so we can present detailed analyses to the Consumer Financial Protection Bureau (CFPB) to show them the impact on the consumer and small businesses in those regions. As anticipated, we've also heard from some mortgage professionals that the QM Rule and its ATR provision have not affected their day-to-day business operations. So, as I have mentioned in the past, this new rule was going to geographically impact some areas more than others. Regardless of the severity of these impacts based on location, it is my goal to drive home the fact to the CFPB that as long as a mortgage brokers’ lender-paid compensation is included in the three percent points and fees cap, there will be disparity in the marketplace and will ultimately

Donald J. Frommeyer, CRMS, President NAMB—The Association of Mortgage Professionals president@namb.org www.joinnamb.com


NAMB PERSPECTIVE hurt the consumer and small businesses across the U.S. As is the case with depository and non-depositories creditors where their service release premiums (SRPs) are included in the rate and excluded from the three percent points and fees cap, the same holds true for a mortgage broker, and therefore, their compensation should be excluded as well. As a result of this new rule, we have seen some immediate and extremely significant reactions from some wholesale lenders across the U.S. We have seen several wholesale lenders make the difficult decision to exit the wholesale business altogether. We have seen one wholesale lender who has decided, regardless of an automated underwriting system finding, to cap its debt to income ratio at 43 percent. But, one troubling activity that appears to be growing in frequency each and every week is the obvious reintroduction of sub-prime lending for non-QM loans. Just today, I saw a rate sheet for a sub-prime lender offering non-QM loans at an 80 percent loan-to-value (LTV) and a credit score over 700 with starting rates at 8.75 percent with 1.75 points. That would be a rate any consumer would be offered if their debt-toincome (DTI) ratio exceeded 43 percent. Now, I know there is a seven-year exclu-

sionary period while Fannie Mae and Freddie Mac are in conservatorship, but to use that seven-year exclusionary as an excuse to not seek changes is simply looking at that time frame as a stay of execution. The impact on consumers and our housing industry could be catastrophic if changes are not implemented immediately. The second talking point we will be focusing on is flood insurance reform. There is no question that the BiggertWaters Flood Insurance Reform Act had some serious unintended consequences that homeowners across the U.S. are now facing. I have heard of examples of flood insurance premiums nearly tripling or more and it's not localized to coastal communities or the wealthy. We are seeing low- to moderate-income homeowners in areas now affected by the re-delineation of flood zones being forced to pay flood insurance premiums in excess of $4,000-$6,000. These flood insurance premiums do not coincide with a home valued at $500,000, they are falling on homes that are valued anywhere from $150,000-$350,000. We need to let Congress know it is imperative that we have an affordability study completed so we can ascertain which regions and which communities should and should not be subsidized. I even heard of one single family home in

By John Councilman, CMC, CRMS

tions are opening TPO centers to cut costs. Recent studies show that TPO loans are performing as well or better than retail originations. The quality and integrity of TPO originators surpasses those of many large lenders due to the stricter standards of the SAFE Act. NAMB and it state affiliates are providing quality education and information. Trade shows where originators can see new products and lender offerings have returned in full force across the country. NAMB National expects well over 2,000 in attendance in September in Las Vegas. As lenders begin to offer non-QM loans and alternative programs, originators need to know about these programs. Finding just one exception can mean a loan is closed and thousands of dollars in commissions. Companies and originators who want to succeed attend these shows to be the best they can be and serve consumers better. Mortgage professionals are becoming a community that is beginning to work together. NAMB works side by side with the MBA, NAR, ABA, NCUA and many of the other trade associations involved in mortgages. NAMB operates major social media sites on LinkedIn, Facebook and Twitter that have attracted nearly 20,000 mortgage professional members sharing information and seeking the advice of others. NAMB was

the first mortgage trade association to heavily use videos and YouTube to bring information to you. Interestingly, through these efforts, we are finding that mortgage brokerage is alive and well in other countries like Canada and Australia. There are still a lot of questions that will be determined in 2014. Will mortgage broker shops be able to grow to companies with dozens of employees like we often saw a few years ago or will the regulations keep brokers small? Will the CFPB create more parity with lenders for brokers in the amount they receive for originating a loan? A bump to a four percent compensation cap instead of three percent would go a long way toward leveling the playing field. Consumers are paying dearly for the three percent cap on all broker compensation. Brokers cannot afford to advertise their greater efficiency and lower points and fees when they are so tightly capped. Consumers seeking small loans suffer because the expanded caps are still too low. Will more brokers move to the mini-correspondent model to avoid the more onerous restrictions on brokers? There are rumors that regulations will require lenders who immediately sell their loans to follow

Richard M. Bettencourt Jr., CRMS, CMHS of Danvers, Mass.-based Mortgage Network is Government Affairs Committee Chair of NAMB—The Association of Mortgage Professionals. He may be reached by phone at (978) 777-7500 or e-mail rbettencourt@mortgagenetwork.com.

continued on page 22

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Against all odds, thirdparty originators look to thrive and gain ground in the coming year. As Mark Twain said, “The rumors of my death have been greatly exaggerated.” Whether you act as an originator, a broker or a correspondent, you are likely to do well in 2014. It is going to be the year of the non-bank and small companies. There have been so many regulatory changes over the past several years and I am sure that everyone would like to see things stabilize. Most of those changes are a result of the Dodd-Frank Act. The CFPB was forced to write many rules that changed the way everyone in the mortgage business operated. Fortunately, most have now been written. Some of the rules tilted against smaller players and originators. Others give smaller players some advantages. There is no doubt that power and money played a part in the outcome of the final rules. The good news is that NAMB was able to preserve many

important areas. Despite the proclamation that yield-spread premiums (YSPs) were dead, brokers can still be paid, and paid rather well by lenders. Brokers can still offer no-cost loans. Loan originators for both brokers and lenders are not double-counted as was written in Dodd-Frank. Disclosures that favor one origination channel over others are set to disappear next year. The FHA has maintained low-downpayment mortgages for folks with lower scores. The USDA has restored its loan guarantee areas through the end of this year. NAMB is present everywhere in Washington, D.C., from the halls of Congress to regulators like the CFPB to the FHA, VA, the Appraisal Foundation and numerous other entities that shape our industry. These are all areas where NAMB is working for you, consumers and the country. The year 2014 will be a year when wholesale and correspondent lenders who cannot compete on price and service levels exit the business. A few of the old big names have left, but many new, aggressive lenders have entered or are expanding their territories. Companies that had relied solely on retail origina-

consumers and will potentially limit many consumers’ access to credit. So, as you can see, we have a pretty full plate here in D.C., but I have no doubt that the information you all will provide, whether it's your own personal experiences or the information we will provide for you, we will turn some heads on Capitol Hill. Listen, mortgage brokers are not going anywhere and we will be a part of this industry for years to come. We have the ability to provide consumers with some of the highest levels of customer service, and in my opinion, the most diverse portfolio of lenders. I truly believe that 2014 will be the year of the mortgage broker! Don't ever give up and please encourage any and all you know to join our incredible association! Together, and acting as one I, have no doubt that we can make a difference. Once again, I truly and most sincerely thank each and every one of you for joining me and NAMB here in D.C.!

NationalMortgageProfessional.com

What’s Ahead in 2014 for TPOs?

Key West, Fla. where the flood insurance premium was increased from $2,800 to $42,000. Those types of premium increases will now force specific regions of the country to rely solely on cash purchase transactions. We were very excited to hear that the Senate has passed a bill with bipartisan support. We will need everyone's help to get a similar bill passed in the House! Our final talking point for our legislative conference will be based on the FHA loan limit decreases that have fallen on almost every single county in the U.S. As a matter of fact, a recent article indicated that one of the most hard-hit MSA's was right in my own backyard in the Commonwealth of Massachusetts. The Worcester, Mass. MSA saw a 26 percent reduction in the loan limit and this reduction will impact more than 14 percent of all FHA mortgages in that MSA. What I find incredibly confusing is that average loan limits are typically based on the median sale price in specific geographic locations. Massachusetts has seen a steady increase in our median sale price and this was evident in the VA's recent decision to increase their loan limits by nearly $11,000 and every single MSA in the Commonwealth of Massachusetts. So, we will be advocating to Congress that these loan limit reductions are not in the best interest of


NAMB PERSPECTIVE what’s ahead in 2014 for tpos? continued from page 21

the broker fee caps. Will small companies be the target of regular CFPB examinations or will they only be audited when there are complaints or referrals? Are small companies going to need an outside compliance provider to avoid catastrophic lawsuits and fines? Will every small com-

pany or originator need E&O insurance to survive? Will non-QM offerings proliferate? What is the future for Fannie Mae and Freddie Mac? Will large banks pull back further from mortgage lending? NAMB will be providing the latest information, as well as making certain you are

A Message From the NAMB Communications Committee Chair By John H.P. Hudson, CRMS

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In case you didn’t know, the word “Communicate” has a Latin derivative meaning “to share.” As I sit here writing this article about the mortgage industry and the current state of the housing market, I cannot help but think about the importance of the word, its roots, and how different the mortgage world would look if we did a better job of “communicating.” This March, mortgage professionals from all around the country will descend upon Washington, D.C. with one goal … to communicate with their elected officials about housing issues and regulatory burdens which have had

a profound impact on consumer access to affordable credit, the ability for small businesses to remain intact in their communities, and the overall health of the economy. In order for these delegates of the mortgage industry to be effective, the communication must be both directions. At this point, you might be asking yourself, “What is John rambling about?” Well, here it goes. As Communications Committee Chair for NAMB—The Association of Mortgage Professionals, I am enlisting your help to join me and our delegates in Washington, D.C. as Communication Committee Co-Chairs. As a co-chair, you are responsible for helping NAMB spread the message about the state of the housing market, the impact of regulatory overload on consumers and small

A Message From NAMB South East Region Membership Communications Committee Chair By Linda McCoy, CRMS Do you have a Membership Certificate from NAMB—The Association of Mortgage Professionals hanging on the wall in your office? I want people to know that I belong to NAMB, a professional trade association that has a Code of Ethics and is concerned about doing things right. NAMB had created its Best Lending Practices long before the Federal Reserve, Dodd-Frank and the CFPB were even a

part of our daily lives. My NAMB Membership Certificate says, “LINDA MCCOY,CRMS (Certified Residential Mortgage Specialist). NAMB has certifications that help set you apart from being just a loan originator. NAMB established the GMA, CRMS and CMC certification exams to provide members with an opportunity to be recognized as leaders within the increasingly competitive field of mortgage originating. The individuals who seek certification should know that the benefits of achieving distinction will enhance their career and reputation.

informed and protected. You can be certain of one thing … NAMB will be there to tirelessly work for originators, brokers and correspondents. That is because NAMB is you. There is no huge staff. NAMB is operated by mortgage professionals for mortgage professionals. We have a full-time lobbyist in Washington, D.C. and folks who take care of member services, but all of the decisions and much of the work is done by people just like you. That is why NAMB will

be here as long as there are people in the mortgage business, fighting for you with you participating. There is power in numbers. Join NAMB and support NAMBPAC. It does make a difference!

businesses, and the perception that those D.C. do not hear our voices. You can help us and your livelihood by reaching out to your colleagues and insisting that they join their trade association and support their Political Action Committee (PAC). You can reach out to your housing industry colleagues in the real estate or homebuilding communities and make them aware of the changes taking place and the impact they will have on a consumer’s access to credit. Most importantly, you can call your elected representatives in D.C. and make sure they are aware of the unintended consequences that are taking shape across this country. NAMB's advocacy has been effective over the years because our members get involved. NAMB members are leaders within the mortgage business because of their experience and expertise. They are widely regarded as leaders within their communities because they recognize the importance of getting involved and making a difference. In order for NAMB to continue to be an effective advocate for mortgage brokers

and mortgage professionals, you must participate in the political process. Communication works when all parties are listening, and in the wake of the U.S. economic conditions, all parties these days should be listening. Let your voice and the voice of millions of Americans hoping to participate in the dream of home ownership be heard. As co-chairs, I hope you will follow the lead of NAMB and spread the message we carry forward supporting consumer choice, the preservation of and promotion of homeownership and the proliferation of small business and the mortgage professional. If you are a member of NAMB, thank you for your support. If you are a future member of NAMB, we are looking forward to working with you to protect and promote your profession.

At the bottom of the page on the Certificate, it says Member Type: Lending Integrity Professional. I have a Lending Integrity Seal of Approval that goes on all of my e-mail, advertising, Web site and social media. The Lending Integrity Seal of Approval helps homebuyers find hard-working, ethical mortgage professionals. To earn the 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. We are meeting in Washington D.C. in March to lobby for mortgage professionals. Loan originators from across the country will be there because they want to make

John Councilman, CMC, CRMS of AMC Mortgage Corporation in Ft. Myers, Fla. is president-elect of NAMB—The Association of Mortgage Professionals. He may be reached by phone at (239) 267-2400 or email jlc@amcmortgage.com.

John H.P. Hudson, CRMS of Premier Nationwide Lending in Flower Mound, Texas is NAMB Communications Committee Chair. He may be reached by phone at (817) 247-4766 or e-mail jhudson@pnlending.com.

sure that our voice is heard and to find out, first-hand, what’s next. The more members we have, the more congressmen will listen to what we have to say. If you would like to become an NAMB member, learn more about NAMB certifications; apply for a certification, or the Lending Integrity Seal of Approval, visit www.NAMB .org. If you have any questions, you can call or email any NAMB Board member and we will be glad to help you. If you are already an NAMB member, I thank you. I am a member of NAMB—The Association of Mortgage Professionals that cares about its members, their clients and our future. Linda McCoy, CRMS is broker/owner of Mortgage Team 1 Inc. in Mobile, Ala., a member of the NAMB Board of Directors and serves as NAMB Membership Committee Chair for the South East Region. She may be reached by phone at (251) 650-0805 or e-mail linda@mortgageteam1.com.


NAMB PERSPECTIVE Updates From NAMB’s Treasurer and By-Laws Committee By Andy W. Harris, CRMS

From your NAMB treasurer … I hope everyone is having a great start to 2014 and you’ve started or finished your personal 2013 taxes without too much difficulty from Uncle Sam. NAMB successfully completed the fiscal year-end 990’s for 2013 which reflected a profit and comfortable balance sheet. We are in a position for growth through membership and successful events and look forward to building value through involved members. Our goal as an association is to responsibly invest in future benefits for our members, while organizing and tracking assets and liabilities for financial stability and strength. If you are an NAMB member and have any questions regarding financials, please contact me directly.

Bylaws Committee update …

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, e-mail aharris@vantagemortgagegroup.com or visit www.vantagemortgagegroup.com.

Going Back to the Basics By Kay A. Cleland, CMC, CRMS

l NAMB Testifies Before Congress l NAMB Works With the CFPB l NAMB Participates in Multiple Regulatory/CFPB Panels l NAMB Webinars l Full-Time NAMB Lobbyist on Capitol Hill l NAMB Protects Your Business l NAMB Forms Industry Coalitions l NAMB Education

For detailed information, visit www.namb.org.

Are You an NAMB Lending Integrity Seal of Approval Holder? (No additional costs to NAMB members)

How to Apply for your National Lending Integrity Seal www.lendingintegrity.org Click on EARN the Seal NAMB members ONLY–Log in to the Lending Integrity site with your NAMB User ID and Password (If you do not know your User ID and Password, type in your e-mail and click log-in and the system will send you a password. If you have any issues, please call (972) 758-1151 or email membership@namb.org).

Lending Integrity Requirements

l l l l l

Kay A. Cleland, CMC, CRMS of KC Mortgage LLC in Castle Rock, Colo. is secretary of NAMB—The Association of Mortgage Professionals. She may be reached by phone at (720) 810-4917 or email kay@kcmortgagecolorado.com.

l l l l

The Lending Integrity Seal of Approval is awarded only to mortgage originators who meet specific requirements. To earn the privilege to display the Seal, mortgage brokers and loan officers must: Be an NAMB member Meet the requirements of the SAFE Act Pass a national criminal background check Attend eight hours (or equivalent) of professional development education each year Attend two hours (or equivalent) of ethics training every other year or each license renewal cycle Provide professional references Subscribe to NAMB’s Best Business Practices Agree to NAMB’s Code of Ethics Must be renewed annually

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It has definitely been an interesting time in the mortgage industry with so many major changes. What is the key to being successful today and how do you stay up on all of the changes? Go back to the basics, roll up your sleeves, follow the directions, do the right thing and get involved. With all of the significant changes, where do you start? You start with your state and national associations. One of the first things that I learned when I got in this business 30 years ago, was to learn from the best and surround yourself with good people who can support you in building your business. The associations are here to support you. Join NAMB—The Association of Mortgage Professionals and stay current on all of the legislative issues at hand. Doing this on your own would be very difficult and definitely hard to follow, but doing it with your peers makes it much easier. The association has a Web

site to keep you up-to-date with videos, fliers, education, sales tools and much more at www.namb.org. NAMB and its state affiliates hold Webinars, education seminars and conferences on a regular basis that you can get involved with while educating yourself. The main reason I hear people not wanting to get involved in their association is because they don’t have the time or really don’t know what it is all about. This doesn’t make sense to me, since this is an essential ingredient for a successful business. Attending networking events, joining conference calls and Webinars consistently help you feel like a part of the industry and help you really get to known the industry. It also helps you realize that you are not in this alone. People want to help you if you let them. Get involved and be the best you can be.

www.namb.org … JOIN TODAY!

NationalMortgageProfessional.com

If you have attended the last few Delegate Council Meetings at our NAMB events, it’s been clear that our association’s by-laws are a hot topic issue. NAMB’s By-Laws Committee has presented revisions to our existing by-laws that propose simplifying the membership into

two categories, Professional Membership and Associate Membership (Corporate Membership remains as well). These two membership types are separated by the NMLS Registry individually or by employer to be considered a Professional Member. We believe this will make things easier for new members, NAMB’s state affiliates, and improve the way we vote and operate as a mortgage trade association. While the By-Laws Committee feels that the changes are quite simple and would benefit membership, the membership dues would need to be agreed upon and kinks worked out for a formal vote in Delegate Council. These discussions will continue and the Committee hopes to see new improved by-laws and membership participation in the future. If you are an NAMB member or involved with the Delegate Council in your state and have questions on the proposed changes, please contact me directly.

Why Do I Need NAMB?


THE INDUSTRY SENDS A MESSAGE:

“HELP WANTED” By Phil Hall From a distance, it is easy to believe that this will be a rough year for the mortgage industry: Predictions of a dire decline in origination, coupled with a still-fragile economy and toohigh levels of unemployment and underemployment, would suggest that originators are quietly planning to reduce their number of employees. Up close, however, the picture is very different. While a few of the industry’s major lenders have already announced layoffs and a number of firms are in various stages of consolidation, many industry leaders are on the lookout for new additions. “I want to be busy when no one else

is busy,” said John Walsh, president of Milford, Conn.-based Total Mortgage Services. “There will be a lot of displaced and talented people, and 2014 presents us with a lot of opportunity.” For Walsh, the ability to hire even during the trickiest economic periods is critical for bottom line success. “In 2007 to 2008, we were able to pick some very talent people who are still with us today,” he adds. The same train of thought is running through United Wholesale Mortgage (UWM), the wholesale arm of Troy, Mich.-based United Shore Financial Services (USFS). “We’re hiring approximately 12 to 14 wholesale reps a month,” said Mat Ishbia, president of UWM and president/CEO of USFS. “We have about 185

account executives.” The key aspect that is driving today’s hiring process is the new regulatory regimen imposed upon lenders by the federal government and many state agencies. “The good news for the employment picture is that it takes more people to close a loan in today's regulatory environment,” said Robert Pieklo, senior vice president of secondary marketing at American Financial Resources (AFR), based in Parsippany, N.J. Indeed, compliance experts are being viewed as the most desirable new employees across the industry. “Compliance is a huge, huge key role for any company,” observed Don Giorgio, president of Levittown, N.Y.based United Northern Mortgage

Bankers. “The people who can stay on top of all the regulatory changes taking place can make or break a company.” And it is not just the lenders that are eager for compliance experts. “The vendors writing the software for these compliance charges need to have compliance experts on staff, too!” said Keven Smith, president and chief executive officer of Southfield, Mich.-based Mortgage Builder Software. Ishbia notes that the legal ramifications connected to regulatory compliance is providing a new opportunity for attorneys to find lucrative employment opportunities in mortgage banking. “We have a team of in-house counsel,” said Ishbia. “That’s how you bring good people into this industry that did not consider working here before.”


Room at the top

Front line warriors

Phil Hall is senior editor of National Mortgage Professional Magazine. He may be reached by e-mail at philh@nmpmediacorp.com.

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Beyond the executive level, industry leaders are confident that the basic foundation areas of the industry will continue to offer significant employee opportunities throughout the year. “Account executive loan officers with books of business are being sought after,” said Rubin. “Those with absolute tie-ins with real estate agents will be the kings of the castle. Furthermore, marketing guys who are really savvy and know how to bring in customers will be in demand.” United Northern Mortgage’s Giorgio believes that opportunities are also ripe for loan processors. “Everything has changed,” said Giorgio. “There will be a need for people to process loans who are not data entry clerks.” Giorgio adds that highquality servicing professionals will be sought after. “Servicers are dealing with so many regulatory changes that it will be important to have a good servicing staff that can counsel people into successful solutions and not just say, ‘It’s okay, we’ll modify your loan,’” Giorgio continued.

Where the jobs aren’t Sharga adds that those seeking mortgage jobs would probably do well by not aggressively pursuing the money center depositories. “It will be a slow year for hiring at large banks,” said Sharga. “There is not enough purchase volume for them to energize massive hiring.” While credit unions are slowly growing their market share, it does not appear that they will be on a frenzied hiring spree for mortgage help. “I would like to see them hire some people laid off from the biggest banks,” said Bob Dorsa, president of the American Credit Union Mortgage Association, who adds that many credit union executives are still pondering whether to actively expand their mortgage staffs. “We’re at a little bit of a crossroads.” Secondary marketing officers will also see fewer job openings available, according to American Financial Resources’ Pieklo. “Hedge advisory firms have taken a bite out of these departments, specifically in small and mid- size mortgage companies that sell servicing released,” said Pieklo. Furthermore, hiring trends are not evenly spread out across the nation. “Right now, the demand is on the West Coast, especially in California and Colorado,” said Carl Markman, director of national sales at REMN Wholesale, a division of Iselin, N.J.-based Real Estate Mortgage Network Inc. (REMN). “We are also seeing more activity in Texas, the mid-Atlantic states and the Southeast.” “There are roughly 2,500 non-depository mortgage lenders out there, and 30 to 35 percent are going out of business and/or consolidating with other companies,” said Rick Roque, principal with Menlo Company, based in Washington, D.C. “It is not evenly distributed across states. Eighty-five to 90 percent of mortgages are done in about 11 states.” Finally, there is the issue of which individuals will be gaining the new jobs: Those who are new to the industry or those who have been around the block more than a few times? “A major issue with our industry today is the inability to attract young, educated people to pursue a career,” said Pieklo. “The industry is aged and this extremely regulated environment may push some people to just hang up their cleats. As a result, this will be a great opportunity for the next generation of mortgage professionals to step in.”

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Drew Waterhouse, managing director and chief executive officer of Hammerhouse LLC, a recruiting firm based in Mission Viejo, Calif., believes that the increased focus on compliance will bring about a new addition to many C-suites: A chief risk officer. “This could be the blending of the CEO, the COO and the general counsel,” said Watherhouse, adding the new chief risk officer would be tasked as “protector for originations.” But even without creating this new role, the C-suite is seen as a place for new hiring. “The executive level offers a lot of opportunities for seasoned executives,” said Andrew Peters, chief executive officer of Frederick, Md.-based First Guaranty Mortgage Corporation. “Due to consolidations and mergers and acquisitions, we are seeing senior level executives shift around because the places they’ve been were downsized.” Ishbia agrees with Peters’ assessment. “There is a lot of opportunity in leadership and management positions,” said Ishbia. “A lot of companies are looking to hire top talent. We believe the company with the best talent wins.” And for the companies that seek to absorb former competitors, there will also be a need for a specialized expertise in turning two companies into one. “There will be opportunities for mergers and acquisitions experts,” said Bob Rubin, managing director of The Business Loan Connection LLC, based in Southfield, Mich. “Today, of course, the formulas have changed in considering the book of business, the pipeline, cash flow and the servicing value.”

“As big banks divest themselves of servicers, there will be increased level of hiring at smaller independent servicing shops,” said Rick Sharga, executive vice president of Irvine, Calif.-based Auction.com.


heard street ON THE

Our Heard on the Street column is a chronicle of events, changes and passages in the lives of the people and companies shaping the mortgage industry.

REMN Announces New Company Name

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Effective immediately, Real Estate Mortgage Network Inc. (REMN) has changed its name to HomeBridge Financial Services Inc. As one of the nation’s largest privately held, non-bank lenders, the company’s new name reflects its focus on making the home mortgage process easier for customers. “The decision to change our name from REMN to HomeBridge was based on many months of research and careful consideration,” said Peter Norden, chief executive officer of HomeBridge. “We believe it is a smart move, particularly for our retail mortgage segment, because it directly correlates to what we do for home buyers, homeowners and housing industry professionals—we provide a bridge to fulfilling the American dream of homeownership. We also believe the HomeBridge name will help us continue to grow as more customers realize that one easy name represents exceptional service, fiscal strength and uncompromising integrity.” HomeBridge has grown significantly since its founding in 1989 and is currently made up of nearly 1,300 associates, more than 70 retail branches from coast to coast, two separate wholesale operations and a rapidly developing correspondent division. In addition, the company is an approved GNMA and FNMA seller servicer and services approximately 40,000 loans today. In the fall of 2012, the company launched its correspondent division, HomeBridge Funding, and a second wholesale division, HomeBridge Wholesale, as separate business units under the REMN umbrella. Moving forward, these two divisions will maintain their existing names as divisions of HomeBridge Financial Services Inc. Due to the unique nature of its business and existing client

base, the company’s original wholesale division, REMN Wholesale, will not be changing its name. To support awareness of the HomeBridge name, ads will appear in national trade publications and more than 100 regional media outlets in key markets.

DocMagic Completes Integrations With OpenClose and Mortech DocMagic Inc. and OpenClose have jointly announced that the two companies have established a new seamless integration. The integration will allow users to access DocMagic’s services, including its full compliance suite for qualified mortgage (QM) and HighCost loans, without ever having to leave OpenClose’s LOS. “Both DocMagic and OpenClose are very progressive, innovative technology companies that have engineered true software-as-a-service (SaaS) applications, which work very well together,” said Dominic Iannitti, CEO of DocMagic. “We have many clients in common that can take advantage of our robust document system, eSigning and eDelivery functionality from within OpenClose. Establishing a tight, seamless integration with the LOS platform is a best practice that will serve our customers well.” The interface with DocMagic allows OpenClose’s users to efficiently and compliantly handle the entire document preparation process directly from within their LOS, complete with eSigning capability, automatic eDelivery to borrowers and tracking. OpenClose’s LOS serves as the database of record, which prevents data inconsistencies between the two systems that can potentially produce

inaccurate documents or information. The interface is bi-directional and allows the two systems to communicate time sensitive, actionable information and tasks in real-time, thus speeding up the process. There is no re-keying of data and all relevant information returns to OpenClose’s system in full compliance with state and federal-based regulations as well as the Consumer Financial Protection Bureau’s (CFPB) new QM rule. “Our clients count on us to keep them operating smoothly and in full compliance with document preparation and QM guidelines amid a highly fluid and challenging marketplace,” said Rob Pommier, SVP of business development and strategic alliances at OpenClose. “Put simply, this integration facilitates effortless automated orders, delivery and reception of compliant mortgage documents back into our system for imaging storage in a very easy and straightforward manner. Using the integration, our mutual clients don’t have to worry about being out of compliance with any document preparation and QM rules.” DocMagic Inc. also announced that Mortech, a Zillow business, has integrated DocMagic technology into its Marksman software. This integration will allow users to run regulatory compliance checks, generate upfront disclosures and re-disclosures (Change in Circumstance documents) and deliver them for customers to sign electronically via DocMagic’s eSign technology. Designed for mortgage bankers who want instant information, Mortech’s Marksman software provides accurate, real-time, best-execution pricing data. As the only pricing engine with a partnership with AllRegs, Marksman provides unmatched compliance and is in use by hundreds of lenders, including correspondent lenders, credit unions and community banks. DocMagic’s

technology will now allow joint customers to create upfront disclosures, initiating a deeper relationship with their prospective borrower.

GSF Continues Westward Expansion With New Denver Branch

GSF Mortgage has announced its Westward U.S. expansion with its latest branch in Denver. The new branch will be overseen by Jim Ahlin, branch manager. Ahlin graduated from California State University-Sacramento with a degree in Business Admini-stration and an emphasis in Management of Information Systems. Upon graduation, Ahlin became a Web developer. In 2004, after consulting with a real estate investor, he found his true calling. Ahlin has always been passionate about real estate and encouraging people towards homeownership. With his expertise, he has been educating friends, clients and colleagues about the benefits of owning their own home. “There are two key factors to be successful in this industry: You have to be online and you have to have relationships with Realtors,” said Ahlin. Ahlin has worked with First American Military, a non-profit that offers downpayment assistance to veterans. He also specializes in investor deals and complex loan situations. He teaches classes to real estate agents, covers end-to-end transactions and Internet marketing. “Jim’s proficiency and dedication ensures his longevity with GSF. His prior experience and knowledge of the many facets of the industry is a strong model-match. Jim is an out-

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LYKKEN ON

leadership

Creating a Winning Culture: Conviction By David Lykken he General stands solemnly on the shoreline and gazes pensively out onto the deep blue horizon. The gently flowing waves are highlighted with a fiery red lining, as the setting sun casts its final rays upon the earth before sinking silently into its grave. The General swings his head and turns his gaze back to the bay, locking his eyes on the fleet of empty ships anchored in a row along the coast. He takes a moment to admire the craftsmanship of each. He imagines the countless hours that must have gone into constructing the ships. They are a truly beautiful sight to behold. The General shakes himself from his whimsical state of reverie and turns swiftly to his assistant, who is nearby awaiting orders. Without

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missing a beat, the General stiffens his neck, narrows his eyes, and barks out the order. "Burn them. Burn them all. And when the last flame flickers out, sound the alarm. We attack within the hour." They had come a long way for this fight. The natives of the land had assembled a large number of warriors in expectation for the coming war. The General had been sent by his king to provide reinforcements for the settlers trying to make a life for themselves in the new land. When his troops had first arrived on the shore several weeks ago, they had been ready for battle. They were confidently devoted to the cause of their king and were prepared to fight to the death. But then they caught wind of what they might be up against—a force more than three times their size. They were ready to die for their king, but they hadn't realized how swiftly that death might have come.

The soldiers started to panic. The General's aides began to hear talk of mutiny and retreat. They had come to fight the enemy but, instead, spent weeks fighting amongst themselves. Should they stay and fight in service to their king? Or, should they flee the lands in order to spare their own lives? The General knew the right answer. And he knew just how to convince his troops. He burned the ships. Now, the General stands to address his troops, shaken from their slumber to find their escape cut off from them. "Your bridge to cowardice has been burnt," he declares, "and there is now no way to go but forward. Right here and right now, in the dead of night, we attack the enemy. We do what we came here to do. This is our chance to prove that we are worthy of our King's service. Either we return heroes, or we do not return at all. So, what is it going to be?" The soldiers answer their General with a resounding battle cry and march on to the conquest. The battle is long and fierce, with several days of intense conflict and bloodshed. In the end, though, the General and his troops win the war. They fight with all that is in them, because they know they cannot retreat. And their prize is glorious victory, as well as the eternal honor of their King. This is what happens when you believe there is no turning back. The story I've just told is a retelling of an actual historical event involving Spanish general Hernan Cortes. In the original story, Cortes actually sunk the ships—and it was for a different reason. However, I've embellished the story a bit to make a point. I've been focusing recently on how to cre-

ate a winning culture within a company. What aspects of a company's culture make that company more likely to achieve success than failure? Through my research, I've discovered the “7 Cs” that each successful company has embedded within its cultural ethos. Last month, I talked about “Character.” This month, I want to talk about “Conviction.” In a word, “Conviction” means certainty. It comes from the Latin "convincere," which means "to overcome decisively." When you are convicted about something, it means that you are decisively overcome by it, that you are firmly persuaded by it, and that you are unequivocally devoted to it. It means that you have burnt your ships—and there is no turning back. I often say that you cannot know where you are going unless you know where you're at. How convinced are you of the core values of your organization? How committed are you to seeing those values borne out in your business practices? How confident are you that you will achieve success? The extent to which you can answer "extremely" to these questions is the extent to which you are truly convicted. As a leader within your organization, as well as within the mortgage industry, conviction can help you achieve greater success in a number of ways. First, strengthening your own resolve can help you become more confident in your success. If you don't believe deep down that you will succeed, then you probably won't. There's a famous study in which a psychologist and an educator teamed up to show the power of belief as a self-fulfilling prophecy.


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selves if the teachers The researchers adminhad not encouraged istered tests to all of “As a leader them to do so? the students in an eleProbably not. The stumentary school, assesswithin your dents were firmly coning their respective IQs. When they had col- organization, as vinced that they could become more successlected all the data, well as within ful precisely because they met with each of their teachers were the teachers in the elethe mortgage convinced as well. mentary school. The I n t h e m o v i e “Reresearchers told the industry, member the Titans,” teachers which of the students who had been conviction can there's a scene in which the captain of tested scored in the help you the football team tells top 10 percent. At the one of his players, "I end of the school year, all of the students were achieve greater don't like your attitude." The player retested. The scores of success in a pauses for a moment the students who had and then looks up to been labeled "the top number of his leader and says, 10 percent" improved ways.” "Attitude reflects leaddramatically more ership, captain." It's than all of the other true. You're called a students. But, here's the catch: those students weren't leader for a reason. If you lead with really in the top 10 percent. They conviction, your people will follow were simply randomly selected by the with an equal amount of conviction. If you know you will be successful and researchers. So, why did those students your team knows it will be successful, improve so much more greatly than just think of how unstoppable you the others? Throughout the school can be. Finally, a deep level of convicyear, it turns out, the teachers paid special attention to those students tion will send the signal to your cusand instilled in them the likelihood tomers that you are someone worth of success. Those students believed doing business with. If you are that they would improve; therefore, shaky in your values or uncertain in they improved. It's the power of your goals, people can sense it. expectations. When you are absolute- Often, they will interpret your ly sure about something, beyond the wavering demeanor to mean that shadow of a doubt, it will probably you are hiding something. Why become true. Conviction doesn't would you be unsure of yourself mean hoping for success … it means unless you were trying to pull a fast knowing you will be successful and one? When you and your team approach your clients with a sense acting accordingly. But it isn't just you that your of certainty, it will be contagious. If conviction affects; it's also your you're sure, they too will be sure. To create a winning culture, you team. Your level of conviction will rub off on those around you. Your need conviction. It isn't enough to employees can smell your level of merely have a set of core values commitment in the way you speak and focused goals. You have to be and behave. And, however deep or unequivocally convinced that those shallow it is, it will become infec- values are right for you and that tious. Your people will be as con- those goals are within your grasp. If victed as their leader. Think about you can build a deep level of conthe story above involving the viction, I guarantee you will be able General and his soldiers. What do to name your organization among you suppose would have happened those who succeed rather than if the General had kept one small among those who fail. Conviction boat back for himself? How can make all the difference. inspired do you think his troops would have been? They probably David Lykken is president of mortwould have fought with one anoth- gage strategies and managing partner er to overtake the General and with Mortgage Banking Solutions. He commandeer the ship for them- has more than 35 years of industry selves. Instead, by burning all of experience and has garnered a the ships, the General sends the sig- national reputation, and has become a frequent guest on FOX Business nal: "We're all in this together." When you are convicted about News with Neil Cavuto, Stuart your success, your people will Varney, Liz Claman and Dave Asman become convicted as well. Think with additional guest appearances on about the story I've just told about the CBS Evening News, Bloomberg TV the students in the top 10 percent. and radio. He may be reached by The story is just as much about the phone at (512) 977-9900, ext. 10, or eteachers as it is the students. Would mail dlykken@mortgagebankingsoluthe students have believed in them- tions.com or dlykken@mbs-team.com.


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Damming t Regulatory Floo Technolog By Scott K. Stucky The overwhelming flood of regulatory changes has made it impossible for lenders to keep up with compliance without technology. Since the passage of the Dodd-Frank Act, financial institutions have faced up to 400 new regulation proposals, seen more than 200 passed and struggled to work with a new enforcement agency, the Consumer Financial Protection Bureau (CFPB). The attention put on compliance has resulted in a burden that cannot be maintained by manual processes or simple spreadsheets. The good news is that technology firms across the mortgage industry have embraced the need for strong compliance and built reports, analytics and tests into their DNA. As 2014 takes off, there are two areas that technology will best assist lenders in holding back the flood waters of compliance—complying with the Qualified Mortgage (QM)/Ability-toRepay (ATR) standards and document compliance for Truth-in-Lending Act (TILA) and Real Estate Settlement Procedures Act (RESPA) disclosures.

Understanding QM/ATR The QM/ATR rule establishes strict underwriting standards to ensure

lenders are making loans that consumers can pay back. It requires lenders to make an assessment of a borrower’s ability to repay their mortgage loan, and also protects them from liability if they make “qualified mortgages” as stated in the rule. As defined in January 2013, QM outlines a series of standards that a loan must meet. The QM rule seeks to: l Establish a cap on borrower’s debtto-income (DTI) ratio of 43 percent, unless approved by a governmentsponsored enterprise (GSE) and/or homeownership stabilization program; and l Implement a three percent limit on the fees and points lenders can charge. The rule splits qualified mortgages into two categories of liability. The first category provides a “safe harbor” protection for qualified mortgages that are not categorized as “higher-priced” as defined by the 2008 Federal Reserve Board Truth-in-Lending amendments. This “safe harbor” will exempt lenders from litigation by the borrower and provide protections from buybacks. “Higher-priced” qualified mortgages will receive a rebuttable presumption of compliance. Loans originated under the “higher-priced mortgage” definition will not exempt lenders from litigation;

instead, they will be presumed to have reviewed the borrower’s ability to repay, which provides a stronger defense in the event litigation reaches the court.

A new disclosure hits the streets The other key rules that technology will impact is the recently announced rule combining certain TILA and RESPA disclosures into a single document. The new rule, revealed in November 2013, provides the borrower with two integrated disclosure forms, The Loan Estimate and The Closing Disclosure, enabling them to compare loans and better understand their mortgage terms. According to the CFPB, The Loan Estimate form must be sent to consumers within three business days after a loan application submission. The form satisfies the Truth-inLending (TIL) and Good Faith Estimate (GFE) mandate and is intended to give borrowers the information needed to compare costs and features across loan offers. The form’s features highlight risk factors, short-term and longterm costs and allows for better comparison shopping, which will ultimately decrease the number of issues between lenders and borrowers. The new disclosures must be implemented by Aug. 1, 2015.

Going digital to better comply Using electronic documents provides lenders the best option to cost-effectively manage new industry regulations. Since lenders will have certain legal protections–or lack thereof– depending on the QM status of a loan, documentation is critical. From the initial disclosures to closing documents, every loan must be 100 percent accurate and defendable to regulators, investors and the courts. In order to accomplish this, lenders must move away from static PDF-based documents. These first-generation electronic files are not flexible enough to meet the needs of today’s lenders, and the new disclosures will require a complete rebuild of all PDF-based documents. Alternately, dynamic mortgage documents import XML data directly from the loan origination software (LOS) to populate fields. Based on the specific loan data, dynamic documents can change a word, line or paragraph at once. There are no fixed field lengths, no extra small fonts in order for information to fit and the necessary language and data are stated on the documents—nothing more, nothing less. This approach also eliminates the need to maintain expensive document libraries or include excess documents in every loan package. Only those docu-


AllRegs® State Compliance State laws and regulations are constantly changing. Take the worry out of keeping up with the endless changes and legislative mayhem. AllRegs State Compliance Package is a comprehensive source of laws, regulations, plain-language analyses and disclosures for every jurisdiction.

the od With gy

When making the decision on how to implement electronic documents, there are a few considerations to keep in mind. The most important is compliance. All mortgage document systems—paper-based and electronic— must comply with federal, state, agency and investor requirements. In the case of electronic mortgages, lenders should make sure that the proper forms will be delivered in the correct format at the right time.

Scott K. Stucky is chief operating officer at Idaho Falls, Idaho-based DocuTech Corporation, a provider of compliance services and documentation technology for the mortgage industry. He may be reached by e-mail at scotts@docutechcorp.com, online at www.docutechcorp.com or on Twitter at @DocuTech.

 AllRegs offers the right tools to help you make compliance decisions and resolve issues that affect your business.  Visit www.allregs.com to learn more or call (800) 848-4904.

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What to look for in paperless mortgage technology

The best document providers will also have a reporting feature that enables lenders to track every stage of the mortgage process to guarantee each and every step is completed on time and in accordance with all regulations. The reporting function could also be tied to a mailing service that would send paper copies of the documents to borrowers automatically when the electronic communication is not completed in time. Compliance will once again be the driving concern for lenders, but the technology is available to help manage the process without unnecessarily sacrificing excess time or expense. Begin with those areas where automation and paperless technology can smoothly implement into existing technology platforms. Documents are often one of the easiest pieces to begin to implement new compliance technologies, and the savings per loan can fuel more profits as loan volume continues to rise.

What are you waiting for?

NationalMortgageProfessional.com

ments needed for each customer are generated and printed. For many lenders, e-disclosures are another simple way to comply with both QM/ATR and the new TILA/GFE requirements. Electronic delivery ensures compliance with regulations, and it also saves time—since borrowers can receive electronic communications immediately. In terms of complying with the regulations, the most significant benefit in using e-disclosures is that there is a reporting trail for the generation, distribution and receipt of all disclosures. Lenders can ensure that borrowers have opened the disclosures, and some systems will mail a back-up paper copy when the disclosure is not accepted in the required timeframe.

New and Improved:  State Mortgage Compliance Checklists  State Required Disclosure Matrices  Permissible Fee Matrices




Marketing Compliance Corner: Personal vs. Business Social Media ... Expectation of Privacy By Michael J. Wallace Esq.

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People use social media for personal as well as business purposes. The ease of use and ability to remain in contact with large groups of people, as well as upload pictures, movies and other content, make it a rapidly growing method of communication. The line between permissible reviewing of business social media, as opposed to impermissible restriction of personal freedom of expression is not always clear. There is concern and potential risk for the mortgage company. How do you walk this narrow line? There is a need for reviews, yet respect the privacy of your employees. There is no expectation of privacy for an employee’s corporate e-mail account. The company may, and actually should, review e-mail usage to determine compliance with policies and regulations. However, a personal letter being delivered to the employee by the USPS at work is not subject to scrutiny. The employee has an expectation of privacy. The same is true to usage of the company’s phone lines as compared to a personal cell phone, or his desk in the office as compared to a desk at home. How does this apply with social media? The difference lies in the manner of the communication. Social media, by definition, is “social.” It is published to a wide audience and intended to be viewed by many people, some of whom are not known to the publisher (poster). However, if a site were only accessible by a select group with log-in rights, then this could be deemed “non-social” social media with an expectation of privacy. The issue as to business or private social media must be viewed and determined by the intention of the one posting the content. Here are a few thoughts when making this determination: 1. Is the site freely accessible to the public with no restrictions? 2. Is substantial information regarding the employer posted? 3. Is the amount of employer information greatly more than personal, or is it an afterthought or small amount? (For example, I work at ClixMortgage. Or I am a loan officer at ClixMortgage and here are updated rates.) 4. Is this site referenced by the employee on other material such as Web sites, business cards, e-mail signatures? Just because an employee states that he/she has a “personal” Facebook account does not let compliance off the hook. There needs to be a determination that personal activities are conducted and not business. This is not always clear, but a determination must be made by the company. Michael J. Wallace Esq. is president of CLIX MG. AcuClix is a Web-based software solution that provides a company with the ability to comply with FFIEC Guidelines to manage, review, report and inspect the usage of social media by its loan officers. For a free White Paper on social media and managing risk, visit www.acuclix.com. Michael may be reached by phone at (727) 4740961 or e-mail mwallace@clixmg.com.

www.acuclix.com SPONSORED EDITORIAL

heard on the street continued from page 26

standing addition to GSF,” said GSF recorded in the past three months on Mortgage National Sales Director Mike single family homes in a specific zip code. Maida.

PMAC Lending Publishes Lending Library Using AllRegs PMAC Lending Services has announced that AllRegs will publish its lending library of correspondent lending guides. PMAC will now leverage the AllRegs technology platform and publishing expertise to manage and maintain its product guides and correspondent seller’s guide. Users will benefit from a variety of productivity tools, including an electronic Table of Contents tree with links to guidelines, a search engine that features a thesaurus with industry jargon and relative matching results, PMAC Lending Services staff and business partners will be able to access content through the online Lending Libraries, including product guides, exhibits and seller’s guide. “Our proprietary AllRegs publishing system provides a robust resource for delivering content and searching product guides and related content,” said Dan Thoms, executive vice president of AllRegs. “We at AllRegs are very excited to help PMAC Lending Services provide their staff and business partners with a resource that will streamline their business processes and increase productivity.” In addition, the PMAC Lending Services libraries feature a Recent Updates section and Latest News announcements delivered via E-Alerts, to notify users of changes to content.

GeoData Plus Expands Mortgages Into NY’s Nassau and Suffolk Counties GeoData Plus has announced the addition of mortgages in New York’s Suffolk and Nassau Counties, accessible from within its Web portal, GeoData Direct. “Mortgages are an important piece of information for any real estate professional using our data source,” said Erik Wind, president of GeoData Plus. “Coupled with our sales, foreclosure and valuation data, mortgages give a more complete picture of a property, allowing our customers to not only accurately determine the value of a property, but also how much a property is leveraged in debt in relation to the value.” Customers also have the ability to search for mortgage transactions. For example, a GeoData customer can search for all mortgage transactions

Norcom Mortgage Opens First Branch in Sunshine State

Norcom Mortgage has announced the grand opening of their Trinity, Fla. branch. Barry Horvath will be Norcom Mortgage’s branch manager at its first ever Florida location. Horvath has more than 15 years of experience in mortgages, financial services, insurance, title and short sale solutions for real estate. “Expanding branching into Florida has been one of our goals for a while now and I am excited to have Barry at the helm of our first location in the state,” Norcom CEO Phil DeFronzo said. “My vast range of experience allows me to see an individual’s entire financial picture,” said Horvath. “I believe in partnering with the best in the industry which is why I chose Norcom, and know I will continue to provide superior service for my clients.”

Total Mortgage Rebrands Its Wholesale Division

Total Mortgage Services LLC has announced that it is re-launching its wholesale division under a new brand name. Formerly known as TMS Funding, Total Mortgage’s wholesale division will now be named Total Mortgage Wholesale, and will continue to partner with high-quality mortgage brokers with a renewed commitment to offer them competitive rates, quicker closings, and best-in-class service. The rebrand is the culmination of a lengthy internal process that included interviews with mortgage brokers, employees, and industry experts. The new name, Total Mortgage Wholesale, is a reflection of the significant brand equity in the Total Mortgage name, and speaks to the company’s legacy of responsible lending, leadership, innovation, and commitment to client service. “Brands are built through ongoing transparency, delivering relevant products or services and operating with the highest level of ethical standards. The Total Mortgage brand speaks directly to our long standing values of responsible lending, authentic communications, trusted advice and quality service,” said John Walsh, president of Total Mortgage. “Bringing continued on page 44


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N A T I O N A L

M O R T G A G E

P R O F E S S I O N A L

M A G A Z I N E ’ S

economic commentary

PREDICTIONS AND WEATHER By Dave Hershman

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It’s a new year and that means just about every economist has made their predictions for the year. One consensus of predictions for 2014 has been for higher interest rates. It makes sense—as the economy recovers interest rates will continue rising from record lows. Keep in mind that even as rates rise they are still at bargain lows. However, when one looks at rates for the first month of the year, they are trending moderately lower. There are many reasons one can give for these lower rates, starting with the weak December jobs report released in early January. Today, we will not assess the factors causing rates to ease. Today, we will make a few points about the

significance of these lower rates. For one, it is just a reminder that no one can predict the future. As a matter of fact, when everyone seems to predict the same thing, often the opposite happens. Secondly, one month of lower rates does not mean that rates will be lower all year and the original prediction is moot. What we have here is an opportunity for those who were thinking about purchasing or refinancing their homes. Rates do not go up in a straight line. There are always dips and these dips provide opportunities. Again, we can’t predict if the trend will continue. Which leaves us to one last question—What would make rates start heading back up? Well, a good starting point would be stronger jobs data. We all know that December’s report was disappointing. A few

weeks ago, the Federal Reserve Board’s Open Market Committee (FOMC) met and its decision to progress with its tapering of asset purchases seemed to be consistent with further optimism regarding the economy. Does that give us a hint that better days ahead? One thing we know from seeing Ben Bernanke refinancing his home a few years ago—even the Fed can’t predict the future.

mated that this shutdown knocked approximately one percent off the growth rate for the fourth quarter. A 3.5 percent growth rate, while not smoking hot, is strong enough to bring down unemployment while not igniting fears of inflation. And this balanced growth is a good indication as to why the stock markets rallied strongly in 2013 while long-term interest rates rose. Until we hit January.

The reason for optimism

Is it the weather?

For one, in the past three quarters, the economy has grown at an annual rate of just under 3.5 percent based upon the preliminary numbers released in late January for the fourth quarter. This growth rate is even more impressive when you consider the fact that we endured a government shutdown for part of the last quarter of 2013. It is esti-

Now we ask whether this growth rate is sustainable for 2014. We had several weak reports released in January, including the December jobs report and a slowing housing sector. Some have hypothesized that the severe winter weather in December and even worse weather in January is the culprit. If this is the case, the numbers should bounce back—including the stock market and rates. Keep in mind that storms actually can boost some sectors of the economy such as the use of energy. Our heating bills are telling us that. January’s jobs report released in early February was another mixed bag with the unemployment rate unexpectedly moving down slightly to 6.6 percent, but the total jobs created were below forecast at 113,000. It is interesting to see both the number for January and also the revision of the previous months’ numbers as there was very little adjustment to the disappointing December release but upwards adjustments in previous months. Was it a weather-related slowdown? With regard to jobs creation, we certainly hope this is the case. We think everyone is hoping for a warmer February, though it has not started out that way. Dave Hershman is a top author in the mortgage industry with seven books published. He is also the founder of the OriginationPro Marketing System, and currently the director of branch support for McLean Mortgage. He may be reached by e-mail at dave@hershmangroup.com or visit www.originationpro.com.


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TALES FROM THE CLOSING TABLE By Andrew Liput The mortgage closing transaction is the single largest financial transaction in the lives of most consumers, and it is also the riskiest stage of the mortgage process for lenders. While the vast majority of lawyers, notaries and title agents are experienced, ethical and diligent professionals, for a few, the role of closing agent is too tempting a lure for selfish criminal intent. This monthly column addresses the good, the bad and the ugly … January has brought us a New Year and new final regulations, including the qualified mortgage (QM). To say that lenders are scrambling to comply would be an understatement. Welcome to the age where compliance is one of the pillars of success in our industry!

You can’t make this stuff up! l A closing agent in California called a lender to explain that he would be unable to attend the scheduled closing as he was arrested on the way there! He left his bail money on the closing table! l A Massachusetts attorney died two days before the closing. No one knew. The borrower showed up, the seller showed up, and the title company showed up. Unfortunately, the money and documents never made it and since the borrower had never even met the attorney he had no idea how to reach him. RIP! l A New Jersey title agency has dutifully been issuing CPLs in connection with mortgage transactions, apparently unaware that its underwriter terminated their agency relationship. I won’t tell if you won’t tell. l A settlement agent showed up at a closing in Texas. Everyone was present but the transaction had to be adjourned. None of the other participants spoke English and the agent could not communicate with them. Could you repeat that? In response to the huge security breach at Target that potentially exposed millions of consumers to identity theft, the U.S. Senate is taking steps to draft and pass new data security legislation. So much personal data flows around the closing table! Graham-Leach-Bliley requires banks to safeguard borrower data, and for mortgage lenders, that includes settlement agents who routinely handle a borrower’s financial and identity information. The HUD-1 is a veritable treasure trove of lucrative criminal material if it falls into the wrong hands. Lenders need to manage to whom they deliver personal data and monitor them to protect consumers. Paperless has been a goal for techies in the industry for quite some time. It took forever for some, but with LOS systems, most lenders today are creating paperless loan files. When it comes to the closing, however, that has always been another story. Some companies, Doc Magic for example, have created amazing tools to allow for electronic document signing, yet to date, lenders and investors remain anchored to a physical closing file. The table has been set for a seamless, paperless closing in the very near future.

On a lighter side Following the problems in the sub-prime lending market in America, uncertainty has now hit the Japanese financial community. In the last month, Origami Bank has folded, Sumo Bank has gone belly up and Bonsai Bank has announced plans to cut some of its branches. Karaoke Bank is up for sale and will likely go for a song, Kamikaze Bank was suspended after they nose-dived, 500 staffers at Karate Bank got the chop, and analysts report that there is something fishy going on at Sushi Bank where it is feared that staff may get a raw deal. Andrew Liput has been a corporate, real estate and banking attorney for more than 25 years He is the founder, chief executive officer and president of Secure Settlements Inc., the first data intelligence and risk analytics firm to offer specialized vendor management services addressing settlement agent risk to mortgage lenders and banks nationwide. He can be reached by e-mail at aliput@securesettlements.com.


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LONGTIME INDUSTRY ADVOCATE JUMPS INTO RACE FOR STATE OFFICE John G. Stevens, Broker Sector Champion, Runs for Utah State House By David J. Coster John G. Stevens is a man on a mission. For the past several years, that mission has included being a leading advocate for his profession— the mortgage brokerage industry. His profession has been under unprecedented assault from regulators and the media alike in the wake of the mortgage crisis. But Stevens has fought to make it clear that the problems that led to the mortgage crisis did not begin with mortgage brokers. Moreover, regulations created in the aftermath of the crisis would do a disservice to consumers if they eliminated the advantages mortgage brokers bring to the mortgage marketplace. Having succeeded in preserving the viability of the mortgage broker model, Stevens is preparing to launch an effort to preserve and protect other things he values by running for the Utah State House of Representatives. National Mortgage Professional had a chance to sit down with John recently to

discuss how his industry advocacy has led him to want to expand his influence. You have been a leader for NAMB— The Association of Mortgage Professionals. Why did you decide to get so involved in the organization? Our industry, as a whole, and our part of the industry, in particular, were under attack. We were being unfairly blamed for the crisis and mischaracterized in the media. Not only was our way of making a living being jeopardized, but more importantly, an essential component of an affordable housing finance system was being threatened. That impacts not just me and my family, but the company I work for and all of our society. The ability to find affordable financing for a home is a crucial part of the American Dream—that eternal goal of building a self-sufficient life for our families and giving our children the opportunity to do the same in the future. NAMB gave me an outlet to share my beliefs on this subject. Through the hard work of many colleagues, we have

made a difference. The fight is not over by a long shot, yet we have prevailed in keeping mortgage brokerage a viable piece of the home financing market. You are now embarking on a leadership role beyond the mortgage industry. Why is this campaign for a seat in Utah State House of Representatives so important to you? I have learned that not everyone sees the world the same way. That’s okay of course, but it also means that if you believe strongly about something, you must be willing to step up and fight for it. I have experienced, first-hand, the great benefits our American society and economy can offer. I know how great a place Utah and Pleasant Grove—my hometown—is to live, work and raise a family. But I also see risks developing that could harm my friends and neighbors if not confronted. I believe firmly that I can do a better job in preserving and protecting our community than the incumbent representative in my district. It is really that simple, and I am willing to step up and be counted.

Your campaign has received a great deal of support from colleagues and even competitors in the mortgage industry. How does this make you feel? I am humbled and blessed to have earned the support of people whom I’ve worked with and even competed against in the business world. To me, it is simply a sign that there is more that unites people of good will than there is that divides us. I believe it also is an endorsement from folks who have seen how hard I will work to make things better and want that in a State Representative. How can our readers learn more about your campaign? By visiting www.JohnGStevens.com. I would welcome an opportunity to share my views on the issues and; of course, I would appreciate the endorsement and financial support of my industry colleagues. David J. Coster is senior editor of National Mortgage Professional Magazine. He may be reached by phone at (919) 559-2171 or e-mail davidc@nmpmediacorp.com.


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Creating a

By Jonathan Foxx “Everywhere we turn, there is compliance, compliance, and more compliance required across the board.”1— Donald J. Frommeyer, CRMS, President, NAMB—The Association of Mortgage Professionals

T

he ancient Greek philosophers knew the fundamental distinction between theory and practice. For them “theory” (or theoria) differed from “practice” (or praxis) in that the former meant examining things and the latter meant doing things! In other words, theory was a sort of spectators’ sport, while practice was playing the sport itself. Advanced mathematics is somewhat similar: There is pure (or theoretical) mathematics and then there is applied mathematics. Some theories remain theories forever, and others are extrapolated into practice. So, as it happens, some cogent theories simply do not need to have applied applications

to be cohesive theories. Practical applications, however, must be experimentally valid all of the time. The requirements of implementing a theory can be daunting, especially when the consequences of its practical applications are not sufficiently understood. To put a fine point on this observation: What may seem perfectly acceptable in theory can be entirely unacceptable in practice. Thus, some things are possible theoretically and other things are not possible practically. In compliance, I have learned to approach the notion of something being ‘theoretically possible’ with extreme caution! So, given the challenges of regulations (theories) and compliance requirements (practices), (1) how should a financial institution accomplish evaluations of its loan origination risks and, most importantly, (2) how to go about embedding such assessments into a culture of compliance? In this article, I am going to provide ways and means by which the management of a financial institution will be able to create a culture of compliance that serves as the foundation upon which to manage risk associated with mortgage loan origina-

tions. I will provide an extensive set of questions, the answers to which should call forth the ways and means to establish compliance solutions. “If you have ten thousand regulations, you destroy all respect for the law.” — Winston Churchill So, how to create a culture of compliance? Begin at the beginning! When was the last time that a risk assessment was performed to identify all the loan products, which departments were affected in originating them, and what staff are responsible to effectuate the origination? That is where to begin. Residential mortgage lenders and originators may offer some, or all, of the loan products subject to the Ability-to-Repay (ATR) and Qualified Mortgage (QM) rule promulgated by the Consumer Financial Protection Bureau (CFPB). But originating those loan products starts with identifying the loan flow process itself. Furthermore, any new origination requirements will affect a number of parts of business systems and processes. For instance, a very short list of affected areas are the forms and processes used

to communicate internally and externally that are subject to verification requirements; systems and processes used to underwrite loans must be considered; secondary marketing and servicing processes and systems need risk evaluation metrics, especially with respect to ATR provisions related to the refinancing of non-standard loans into a standard loans. Specifically, are the various integrated processes and procedures set up to identify loans on the transaction systems with their definitional status under such regulations as the ATR and QM rule, which may involve creating new data element(s) within those very processing systems? Likewise, if the loan is a QM, is a formal consideration undertaken to determine levels of liability exposure and liability protection that a loan is receiving as it moves through the origination process? “To insure peace of mind, ignore the rules and regulations.”—George Ade The American humorist, George Ade, may have found a way to peace of mind by ignoring rules and regulations. Perhaps he intuitively knew something


Culture of Compliance about the stress involved in originating residential mortgage loans! If you have problems with rules and regulations, I suggest you choose another line of work, for happiness will forever elude you. Consider this: The ATR and QM rule is just one component of the Bureau’s Dodd-Frank Act Title XIV rulemakings! Here are a few other rules that are now the law of the land: l 2013 HOEPA Rule l ECOA Valuations Rule l TILA Higher-Priced Mortgage Loans Appraisal Rule l Loan Originator Rule l RESPA and TILA Mortgage Servicing Rules l TILA Higher-Priced Mortgage Loans Escrow Rule Some of these rules are directly and indirectly intersected, interlocked, overlapped, interfaced, and cross-tabulated; they are correlated, tabularized and re-tabularized, re-ordered, enumerated and re-enumerated, re-codified, and, generally, comprehensively systematized.2 Each of these rules

affects one or more aspects of the loan origination process, organizational structure, and risk exposure. So maybe the great American humorist was on to something! Nevertheless, if we are going to play, we will have to play within the rules. This means not only considering the compliance implications internally but also the interaction between the financial institution and third-parties upon which the institution relies for verifications, credit and other borrower information, disclosures, underwriting software, compliance and quality-control systems and processes, records management. Notwithstanding the foregoing third-parties, also to be considered are software providers, various vendors, and business partners. Training may also be necessary for these service providers and agents! All the starting-point reviews in the world will lead to little or no action throughout an organization where certain training needs are not being met. Therefore, from the outset, it is critical to consider what training will be necessary for loan officers, secondary marketing, processing, compliance, and quali-

ty control personnel. Any staff involved at critical junctures in the loan flow process should receive training, certainly anyone who approves, processes, or monitors credit transactions. For the remainder of this article, I will outline the key questions that should be asked, the answers to which will determine the extent, depth, and integrity of a culture of compliance. I am going to take you through a set of questions that will form the basis of a self-assessment. This type of internal review should be undertaken in order to set a baseline and determine progress towards compliance with mortgage acts and practices, and certainly the new mortgage rules.3 During any such evaluation, keep in mind that this is a due diligence process which is subject to an institution’s size, products offered, risk mitigation, complexity, and overall strength of the existing compliance management system. “Regulations grow at the same rate as weeds.” —Norman Ralph Augustine4

services you offer to consumers to determine applicability: l Do you offer mortgage loans to consumers? l Do you offer any of the following mortgage products: l Home equity lines of credit secured by a dwelling (i.e., HELOCs)? l Mortgages that qualify as higherpriced mortgages?5 l Mortgages that qualify as highcost mortgages?6 l Loans that are intended to meet the criteria for Qualified Mortgages?7 l Second mortgages?8 l Do you service mortgage loans or own servicing rights? l Do you own mortgage notes that you have sold servicing rights to? 2. Based on the products you offer to consumers, determine which regulatory amendments impact your current products. l What are the requirements that apply for each of your products?

The Implementation Plan 1. Evaluate the current products or

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• www.AppraisalWorld.com • CVR@AppraisalWorld.com




David and Goliath: How Small Players Beat Out the Big Banks By Atri Chatterjee With mega banks continuing to dominate the mortgage industry, the smaller players need a smart strategy for retaining customers and intelligently targeting new prospects. With limited marketing budgets and resources, competing for customers with the big banks is no easy feat. The marketing game used to involve saturating the market to the fullest extent of a company’s pocketbook. But the game is changing. The rise of digital marketing and online consumerism With the evolution of the Internet, there has been a drastic shift in the way consumers make spending decisions. With increased access to online information, customers are empowered to explore and discover products and services on the Web at their leisure. They are an active participant in their own buying pathway, and their specific buying interests can be identified by marketers based on the Web pages they visit, the e-mails they open, and the content they consume. This means that companies need to take a more targeted marketing approach, focusing on identifying buyers who are in the discovery process, and leveraging marketing automation technology to deliver appropriate sales messages. The rise of digital marketing and online consumerism has created a new paradigm in which massive budgets aren’t a prerequisite for creating a powerful marketing presence.

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Optimizing the use of LOS data Mortgage professionals are uniquely positioned to leverage this shift, as most have ready access to potential customer data via their LOS. Marketing automation can help intelligently communicate to these potential clients with automated drip e-mail campaigns (known as lead nurturing to marketers) to get higher engagement rates and higher conversion rates for prospective customers. It’s common for LOS data to be used in postcard mailings or other offline initiatives, but taking a cost-efficient digital approach can generate a higher yield given that consumers are spending more and more of their time online, and paying less attention to print ads, mail, and other forms of traditional marketing. A new marketing toolset Taking advantage of this new paradigm requires businesses to adopt a new set of tools and tactics for targeting customers. These tactics can be broken into three distinct categories: 1. Attracting traffic to your online properties (social media, search optimization, search ads) 2. Converting Web traffic into sales leads (Web site sign-up forms and free content) 3. Converting sales leads into sales (lead nurturing and lead scoring) For smaller competitors in the mortgage industry, this opens up a world of opportunity for winning out against big banks. All it takes to win is the right technology, the right mindset, and proper planning. Atri Chatterjee is chief marketing officer with Act-On Software, responsible for all things marketing at the company. His previous experience includes senior roles at Symantec, VeriSign, McAfee and Secure Computing. He was also a member of the founding team at Responsys, and an early employee at Netscape. For more information, visit www.act-on.com.

SPONSORED EDITORIAL

heard on the street continued from page 32

our wholesale division under the Total Mortgage umbrella will not only support the firm’s vision of becoming the most trusted mortgage lender across all origination channels, but will help deliver the right mortgage solution to more borrowers and create a positive business outcome for mortgage brokers.”

ValuTrac Integrates With LendingQB to Expedite Appraisal Process ValuTrac Software has announced an integration w i t h LendingQB which will allow LendingQB customers to seamlessly and effectively facilitate appraisals from within LendingQB. This system to system integration will also allow for the automated delivery of completed appraisal reports and other documents back into LendingQB. Removing manual steps in this process will minimize risk and increase operational efficiency. ValuTrac’s direct integration with LendingQB is available with the ValuTrac Pro and ValuTracPro Plus products. “We are excited about working with our newest integration partner, LendingQB, and the trusted value they add to our customizable appraisal management platform,” said Clint Cornett, CEO of ValuTrac Software. “By partnering with LendingQB, our customers have more seamless electronic interface options, and ValuTrac takes another step in integrating innovative technology into a holistic platform to further streamline and mitigate risk throughout the lending value chain.”

strengthen and build on this relationship.” said Steve DeBlasio, VP of business development at Axacore. “The synergy created by having imaged documents and LOS data co-exist is critical for any lender to meet current loan quality standards.”

Freedom Mortgage Announces New Division Focused on Outsourcing

Freedom Mortgage Corporation has launched the Financial Institutions Partner Group, a newly formed division that provides end-to-end mortgage outsourcing for regional banks, community banks and credit unions. The new Financial Institutions Partner Group fills the industry’s need for complete outsourced mortgage services specifically for small- to mid-sized financial institutions. The division handles all aspects of the mortgage transaction, from the initial client call to closing and servicing of the loan, on behalf of its financial institution clients. “Banks and credit unions need to offer the full range of banking products and services in order to stay competitive,” said Stan Middleman, chief executive officer of Freedom Mortgage. “We are pleased to provide small to midsize financial institutions a way to offer one of the most important consumer financial services, without the risk or costs associated with keeping their operations in-house.”

MCT Announces Move to Larger Facility

Integra Selects Axacore for eDoc Management Platform

INTEGRA Software Systems has selected Axacore’s award winning electronic document management platform to power the paperless workflow features within their loan origination platforms Destiny and Epic which are used by residential, consumer and commercial lenders. Building on Axacore’s platform will allow INTEGRA’s existing and new customers access to end to end, enterprise grade electronic document management features without needing to manage a third party vendor. “Through working closely together on solutions for mutual customers, we have come to know and respect the INTEGRA team and their ‘customer first’ philosophy. With recent regulatory changes, it’s a great time to

MCT Trading Inc. (MCT) has announced that it has relocated its corporate headquarters to a larger facility. The move provides MCT with the necessary infrastructure to accommodate its increasing growth and the capacity to continue delivering elevated support to clients. MCT’s new building nearly triples its space and is equipped to house double the number of employees. The new office is located near its previous location in downtown San Diego, which overlooks PetCo Park where the San Diego Padres play. The increased space allows MCT to add more trading analysts, which supports MCT’s unique customer service model that assigns each client its own dedicated trader. This personalized assistance provides clients with immediate responses to any questions or needs they have throughout the trading day. continued on page 46


creating a culture of compliance

NAPMW REPORT

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l Do you qualify for any exemptions?9 l Have you discussed which rules apply and any potential exemptions with your compliance counsel or risk management firm, as applicable, or regulator?

F E B R U A R Y

Policies and Procedures

Marketing for Change

1. Do your policies and procedures at least reflect the appropriate provisions in these rules?11 Ability-to-Repay and Qualified Mortgage Standards12 l Ability-to-Repay To the extent you seek to preserve your ability to make loans that are not Qualified Mortgages, do your policies and procedures address the key components of the ability-to-repay provisions, including: v Obtaining and verifying certain financial information related to the consumer(s)? v Ensuring that borrowers have sufficient assets or income to pay back the mortgage? v For adjustable-rate mortgages (ARMs), that the monthly payment is calculated using either a fully indexed rate or an introductory rate, whichever is higher? v Any exemptions that apply and a full description of when the exemptions apply and conditions for exemptions (e.g., for a customer trying to refinance certain risky loans only after specific conditions are met)?

Escrow Requirements Under TILA13 Do your policies and procedures address the key components of the higher-priced mortgage loan escrow provisions, including: v Requirements to establish and maintain escrow accounts for at least five years after concontinued on page 50

By Nikki Gilbert-Bell In today’s marketplace, change has become a “Four-Letter Word.” However, many associations and professional organizations overlook that it may be the best-kept secret for growth. If associations cannot find a way to embrace an aptitude for change, the leaders will soon look up and wonder where all their members went. Successful leaders know when to get out of their own way and tune in to what the members want and need. This is exactly what the board of the NAPMW Atlanta Association did. The Atlanta Association’s goal was not merely to survive, but to thrive. More importantly, we wanted to serve our members creating a positive and passionate synergy to have them recruit perspective members. As the board headed into the 2013-2014 planning meeting, there was only one thing on the agenda—growth. The mortgage industry was changing faster than the association, so with this in mind, there became a collective mentality that the Association needed to change. As a result, the decision was made to implement some old-fashioned marketing paired with some “out of the box” thinking … both of which can be applied to any association. From a marketing perspective, small changes can result in large opportunities.

What are your needs? The first step was to identify areas within the Association that needed to change. The areas to change, which are the same with most associations, were venue, education, marketing and membership growth. 45

The change-up plan l Venue: The old saying “If it’s not broke, don’t fix it,” does not apply to this category. There may be nothing wrong with the current venue an association is utilizing; but are there enough positives to draw people to the meetings and events? Look for a venue that is centrally located that has stellar meeting space. The space should be able to accommodate growth while giving the illusion of being full. Hosting a meeting at a venue which is to large will give the appearance of poor attendance causing a negative emotion for current and perspective members as well. The venue’s menu should host a wide variety of choices so the same meal is not served twice within the same year. Most restaurants will work to customize a menu allowing for multiple options and last minute additions or alterations. Finally, selecting a venue where the management is willing to work in collaboration with the association to entice people to attend is beneficial and by doing so creates a win-win opportunity for both. For example, ask the restaurant to provide a $50 gift card for each month of the contract for drawings. This provides the association with a nice door prize, while generating additional revenue for their venue. l Education: The mortgage industry is overloaded with education geared toward compliance and regulatory changes. Although this is necessary, it does not give the mortgage professional a sense of personal growth or value to their business growth. To attract industry professionals to an association for education, the environment should be engaging focused on personal development and growth along with the necessary compliance and regulatory information. Topics that generated large crowds in the Atlanta Association were: 1. Local authors and speakers who were very informative, motivating and captivated the audience, including: Kimberly Kennedy, author of Left at the Alter; Lesa Osborne, author of 365 Daze; Kit Cummings, author of Forty Days of Power; and Marci Fair, author of Tilt. 2. We hosted several Industry Panels, including Local REALTOR Board Presidents who gave an update for each of the geographic areas they served, along with what was ahead in 2014 and continued on page 60

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Qualified Mortgages Do your policies and procedures address the key components of the qualified mortgage provisions, including: v Documenting, where applicable, that loans were eligible for purchase by Fannie Mae or Freddie Mac or insurable by FHA? v Restrictions on charging points and fees and prohibition of certain risky loan features (as applicable)? v Limits on debt to income ratios (as applicable)? v Full descriptions of qualifications for any qualified mortgage provisions (e.g., if the loan is made by a smaller creditor in rural or underserved areas)?

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3. Have you developed an implementation plan? l Have you performed gap analysis to determine what business, operational and automated transaction processes need to change as a result of the new rules? l Has the plan been approved by senior management and the board, if applicable, or similar oversight functions, as appropriate? l Has the plan been developed in consultation with or reviewed by key stakeholders, such as legal, compliance, and information technology? l Does it contain key milestones, dates for completion of required steps for compliance, and progress reports? l How are you tracking progress? l Who reviews progress reports? l Does the plan include an audit review? l Have testing procedures been defined? l How are results and progress tracked? l Does the plan identify the responsible parties for developing the plan, ensuring adherence to the plan, and future compliance? l Is progress reported to senior management or the board (or similar oversight functions), as applicable? l Is your plan on schedule? If not, has the deviation from schedule been approved by the board, or similar oversight function, or senior management, as appropriate, and discussed with regulators? l Are all aspects of your plan scheduled to be completed prior to the rule effective dates? l Have you discussed your implementation plan with your regulators, compliance counsel or a compliance professional, as applicable? l Have discussions with regulators resulted in any changes to your implementation plan? l Do you have contracts with any third parties related to mortgage activities? l If so, have you discussed and evaluated their implementation plan? l Do you have a back-up plan should the vendor not fully implement the necessary changes prior to the effective dates?

“The problem is that agencies sometimes lose sight of common sense as they create regulations.”—Fred Thompson10


Mortgage Delinquencies Required by the Lender is the Root of Credit Problem That Faces Short Sellers By Pam Marron

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There are two credit issues that follow a short seller. One is that the short sale becomes coded as a foreclosure, and the short seller is often unaware of this. The second is that the foreclosure code either stops or stalls the past short seller from getting a new mortgage when they are eligible again. Most lenders continue to require underwater homeowners to go delinquent before assistance is issued for a short sale. Once the mortgage payment is over 120 days delinquent, the credit code is most often coded as a foreclosure.1 Then, two years later when the past short seller is eligible to repurchase a home again with a conventional mortgage2 and 20 percent downpayment, they receive a "Refer With Caution,” or a denial through either Fannie Mae’s or Freddie Mac’s automated underwriting system (AUS) because the short sale is coded as a foreclosure. A foreclosure requires a seven-year wait to get a mortgage rather than the two-year wait needed after a short sale. For conventional, VA or USDA mortgage programs, there are either exceptions to stay current or NO REQUIREMENT to be delinquent! And, if you have an FHA loan, you must be 31 days delinquent by the time of the short sale closing only! Documented below is information found for all loan types under Federal Housing Finance Agency (FHFA) for Fannie Mae and Freddie Mac, and for FHA, VA and USDA loans. Then, link to the Home Affordable Foreclosure Alternatives (HAFA) Eligibility Matrices3 to find Making Home Affordable (MHA) specific participating lender criteria regarding mortgage delinquency to proceed with a short sale. Though loan programs and specific lender criteria often provide options where underwater homeowners can be current, lenders continue to tell homeowners they must be delinquent in order to start the short sale process.

Delinquency requirements prior to short sale on all loan types l Fannie Mae and Freddie Mac/Conventional: No delinquency required per new short sale guidelines from the FHFA4 if one of eight acceptable hardships5 are present (listed on page three of the FHFA Fact Sheet). l FHA: At the time of the short sale closing, the loan must be in default 31 days.6 Mortgagees may exercise discretion to accept applications from mortgagors who are current but facing imminent default. An important note from HUD: If the lender requires more than 31 days delinquency, HUD should be notified and will intervene to insure that the mortgage does not go into foreclosure. l VA: No delinquency requirement from the VA in order to proceed with a short sale.7 Guidelines are specific to lender only. l USDA: No delinquency requirement from the USDA in order to proceed with a short sale.8 However, the deficiency must be paid back. Additionally, lenders have routinely used a method called "Dual Tracking," where defaulted mortgages proceed along a loss mitigation track at the same time underwater homeowners proceed with a short sale. Effective Jan. 1, 2014, Dual Tracking is restricted,9 per new regulations set forth by the Consumer Financial Protection Bureau (CFPB). For help getting underwater homeowners through the system with credit intact, e-mail me at pmarron@tampabay.rr.com or call me at (727) 375-8986. Pam Marron is senior loan officer with Bankers Mortgage of Pasco County. She may be reached by phone at (727) 375-8986 or e-mail pmarron@tampabay.rr.com.

Footnotes 1—There is no specific, universal short sale code (like a bankruptcy or foreclosure), and the Metro 2 system borrows foreclosure code for short sales. 2—A mortgage denial may not occur with an FHA or VA mortgage. Total Scorecard, a secondary automated credit system for FHA and VA, directs the lender to provide documentation needed to confirm the status of a mortgage that may show as settled for less than full balance. Most often this accompanies an Approve/Eligible AUS finding. 3—HAFA Eligibility Matrix listing all participating lenders (http://goo.gl/O29qO2). 4—FHFA Announces New Standard Short Sale Guidelines for Fannie Mae and Freddie Mac; Programs Aligned to Expedite Assistance to Borrowers (http://goo.gl/7VWaC0). 5—FHFA Fact Sheet: The person must have a demonstrated hardship which includes: 1) Death of a borrower or death of the primary or secondary wage earner in the household, 2) Unemployment, 3) Divorce, 4) Long-term disability, 5) Distant employment transfer/relocation [more than 50 miles one way], 6) Increased housing expenses, 7) Disaster [natural or man-made], 8) Business failure (http://goo.gl/7VWaC0). 6—Pre-Foreclosure Sale (PFS) Program-Utilizing the PFS Loss Mitigation Option to Assist Families Facing Foreclosure, Dec. 24, 2008, page 5 (http://goo.gl/YssEMF). 7—United States Office of Veterans Affairs, (877) 827-3702. 8—USDA Rural Development Davenport, Fla. Office (863) 420-4833. 9—CFPB Releases Second Update of Exam Procedures for Mortgage Rules (http://goo.gl/RSlqFO).

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“As we grow, we want to do so at a healthy, controlled rate so we are able to continue delivering on our promise and companywide mantra of being a ‘trusted capital markets partner for our customers’ while providing the highest possible levels of hands-on customer support,” said Curtis Richins, president of MCT. “We’ve had significant growth over the past few years and have successfully scaled up multiple times to accommodate new clients.” In early 2013, MCT surpassed its 100th client that is using its HALO (Hedging and Loan-sale Optimization) hedging model. Additionally, the growth of MCT’s outsourced lock desk service grew exponentially in 2013, adding to the company’s need for additional office space to house its growing team of Lock Desk Analysts, as well as Trading Analysts.

Prospect Mortgage Acquires Impac Branches Prospect Mortgage LLC has announced the acquisition of certain assets of the retail mortgage branch operations of Excel Mortgage Servicing Inc. d/b/a Impac Mortgage in four Western states. The acquisition should add approximately 40 loan officers to Prospect’s origination platform across 12 branches in California, Washington, Oregon and Idaho. “This strategic acquisition will increase our local footprint in several key markets and strengthen our ability to serve homebuyers and real estate agents,” said Prospect Mortgage President of National Lending Doug Long. “It will allow us to extend our successful purchase-loan strategy and gain local market share.” Included in the acquisition are portions of Impac Mortgage’s Operations team, including the hiring of approximately 15 operations personnel in Washington, Oregon, Idaho and California. “We are seeing an increase in acquisition opportunities from independent mortgage bankers and brokers as 2014 begins,” said Long. “As we continue to explore future acquisitions, we believe that our purchase-focused strategy along with our marketing capabilities, loan processing infrastructure and loan officer-centric resources will prove to be attractive in an operating environment in the mortgage industry that has become more complex.”

Stonegate Subsidiary Crossline Capital Announces Acquisition of SoCal-Based Medallion Stonegate Mortgage Corporation has announced the completion of its acquisition

of Southern California-based Medallion Mortgage Company through its wholly-owned subsidiary, Crossline Capital. Medallion originated $400 million-plus in mortgage loans during the year ended Dec. 31, 2013 through its California and Utah locations, serving customers with an extensive portfolio of residential real estate loan programs. Crossline’s acquisition will include 10 offices along the southern and central coast of California, Utah and a new operations center in Ventura, Calif. These offices will employ more than 30 loan officers. Mack McConkey, Medallion’s EVP, will join Crossline Capital in a senior role and manage portions of its southern and central California mortgage retail production. “This is a great opportunity for Crossline,” said Crossline Capital Executive Vice President Scott Contreras. “Medallion has huge purchase presence in their current markets and a scalable platform in markets where we were actively seeking to be in. This will further enable Crossline to expand into the central and southern California markets while establishing and maintaining new relationships across the state.”

Mortgage Professionals to Watch l Real Estate Mortgage Network Inc. (REMN) has announced that Kim Porto is the latest mortgage loan originator to join the company’s team of associates in its Galloway Township, N.J. office.

PORTO

The Business of Short Sales

heard on the street

l RightStart Mortgage has announced the hiring of John Stangarone as retail business development manager.

STANGARONE

The Long & Short:

l Norcom Mortgage and Insurance has announced the promotion of Scott Kennedy to the position of vice president and chief financial officer. Norcom has also announced the addition of James Forte as branch manager of the firm’s new Brookfield, Conn. branch. Norcom Mortgage has also announced the additions of Wholesale Account Executives Lance Topol and Ken St. Clair.


KENNEDY FORTE

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l Wingspan Portfolio Advisors named industry veteran Arleen Scavone to the newly created position of chief operations officer.

SCAVONE

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l Inlanta Mortgage has announced the addition of Siomara Barboza to its origination team in Oak Brook, Ill.

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MILLER

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GUY

Your turn l First Guaranty Mortgage Corporation (FGMC) has announced the appointment of Gretchen Malatesta as chief strategy officer. l REMN Wholesale, a division of Real Estate Mortgage Network Inc. (REMN), has announced the addition of several new AEs and sales managers nationwide, including: Tina Lewandowski, regional sales manager in the firm’s Iselin, N.J. location; Cara DeStafano, regional sales manager for the Tennessee and Alabama regions; Trey McAtee, regional sales

National Mortgage Professional Magazine invites its readers to submit any information, events, passages, promotions, personal or professional occurrences that seem appropriate and/or other pertinent data to the attention of: Heard on the Street/Mortgage Professionals to Watch column Phone #: (516) 409-5555 E-mail: newsroom@nmpmediacorp.com Note: Submissions sent via e-mail are preferred. The deadline for submissions is the 1st of the month prior to the target issue.

n Alabama Mortgage Professional Magazine n FEBRUARY 2014

l Wingspan Portfolio Advisors has hired industry veteran John Guy to the newly created position of senior vice president of business development.

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l International Document Services Inc. (IDS) has announced the hiring of Daniel Miller as vice president of business development.

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manager in Texas; and a group of Texas-based AEs, Michelle ZamoraLadd, Lea Shaw, Patrick Creighton, Laura Lund and Melvin Glasco. GSF Mortgage has announced the addition of Clay Strickland to the firm’s Delaware branch. GSF has also announced the addition of two new mortgage loan originators to their Brookfield, Wis. location, as Hannah Goreta and Lourdes Marquez will be working under Andy Newman, Brookfield branch manager. Martin Siklich has been named branch manager of GSF’s newest Michigan branch in Suttons Bay, Mich. GSF Mortgage has also added another mortgage loan originator to their Delaware branch, as Christopher Patille will be working under GSF’s Delaware Branch Manager Bill Compton. Carrington Mortgage Services LLC has announced the appointment of Ed Ciemny as branch manager of the firm’s Oak Brook, Ill. office. 360 Mortgage Group LLC has announced that Gino Berchock has rejoined the company as southeast regional sales manager. Stonegate Mortgage Corporation has announced the hiring of Daphne Smith as area manager of the greater Atlanta, Ga. market. Mortgage Guaranty Insurance Corporation (MGIC) has announced the promotion of both Mike Kull and Dean Dardzinski to the positions of vice president, national account manager. Stewart Lender Services (SLS) has announced the appointment of Susan Rosen to the Stewart Lender Services’ national sales team. RealtyTrac announced that real estate and technology specialist Samantha Tino has joined the company as vice president of sales for the RealtyTrac Network. John Desmond has joined Stewart Lender Services (SLS) as director of regulatory compliance, capital markets. ClosingCorp has named John Alexander vice president of strategic operations. LRES has appointed John Coughlin as its new vice president of sales. Seth Trimble has been named compliance trainer for Churchill Mortgage.


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GSE Reform: Thinking O

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Outside the Box? (Part I) By Ryan W. Birtel

Introduction

Before the Great Depression, the federal government did not have a direct involvement in housing finance. When left to their own devices, lenders, e.g. banks, insurance companies, etc., would offer mortgage loans

The 1929 financial market crisis In late 1929, the U.S. stock market suffered a series of collapses that would begin a cascading failure of financial market liquidity providers, e.g. brokerages, banks, insurance companies, etc., which would ultimately strain and break the historically conservative housing finance market. This would not be dissimilar to how the U.S. residential housing market crash in 2008 affected the stock market and relatively conservative commercial real estate market. Beginning on March 2, 1932, the U.S. Senate passed a series of resolutions authorizing the Committee on Banking and Currency (Pecora Committee) to investigate, amongst other things, practices related to: The

buying, selling, borrowing and lending of securities; the general industrial and commercial credit structure of the U.S.; and the operation of the national banking and Federal Reserve systems. The broad scope of this Committee highlighted what was the growing concerns regarding fundamental financial risk management in the U.S., as what had begun as the collapse of an unstable stock market expansion in 1929 had spiraled into a stable economic depression. In other words, the goal was to find and address obsolescence in the U.S. system of financial liquidity providers. On June 16, 1933, the Banking Act of 1933 (Glass-Steagall Act) was enacted. This law was, by design, to “Prevent the undue diversion of funds into speculative operations” by separating commercial and investment banking activities and by requiring the Federal Reserve bank to keep itself informed of whether “undue use is being made of bank credit for the speculative carrying or trading in securities, real estate …” While Congress again enlisted the Federal Reserve as an agent capable of managing the degree to which commercial banks speculate, it was deemed too difficult for this regulator to otherwise manage the conflict arising from a single financial services holding company attempting to manage businesses having inconsistent objectives. Therefore, Congress hoped to cure the Federal Reserve’s particular obsolescontinued on page 53

We have them! Do you? Because we bond thousands of mortgage companies across the country we use our buying power and leveraged competition among multiple surety companies to offer underwriting parameters and lower rates that other bond agencies only wish they had. Don’t wait for your bond’s expiration. Trade in your overpriced bond for a new bond – And start saving money today!

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Pre-depression housing finance

their LTVs? Liquidity. Lenders that are not in the business of owning real estate outright are most concerned with their ability to seize and sell the collateral backing their loans quickly. A bank which ceases to receive interest income from a borrower must replace that borrower as quickly as possible, thus its ability to foreclose on and sell that house is greatly improved if it may do so at 50 percent of the borrower’s purchase price or the loan amount. The notion that some types of lenders are designed to provide liquidity in return for stable interest income as opposed to speculating on the value potential of the collateral will be relevant to understanding GSE reform.

NationalMortgageProfessional.com

Reform is defined as both changing and improving something by correcting its faults. In the real estate business, faults are considered those traits which prevent a property or company from performing adequately the function for which it is used. When examining such faults it can be helpful to categorize them in a fashion that makes the decision of whether or not to reform clearer. Faults related to design, or obsolescence, require a different response than those related to, for example, depreciation or the natural ‘wear and tear’ a business or house experiences over its useful lifetime. While addressing depreciation can help maintain the current value of the asset, reform is by definition the act of addressing that asset’s obsolescence. The collapse of Fannie Mae and Freddie Mac, like any corporate failure, presents an obligation of vested parties to assess any obsolescence these institutions may have had such that the most appropriate choices can be made with respect to their future. Identifying how these firms are designed, what they are designed to do, and how they proved to be either inadequate or super-adequate to their purpose will highlight what needs to be changed to affect real reform. This does not mean that their failure could not have been the result of a deprecation that is addressed by, for example, getting new employees, but without isolating the obsolescence such a determination would be impossible. Though much has been written on this subject, the fact that these institutions became so integral to the lives of so many people, across all social, economic and political boundaries has made narrowing in on key issues, at best, very difficult. As multiple perspectives compete for attention, reform becomes as daunting as ‘boiling the ocean,’ so to speak. However, since real reform will benefit all, there is an incentive to finding where these perspectives overlap and focusing efforts to address obsolescence within that overlap.

exhibiting what might seem draconian by today’s residential financing standards. Loan-to-value (LTV) ratios of 50 percent, variable interest rates and five- to 10-year maturities requiring large ‘balloon’ or ‘bullet’ repayments at maturity were typical. These terms, however conservative they sound, do actually have contemporary analogies which may hint at the mindset of pre-1930s lenders. In modern commercial real estate finance, five- to 10-year balloon mortgage loans are made available by those same types of lenders subject to the strength of the borrower and the demonstrable historical cash flow of the property. When a borrower is not able to present evidence of stable cash flows, from either the property or a corporate sponsor, first mortgage lenders will usually place a 50 percent LTV cap on the amount lent. While this is often the case when financing raw land, or the conversion of an existing structure to perform a new purpose, plenty of hotels and singletenant office buildings receive this treatment as well. With respect to the residential lending market, within a couple of years of the 2008 financial crisis, lenders and investors were offering 55 percent LTV jumbo first mortgage loans to customers who were borrowing more than what conformed to standards set by the government sponsored enterprises (GSEs). What motivates certain lenders, both now and then, to avoid speculating on collateral value by limiting




Why Providing the Right Training for the Right Employees Helps Your Business By Melissa Hruza

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Every company has to have a strategy for managing regulatory compliance training. Many of our customers are already providing training for their employees through a Learning Management System (LMS). Your LMS is a great vehicle to deliver and track training, but you must also ensure that you are providing the right training with the right content to the right employees. Here is why you need customized training: l To meet your compliance requirements: Dig deeper into federal regulations and you will discover that in order to remain compliant in critical areas (fair lending, anti-money laundering), the training you provide your employees must fit their job role. l To provide a better education experience for your employees’ roles: If the training does not relate to your day-to-day activities, it is hard to retain the information presented. When education focuses on how regulations affect your employee’s job directly, the training will be more engaging and they will walk away with a deeper understanding of the regulations they must follow. l To reflect your company’s goals and policies: Consumer Financial Protection Bureau (CFPB) guidelines suggest that your employees receive education that not only meets the legal requirements, but also reflects your own internal policies. There are several reasons why this is a great improvement for your employee training beyond compliance. First of all, you eliminate any confusion by providing policies that only reflect your organization. You also have the chance to help new and existing employees better understand your internal processes and procedure. Finally, your employees will get a better sense of your organization’s objectives. l To complete a cleaner audit: When your employees fully understand how to comply with regulations, paperwork throughout your organization will be complete and thorough and you will experience greater data integrity. l To create happier customers: Finally, the ultimate reward for improving the education of your employees is to improve their interactions with customers. When you have a knowledgeable employee base, your customers will notice. So, how can you create the perfect balance of a Learning Management System and customized training? The Education Professional Services Group from AllRegs is ready to partner with you on your education initiatives this year. We can help you with the following: l AllRegs Branded University is our own LMS that is built and branded to reflect your organization. l Custom Training brings the training you need, where you need it. We can deliver via classroom, distance, or eLearning for your LMS. We will assess your mortgage training needs and come up with a custom, tailored solution to meet them. l Professional Services Engagement projects can help you with development of policy manuals or guides. We can also help you take it a step further and write course content or assessments to match and support your internal policies. For more information about AllRegs and its services, visit www.allregs.com or contact AllRegs at (800) 848-4904, Monday through Friday, between the hours of 8:00 a.m. and 6:00 p.m. CT. Melissa Hruza is marketing and communications specialist for AllRegs. AllRegs has a variety of resources to help meet your company’s anti-money laundering needs, including turnkey policy manuals, training, tracking and implementation resources, and even a free online course to get you started. Learn more about AllRegs and the full suite of products and services at www.allregs.com today or call (800) 848-4904.

SPONSORED EDITORIAL

creating a culture of compliance continued from page 45

summating higher-priced pensation for at leasta three years? mortgage loan? v If you qualify for any exemp++Mandatory Arbitration and tions and a full description Financed Single-Premium Insurance why, for instance, if you are a Do your policies and procedures smaller creditor operating address provisions that: predominantly in rural or ++Prohibit contracts or agreements underserved areas and meet from requiring consumers to submit the other elements of that disputes concerning a residential mortexemption? gage loan or home equity line of credit v If you eligible for the to arbitration and are prohibit applying or smaller creditor exemption interpreting such contracts or agreeabovefederal but you nevertheless ments to waive statutory causes intend to continue to offer of action? escrow accounts on premiloans ++Prohibit financing of any covered by the rule for which ums or fees for credit insurance or debt applications are inaccepted cancellation or suspension connecafter June 1, 2013 (which will tion with a consumer credit transaction mean you will forgo the secured by a dwelling?20 exemption unless you offer escrow accounts 2. Do your policies containforall disthe tressed borrowers only)? relevant disclosures required by the v Limited exemptions for “comnew rules? communities?” ++Do mon you interest use model disclosure forms and language contained in the High-Cost and regulatory guidance? Mortgage 14 Homeownership Counseling ++If not, are your disclosures clearly policies procedures writtenDoinyour a way that and consumers are address the key components of likely to understand? the high-cost mortgage provi++Are the disclosures presented in a sions, including: way that is likely to call the consumer’s v Identifying mortattention to the nature high-cost and significance gages under the revised of the information in the notice? coverage tests? ++HaveHOEPA disclosures been reviewed v Determining the by compliance and audit? applicable average prime offer rate. v and fees 3. HaveDetermining the policies points been reviewed thresholds. by the board (or similar oversight funcprepayment tions) vandDetermining senior management as penalty triggers. appropriate, the compliance officer, v Imposing and risk management firm,limitations or legal counsel? on certain loan ++Wererestrictions any concerns identified at terms for HOEPA loans? this level? ++If yes, have they been resolved? Do your policies and procedures address the key components of 4. Do the policies reflect your actual the Homeownership Counseling practices? provisions, including: ++Do you have testing planned to v Identifying when homeownerconfirm this? ship counseling is required? v required, providing a 5. WhatWhen processes do you have in list of homeownership counplace to ensure that policies are kept seling organizations to applicurrent and account for all changes in cants within three the regulatory environment? business after theyfor apply for a ++Whodays is responsible maintainfederally-related mortgage ing content? loan? v Receiving confirmation that 6. Describe the steps you will take to required borrowers have ensure that new product development the appropriate considers received new regulatory rules and counseling before making a associated risks. that provides for or per++Is theloan compliance function repremits negative amortization sented in the new product development process? to the borrower? 15 Mortgage Servicing 7. Do your policies and Rules procedures Do your policies and by procedures vary materially regionally, delivery address the key components of method, or by legal entity? the Mortgage Servicing provi++If practices vary: including: ++Issions, testing done for each segment? v Periodic billing statements ++Are all policies individually v Interest-rate adjustment approved? notices for ARMs ++What controls are in place to Prompt payment crediting ensurevthat regulatory updates are

payoff statements accountedand for in all policies? v Force-placed insurance Error resolution and informa8. v Have automated tools been tion requests updated to reflect your new policies v General servicing policies, and procedures? and to require++Haveprocedures they been tested confirm accuracy? ments v Assessing and providing timeand accurate information 9. Havely you updated your risk assessv reflect Properly mitiment to the evaluating regulatory loss changes? gation applications ++Do your policies and procedures Facilitating oversight of, and define v a process for ongoing updates to compliance by, service the risk assessment to account for reguproviders latory changes? v Facilitating transfer of information during servicing “Confidence comes from discipline transfers and training.”—Robert Kiyosaki21 v Informing borrowers of the Trainingwritten error resolution and proceTraininginformation is a critical request component of dures self-assessment and, indeed, it is a pivv ofEarly intervention with delinotal part a compliance management quent borrowers system. Policies statements are guide v Continuity of contact with posts, but, inevitably, the employees of a financialdelinquent institutionborrowers must know the v Loss mitigation procedures many requirements related to the company’s regulatory compliance commitfor list First Lien Loans ments.Valuations Consider this a de minimis 16 Secured by a Dwelling set of questions! Do your and what procedures 1. Have you policies determined trainaddress key components of ing needs to bethe developed? the ECOA Valuations who provisions, 2. Have you determined needs including: training? v Notifying applicants of their 3. Have you considered the following to receive copies of all questions right in developing training: appraisals ++Whatvaluations informationand will be covered developed, along with other in the new training? information required in the ++What will the format be for trainnotice? online, et cetera.) ing? (Instructor-led, v Providing applicants a copy ++How will training vary based on job duties?of each appraisal and other ++Howwritten do youvaluation document“promptly completupon their completion” or ed training? days prior for to ++Whatthree are business the consequences consummation (for closedemployees not completing training by enddeadline? credit) or account openthe assigned open-end credit), ++Haveing the(for changes to the training whichever is earlier?into your program been fully integrated v That program fees cannot be ongoing charged full training and schedule? in connection with providing copy of roll the out appraisal or val4. How awill you the changes uation? to your training program? ++When will training be completed? Appraisals Higher-Priced ++Do training for timelines allow for 17 Mortgage enough time forLoans staff to fully underpolicies andprior procedures stand Do ruleyour requirements to the address effective dates?the key components of the higher-priced mortgage ++Have you done any testingloan of appraisal training programprovisions, changes? including: v For all higher-priced mortgage 5. Who is responsible for developing loans that are not eligible for course content? at least one of the several ++Did you purchase content from an outsideexemptions vendor? from the rule: of ++Hown isNotifying senior applicants management their right receive involved in developing andtoapproving copies of all valuations course content? andyouappraisals ++How did determinedevelthat oped, along with other course content is adequate? required in ++What is information the process for identifythe notice? ing the need for additional changes? 6. HavenyouObtaining determined awhatwritten trainappraisal (including a ing will be needed to address operaphysical visit of the interior of the property) per-


formed by a certified or licensed appraiser? n Obtaining an additional written appraisal (including a physical visit of the interior of the property), at no cost to the borrower, in connection with certain “flipped” properties? n Consumer receiving a free copy of all written appraisals for the transaction at least three business days before consummation?

Loan Originator Compensation Requirements18 Do your policies and procedures address the key components of the Loan Originator Compensation provisions, including: l Requirements that a loan originator’s compensation cannot be based on any of the transaction’s terms?19 l Assuring that a loan originator that receives compensation directly from a consumer cannot receive compensation from another person in connection with the same transaction? l Requirements that your individual loan originators are licensed or registered as applicable under the Secure and Fair Enforcement for Mortgage Licensing Act of 2008 (SAFE Act) and other applicable laws? l Requirements that your loan originators provide their name and unique

identifier under the Nationwide Mortgage Licensing System and Registry on loan documents? l Requirements for maintaining records concerning loan originator compensation for at least three years? Mandatory Arbitration and Financed Single-Premium Insurance 1. Do your policies and procedures address provisions that: n Prohibit contracts or agreements from requiring consumers to submit disputes concerning a residential mortgage loan or home equity line of credit to arbitration and prohibit applying or interpreting such contracts or agreements to waive federal statutory causes of action? n Prohibit financing of any premiums or fees for credit insurance or debt cancellation or suspension in connection with a consumer credit transaction secured by a dwelling?20 2. Do your policies contain all the relevant disclosures required by the new rules? n Do you use model disclo-

sure forms and language contained in the regulatory guidance? n If not, are your disclosures clearly written in a way that consumers are likely to understand? n Are the disclosures presented in a way that is likely to call the consumer’s attention to the nature and significance of the information in the notice? n Have disclosures been reviewed by compliance and audit? 3. Have the policies been reviewed by the board (or similar oversight functions) and senior management as appropriate, the compliance officer, risk management firm, or legal counsel? n Were any concerns identified at this level? n If yes, have they been resolved? 4. Do the policies reflect your actual practices? n Do you have testing planned to confirm this? 5. What processes do you have in place to ensure that policies are kept current and

account for all changes in the regulatory environment? n Who is responsible for maintaining content? 6. Describe the steps you will take to ensure that new product development considers new regulatory rules and associated risks. n Is the compliance function represented in the new product development process? 7. Do your policies and procedures vary materially regionally, by delivery method, or by legal entity? n If practices vary: n Is testing done for each segment? n Are all policies individually approved? n What controls are in place to ensure that regulatory updates are accounted for in all policies? 8. Have automated tools been updated to reflect your new policies and procedures? n Have they been tested to confirm accuracy? 9. Have you updated your risk continued on page 52

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n Alabama Mortgage Professional Magazine n FEBRUARY 2014

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creating a culture of compliance continued from page 51

assessment to reflect the regulatory changes? n Do your policies and procedures define a process for ongoing updates to the risk assessment to account for regulatory changes? “Confidence comes from discipline and training.”—Robert Kiyosaki21

Training

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Training is a critical component of selfassessment and, indeed, it is a pivotal part of a compliance management system. Policies statements are guide posts, but, inevitably, the employees of a financial institution must know the many requirements related to the company’s regulatory compliance commitments. Consider this list a de minimis set of questions! 1. Have you determined what training needs to be developed? 2. Have you determined who needs training? 3. Have you considered the following questions in developing training: l What information will be covered in the new training? l What will the format be for training? (Instructor-led, online, et cetera.) l How will training vary based on job duties?

l How do you document completed training? l What are the consequences for employees not completing training by the assigned deadline? l Have the changes to the training program been fully integrated into your full training program and ongoing schedule? 4. How will you roll out the changes to your training program? l When will training be completed? l Do training timelines allow for enough time for staff to fully understand rule requirements prior to the effective dates? l Have you done any testing of training program changes? 5. Who is responsible for developing course content? l Did you purchase content from an outside vendor? l How is senior management involved in developing and approving course content? l How did you determine that course content is adequate? l What is the process for identifying the need for additional changes? 6. Have you determined what training will be needed to address operational changes? l What areas are impacted by the changes?

“Life is the continuous adjustment of internal relations to external relations.”—Herbert Spencer22

Audit, Compliance Review, Internal Control The following questions tease out certain factors that are central to a compliance management system with respect to auditing and internal control functions. Ideally, these factors include the nature and extent of present compliance with Federal consumer financial law, the commitment of management to compliance and its ability and willingness to take the necessary steps to ensure compliance, and the adequacy of systems, including internal procedures, controls, and audit activities designed to ensure compliance on a routine and consistent basis. 1. Did audit and compliance review play a role in developing and implementing your new procedures for complying with the new mortgage rules? l If so, did they make any suggestions for process improvement? l Are any action items outstanding? l How are they being tracked? l Will enhancements be made prior to the rule effective dates? 2. Have audit/compliance review/internal control procedures been updated to reflect the regulatory changes? l Have the updated procedures been tested? l Has the updated audit/compliance/internal control program been approved by the board (or similar oversight function) and senior management, as appropriate? l Have you conducted a pre-exam review to determine the level of compliance? “Complainers change their complaints, but they never reduce the amount of time spent in complaining.”—Mason Cooley23

Complaints 1. What training will the associates that process consumer complaints receive regarding the changes to the mortgage rules? l Will all training be completed prior to the effective dates of the new rules? 2. Are complaints processed centrally or by individual business lines? l If by line of business, how will complaints training vary? 3. Is complaint data analyzed to identify training needs and process breakdowns? 4. How are complaints handled when regulatory violations are noted? l Are violations tracked? l Is root cause analysis done when violations are noted? “It is not enough to have great qualities. We should also have the management of them.” —Francois de La Rochefoucauld 24

Third-Party and Vendor Management 1. What arrangements, agreements, or contracts exist with vendors and third parties related to mortgage products or servicing? l Do you have changes planned for third-party practices as a result of the new rules? l Will your third-party service providers deliver compliant application technology releases and/or fully tested process updates in time for the effective dates? 2. What changes have been made or need to be made to the above arrangements, agreements, or contracts to ensure that service providers comply with new regulations and all legal obligations? 3. Do you review complaints regarding vendor activity for compliance and process concerns? l How frequently do you receive this complaint data? 4. Do you receive and review training procedures for third parties related to regulatory requirements? 5. Will you provide training for any third party service providers? “From the end spring new beginnings.”—Pliny the Elder25 Pliny the Elder saw the eruption of Mount Vesuvius, on Aug. 24, 79 CE, during which Pliny the Elder, his uncle, died. Pliny started writing at the age of 14, and was particularly drawn to writing in the style of Greek tragedy. In the course of his life he wrote a quantity of poetry, most of which was lost despite the great affection he had for it. Also known as a notable orator, he professed himself a follower of Cicero, but his prose was certainly more eloquent and less direct than Cicero's, who was a well-respected philosopher, politician, lawyer, orator, political theorist, consul and constitutionalist. Pliny understood that it is possible to build anew, even in the face of substantial challenges, and even if the difficulties seem insurmountable! The dried-up soil of the past become the green plains of the future. The CFPB expects institutions to comply with all relevant provisions by the effective date of each rule. Policies and procedures should be updated to ensure that employees fully understand the changes prior to the effective dates. Indeed, the CFPB expects to assess policies and procedures in a timely fashion. It will implement robust transaction testing. You should be prepared to discuss your implementation plan and policy changes. Remember: The Bureau, in carrying out its mandate,26 will coordinate with other regulators, and those regulators, state and federal, will communicate examination plans and findings with each other. When appropriate, the regulators will coordinate examination efforts. In my view, there are two ways to meet a challenge: (1) be pulled along by


it or (2) get in front of it and stop its unfolding! The CFPB has set forth its challenges. Its theories and our practiced responses can bring about greater consumer financial protection. We can meet this new challenge, now rising from the ways of the past. We can find beginnings that bring stability to market participants, both consumers and residential mortgage loan originators. Jonathan Foxx is president and managing director of Lenders Compliance Group and Brokers Compliance Group, mortgage risk management firms devoted to providing regulatory compliance advice and counsel to the mortgage industry. He may be contacted at (516) 442-3456, by e-mail at jfoxx@lenderscompliancegroup.com, or visit www.LendersComplianceGroup.com or www:BrokersComplianceGroup.com.

Footnotes 1—Statement of Donald J. Frommeyer, CRMS, President of NAMB—The Association of Mortgage Professionals, “Compliance, Compliance and More Compliance,” NAMB Monday Morning Messenger, Feb. 10, 2014. 2—These rules may be viewed at http://www.consumerfinance.gov/regulations. 3—To discuss some facets of these due diligence considerations, I will draw on the 2013 CFPB Dodd-Frank Mortgage Rules Readiness Guide, Version 1.1, July 2013, especially “Part II – Readiness Questionnaire.” 4—Chairman of the Review of U.S. Human Space Flight Plans Committee. 5—Regulation Z 1026.35. 6—Regulation Z 1026.32. 7—Regulation Z 1026.43.

8—See the requirements of 1026.32 or 1026.35 of Regulation Z. 9—Refer to the CFPB’s Small Entity Compliance Guides or the rules themselves for additional information on exemptions. 10—American politician, actor, attorney, lobbyist, columnist, and radio host. 11—This outline of questions is not meant to be nor is it comprehensive of all questions and due diligence requirements for any given financial institution. Each institution must be evaluated as comprehensively as possible. 12—Regulation Z 1026.43. 13—Regulation Z 1026.35. 14—Regulation Z 1026.32 and Regulation X 1024.20. 15—Regulation Z 1026 and Regulation X 1024. 16—Regulation B 1002. 17—Regulation Z 1026.35. 18—Regulation Z 1026.36. 19—The CFPB has issued a complete exemption to the prohibition on loan originators receiving origination fees or charges from someone other than the consumer where the consumer pays upfront points and fees pursuant to its exemption authority while it scrutinizes several crucial issues relating to the design, operation, and possible effects in a mortgage market undergoing regulatory overhaul of such a restriction. 20—Credit insurance can be paid on a monthly basis and some unemployment insurance is excluded. 21—American investor, businessman, self-help author, motivational speaker, financial literacy activist, and financial commentator. 22—English philosopher, biologist, anthropologist and sociologist. 23—American aphorist known for his witty aphorisms. 24—French author of maxims and memoirs. 25—Lawyer, author, and magistrate of Ancient Rome. 26—As set forth in the Dodd-Frank Wall Street Reform and Consumer Protection Act (Public Law 111–203, HR 4173).

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gsf reform: thinking outside the box loans,” Congress saw fit to suggest limits on LTVs related to securities lending. While the Federal Reserve was made responsible for reviewing the suitability of such limits over time, LTVs were initially set at the higher rate of 55 percent of the current market price or 100 percent of the lowest market price during the preceding three years, subject to an overall lending cap at 75 percent of the current market price. This was a good example of a counter-cyclical capital reserving scheme, where within a defined stable market, a reserve level is set lower to maintain that stable market while another level is set higher to help a market in crisis recover. Ten days later, on June 16, 1934, the Pecora Committee released its final report. Though initially tasked with doing so, the report stops short of making legislative recommendations as Congress had already passed major legislative responses between 1932 and 1934. While acknowledging how these new laws would positively affect reform of important issues highlighted within the report, it is also emphasized that certain immediately “vital matters” remained to be continued on page 57

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cence through the Glass-Steagall Act while letting the Federal Reserve choose how to address any residual obsolescence related to commercial banks failing to perform their liquidity function due to their direct and indirect exposure to the practice of speculating on asset value appreciation (a function better suited to investment banks and brokerages). One year later, the Securities Exchange Act of 1934 is passed. To prevent excessive speculation and the resulting “unreasonable fluctuations in the prices of securities,” the law sought to create more transparency around the trading of securities while also acknowledging the pro-cyclicality of lenders. Pro-cyclicality describes the tendency of lenders to offer more loans and higher leverage when collateral prices are rising, while also tending to restrict lending, offering lower leverage, when collateral prices are dropping. This tendency creates a self-reinforcing cycle which, if left unchecked, will lead to financial bubbles and depressions. To address how procyclicality can cause “alternately unreasonable expansion and unreasonable contraction of the volume of credit” and the prevention of “fair valuation of collateral for bank

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NMP M O R T G A G E

P R O F E S S

Brian Kent, General Manager C2 Financial

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M

ortgage brokers are often referred to as “mom and pop” mortgage operations. That is because the average mortgage brokerage is very small, having only one, or just a few, originators. But C2 Financial is not your typical mortgage broker and it’s a place where the words “mom and pop” do not apply. With more than 500 originators closing well over $1 billion in loans annually, C2 Financial is one among the largest mortgage brokers in the U.S. Among the leadership team of this brokering behemoth is Brian Kent, the firm’s general manager. Brian was selected as National Mortgage Professional Magazine’s Mortgage Professional of the Month after being nominated by United Wholesale Mortgage (UWM). We recently had a chance to sit down with Brian to learn some more about him and C2 Financial. Tell us how you first got started in the mortgage business? I graduated from college in 1993 with a major in biology, not exactly sure

BY DAVID J. COSTER

what direction I was headed. I took a job in the laboratory at The Scripps Research Institute in La Jolla, Calif. and worked there for a few years, but realized the lab was not for me. Long story short, I completed the sales training program at Northwestern Mutual Life (NML) in the insurance/investment/group benefits space. A mortgage company called in one day needing assistance with group benefits and a 401k plan. The owner and I got along well. He needed someone to help expand his business and offered me a recruiting position at the company and I accepted. That was 15 years ago. Tell us about C2 Financial. C2 Financial is a mortgage brokerage/banker based in San Diego, Calif. We maintain approximately 50 wholesale lender relationships and focus our state approvals in the West, including Arizona, California, Colorado, Nevada, Oregon and Washington, not to mention, we have a great group in Florida and Texas as well. We work with self-sufficient, seasoned originators who hold ethics and compliance in the highest regard, but don’t need or want a lot of hand-holding. Most of

our folks are with us because, other than compliance—which we are strict on—we stay out of their way. And because of our volume, we have access to some of the most competitive wholesale rates, and preferred service with our lenders. In fact, when talking with prospective originators, we frequently are asked to do a rate comparison. Nine out of 10 times, our rates are superior—and not by a little. It is the combination of our rates, relationships and resources that allow C2 originators to provide the best pricing and service to their Realtor partners and clients, which create clients and Realtor partners for life, critical to a career originator’s success. You believe very strongly in the brokerage model. What is your philosophy about this model of lending? While we have recently started banking some loans, our main focus has always been brokering because brokering comes with freedom. With brokering, you’re not stuck submitting to a single entity. At our core, we like the free-market system where the originator has choice. We strongly believe that the mortgage brokerage model is best for both consumers and mort-

gage professionals, and C2 is committed to being the best. Many originators have joined us who were previously with a bank. If their bank’s rates were out-of-themarket, or service was lacking, they were stuck with that one option, forced to sell a higher rate, or forced to make excuses to their client or Realtor about service delays. With over 50 wholesale relationships, our originators can submit to the lenders who are providing the best rates and service at the time. If a lender’s service levels fall during a busy time, it’s not a problem, because there are 49 other wholesale lenders to choose from. What is the overriding philosophy of C2? It’s easy to get lost in the day-to-day business. But a company philosophy I think is critical, so I’m glad you asked. Our philosophy is this, which I’ll paraphrase from our manual: Our titles vary. We are mortgage consultants, we are loan originators, we are loan officers, and we are mortgage brokers. What does not vary is that, every day, borrowers entrust us with one of the most important financial decisions of their life that, if not executed proper-


S I O N A L “We strongly believe that the mortgage brokerage model is best for both

O F

T H E

intent of the tool was to recognize the best lenders for “a job well-done,” these tools have done wonders for our service levels with our lenders as there is accountability. Nothing makes my day more than e-mailing an AE and their boss when a “Good” posting is on the Board.

consumers and mortgage professionals, and C2 is committed to being the best.”

ly, can have long-lasting repercussions as was witnessed in 2008 during the mortgage meltdown. We do not take that responsibility lightly. We do what is best for the client, not what is best for our pocketbook, as some brokers before us have done. We know by doing this, we not only are doing what is morally and ethically right, but we know this belief system will result in our borrowers referring us additional clients, the underpinnings of a longterm business model.

Would you recommend this industry to young people seeking a career? I think, for the right person, this can be a great career choice. But, it takes a very unique blend of skills and talents, from being tech-savvy, to having an eye for marketing, being a student of loan programs, being good with math, a strong delegator and excellent provider of customer service. Most jobs divide up those skills. In our business, you have to be fluent in all of those areas.

Where will your firm be in three years? It’s always tough to project, especially in our industry, as we’re so closely tied to what rates and the economy are doing. However, our long-term plans are to continue growing as we have been, adding about 10-15 originators per month, and continuing to be proactive, looking for new opportunities as they develop, adding new states when warranted, continuing to add new tools

to our Web site and new resources to our library to make our originators the most efficient, effective and experienced in the industry. With the excellent corporate staff at C2, along with the great sense of community amongst our seasoned originators, we have no doubt we can reach that goal and beyond. You were nominated for NMP’s Mortgage Professional of the Month by United Wholesale Mortgage. How does that make you feel? It is an honor and I am truly appreciative. It is a sign of a strong partnership with United Wholesale Mortgage and an indication that they value not only what we are doing, but also how we are doing it. The relationship between brokers and wholesale mortgage bankers is one of the competitive advantages that helps deliver the service and value that consumers have come to expect from mortgage brokers in general and from C2 Financial in particular. David J. Coster is senior editor of National Mortgage Professional Magazine. He may be reached by phone at (919) 559-2171 or e-mail davidc@nmpmediacorp.com. 55

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What are the biggest challenges you are facing? How about opportunities? I think the biggest challenges are overcoming misperceptions. There’s been a lot of noise about QM, the three percent cap, etc. But by and large, our average comp is about 1.75. Most of our originators aren’t impacted by the three percent cap, especially since many lenders are “building in” their fees to the rate. We don’t own a title, escrow or appraisal company, so none of those fees are counted in the three percent cap. Certainly, keeping up with the regulations is a challenge. However, we are fortunate to have excellent compliance attorneys who keep us up-todate. They read the regulations, digest it all and give us the bottom line. Then, we implement it in a format that is originator and borrower-friendly. Many originators who have joined recently decided rather than deal with having to keep up with everything themselves, we can do it for them, and they can focus on originating and mar-

keting, not worrying about questions like, “Can the RRA be sent out before the ITP, and under the new QM, does the GFE need to go out with the BSA or BCA?” The main challenge is, of course, shifting to an almost exclusively “purchase” market, but in conjunction with our lending partners, we’ve been doing lots of sales training Webinars and seminars on making the shift, for those who haven’t yet. Additionally, to help supplement lost refi volume, in addition to a reverse mortgage department, overseen by longtime RM originator Monte Howard, we’ve recently rolled out a banking channel which is a nice option.

NationalMortgageProfessional.com

What is it about the mortgage industry that you most enjoy? Nothing gives me more satisfaction than solving problems, which results in a better originator and borrower experience. Creating a solution, a tool and seeing folks benefit from it is quite a reward. When I first came into the industry in 1998, originators spent hours poring over guidelines looking for a lender that could do some obscure niche. Originators were constantly asking us: “Which lender has what niche?” but we didn’t have the answer. However, we were good listeners. So I grabbed our Web designer and we developed a very simple “Niche-Finder” tool. The AEs would log-in and indicate what niches they had, and our LOs could log-in to easily search the lender niches. It was simple, but very effective. That saved tons of time, allowing originators to focus on marketing, instead of program-hunting. Finally, I would hear about which lenders were doing a great job, and which were not. But that is information that our other LOs needed to hear—not me! So we created a tool we call “The Good, the Bad and the Ugly” and our “AE Scorecard” on our Web site, allowing our LOs to post feedback on each lender they used. While the original

It seems that your Web site is what really differentiates you from the competition. We definitely hear from our originators that our Web tools are helpful. The bottom line is that if there was something that we could use our Web site for to make the lives of our LOs easier, better and more efficient, then we did it. Often, we were just good listeners. If at our quarterly sales meetings, someone said, “We’re having trouble with ‘X’ issue,” then we would delve into the topic and seek a solution. Many times, the issue is solved using a Web site tool. Our philosophy is that if one originator is running into an issue, others probably are as well, so we’re going to do our best to try to solve the problem.

M O N T H


The “One Big Thing” You Cannot Overlook When Choosing a Branch Partner

By Eric Tishaw If you’re looking to find a new home for your origination business or your branch, there is “One Big Thing” you should prioritize over everything else when comparing companies. Find a great fit with this one big thing and your business will thrive. However, pick the wrong one, and you’ll be looking to make another move next year … or even sooner! Let’s face it, no company has a magic bullet. Every company basically has the same products/pricing/investors/LOS/accounting/etc. So what is that “One Big Thing” that truly sets a great company apart from the rest? It’s surprisingly simple … the quality

of the people is what separates a company apart from the rest of the pack. Your business can thrive when you are aligned with great people who get the following 10 things right: 1.

2. 3.

4. 5.

6.

You get a “seat at the table” and are asked for your input and listen to your suggestions. Will treat you and your team as partners. A focus on YOU and helping YOU be more successful this year than you were last year. Are trustworthy and honest with you. Genuinely want to help you grow your business and help you score the winning shot. Are friendly and one whom you

will actually like and want to work with on a daily basis. 7. Are always there for you and will help you when you need it, every time. 8. Genuinely care about your goals, needs and desires. 9. Reward you for being a valuable partner. 10. Have a positive and helpful attitude that’s ingrained into the internal culture of the company. Before making a move, get to know the people first and see how you think they will fit the criteria above. Let them give you a tour of their office, meet all of their key players, and get their cellphone numbers to test them to see just how responsive they are. Also ask them

how they will be helping you and what their role would be in helping you get to the next level. A great company will be filled with great people who will be able to answer this question quickly and accurately. The year 2014 is going to be huge, and making the right choice when picking a branch opportunity can help you make it even bigger. If you are serious about growing your business and your personal income, then you will want to be a part of a great company filled with great people who value you and want to see you succeed. Then, your business can truly soar to the next level! Eric Tishaw is chief executive officer of HomeTown Lenders. He may be reached by e-mail at eric@htlenders.com.


gsf reform: thinking outside the box continued from page 53

the view to investment return rather than capital appreciation, may have a place in our investment system” and subsequently challenged Congress and the private financial market participants to work together to insure future trusts be structured as such.

A new new yyear... ear....

Government-sponsored housing finance

continued on page 60

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Less than two weeks after the Pecora Committee report was released, the National Housing Act is created “to encourage improvement in housing standards and conditions” and “to provide a system of mutual mortgage insurance.” The Act creates the Federal Housing Administration (FHA) and gives it the mandate and authority to begin writing housing finance related insurance to approved institutions. It was anticipated that with a relatively small upfront capital investment from the government and an implied backstop from the U.S. Treasury for losses larger than reserved for that the FHA would be able to administer a fund facilitating the sharing of housing finance risk amongst policy holders, i.e. lenders, for the mutual benefit of those policy holders. FHA’s mandate to promote new housing construction, renovation and general affordability was, in aggregate, an attempt to affect a counter-cyclical macroeconomic strategy. Not only would this construction related subsidy promote jobs, hence wealth creation, Congress hoped that an 80 percent LTV limit for FHA would help side-step what would be an otherwise longer process of recovery in the banking sector. The failure to maintain the strength of liquidity providers was a hard lesson learned after the crash. Hopefully, higher LTVs would increase demand for housing and lead to greater transaction volume and banking revenues. However, unlike the new regulations specific to the stock market, no mechanism was put into place to recognize the existence of a stabilized housing market or establish an appropriate LTV limit for such a market. Recognizing that to insure an asset is to invest in that asset, it can be instructive to evaluate FHA as an investment trust from the perspective of the then contemporaneous Pecora Committee. Does the FHA seek to consolidate control of public money so that it can be diverted into concentrated risks allowing for private gain from capital appreciation? FHA does possess potential access to a considerable amount of government funding and was obviously intended to consolidate certain lending standards for the housing market. Would increasing LTV limits beyond private market norms for an indefinite timeframe for

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addressed, such as “the nature and diversification of loans and security” and “proper banking reserves.” The term “reserves” is related to the amount of cash a lender holds, rather than lending, which serves as a form of buffer for the benefit of depositors, in the case of a bank, just as a homebuyer’s downpayment acts as a buffer for the benefit of a bank. As all professional financiers understood, and as the Pecora Committee suggested, the diversity of an institution’s loan portfolio is of both critical concern and directly related to the level of cushion those loans have to the value of the collateral securing them, i.e. LTV. If this is not immediately intuitive, consider how LTV affects liquidity as discussed earlier. A bank has more comfort providing 50 percent LTV loans versus 100 percent LTV loans because as the price of a property drops, holding all else equal, more people would be willing to purchase it. Put another way, every home is unique, hence the price paid by the buyer must contain some purely subjective component that is justified only to them, i.e. beauty is in the eye of the beholder. As the bank’s valuation of that home, for lending purposes, drops below the sale price there is less reliance on the subjective components to that price. Therefore a lower LTV results in the bank’s ability to foreclose and own that home at a value which is supported by more objective factors, i.e. factors that a broader selection of potential buyers agree upon. Broader agreement is, by definition, a more diversified agreement. In essence, lower LTV equals higher diversity and greater liquidity. The attempt to manage diversity without managing LTV will prove to be a point of failure for many financial risk managers in the years to follow. Another topic that the Pecora Committee focused heavily on was the proper role of the investment trust, where an entire chapter within their report was dedicated to the nature and abuses of these trusts. The investment trust, being a company organized to acquire and hold financial assets, is a tool that while historically beneficial to financial markets was found to have been abused in the years running up to the 1929 crash. The general consensus was that, through false claim of diversification and safety, investment trusts were used by American financiers to consolidate greater control of the “public’s money” such that it could be diverted into concentrated risks for purely speculative purposes and private gain. The report concluded that “Investment trusts conducted in accordance with the underlying principles responsible for their creation, diversification of investments with


taking the lead Marketing Liberation

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By Jonathan Blackwell Are you tired of relying on real estate agent referrals for your livelihood? It doesn't have to be that way. It shouldn't be that way … there are other ways. In fact, my entire business was built without ever soliciting an agent. You can do the same.

Donuts and coffee We are told that the key to mortgage success is simple; get the most agents. Grab the donuts, the coffee and pound the pavement kid. Don't get me wrong, that model works and drives many a top producers. It is not for everyone though. Despite what your manager says, you can win without soliciting agents. Our goal, and the goal of this column, is liberation and empowerment. You can be free from the weekly smile and dial session you hate so much because you are empowered with the ability to generate the lead before the agent does. The result is a new paradigm where the tables have turned.

form to promote yourself and build authority. You also need to seek out your audience on their turf so you can engage.

Building the brand Your blog serves as the hub. This is the platform you use to educate, teach, build authority and cast your net. Customers and agents alike are searching for answers. Sometimes, they are searching for you by name even. What will they see? Expertise? Knowledge? Will they see value? Your Web site is a direct reflection of you, your ability and your authority. I can hear the excuses building already … I don't know how to design a Web site … I'm not a good writer. Fine, continue your agent boot-licking. These tasks are not hard. There are dozens of simple Web site builders and sites to outsource the design on the cheap. There is no excuse for letting the creation process stump you. My nephew can build a Web site and he's nine! He may be able to build a Web site, but you know what he can't do? He can't convey how PMI works. He can't describe the appraisal process or guide a homebuyer though downpayment options. He can't, but you can.

Getting started If you want to take the lead, you need to think differently. You need to think consumer-direct. The process starts online obviously. Developing an online brand requires patience and work, but the benefits are real. It's not hard if you understand the basics. You need a platform to educate your target audience. You need a plat-

If you write it, they will come Make no mistake, the lead machine is fueled by content—smart, compelling and informative content. You have to provide value and educate. If you are not willing to write or pay someone to write, then explore video, presentations, whatever. Content is more than words on

paper, it takes many forms. How much time and effort do you spend answering the same questions repeatedly? You are a living, breathing content goldmine! Why not tap into that experience and turn those answers into content? You can use your answers for posts, e-mail, video or social engagement. Write it, film it, e-mail it, draw it … send up smoke signals for all who care and create clever content consistently.

Optimize your content The traffic and leads will come just by creating the content, but you want the floodgates to open right? You want enhanced performance. You want to turn your plain content into optimized content. 1. Don't waste your first five seconds: More than 80 percent of readers only read the headline. Let that soak in. It's imperative that you nail your headline and opening, because if you don't, most readers will cruise right on by. You have FIVE seconds to grab their attention, so use it wisely. 2. Write for the readers: Always write for the reader first, but never forget about the search engines. Study the basics of on-page SEO and use them in every single post. 3. Promote your content: Write and publish is not the formula. Write, publish and promote is the formula! Promote your content appropriately and do it frequently with a social media scheduling tool. 4. Include a call to action: We write because we want leads. Make the conversion process easy with a clear call to

action in every piece of content you produce.

Increasing conversions You wrote it, you optimized it and the leads are starting to flow, but they are fleeting and don't stick. You have a conversion issue. You just hung up with a lead. You go to work for them. What do you think the lead does? They GOOGLE you. What will they find? They may find nothing or they will find a carefully crafted narrative of your design. Your lead generation site needs a conversion compliment, you need a name site. Keep it simple, focus on accomplishments. Collect reviews and testimonials. Consider it your online business card and an effective way to shape your brand and narrative. That's not all you need though, you want to own that top 10 in Google. You need social media too. You need to prove you're a human, a really awesome human who is stellar at your job. Your brand messaging needs to consistently appear everywhere: LinkedIn, Google+, Facebook, Twitter, Yelp, Zillow, Trulia, Pinterest. Use the free tools that the social media gods have provided. Shape your narrative, shape your brand, and be consistent across multiple channels. Be found. This is your legacy, your brand and your paycheck … so own it. Stop relying on agents for your livelihood and start taking the lead. Jonathan Blackwell is chief engagement officer for BoldCopy.net. Jonathan may be reached by phone at (404) 551-3845 or email jonathan.blackwell@gmail.com.


BEWARE OF SOME CLAIMED “FACTS”

By Terry W. Clemans

Chairman of the Regional Conference of Mortgage Bankers Association, and executive Director and Counsel of the MBANJ, NJAMB and PAMB The Regional Conference of Mortgage Bankers Associations, set for March 9-13 at the Trump Taj Mahal Casino Resort in Atlantic City, N.J. (now in its 31st year) will provide residential mortgage lenders with two days of programs that can make their companies compliant with the Consumer Financial Protection Bureau (CFPB), while maintaining profitability, a bold statement yes, but understandable when you look at the Regional Conference’s program for 2014. From a compliance and profitability standpoint, the program is truly outstanding. Start with Barry Habib, who is always informative and entertaining, followed by two great General Session Panels. Regina Lowrie’s panel discussion will give you insights from key industry leaders who will discuss their views on running a mortgage company successfully given the current regulatory and economic environment. Our second General Session Panel Discussion is comprised of CFPB experts, including those who worked directly with the Bureau in finalizing the Jan. 10th regulations with a view toward alleviating industry concerns. Brian Montgomery, former commissioner of the Federal Housing Administration (FHA), brings the Collingwood Group’s views regarding FHA and its self-auditing requirements to our attendees, along with an attorney’s view, as well as that of an industry representative. Our Regulators Panel brings speakers from the Pennsylvania Department of Banking and Securities, who will discuss the structure of the Department since Tim Siwy’s departure for the CFPB. Representatives invited from the New Jersey Department, New York Department and Maryland Department of Banking will bring attendees up to date on their state’s activities and what their state’s regulatory environment may look like in 2014. On Thursday, a one-half day program, attendees will hear from 10 speakers covering topics of primary interest and concern to the industry in dealing with CFPB regulations. This is a rare opportunity to hear attorneys and industry reps working in the industry and dealing with the new regulations on a daily basis explain some of the most problematic aspects of the regulations, and how to handle them while remaining compliant. And you can take a break from the CFPB for a while and relax with your colleagues and exhibitors in the Exhibit Hall (with lunch provided), as well as at the three cocktail receptions, two at the Taj Mahal and one jointly with REMN at the new casino hotel, Revel. For those who are interested in commercial mortgage lending, the Regional Conference offers two days preceding the Residential Program with a General Session, special panel discussions, two lunches (one with a speaker and the other in the commercial exhibit hall) and two cocktail receptions (commercial attendees are also invited to the Opening Residential Cocktail Reception on Tuesday evening, march 11). Now that you have read the foregoing, I have no doubt that you will agree this is truly a one-of-a-kind event and a must-attend conference! It is not surprising that the Regional Conference is considered one of the best state or regional conferences in the country. See you at the Taj! E. Robert Levy is executive director of and counsel to the Mortgage Bankers Association of New Jersey, the Mortgage Bankers Association of Pennsylvania, and the New Jersey Association of Mortgage Brokers. He is a partner in the law firm of Levy & Watkinson PC, with offices in Woodbridge and Trenton, N.J. He may be reached by phone at (732) 596-1619 or e-mail info@mbanj.com.

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l https://www.consumer.ftc.gov/articles/0225-credit-repair-scams l http://www.attorneygeneral.gov/uploadedFiles/Consumers/cre dit_repair_scams.pdf l http://ago.mo.gov/publications/creditrepair-full.htm l http://www.oag.state.md.us/consumer/tip4.htm l http://www.naag.org/national_association_of_attorneys_general_urges _consumers_to_beware_of_credit_r epair_scams.php

A Message From E. Robert Levy

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For some industry insiders, this is an old story, but for the sake of those new to the mortgage industry, and those who are always hopeful for ways to close more loans, it’s time to address some real “Facts” about credit repair. In a recent edition of this publication, there were some claims made about credit repair “Facts” by individuals who provide credit repair. Many of the claims of “Fact” were truly “Fallacies” and referring consumers to credit repair firms comes with risks that will put your mortgage origination business at risk. The Federal Trade Commission (FTC) and state Attorney General offices (AG) from coast to coast have been very clear about credit repair, assessing fines on many credit repair companies that force them to close, only to reopen under a different name. Steve Baker, director of the FTC office in Chicago has maintained the same position as previous FTC credit repair enforcers since the early 1990s and claims that he has “… not seen a legitimate credit repair clinic.” Check the Web sites of the FTC and state AG offices regarding credit repair and you will find that, nationwide, these firms are most commonly associated with the term scam. Before associating your business with anyone in this industry, you might want to check your local state AG’s position on credit repair. Below, please find a few state AG links and the National Association of State Attorney General link on credit repair as examples:

A good summary on the various government perspectives comes from the California AG’s Web site (http://oag.ca.gov/consumers/general/repair_credit10). The California AG warns consumers: “As you begin, be aware that there are no instant fixes and no one can "erase" your bad credit. Only your deliberate effort, correction of errors and good practices involving prompt payment of bills over time can rebuild your credit.” More important reminders for mortgage professionals about credit repair is that working with a credit repair company could cost you the loan and your ability to obtain credit reports from any credit reporting agency. Due to the massive fraud and illegal activity rampant in the credit repair field, even by those in the industry claiming to be legitimate and in it for decades, mortgage lenders who have been documented as to referring consumers to credit repair companies have had their ability to access credit reports terminated. This termination is in effect for ALL consumer credit reporting agencies as each national credit bureau publishes a “Do-Not-Sell” list and requires mortgage credit reporting agencies to monitor it. Anyone on those lists cannot be provided credit reports by anyone in the industry. Obviously, it’s rather difficult to conduct business as a mortgage originator if you are not allowed access to credit reports. If you are referring consumers to credit repair firms and are lucky enough not to get discovered by the credit bureaus, you better hope that your luck continues as that loan is no longer eligible for sale to many of the major wholesale lenders. Wells Fargo (Newsflash C13-057 10/15/2013), SunTrust (Wholesale Bulletin BRO 08346 11/28/2008), and certain other wholesale lenders have taken the position that once a consumer has been working with a credit repair company, that loan is no longer eligible for purchase. Remember, non-eligible loans delivered to most lenders are subject to buy-back provisions in the contract. Lenders are turned off by multiple



CREDIT REPAIR AND MORTGAGE LENDERS 




Effective Marketing While Maintaining Compliance

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All too often, we find ourselves trying to put together a marketing campaign and wind up at a road block called compliance. The mail pieces need to be compliant, the data needs to be compliant, your call script needs to be compliant, and the list just keeps going. If you don’t know the regulations you could find yourself in hot water and ignorance won’t hold up in court. In order to produce an effective marketing campaign, the target audience needs to be qualified. The best way to find these prospects is by using credit bureau data or pre-screened credit data. In order to obtain this data you must apply and be accepted by one of the three major credit bureaus and your marketing efforts must comply with their regulations. These regulations are set forth by the Federal Trade Commission (FTC) and monitored by both the FTC and the Consumer Financial Protection Bureau (CFPB). These agencies have recently become proactive in their efforts to find and stop predatory lending, mal-used credit data and marketing campaigns that are non-compliant. While having a qualified prospect is important, so is keeping your business operating and functional. Penalties for non-compliant marketing can be costly. The good news is that you have other very compliant options for marketing. The most common is Internet leads. These are people who go online and ask to be contacted by a mortgage professional about purchasing or refinancing a home. Another way to effectively acquire new business is the use of live transfer leads. The people have been verbally qualified and have expressed their interest in a purchase or refinance. The benefits of using this type of marketing when compared to traditional direct mail or telemarketing is that it alleviates most of your risk in terms of compliance. No credit data is used, all calls are made to people who have opted in to receiving a phone call and no interest rates or any loan specific information is given until they get on the phone with a licensed loan originator (YOU). This keeps you, your company, and your reputation in good standing. Compliance in getting more and more stringent so be sure to check with your compliance department BEFORE you begin your next marketing campaign … especially if you’re using credit data. If you don’t have a compliance department, check with your colleagues or your marketing firm. These aren’t legal counsel, but they know the rules and should be able to point you in the right direction to get your questions answered and keep you out of harm’s way. TagQuest customer spotlight Each month, we like to talk with our clients and find out how their campaigns are going. Here’s what we heard from one of our mortgage professionals in Illinois on the results of their live transfer lead campaign. • 100 live transfers • Live transfer type: Refinance • Received calls Jan. 1-17 • 35 applications • 12 closing now • 14 more to close over the next six weeks (pipeline) Highlights of the campaign that work well for you: “Being able to specify the call volume allows us to market ourselves aggressively and still have enough time to process the loans.” Highlights for growth that could appeal to other loan officers or offices: “Being able to start a campaign and get an immediate return allows us to better plan our growth.” —Chris S., Chicago, Mortgage banker 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. VIEW OUR MOST RECENT WEBINAR ON YOUTUBE Online readers please click on the link below, readers of the print edition, please copy the link and paste it into your browser. http://www.youtube.com/watch?v=coBEsmEVOgo

SPONSORED EDITORIAL

napmw report continued from page 45

answered questions from the members. We also featured updates and changes ahead in the industry related to underwriting, appraisals and mortgage insurance. 3. A Legal Corner, featuring Howell Haunson, a partner with Morris|Hardwick|Schneider, who delivered a humorous but informative update on the changes that were made to the Georgia Association of Realtors Purchase and Sale Agreement. l Marketing: Associations lacking growth should look carefully at their branding and reputation in their industry and marketplace. A wellcrafted message on the association’s mission and vision can be contagious in the community. There are multiple outlets that can be utilized: social media, flyers, postcards, emails, etc. However, the one that will spread the quickest is word of mouth. People like to pass along information that is exciting, interesting and valuable. It gives the person who is spreading the word that they are cutting-edge. The value in word of mouth marketing is the person spreading the information, not the message itself. This is why associations should tap into their member resources. Identify members who hold positions of influence, such as salespeople or client reps who have a large sphere of influence. These members will be crucial in spreading the word about upcoming events or

what a great time they had at an event to their peers and industry partners. l Membership growth: Enhancing recruitment efforts is not an easy undertaking. In order for associations to thrive and survive, it is crucial to seek talented professionals, especially younger ones, for recruitment. Having younger people join an association is essential for growth, brings new perspective and thought-provoking ideas. There are numerous professions affiliated with the mortgage industry which would be a valuable resource for potential members. There are many real estate agent associations and organizations that would be willing to host joint meetings and events. Think big and act small when searching for new avenues for potential members. By implementing these changes, the NAPMW Atlanta Association has doubled its membership within the year and is gaining new members weekly. The main point to remember is change is not always bad. Be positive, be a communicator and be passionate about the association. Nikki Gilbert-Bell is director of client relations for Morris|Hardwick|Schneider, and serves as a governor for the Mortgage Bankers Association of Georgia and as vice president for the NAPMW Atlanta Association. She may be reached by phone at (678) 357-2574 or e-mail ngilbert@closingsource.net.

gsf reform: thinking outside the box continued from page 57

the benefit of existing private homeowners and private lending institutions be considered speculative? At what point could FHA’s efforts go beyond recovery and begin facilitating an unstable expansion? Taking a cue from the Pecora Committee report, instability arises from making concentrated investments under the guise of diversification, which means FHA’s lending and insurance activities would have to be deemed concentrated to suggest being speculative. Given the limits placed on the size of the loans to be insured relative to the size of its fund, it is fair to say that FHA would not be allowed to be overexposed to any single borrower, but what about its exposure to a singular market (or corporate entities within that market)? Having a portfolio of loans or investments, entirely within any one particular market is not concentrated as a rule, but one needs to under-

stand what factors tie the risks of those individual loans together within that market. Such factors are otherwise known as the market’s systemic risks. If a lender is able to successfully isolate those systemic risk factors and either reduce, avoid or effectively transfer them to another entity, then their portfolio of loans could be considered diversified. In the FHA’s case, Congress recognized two primary risk factors to manage: The borrower’s ability to pay and the value of the home securing the loan. While Congress left it up to the FHA to determine how to reasonably assess the first risk, it made explicit the limitation on exposure to housing prices in the form of a cap on LTVs. As explicit was the recognition that housing value risk could not be diversified in the same way that borrower credit risk could be, for example, by continued on page 78


Social Media Analysis in Lending: The New Frontier for Growing Business and Satisfying Customers By Steven J. Ramirez

Outside of traditional customer feedback channels, such as call centers and surveys, social media analysis can provide a more detailed account of customer sentiment by studying large volumes of data being shared about lenders’ business, products and services. Regardless of if the customer has had a positive or negative experience with a given organization, people turn

In addition to serving as a valuable tool for uncovering problems, social media data can be of great use for lenders as a means for acquiring new customers and retaining existing ones. Lenders can leapfrog their competitors by consistently monitoring social media channels for unhappy customers and presenting viable alternative to resolve the customer’s current plight. To accomplish this objective, lenders have to active thought leaders. They should publish useful online content via social media to draw attention to their strengths and value proposition. From a customer retention standpoint, lenders can personally address any issues expressed via social media. Because consumers often turn to social media to air their frustrations about the companies they work with, lenders can solidify their relationship with a given customer by engaging them directly to provide a resolution to the problem. Social media offers lenders the prime (and free) opportunity to market their products and

Taking social media’s use as a customer acquisition tool a step further, tapping into the power of social media influencers can help lenders further beef up their online strategy and serve as an added advantage over the competition. But what classifies a user as an “influencer?” While there are a multitude of factors that make up influencers, such as high social media following, Klout scores and engagement with other users, the basic differentiator is their ability to drive action among their followers. For example, should a displeased customer with a high social media influence share their discontent, this negative sentiment could potentially spread much more quickly than that of an average social media user. Without the proper response, the negative experience of one could continue to rapidly spread across the Web and wreak havoc on a lender’s business. The key to preventing such a catastrophe lies in reaching out to these influential individuals first and as early as possible before their negative opinions spread in order to maintain

Steven J. Ramirez is CEO of Beyond the Arc Inc., a customer experience and advanced analytics firm helps financial services clients identify opportunities to differentiate themselves in the marketplace. He may be reached by e-mail at web@beyondthearc.net or call (877) 676-3743. 61

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Leveraging social media to uncover customer pain points

Social media for customer acquisition and retention

Boost your brand by engaging influencers

a positive brand perception. Additionally, it is important for lenders to proactively reach out and engage with influencers that share positive experiences and praise. Just as negative experiences can have a dramatic impact on an organization, positive feedback can significantly boost overall brand awareness, which will in turn strengthen existing customers’ confidence in expanding their relationship and motivate others to become potential new customers. Bottom line … when used correctly, social media can be one of the most valuable business tools readily available to lenders today. Outlets, such as Facebook, Twitter, and LinkedIn, can provide lenders with a constantly growing source of customer feedback as well as a free channel to proactively engage with them in real time. With the right strategy in place, social media can serve as a highly diverse tool for lenders to not only improve customer experiences, but also expand their business.

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While utilizing customer feedback to drive key business decisions isn’t entirely new to the mortgage industry, the type of information now available has drastically shifted in recent years. Gone are the days in which social media was merely thought of as an avenue for sharing photos and reconnecting with lost friends and classmates. Social media has transformed into a direct line into the mind of the customer, as consumers freely share their opinions on various products, services and brands with their friends, family and followers. Due to the uninhibited nature of today’s consumers, social media is a less biased data source in comparison to traditional surveys or focus groups. Social media serves as an opportunity to better connect lenders with their customers, and the expanding volume of available data makes social media a highly valuable resource. Utilized to its fullest, social media can help lenders to understand and improve customer experience. Ultimately, its benefit to the business is to win new customers and keep existing ones happy. Social media like LinkedIn can also be used to deepen relationships with real estate brokers, builders, and other key B2B partners that help you to drive originations. So what exactly can lenders learn from analyzing social data?

to social media to voice their opinions. By thoroughly analyzing customer commentary, lenders can more easily identify key pain points and begin taking action to improve the issue before it turns into a larger-scale problem. No matter the size of the company in question, consumers want to feel important to the organizations they work with and will respond positively to efforts made to improve any problems or inconveniences they experience. Proactively identifying and addressing key customer pain points reassures the customer that their lender is aware of their concerns and truly cares about their overall customer experience. In the end, consistently monitoring and addressing customer problems shared through social media can significantly reduce the risk of attrition and further spread of negative brand sentiment.

services to existing customers while also providing a convenient communication channel for any questions or concerns.


“Word of mouth is the cheapest form of advertising and I am the cheapest form of loan officer.”

My Marketing: Humor Me By Eric Weinstein I don’t have a big marketing department backing me up with tons of leads every month. I have been in the mortgage industry more than 20 years and rely mainly on word of mouth. Word of mouth is the cheapest form of advertising and I am the cheapest form of loan officer. Like mushrooms, I am a fun guy (fungi.) Life without whimsy is…, well, you

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might as well work for a bank. I found that if my marketing was not funny, people just didn’t bother reading it. Now my old customers tell me they look forward to my advertising. If they read it, they read my name and remember what I do for a living. That is whole purpose of drip advertising. If you are not doing this already, you are a moron. Here is a starter kit to

get you going. Of course, change them to your personality, if you are not a fat, balding Jewish guy like me.

gage program exclusively made to “get your kids out of the house.”

Three great rabbis were talking …

NEVER sell life insurance to possum. They are ALWAYS playing dead. NEVER lend money to a guy named Waldo. When it is time to collect, you are ALWAYS playing “Where’s Waldo?” NEVER do business with Lions and Cheetahs They are ALWAYS lying and cheaters. NEVER take a shower with a shark. They ALWAYS take your Head and Shoulders.

“Never” and “Always” Three great rabbis were discussing at what point life really begins. The first rabbi said, “At conception.” The second rabbi disagreed and said, “At birth.” But the third rabbi, probably the wisest sage of them all, said, “Life begins when your children grow up and move out of your house.” Introducing a NEW, EXCITING mort-


“To be successful, you have to set yourself apart. You can’t just do what everyone else does.” —Heidi Frigano, VP of Business Development, United Northern Mortgage Bankers

ALWAYS call Eric first when considering buying or refinancing. He will NEVER steer you wrong.

The best advice

We have Green Mortgages

Our processing is gluten-free All rates are organically grown with NO junk fee fertilizers added! Eleven out of 10 borrowers agree … Eric is the BEST loan officer! Our rates have LOW fat content. All fixed-rate mortgages are microwave and dishwasher safe. None of our FHA loans contain lead paint. Made in the USA! Seriously, this is just a reminder you have a friend in the mortgage industry to help you with all your financing needs!

Alive and kicking Never ask a zombie to give you a hand, especially when it comes to mortgages. The undead tend to make

Every New Years, my wife would make a turkey dinner for the family. As tradition, she would cut off both the front end and back end of the turkey. One year, my daughter asked her why she did this. She said, she didn’t know, but her mother always had done it that way. So we called her mother up, and asked her why. Her mother said, she didn’t know either, but HER mother had always done it that way, too. So we called my wife’s grandmother and asked her. Grandma said, when they were living in Poland, the oven was too small to fit the entire turkey in, so they had to cut off both ends to make it fit it in the oven. So … next time you are thinking about buying a house or are considering a refi, don’t just go to the bank where you have your checking account. Call me. Eric Weinstein worked in banking, on the commercial real estate side until 1991, when he fell in love with residential lending. In 1995, he started a small mortgage company in his basement called Carteret Mortgage Corporation,

either saving people money per month or helping them buy a new home. What a great job!” He may be reached by phone at (703) 505-8692 or e-mail eweinstein4u@gmail.com.

Customized Marketing Delivers Results By Robert Ottone When it comes to marketing, there’s a common theme that should be readily apparent to anyone looking to make a serious decision in their marketing plans. That theme is customization, focusing on providing customized marketing plans for clients, while also making use of concepts and established tricks of the trade that have worked over the years. That blend of traditional marketing concepts with new, exciting notions, is what will set you apart from other companies. “To be successful, you have to set yourself apart,” said Heidi Frigano, vice president of business development with United Northern Mortgage Bankers. “You can’t just do what everyone else does.” Frigano has more than 19 years of experience in the mortgage profession, which lends credence to knowing exactly what a loan officer is looking for, in terms of marketing. She highlights the concepts of user-friendly initiatives being of tremendous import to her clients, as well as streamlining the day-to-day process of working in the mortgage industry. Everything should be geared toward building a better business. To deliver results, one needs to focus on five key aspects of marketing for their clients.

1. Local branding In order to provide a solid marketing plan, you will look to market your clients to that particular region, all across the nation. By not wasting resources through marketing to regions unaffected by their client, you can deliver a more exact marketing product.

2. Social media These days, an individual lives and dies by

their social media presence. The big two, Facebook and Twitter, are drops in the bucket when compared to the entirety of the social media landscape.

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3. Development You must put a premium on developing real estate agents and their business. Word of mouth and referral marketing are still strong and are great ways to spread the word.

4. Direct response Meant to generate an immediate response, United Northern focuses on generating leads in an immediate and direct fashion.

5. Events and seminars By generating personalized material for events and seminars, a client never goes out into a situation unarmed. Having upto-date marketing materials for a seminar is a key to success that often goes overlooked. The keys lie in supporting customization. Taking a look at that list of five criteria, it’s easy to see the levels of customization available to a client. Frigano also puts an emphasis on creating a friendly environment when it comes to developing a marketing plan for a client. A key to developing a successful marketing strategy includes promoting healthy, fresh thinking. “It’s important to know that you’re part of something bigger,” Frigano said. Robert Ottone is executive editor with National Mortgage Professional Magazine. He may be reached by phone at (516) 4095555, ext. 314 or by e-mail at robertpo@nmpmediacorp.com.

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With environmental safety on everyone’s mind, I just wanted to remind you that our mortgages are ecofriendly. No dolphins were harmed in the making of our loans. All paper used in our mortgages are from old and sick trees which would have died anyway.

Tradition

which in 2003, grew to one of the largest mortgage broker companies in the United States. These days, Eric is semi-retired, doing mortgages by referral only. As he likes to put it, “He is

NationalMortgageProfessional.com

The best advice I ever got from my father was, “Buy real estate when both prices and interest rates are low.” The WORST advice I ever got from my father was: “Pull my finger.” Seriously, we are at the perfect storm right now with mortgage rates low and real estate prices near rock bottom. If you are a real estate investor looking to buy a rental, a potential new homebuyer or have just not got around to refinancing yet (unbelievable!), now is the time. Buying a house or refinancing can be a significant financial transaction. I have been doing this for 20 years, have a proven success record and am someone you can trust to advise you with the right decisions.

notoriously bad mortgage loan officers. They are slow, don’t really give good advice and when they hold your hand during the loan process, they tend to nibble on your fingers (literally biting the hand that feeds them). I, on the other hand, have been alive my whole life. I have been in the mortgage industry over 20 years, have handled thousands of real estate transactions. Now that the holidays are over, if you are interested in buying a new home (or know someone who is), I can help discuss financing options, explain closing costs, go over monthly payments and search the variety of programs available. If you are looking for someone LIVELY, and DEADicated to helping you, I am here. I am nicer, smarter and more hygienic then any Walking Dead loan officer you will find at your local bank. Give me a call. I am here to help.


“PPC has an advantage over pay per impression, in that it tells us something about how effective the advertisement was.”

Pay Per Click: Defined

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include room for an image. It might be helpful for you to run some A/B testing with two separate ads, to see what receives a higher click through rate. You can then move forBy Ryan Kelly ward with the ad that appears to be receiving more attention, which is the end goal. If no overspending on these campaigns or losing one clicks on your ad, then you are wasting What is it? PPC stands for “Pay Per Click,” an Internet track of your budget. time and need to reevaluate your approach. PPC has an advantage over pay per advertising model used to direct traffic to your Web site, where an advertiser pays the impression, in that it tells us something Successful click-through publisher when the ad is clicked. PPC can be about how effective the advertisement was. rates an effective way to supplement your Clicks are a way to measure the attention Now what is a click-through rate (CTR)? CTR inbound marketing efforts, and are current- that your ad is receiving as well as any inter- is a way of measuring the success of an ly quite popular. Examples of PPC include est. To utilize PPC correctly, increase your online advertisement and is typically interGoogle Ad words and Facebook advertising. conversions and click-through rate with the preted in percentages. The click-through You can set your PPC budget by day, week or right ad copy. Some PPC ads only allow for rate is the number of times a click is made month so you never need to worry about copy, while others, like Facebook ads, on the advertisement divided by the total impressions. Impressions are defined as the number of times the advertisement was served or presented. For example, if an online ad is served 200 times (200 impressions) and receives two clicks, then the clickthrough rate for the advertisement would be two percent. You might wonder what a good CTR is these days. As Internet surfers become more numb to an ad’s location, CTRs for ads have started to fall. Banner ads are shown across the top of Web sites, or down by the footer, or on the right hand side and since these locations haven’t changed, surfers now spend less and less time focused on these areas as they navigate from one site to another. Their eyes only focus on the content areas. CTRs are currently averaging closer to 0.2 or 0.3 percent. 

Grabbing their attention I would suggest using an animated GIF format for your online ads. Adobe Photoshop will allow you to create an animated GIF with multiple frames. We are starting to see more and more of this because it grabs the surfer’s attention. The ad is no longer a still frame, as it changes and can repeat indefinitely. You might also want to consider using colors that pulls their eyes away from the content towards your ad. Animated GIFs might only be suitable for certain PPC advertising platforms and might see them being used in banner ads on Web sites. In the end, it all goes back to trial and error. You need to find out over time what works best for your target audience. Before you go live with PPC advertising, you need to decide where you are going to

direct the traffic. Where will it take them once they’ve clicked on the ad? Most ads will direct you to their site. I don’t always think that this is the best decision. If someone clicks through to your Web site, but quickly becomes disinterested, then you’ve lost them and they will venture off elsewhere. It’s important to direct the ad to a landing page that makes sense. I am a big fan of driving traffic back to our social media sites through our PPC ads. I think this is the way to go because it is less pushy. They may not be ready to reach out to you today or make that buying decision right now, but if your ad directs them to your Facebook page, for example, there is less pressure. They may look to see what type of content your posting, whether your company has received positive reviews and hopefully, if all goes according to plan, they will “Like” your page. This is the goal. We post on a daily basis on all of our social media sites, so if they decide to “Like” us on Facebook, “Follow” us on Twitter or anywhere else that gives us an opportunity to show up in their News Feed every day, then we have successfully remained in front of the customer. This is much more valuable than just dropping them on the homepage of your Web site.

Tracking your results The number one reason that most businesses fail at PPC advertising is they don’t log in enough. You have to commit to regularly logging in to review your account and its performance, as it won’t manage itself. This is also a great opportunity for you to learn about what’s working and to pull some analytics or data from the campaign. As a beginner that is interested in getting started with PPC, I would suggest starting with Facebook. Over one billion people use Facebook to connect. Ads on Facebook can be strategically targeted based on a user’s age, location, relationship status and more. However, be mindful of being strategic with the ad copy as with all PPC advertising, there is typically a character limit. Make sure that you include a call-to-action giving them a reason to click on your ad. PPC can be an integral part of your online marketing strategy when done correctly. Ryan Kelly is marketing manager with Norcom Mortgage & Insurance. He may be reached by phone at (860) 899-2734 or e-mail ryan@norcom-usa.com.


â&#x20AC;&#x153;Taking the time and initiative to carefully consider marketing orchestration and the value it will add to the long-term success of mortgage operations will be a major competitive advantageâ&#x20AC;&#x201C;and perhaps an instrumental conduit to the overall success of loan officer careers.â&#x20AC;?

Strike Up the Band

the10 questionsâ&#x20AC;&#x201C;and the reasons why they are important to successfully approach marketing orchestration.

By Mary Beth Doyle

Database tools and interfaces

Loan officers rely on varying outlets to Although multiple third parties might be manage contacts and related information. used to outsource marketing and the Simplifying the data storage and access varying service components of CRM, environment will enhance the opportuniprint, direct mail, e-mail and gifts/pro- ty for enterprise-wide, cross-channel marmotional material fulfillment, multiple keting success (while also diminishing the 1. How many marketing platforms or vendor relationships can increase the risk risk of data duplication, inaccuracies and services are being used across the of fragmentation and inconsistent mes- overall security in line with 2014 Federal organization? saging, branding, and campaign execu- Reserve requirements). 2. How many database solutions are tion. Identify opportunities to retire legacontinued on page 66 loan officers interfacing with to man- cy systems and to utilize a centralized age contacts and related information? 3. How does the enterprise synch-up and manage data from disparate sysDAYS tems for the benefit of cross-channel marketing and business development FASTEST efforts? CREDIT 4. How many points of data capture REPAIR exist in the customer lifecycle for realtime, decision-based analysis and actionable communications? 5. What level of variation is incorporated into multi-tiered marketing campaigns to satisfy privacy conditions? 6. What unique attributes are steadily employed in marketing materials that consistently deliver compliant and branded communications for highquality impact and distribution? 7. How can the organization reduce regulatory risk while continuously identifying and managing remediation issues? 8. How can high-impact, rules-based RRemoving emoving Negative Negative marketing be implemented so that it IItems tems Such As As #BOLSVQUDJFT tt#BOLSVQUDJFT is consistently delivered at the right -JFOT tt-JFOT time, to the right people, with appro+VEHNFOUT tt+VEHNFOUT priate lifecycle content? 'PSFDMPTVSFT tt'PSFDMPTVSFT $PMMFDUJPOT tt$PMMFDUJPOT 9. How can third-party relationships be 3FQPTTFTTJPOT Helping Y Your o our Clien Clients ts R Realize ealize TThe he P Possibilities ossibilities tt3FQPTTFTTJPOT improved to reduce the risk of data -BUF1BZNFOUT tt-BUF1BZNFOUT " TB-PBO0óDFS XFBU1SJNF/BUJPOBMVOEFSTUBOEKVTUIPXJNQPSUBOU "TB-PBO0óDFS XFBU1SJNF/BUJPOBMVOEFSTUBOEKVTUIPXJNQPSUBOU $IBSHF0òT tt$IBSHF0òT breach and inappropriate access? it is ffor or o ZZPVUPIFMQZPVSDMJFOUTSFBMJ[FUIBUIPNFPXOFSTIJQ PVUPIFMQZPVSDMJFOUTSFBMJ[FUIBUIPNFPXOFSTIJQ is N PSF NPSF R easons Clients Clients CChoose Reasons hoose 10.How can loan officers gain 24/7UUIBOBESFBN JUDBOCFBSFBMJUZ"OE GPSTPNFJUTUBSUTXJUIPOF IBOBESFBN JUDBOCFBSFBMJUZ"OE GPSTPNFJUTUBSUTXJUIPOF TTJNQMF JNQMF PPrime rime Na National tional secure access to their books of busi)JHIFTU3FNPWBM3BUJOHT tt)JHIFTU3FNPWBM3BUJOHT SFEJU TTUFQUPXBSESFQBJSJOHUIFJSDSFEJU8FQSPWJEFJOEVTUSZMFBEJOH UFQUPXBSESFQBJSJOHUIFJSDSFEJU8FQSPWJEFJOEVTUSZMFBEJOH DDSFEJU 'BTUFTU$SFEJU3FQBJS%BZT tt'BTUFTU$SFEJU3FQBJS%BZT ness coupled with a cross-channel SSFQBJSTFSWJDFTUIBUDBORVJDLMZJNQSPWFBDMJFOU FQBJSTFSWJDFTUIBUDBORVJDLMZJNQSPWFBDMJFOUTDSFEJUBOESFTUPSF DSFEJUBOESFTUPSF their .POFZ#BDL(VBSBOUFF tt.POFZ#BDL(VBSBOUFF marketing interface that executes and SSBUJOHT1SJNF/BUJPOBMJTDPNNJUUFEUPIFMQJOHQFPQMFSFCVJME BUJOHT1SJNF/BUJPOBMJTDPNNJUUFEUPIFMQJOHQFPQMFSFCVJME BBOE OE 3FHJTUFSFE#POEFE tt3FHJTUFSFE#POEFE " 3BUJOHXJUIUIF### tt" 3BUJOHXJUIUIF### SSFFTUBCMJTIUIFJSDSFEJU XIJMFIFMQJOHUIFNSFBMJ[FUIFQPTTJCJMJUJFT FFTUBCMJTIUIFJSDSFEJU XIJMFIFMQJOHUIFNSFBMJ[FUIFQPTTJCJMJUJFT manages campaigns? services, programs, and products that individual loan officers, teams, and branches use). At a high level, these are the questions to be considered:

30

This checklist of questions is imperative to start fine tuning business development initiatives as the industry shifts from refinances to purchases (and to favorably impact production). Here is a guideline on

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Financial F inancial DREAMS DREA MS

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When it comes to mortgage marketing, many initiatives come to mind. Helping loan officers manage databases; sending out thank you cards and gifts for recently closed loans; creating sales flyers and promotional materials for relationship support/education; generating scripts and conditions for telephone campaigns; and e-mailing customers, partners and prospects with time-sensitive information in an effort to capture more business. All that said, and we still have not touched on the ever-growing opportunities and outlets for social media (as well as the guidelines and preparation required to help broadcast compliant messages in this high-risk environment). Yet what about the enterprise? How does it keep up with all of its team members whom, in many instances, march to their own beat and rely on self-serving marketing tactics to generate new business? More and more, top-producing retail mortgage lenders are embracing marketing orchestration: The methodology of establishing enterprise-wide standards and cross-channel marketing campaigns that, in combination, yield a comprehensive impact on customer loyalty and production. As the mortgage industry steadily contracts and consolidates in an ever-challenging, interest-rate rising economy, you can count on the major banks and mortgage companies to fine tune the art of synchronization. Taking the time and initiative to carefully consider marketing orchestration and the value it will add to the long-term success of mortgage operations will be a major competitive advantageâ&#x20AC;&#x201C;and perhaps an instrumental conduit to the overall success of loan officer careers. But how is marketing orchestration measured? Start by assessing existing modes of marketing across the organization in an effort to identify areas for improvement. In order to unveil marketing fragmentation and gaps, an up-todate hierarchy must be drawn out and analyzed (with details of current systems,

Marketing platforms and services

mortgage-marketing platform for the benefit of the enterprise at large.


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Enterprise synchronization Hosting and managing data and data feeds in support of cross-channel and real-time marketing requires data consolidation across multiple systems. Be certain to define processes that allow the organization to synch-up disparate points (and architectures) of data for the effective and comprehensive distribution of time-sensitive communications and campaigns.

Customer lifecycle analysis

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In order to map out effective marketing methodologies and campaigns, it is imperative to determine actionable stages throughout varying customer

incorporate telephone, e-mail and direct mail components. When customers optout from any one of these marketing vehicles, an effective campaign will recognize privacy flags in the database–and default to an approved method of delivery. This is imperative to avoid the strict penalties and fines associated with privacy violations.

lifecycles. Communicating from the lead stage all the way through to establishing new clients (and keeping them loyal for years) are examples of actionable stages in the customer lifecycle. Being certain that consistency, quality, and automation are core components Compliance and branding of the campaign are essential to enter- At the top of the list of importance, ensure that enterprise-wide marketing prise-wide marketing success. campaigns satisfy ever-rigorous and ever-changing compliance and branding Privacy standards criteria. Utilize technology, systems, and and conditions How many times do loan officers dis- service providers that can manage the cuss preferred methods of marketing? necessary compliance and customization True marketing orchestration requires attributes for differentiation and impact. multi-tiered campaigns to serve the numerous conditions of privacy stan- Risk management and dards and conditions. Therefore, it is remediation important to generate campaigns that Since the majority of data-hacking and breach incidents occur through thirdparty relationships, it is important to assess the infrastructure and experience of marketing vendors. SAS-70 is no longer an acceptable attestation standard for third-party controls. Aligning your organization with a marketing firm that is complying with SSAE-16 controls (and that proves capable of satisfying risk policies and guidelines for toptier banks) is a great place to start. Marketing orchestration can only be effective when stringent regulatory guidelines are met.

Rules-based communications Rules-based marketing is a core component of most mortgage environments– but typically it occurs on a manual basis. To empower marketing orchestration, apply rule-based conditions to empower consistency and automation of critical communications and processes. Start by defining campaign goals, map the goals in order of importance, and assign rules to manage the ‘if-thenelse’ hierarchy of actionable marketing. Automating repetitive tasks and quality processes throughout the enterprise can substantially improve time management and production.

Third-party assessment Even though the advantages of outsourcing marketing to expert third-party firms often improves quality marketing standards, it helps to diminish risk by partnering with providers that are capable of

streamlining processes and fulfillment. World-class service providers have established in-house printing and fulfillment centers. Be certain to build in “right-toaudit” clauses in master agreements and contracts in order to steadily audit controls through annual reviews and due diligence processes.

24/7 secure access Soaring above the clouds with enterprise-wide marketing orchestration requires loan officers and management to have permission-based access to a centralized platform on a 24/7 basis. Web-based applications are becoming the standard marketing solutions for banks and mortgage companies. They enable loan officers, managers and executives to log-in via the Internet or Intranet to gain access to contacts and databases as well as multi-dimensional facets of marketing campaigns. Expertise and guidance with regulatory guidelines, due diligence processes, and penetration tests & audits are just a few examples of minimum third-party requirements to service banks and mortgage companies. Like any important strategy and dashboard, it is imperative to understand existing performance attributes and conditions while setting out to make improvements. Mortgage marketing orchestration (when implemented effectively) advances organizations by attracting customers for life. Strike up the band and place the Marketing Maestro’s baton in the hands of a management committee tasked with improving overall organizational value for customers and employees alike. And don’t forget to consider the frequency that a guest conductor might appear: The Federal Reserve has brought an exceptional level of regulatory requirements that must be consistently enforced. When auditors get a hold of the baton, you want to be certain that all performers are synchronized and empowered with quality marketing standards that will pass inspections with flying colors. Mary Beth Doyle is the founder of LoyaltyExpress, leading all aspects of creative and sales initiatives. Nationally, Mary Beth has been recognized by Executive Women International as a top achiever in business. She may be reached by phone at (781) 897-2128 or e-mail marybeth@loyaltyexpress.com.


“…successful marketers of the future will begin to align all marketing efforts with a prospect narrative.”

Five Questions That All Marketers Need to Ask Themselves By Marc Wayshak

Most organizations create their marketing materials without considering what a prospect will be doing when he or she receives a marketing message. Prospects are busier than they have ever been in history. In fact, they are spending over a quarter of their day just responding to e-mails. In order for

2. What is keeping them up at night? Usually, a company centers the majority of its marketing efforts around the company itself or the features and benefits of a specific product. However, prospects don’t care about us, our company or our offerings. All they care about are the issues they are dealing with right then and there. What are the challenges that your ideal prospect takes home with them each night? If you want your marketing to elicit a particular behavior, then spend some time matching your message to the challenges your prospect cares most about.

Rarely do companies develop marketing campaigns that create long-term engagement. However, those that do receive dividends over and over again, all from that initial investment. Therefore, the question great marketers want to answer is, given the prospect’s narrative, what are realistic ways to engage them in the long run? This will be the difference between developing a one-time customer and a long-term fan.

Marc Wayshak is the author of two books on sales and leadership, Game Plan Selling and Breaking All Barriers, as well as a regular contributor for Entrepreneur Magazine and the Huffington Post Business section. He may be reached by phone at (617) 203-2171, e-mail info@marcwayshak.com or visit www. marcwayshak.com. 67

We ar Califor e Premie nia’s r Private Direct M and Br oney idg Lender e

3. What will catch the prospect’s attention? Most organizations are so focused on broadcasting how great they are that they don’t think about what will most effectively catch the attention of the intended prospect. Most commercials, for example, are generic and unmemorable, so in order for yours to stand out, you need to develop a message that is so appealing or jarring to your prospect that he has no choice but to react to it.

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4. What action will they most likely take? So many marketing campaigns are focused solely on increasing awareness of an organization, rather than encouraging a prospect to take some action. This is tantamount to burning cash in a barrel. Think about what action your prospect would most realistically take after absorbing your message. Would he most likely go to a Web site, send a text, pick up the phone, send something through the mail or find you on Twitter? Once you know which medium

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1. What is your prospect doing during his day?

your campaign to break through the clutter, you must consider how your ideal prospect is spending his time.

5. How will you keep them engaged?

By formulating answers to these five questions, you begin to create a story of what your prospect is doing and what he is thinking about. After the prospect narrative is created, your marketing team should channel Dorsey by fitting campaigns precisely into that narrative.

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As a teenager, Jack Dorsey developed dispatch routing software for taxi cabs. During this time, he was intrigued by the way taxis could briefly update others on their whereabouts. Soon, he began to contemplate developing an online program that would allow everyday people to send short messages to others in their online community. Just a few years later, he and co-founders Biz Stone and Noah Glass started Twitter. Twitter has become an integral part of our lives, and the mindset that led to its creation is just as critical to those looking to market their organizations. Dorsey speaks passionately these days about creating a “user narrative” when developing a product that tells a story of the user’s day-to-day life. This allows his companies, like Twitter and Square Reader, to create products that are built with the sole intention of filling a particular need. This same mindset can also be applied to marketing. All too often, businesses market themselves without the prospect in mind. But successful marketers of the future will begin to align all marketing efforts with a prospect narrative. Creating a prospect narrative is an easy and powerful way to put yourself into your prospect's shoes—and ultimately increase the effectiveness of your marketing. Here are five questions to consider when developing a prospect narrative for your company's next marketing campaign:

a prospect is most likely to use, then you can develop a call-to-action that aligns with it.


“… more and more mortgage lenders are returning to direct mail and taking advantage of its tangible, measurable and effective qualities.”

Mortgage Lenders and Direct Mail: A Successful and Rewarding Partnership By Michelle B. Peel

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Direct mail is one of most viable marketing channels available, according to the Direct Marketing Association (DMA). Direct mail continues to outperform electronic channels in acquiring new customers. In fact, statistics from the DMA comparing the performance of direct mail and electronic channels show consumers readily accept direct mail as a

vehicle companies use to market their products and services. But most importantly, direct mail is measurable, and the return on investment (ROI) is strong. Direct mail proves to be a successful and rewarding marketing tool for the mortgage industry. In fact, more and more mortgage lenders are returning to direct mail and taking advantage of

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its tangible, measurable and effective qualities.

Direct mail and the mortgage industry According to market research firm Mintel Comperemedia, mortgage providers mailed nearly 1.8 billion pieces of mail in 2012. When comparing 2013 to 2012, there was a 40.5 percent increase in mortgage mail volume year-over-year. For 2013, mortgage-related direct mail offers totaled nearly 2.5 billion pieces of mail. The top mortgage acquisition mailers were Bank of America, Chase, Discover, Embrace Home Loans, and Quicken Loans. Mintel Comperemedia identifies the following direct mail acquisition package trends from the mortgage industry: l Sophisticated database and digital printing technology is allowing lenders to provide more relevant and timely mortgage offers. l Mortgage lenders are using calls to action that drive response to call centers or Web sites. l Marketers are using the Intelligent Mail barcode (IMb) to manage inhome dates and prepare call centers for increased call volumes in response to their offers. l Messaging is focused on building brand recognition and loyalty with themes that include urgency, offer flexibility and cost savings. Lenders must take advantage of today’s sophisticated database and digital printing technology, which allows for more relevant and timely offers and integration with digital channels. Recommendations to make your mortgage direct mail efforts more effective If you’re looking for effective direct mail techniques to drive open and response rates, consider implementing these proven best practices to elevate the performance of your next mortgage direct mail campaign.

Open rates Smart and creative design of your direct mail piece demands attention in the

mailbox and increases open rates. l Avoid the typical envelope size: Select an alternative, non-traditional size envelope and avoid the typical #10 or 6x9 mailer. When your direct mail piece is different, it will easily get the attention of the recipient. l Keep it simple: A simply-designed outer envelope does not allow the recipient to make a decision about the mail piece without at least opening it first. A white envelope with a return address is more intriguing and “official” than a colorful envelope. Add a simple headline on the envelope that is personal and specific such as, “Information You Requested Regarding Your Mortgage Is Enclosed!” l Create a distinct feel: When the recipient notices that the direct mail piece has something inside, they are intrigued to open it. A heavy stock insert, plastic card or magnet create interest as your recipient determines which mail pieces to review and which to discard. More about the ROI of plastic cards a bit later …

Response rates Now that your mortgage direct mail piece was opened by the recipient, the offer and call to action really need to grab their attention to drive response and turn that recipient into an applicant and finally into a customer. Since the offer is one of the most important things to consider when designing a direct mail campaign, consider these techniques to enhance your offer and call to action.

Highlight the offer Let’s face it, readers are busy, multitaskers who tend to scan rather than read. Incorporate bullets to highlight the key benefits of your offer–they’re great for capturing your recipients’ attention.

Personalize the offer Mortgage lenders are delivering more personal, relevant offers that are tailored to the interests of each recipient through the use of the latest personalization technology. For example, highlight the recipient’s specific qualifying APR or the anticipated mortgage amount for which they qualify.


Optimize the call to action The call to action should be clear, simple and easy-to-use. l WWWdot: Integrate cross-channel marketing by directing an applicant to the mortgage lender’s call center or Web site. Better yet, set up a personalized URL (PURL) or specific landing page with content tailored to each applicant’s needs. l Here’s my card: Affix a “preapproved” card with the mortgage lender’s call center or Web site as a call to action. Card packages are proven to lift response. l Check this out: Enclose a “preapproved” check in the dollar amount of the potential mortgage loan offer with the mortgage lender’s call center or Web site as a call to action.

Color is cool Color has proven to increase response

rates. Direct-mail recipients are 55 per- Target an in-home date cent more likely to pick up a color piece Sophisticated marketers have moved of mail first, according to Xerox. Other from thinking about when to drop mail cool color stats include: to when mail should be received; the conversation has shifted from drop date l Color documents are as much as 80 to in-home date. Data available percent more likely to be read. through the Intelligent Mail barcode l Increases reader attention and recall (IMb) enables marketers (who use the by as much as 82 percent. appropriate services) to know precisely l Boosts reader motivation to respond when mail is delivered so they can staff by 80 percent. call centers or integrate other channels l Improves brand recognition by as like email, text or outbound telemarmuch as 80 percent. keting as an additional touch point for their offer.

er to the weekend puts your mail on top of the pile.

P.S. read me

Michelle B. Peel, marketing services specialist at IWCO Direct, has nearly 20 years of direct marketing industry experience. IWCO Direct is one of the largest direct mail printers in North America and works with many leading brands in the mortgage industry. Michelle may be reached by e-mail at michelle.peel@iwco.com or call (610) 562-1065.

In the Handbook of Direct Mail, Siegfried Vogele suggests that 90 percent of recipients read the P.S. first, and sometimes that’s all they’ll read. Think of it as a summary–reinforce your call to action and tell your readers why they should follow through. A thoughtful P.S. always lifts response rates. Always.

Plans for the weekend? With all that said, some marketers have found the end of the week to be most effective for delivery. This is based on the tested and proven theory that many people spend time on the weekend going through mail that was put aside to look at again. Targeting an in-home date clos-

Mortgage lenders are successfully using direct mail to grow their business through partnership with experienced and knowledgeable direct marketing specialists, creative designs that demand attention, and offers that drive a strong call-to-action. Combining these best practices into your next direct mail campaign is destined to increase open and response rates of your mortgage offers.

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new to market continued from page 12

Castle/AmNet Announce Correspondent Program Now Available in 24 States Castle Mortgage Corporation and American Mortgage Network have announced that its Correspondent Purchase Program is operational in 24 states. The company is adding this delegated underwriting Correspondent Program as part of its strategy to complement its non-delegated program (mini-correspondent) and wholesale broker channel. A subsidiary of Bexil American Mortgage, Castle Mortgage and AmNet originate and service loans for Ginnie Mae, Freddie Mac and Fannie Mae. It currently services over $450 million in mortgages for borrowers in 24 states. “As we open our Correspondent Purchase Program to the market, we bring that same passion of pricing and service to a broader customer base,” said Alex B. Rozek, executive chairman of Bexil American Mortgage. “Our deep experience gives us the ability to offer direct trade, enabling a traditional best efforts correspondent to enter the mandatory market with less than typical risk.”

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Black Knight Announces New Document Delivery Service

The RealEC Technologies division of Black Knight Financial Services (formerly LPS) has announced the launch of its Document Delivery Service, a solution that delivers appraisals and other valuation documents to borrowers. The solution allows lenders to securely and reliably deliver the documents in both electronic and paper formats, helping lenders comply with the Consumer Financial Protection Bureau's (CFPB) recent amendment to Regulation B, which implements the provisions of the Equal Credit Opportunity Act (ECOA). The amendment, effective Jan. 18, 2014, requires lenders to deliver copies of appraisals and valuation documents to first-lien mortgage loan applicants prior to closing. RealEC's Document Delivery Service offers an automated, configurable solution for lenders to order, track and deliver all types of appraisals and valuation products, including AVMs. The solution is delivered through RealEC's Loan Quality Gateway, an open technology network that enables lenders to electronically connect with service providers through a standards-based data exchange. Based on consumer preference and regulatory guidelines, lenders can provide paper documents to applicants or electronically deliver the documents via a secure portal. The solution, which

assists lenders' efforts to conform to federal requirements for electronic signature security, also provides a complete audit trail, offering lenders an efficient, traceable way to document compliance with regulations. "Lenders are looking for effective solutions to support their growing compliance efforts," said Dan Sogorka, president of Black Knight's RealEC Technologies division. "Document Delivery Service offers a configurable tool to manage the ordering and tracking of all required appraisal and valuation documentation, and delivers the information to borrowers within the required timeframe. Several clients are already using this efficient and innovative solution."

Axacore Lowers Barrier of Entry on Pricing Plans

Axacore has unveiled new hybrid pricing plans for direct customers. These plans lower the barrier of entry and allow lenders to go paperless while maintaining control. “Lenders are not willing to part with their cash, but still want control,” said Steve DeBlasio, Axacore's VP of business development. “With our new pricing plans, lenders still get full control of the solution and LOS integration, yet they pay as they go, instead of licensing the software upfront.” The new hybrid approach still allows lenders to maintain flexibility and full control of their platform, data and documents as well as take advantage of Axacore’s signature LOS integration capabilities. LOS Integration allows for security and compliance controls not possible with disparate systems. Lenders using an LOS that is not an Axacore partner can easily integrate with their LOS. Built-in database adapters and API’s make this a very simple process without time consuming and costly development. This new offering also allows lenders who have an Axacore platform that is no longer under support to cost effectively bring their platform up to date without starting from scratch. “Lenders can now deploy an EDM solution that is integrated to their LOS, maintain full control of their data and take advantage of 'SaaS like' pricing. It’s the best of both worlds,” said DeBlasio.

Quandis Announces New Tool for Web-Based Forms

Quandis Inc. has announced that it has developed Custom Form Builder, a tool that empowers users with the ability to easily and quickly make changes to complex workflow-driven Web forms.

The solution exponentially reduces development timeframes and costs for organizations. Using Custom Form Builder, companies are able to implement form changes within their workflows virtually on demand. Quandis' solution empowers business people who do not have any programming experience with an easy-to-use tool that allows them initiate software change management themselves, without the involvement of IT. “The genesis of our decision to make available this type of tool was to reduce development and implementation turn times for us and our clients,” said Eric Patrick, CTO of Quandis. “Using our Custom Form Builder solution, clients can apply business rules to quickly create Webbased forms, easily make changes, designate workflow tasks, and implement them into a live production environment without having to contact us.” There are many different types of Web-based forms and workflows that companies use. Often, forms are buried within existing workflows, making them difficult to edit. Examples of what Quandis’ Custom Form Builder can be utilized for include short sale forms, forms for collections agencies to gather and verify financial information, foreclosure processing forms, bankruptcy forms, and valuations forms, to name a few. Organizations have their own internal processes in place that they use to guide staff through workflows as well as adhere to rules mandated by various outside agencies. Quandis’ Custom Form Builder can apply unique business logic that creates hard stops and alerts in organizationspecific workflows if tasks are not properly completed or required information is missing.

Mortech Announces Additional QM Functionality for Marksman Compliance Tool

Mortech announced the release of new functionality to the suite of Consumer Financial Protection Bureau compliance tools built into Mortech’s Marksman product and pricing engine. Mortech first released a full set of compliance tools in November to allow loan originators to manage compliance upon intake, prior to the loan application entering the loan origination system. This new functionality enhances those offerings while also offering a detailed compliance worksheet for loan officers. "We released our suite far ahead of the compliance deadline to prepare our customers for the new regulations and to allow our users to test the suite and offer feedback,” said Tom Erickson, mortgage industry and compliance specialist for Mortech. “Our

compliance tools have been very well received, and our new enhancements make Marksman the easiest and most effective compliance solution lenders have at their disposal to identify compliance issues early in the loan process.” Among the new enhancements is a full compliance worksheet that provides a complete overview of the loan scenario, both at the application stage and when the loan is locked, that illustrates exactly what tests have been performed and the results. The report makes it impossible for the lender to accidentally approve a deal that is non-compliant and fully explains the calculations performed, any problems that were discovered and by how much the loan is out of compliance. In addition to QM tests, Marksman also provides checks for higher-priced mortgage loans, Home Ownership and Equity Protection Act rules, investor eligibility through an exclusive partnership with AllRegs, and a workflow for anti-steering, where the loan officer can view and print an anti-steering disclosure form. All compliance tests are customizable, allowing loan managers to disable certain tests or make them mandatory. In addition, built-in auditing tools allow lenders to provide support in the case of a compliance audit.

Title Source Launches Real-Time Signing Agent Mobile App

Title Source, a provider of title insurance, property valuations and settlement services, has announced the launch of its mobile app, My Signings, providing a streamlined process for Title Source and thousands of its signing agent partners nationwide. My Signings was built to be the primary avenue for Title Source to communicate with signing agents. The app includes real-time communication, an in-app closing calendar and integrated GPS directions all accessible at the agents’ fingertips. My Signings will help Title Source clients, which include six of the top 10 largest residential mortgage lenders, to gain added efficiencies and transparency in the mortgage closing process. “This app is a complete game changer for our clients and signing agent partners,” said Jeff Eisenshtadt, Title Source president. “Technology is growing more mobile and so should the solutions we create for our clients. We’re passionate about process and focused on improving overall client satisfaction through the entire mortgage process.” My Signings is available in both the Apple App and Google Play stores, was developed in partnership with Detroit Labs, a leader in the development of Android, iPhone, and iPad applications. “We’re pleased to partner with Title


Source to develop this app to help improve the home buying process for consumers. We always appreciate the chance to create apps that improve the way companies do business and ultimately help consumers,â&#x20AC;? said Paul Glomski, chief executive officer of Detroit Labs.

Dataquick Announces Enhancements to Its AVM Product

Pro Teck Valuation Services announced its Appraisal Risk Review (ARR) product for mortgages being purchased into conduits or packaged into securitizations. Pro Teck's ARR measures the accuracy, compliance

ReverseVision Inc. has announced the addition of appraisal services from Landmark Network to the ReverseVision Reverse Loan Origination System (RLOS) platform. ReverseVisionâ&#x20AC;&#x2122;s RLOS offers a library of tightly integrated services that streamline the reverse lending process. The addition of Landmark Networkâ&#x20AC;&#x2122;s appraisal service enables ReverseVision users to simply order an appraisal with the click of a button. Not only does the integration place the order, but also it automatically updates the loan record with details from Landmark as the appraisal is being processed. Tight appraisal integration in the RLOS plays an important role in supporting compliant reverse lending processes. Cited in the January issue of The Reverse Review, the shrinking pool of qualified appraisers can create obstacles for reverse mortgage loan originations: â&#x20AC;&#x153;â&#x20AC;Ś in Montana, for example. There, six-week turnaround times and $800 fees are the standard, simply because there are more transactions than certified appraisers and the closest appraiser might be 100 miles away.â&#x20AC;? Reverse lenders that originate through the ReverseVision RLOS platform can avoid the impact of appraiser scarcity, high costs and delayed continued on page 78

Correspondent Lenders and â&#x20AC;&#x153;Broker to Bankerâ&#x20AC;? â&#x20AC;˘ â&#x20AC;˘ â&#x20AC;˘ â&#x20AC;˘ â&#x20AC;˘ â&#x20AC;˘ â&#x20AC;˘ â&#x20AC;˘

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Bridging the gap from broker to banker Contact: Stephen Bertrand sbertrand@ravdocs.com 800-343-7160

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Pro Teck Unveils New Appraisal Risk Review Product

ReverseVision Adds Landmark Network's RLOS Platform

Mortgage Warehouse Lending Services

NationalMortgageProfessional.com

DataQuick has announced substantial enhancements to CMV-Portfolio, the companyâ&#x20AC;&#x2122;s automated property valuation model (AVM). The enhancements are designed to improve valuation accuracy and increase by up to 20 percent the likelihood that an automated property valuation will fall within 10 percent of the actual sales price. CMV-Portfolio consists of four unique submodels that use different methodologies and sources of data to estimate the value of a property. Estimates are combined using a weighted average determined by property-specific accuracy measures of each submodel. More accurate submodels receive more weight when the values are combined. This approach provides more accurate and stable estimates than any of the individual submodel estimates alone by being less susceptible to extreme over- or under-valuations. It also significantly increases the number of properties that can be accurately valued and allows mortgage professionals to customize valuations based on what is most accurate for a specific market or property. â&#x20AC;&#x153;Our analytics team has boosted the accuracy in each of these models in order to provide the most precise property valuations possible,â&#x20AC;? said John Walsh, president of DataQuick. â&#x20AC;&#x153;AVMs offer a cost effective valuation service through the life of a mortgage, going beyond the loan origination and underwriting process to provide valuation intelligence including monthly property value and mark to market value even after the loan is on the books. What sets CMV-Portfolio apart is its stable estimate based on multiple data methodologies and an interpretable confidence score which can be easily embedded into risk models.â&#x20AC;?

and risk factors of an appraisal and efficiently supports the due diligence needs of investors and the compliance obligations of rating agencies and regulators. The ARR can be utilized to: Determine risk and compliance within an appraisal; evaluate the value and comparable selection by the appraiser; recommend further due diligence based on the client's policies and tolerances; provide an objective risk score to drive workflows. "Pro Teck is pleased to announce the availability of the Appraisal Risk Review for investors who are reviewing loans to place into securitizations or conduits," said Tom O'Grady, CEO of Pro Teck. "The heightened regulatory and risk environment has increased the need for a defendable and actionable Appraisal Risk Review product with the expertise of a USPAP compliant appraiser and objectivity of integrated market data and analytics. The feedback from the rating agencies has been very positive and the product has performed well in several securitizations." Each ARR report includes: A summary page with rating, issues and conclusion; written analysis, comparables and sale history (comparable search parameters customizable to Client guidelines), fully integrated market data & analytics and all supporting documentation.


When Potential Neighbors Sink a Home Loan Most Desirable Neighbors for 2014 Name

Worst Neighbors of 2014 Percent

Name

Percent

Jimmy Fallon

11

Kim Kardashian & Kanye West

25

Miranda Lambert & Blake Shelton

10

Cast of "Here Comes Honey Boo Boo"

18

Jennifer Lawrence

10

Justin Bieber

16

Sofia Vergara

6

Miley Cyrus

16

Robin Roberts

6

Lady Gaga

2

Lebron James

2

Alex Rodriguez

2

Kim Kardashian & Kanye West

2

Lebron James

1

Other

8

Other

2

None of the above

34

None of the above

14

Source: Zillow

By Phil Hall

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Last summer, my mother was in search of a new home, and her journey took her to an awful lot of houses–not to mention a lot of awful houses. For some time, it appeared that her search would be futile, as none of the properties she viewed came anywhere near her definition of habitability. And then, as if by divine intervention, her potential dream home appeared on a Multiple Listing Service. The photographs of the home were highly impressive, and the price was firmly within her budget. She drove to the town where the home was located and fell in love with the house upon sight. Indeed, the property looked even better in person than it did in the online photographs. Alas, there was something missing from the online photographs: The house belonging to the next door neighbors. To say that the place looked like a junkyard would be severely unfair to the individuals that own and operate junkyards–at this house, both the front yard and back yard were littered with an extraordinary depth and scope of broken items, weather-soaked furniture, long-forgotten sports equipment and miniature mountains of miscellaneous muck. The dream house that attracted my mother quickly became a dashed dream. There is no data on how many potential home sales are ruined because would-be homeowners ruefully turn down otherwise admirable

properties based on the happenings next door or across the street from the property that is for sale. But empirical evidence would suggest that such happenings can keep otherwise fine properties on the market for extended periods. Rick Sharga, executive vice president at Irvine, Calif.-based Auction.com, freely admits that he once found himself in this type of situation. “Before we had kids, my wife and I turned down a house because it was next to an elementary school,” he recalls. “We did not want to deal with the traffic and the noise coming from that school.” Taking the NIMBY (Not in my Back Yard) concerns to a star-studded extreme, Zillow’s seventh annual Celebrity Neighbor Survey found that 34 percent of Americans did not want to have any celebrities living next door. Among the A-list crowd that were least welcome were reality television icon Kim Kardashian and her fiancé, rapper Kanye West, who topped the least desirable celebrity survey with a 25 percent unfavorable rating. The rambunctious cast of the reality program “Here Comes Honey Boo Boo” came in second in Zillow’s survey with an 18 percent unfavorable rating, while controversy-courting pop stars Justin Bieber and Miley Cyrus tied for third at 16 percent. “No one wants to live next door to a family who has cameras following them everywhere and seems to seek out as much attention as possible,” observes Amy Bohutinsky, Zillow’s chief marketing officer. While, admittedly, most people will never have the experience of looking

out their kitchen window in the early morning and seeing Kim Kardashian watering her garden in the adjacent front yard, the question of potentially unpleasant neighbors is one that haunts the real estate finance world. “Clearly, real estate is all about location, location, location,” says Sharga. “If you are located near undesirable neighbors, it is harder to sell properties. From a mortgage perspective, you wind up asking, ‘How do I factor that undesirability into an appraisal?’” According to Mike Floyd, chief appraiser and senior vice president of compliance at Indianapolis-based Streetlinks Lender Solutions, the question of valuating what is known in the trade as “external obsolescence” requires an extra level of research. “By and large, appraisers need to go about calculating the impact of these issues,” says Floyd. “They can find comparable properties that recently sold that were impact by similar types of obsolescence.” Floyd admits that sometimes this type of data is sparse, which then forces appraisers to market studies over the previous several years to locate comparable situations. However, he notes that this can create a problem, since older data does not necessarily equal current property values. But, then again, concerns about problems at adjacent properties can also be highly subjective. Sharga warns that some potential queries that an originator may have for an appraiser about neighboring properties and the residents therein might be viewed as insensitive or worse.

“There can be qualitative issues to be aware of that may weigh against financing the property,” he notes. “My guess is that originators don’t ask appraisers for this information.” Nonetheless, Sharga believes that this challenge is often more of a distraction than a daily concern. “It’s a real issue, but I think it is a rare issue as well,” he says. The Zillow folks would agree, noting that not every Hollywood star is unwelcome by the general public as a possible neighbor. In its celebrity survey, Zillow found that comedian and talk show host Jimmy Fallon was the most desirable celebrity neighbor, earning praise from 11 percent of respondents, while country music couple Miranda Lambert and Blake Shelton and Oscarwinning actress Jennifer Lawrence tied for second in the positive column with 10 percent each. However, Zillow’s Bohutinsky warns appraisers and brokers to be on the lookout for paparazzi-pursued limousines. “With more than one-third of surveyed Americans preferring a noncelebrity neighbor, what remains clear is that many people don't want to live next to any celebrity, regardless of why they are famous,” she says. And as a post-script … my mother eventually purchased a new home, and her new neighbors are the most wonderful people imaginable. Fortunately, her search had a happy ending. Phil Hall is senior editor of National Mortgage Professional Magazine. He may be reached by e-mail at philh@nmpmediacorp.com.




credit repair and mortgage lenders continued from page 59

By Melanie A. Feliciano Esq. The Federal Housing Finance Agency (FHFA) announced that, except for 18 counties in which high-cost area loan limits have increased, the 2014 maximum conforming loan limits for first-lien and second-lien loans will remain unchanged from the maximum conforming loan limits for 2013. For more detailed information about conventional conforming loan limits for 2014, please refer to Fannie Mae’s Lender Letter LL-2013-09 [link to https://www.fanniemae.com/content/announcement/ll1309.pdf] and Fannie Mae’s Web site here [link to https://www.fanniemae.com/singlefamily/loan-limits]. Effect on certain high-cost tests Anytime there is a change in the conforming loan limits, the following state high-cost tests can be impacted: California, the District of Columbia, Georgia, Indiana, Maine, New Mexico, New York, North Carolina, Tennessee, Texas and South Carolina. Specifically, the rules governing the applicability of these states’ high-cost tests are determined in part by reference to the then-current conforming loan limits. Note that for both North Carolina and Tennessee, the Fannie Mae conforming loan limits will have no impact on their respective high costs tests.1 Except for the addition of Dutchess and Orange Counties to New York’s high-cost area conforming loan limit of $625,500, the applicable loan limits in 2014 for one-unit properties in the states and counties listed below will remain at $417,000, unless noted below: California

$463,450: Alpine $474,950: El Dorado, Placer, Sacramento & Yolo $477,250: Nevada $483,000: Monterey $520,950: Sonoma $529,000: Mono $546,250: San Diego $561,200: San Luis Obispo $592,250: Napa $598,000: Ventura $625,500: Alameda, Contra Costa, Los Angeles, Marin, Orange, San Benito, San Francisco, San Mateo, Santa Barbara, Santa Clara & Santa Cruz

District of Columbia

$625,500

Georgia

Greene County: Conforming jumbo loan limit is $515,200

New York

$625,500: Bronx, Dutchess, Kings, Nassau, New York, Orange, Putnam, Queens, Richmond, Rockland, Suffolk & Westchester

Footnote 1—The North Carolina High-Cost Home Loan Law applies to a loan if, among other things, the principal amount (or the maximum credit limit in the case of an open-end loan) of the loan does not exceed the lesser of $300,000, or the Fannie Mae conforming loan limit for a single-family dwelling. The Tennessee Home Loan Protection Act applies to a loan if, among other things, the principal amount of the loan does not exceed the lesser of $350,000, or the Fannie Mae conforming loan limit for a single-family dwelling.

Melanie A. Feliciano Esq. is DocMagic Inc.’s chief legal officer and currently serves as editor-in-chief 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 melanie@docmagic.com.

Terry W. Clemans is executive director of the National Consumer Reporting Association (NCRA). He may be reached by phone at (630) 539-1525 or e-mail tclemans@ncrainc.org. SPONSORED EDITORIAL

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of what credit repair firms charge and include a new report, a new score and the report is reissued into the automated underwriting system of the lender’s choice. Another major distinction in this is also that the consumer is prohibited from being charged for credit rescores. Mortgage originators should know that their contracts to purchase credit reports, in the section about rescoring, will contain language that clearly prohibits consumers from being charged—either directly or indirectly—for rescoring fees. Please note that in all the FTC and state AG notices about scam credit repair firms, there are no listings about credit rescoring in them. For the past 12 years, I have worked closely with several attorneys at the FTC and with the Consumer Financial Protection Bureau (CFPB) since its creation, and none have ever suggested that credit rescoring is remotely like credit repair. While the credit reporting system is not perfect and errors do occur, those errors are most often quickly corrected through legitimate means. Despite some uninformed claims, credit report accuracy is not subjective. The debt is either paid or it’s not paid, and the payment was either on time or it was late. The research can be done to document the real story and attempts to fool the lender to try to distort actual payment history are scams and there is no subjectivity to that. The reason that there are different accounts reported to the three national credit bureaus is due to FCRA not requiring creditors to report to the credit bureaus at all as reporting is completely voluntary. If a creditor chooses to report, they report to the bureau or bureaus of their choice. The differences in the creditors and the data they provide each bureau are from that voluntary nature of our system, but the data accuracy is certainly not subject in Federal law. One of the industry’s biggest problems, one that holds back the level of data accuracy is the very existence of credit repair companies. Preying on desperate consumers who are looking for a quick fix and disputing known accurate data in hopes that the creditor has made a mistake in their documentation, is manipulation of the system. Do yourself a favor and don’t refer consumers to entities that every U.S. AG office warns their citizens about. Your reputation, a loan buyback, and potentially, your entire career, will be at risk.

NationalMortgageProfessional.com

problems associated with credit repair. In addition, manipulating a consumer’s true credit risk, credit repair costs the banking industry millions of dollars in wasted resources from the constant re-verification of accurate data repeatedly being disputed by credit repair firms. Technicalities are not needed to correct a legitimate error, they are only needed to try to distort factual information and are why the credit repair industry has the reputation it does. Finding similarities in the comparison to credit repair to credit rescoring provided by mortgage credit reporting companies can only be done by someone who has no idea what each program actually is. Mortgage credit reporting companies are much more than just customers of the credit bureaus, they are consumer reporting agencies under the Fair Credit Reporting Act (FCRA) with most of the exact same obligations to the consumer and lender as the national credit bureaus. They do much more than simply provide credit data in an easy-to-read format, and many of the differences have been documented in my previous articles on this subject. Another one of the incorrect claims about credit repair is that these agencies are competition to credit rescoring. This is completely false as the credit reporting industry is required by the FCRA to correct all errors for FREE and the industry does this countless times on a daily basis. If there is an error on a credit report, the industry corrects those for free, regardless of the source of the error. If the error is on a trade line created by the mortgage credit reporting agency (a manually verified rental, or non-traditional account added to the report), then the mortgage credit reporting agency will correct that data and provide a new report with the updated information to the mortgage lender, free of charge. If the error is from information provided from one of the national credit bureaus, the mortgage credit reporting agency will pass the consumer dispute onto the national credit bureau with the error on behalf of the consumer at no charge. If the mortgage originator requires changes to the credit report on an expedited basis—with the credit report updated at the national level so a new credit score can be calculated and then reissued into an automated underwriting system rather than waiting for free consumer disputes to take effect (this could take up to 45 days)—then rescoring fees will apply. But that is at the choice of the mortgage originator. The charges for that expedited service are also a fraction of the cost

No Changes to 2014 Conventional Loan Limits


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Clix Mg, provides the mortgage industry with compliant marketing solutions. We assist mortgage companies to balance the competing needs of effective marketing campaigns and compliance. Our management team includes attorneys, software developers and marketers, combining more than 50 years experience in the industry. During the past year Clix Mg has been developing the LCP (“Lender Compliance Portal”). LCP is a web based platform that provides mortgage companies the ability to track, control, oversee and approve every marketing piece, material, campaign or program according to their own guidelines in an easy user friendly and cost effective manner. LCP provides reporting capability for internal as well as State and Federal audits.

Mortgage Seminars MortgageSeminars.com 248-403-8181 Cost: Only $19.95 per month per physical office location Jeff Mifsud, a former FHA Direct Endorsed Underwriter trained by HUD and an FHA Originator for over 15 years, is publisher of The FHA Originator, a monthly marketing newsletter which gives you… • • • •

FHA guideline news to keep you updated FHA Marketing tips and downloads that are easily customized Personal development tips to help you develop your character Full access to all previous FHA marketing downloads!

Titan List & Mailing Services, Inc. 1020 NW 6th St Suite D, Deerfield Beach, FL. 33442 (800) 544-8060 www.TitanLists.com

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Titan List and Mailing Services, Inc. is a direct marketing agency that offers a complete range of advertising and design services. The firm specializes in data lists (mail/phone), printing, direct mail, graphic and website design as well as internet and SEO marketing. Starting in 1998, the company has, since then employed highly skilled individuals who have considerable experience regarding marketing trends. The company manages the complete in-house campaign themselves including Design, Data Lists, Printing, Postage, and Mailing.

NationalMortgageProfessional.com

Clix Mg 1756 Hanshaw Road • Ithaca, NY 14850 Office: 727.474.1442 www.clixmg.com

No contracts so sign up today and give yourself the tools to brand yourself as The FHA Expert in your marketplace. Cost: Only $19.95 per month per physical office location.

CREDIT REPORTING

LENDERS COMPLIANCE GROUP 167 West Hudson Street - Suite 200 Long Beach | NY | 11561 | (516) 442-3456 www.LendersComplianceGroup.com MortgageLeads.org 888-695-3239

The first full-service, mortgage risk management firm in the country, specializing exclusively in mortgage compliance. Pioneers in outsourcing solutions for mortgage compliance. Our Compliance Team Will: Leverage your existing employees. Improve your productivity. Collaborate on projects. Make the most of your current technology. Bring innovation to your company. Be a strong cultural fit. Free you to focus on your core competencies. Give you access to world-class expertise. Lower your total operational costs.

Credit Plus, Inc. 31550 Winterplace Parkway, Salisbury, MD 21804 800-258-3488 www.creditplus.com

You want to close more loans. We can help you do it. Accurate information is the basis of smart lending decisions. Credit Plus, Inc. provides that – and more. We’re the company mortgage professionals trust for intelligent insight, smart information that enables them to mitigate risk and build their business. Our information services line is more than 160 products strong. Our expertise in the mortgage industry enables us to quickly assess current and future needs, and provide new solutions for a rapidly changing environment. We move mortgage professionals forward.

Mortgage Internet Leads $9.99. Find out why the nation's top lenders partner with MortgageLeads.ORG. Target by: • Refinance • Purchase • HARP • FHA • VA • Reverse. Close more loans today 888-695-3239 or click www.MortgageLeads.org

n National Mortgage Professional Magazine n FEBRUARY 2014

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LOAN ORIGINATION SYSTEMS

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Gets you more referrals, inquiries, and closings! Count on Calyx: Weâ&#x20AC;&#x2122;re ready to help you do more 800.362.2599 sales@calyxsoftware.com www.calyxsoftware.com Calyx Software is the leading provider of affordable mortgage solutions for banks, credit unions, mortgage bankers and brokers. We design products that enable smooth bi-directional flow of data from beginning to end. Our solid, yet flexible, LOS gives you: â&#x20AC;˘ â&#x20AC;˘ â&#x20AC;˘ â&#x20AC;˘ â&#x20AC;˘ â&#x20AC;˘

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Lenders can take advantage of Calyxâ&#x20AC;&#x2122;s fully integrated automated underwriting and pricing products to help them determine loan eligibility, pricing against investor or FHA guidelines while staying compliant in 2014.

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Veros Real Estate Solutions "Innovating Mortgage Technology" veros.com | (866) 458.3767 Follow us on Twitter at @verosRES Veros has been an industry leader in real estate collateral valuation management & decision analytics for more than a decade. We offer a wide variety of software solutions and tools to help you manage collateral valuation from the beginning of the mortgage chain and throughout the life of the loan. Contact Veros today to learn about: â&#x20AC;˘ Sapphire â&#x20AC;&#x201C; the most comprehensive valuation management platform â&#x20AC;˘ VeroVALUE â&#x20AC;&#x201C; the industryâ&#x20AC;&#x2122;s leading national AVM â&#x20AC;˘ VeroSCORE â&#x20AC;&#x201C; automated appraisal scoring quality control tool â&#x20AC;˘ ComplianceTRACK â&#x20AC;&#x201C; independently designed AVM cascade â&#x20AC;˘ VeroFORECAST - most advanced residential market forecast Email Veros at info@veros.com to learn more or to schedule your complimentary product demonstration.

WAREHOUSE LENDERS

â&#x20AC;&#x153;The year I started their Lender Letter and Week e klly Economic Update, my business the eW DOUBLED. Thank you, Right Side Marketing, for your excellent products and service.â&#x20AC;?

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Steve Peterson Sierra Pacific Mortgage

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8520 Macon Rd. Ste 2 Cordova, TN 38018 info@mcmf.net | 615-477-7118 MCMF developed My Guide, a Premier Credit & Financial Education Magazine that you can customize with your LOGO and Ad Pages to feature your organization as well as provide your borrowers a go-to-guide for credit and financial resources, empowering them to make the most informed financial decisions. This 16 page, full color, quarterly publication, provides financial literacy tools in a concise, unbiased, easy to understand format.

WHOLESALE/CORRESPONDENT LENDERS

973-646-3067 AFR Wholesale ranked #1 with the most Sponsor Originated FHA 203(k) closed loans.*

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WHOLESALE/CORRESPONDENT LENDERS

WHOLESALE LENDERS

Close Jumbo Loans Others Cannot Service more jumbo borrowers with New Penn’s Jumbo Advantage portfolio product 877-930-PENN www.GoNewPenn.com

HomeBridge 5 Park Plaza, 10th Floor Irvine, CA 92614 www.homebridgewholesale.com

Jumbo Advantage Highlights: • Market leading jumbo rates • Loan amounts up to $2 million • Cash out up to $400,000 • FICO down to 680 • Expanded loan-to-value (LTV) up to 85% (no MI) • Expanded debt-to-income ratio (DTI) up to 50%

HomeBridge is a national wholesale lender offering both conventional and government products. We are committed to providing the highest value to our clients through competitive pricing, unique product offerings, superior customer service, and state-of-the-art technology. Currently expanding and hiring experienced Wholesale Account Executives nationwide. Please send your resume to marketing@homebridge.com. Building bridges to success, one loan at a time.

The Direct Path into the Reverse Mortgage Market. Ralph E. Rosynek, Jr. / Senior Vice-President National Production Manager /HECM Direct Endorsement Underwriter E-Mail: rrosynek@rmsnav.com / rrosynek@rmpath.com Office: 281.404.7970 / Cell: 708.774.1092 / EFax: 866.543.5420 URL: www.rmsnav.com • www.RMPath.com

Rushmore Home Loans is a wholesale lender dedicated to understanding and answering the needs of our brokers. We provide competitive mortgage loan products with a focus on quality, efficiency and flexibility. Our goal is to deliver an experienced, customer-focused team with access to the most comprehensive technology platform to deliver the highest possible service to our brokers.

Interested in joining our Wholesale Division? Send your resume to aerecruiting@remn.com

United Wholesale Mortgage 800-981-8898 www.uwm.com UWM has a full set of mortgage products to meet all of your lending needs with Conventional, FHA, USDA (Rural Development), VA, Jumbo, HARP 2.0 and DU Refi Plus. With UWM’s ELITE program, you will receive the most aggressive conventional rates and pricing in the industry for your elite borrowers! Discover Lending Made Easy with United Wholesale Mortgage!

n National Mortgage Professional Magazine n FEBRUARY 2014

Rushmore Home Loans www.rushmorehl.com 888.202.0878

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.

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NationalMortgageProfessional.com

Whether you are an experienced reverse mortgage professional looking to grow faster or a firm wanting to create a new product line, allow RMS’s production division RMPath to work with and alongside you to build a strategic path to success. We have: • Correspondent, Wholesale Lending And Aggregation Partnering • We Offer Exceptional Customer Service And Market - Leading Pricing • Powerful, Secure, Scalable Loan Origination Systems • Proprietary State-Of-The-Art Technology Utilizing The RM COMPASS Technology Platform • Customizable Production Strategies To Fit Your Needs • Rapid Execution And Exceptional Customer Service • Excellent Compliance And Regulatory Controls

Real Estate Mortgage Network, Inc. www.remnwholesale.com 866-933-6342


gsf reform: thinking outside the box continued from page 60

demanding the insured loan portfolio always exhibited a high number of borrowers, or homes in this case. So, with the mandate to affect a countercyclical response to the depression of the entire housing market and the knowledge that LTV was the key to diversifying collateral value risk, Congress chose to structure FHA initially with that 80 percent LTV limit for the loans it insured. This limit falls somewhere in the middle of a range bounded by a non-speculative, liquid financing level of 50 percent, relied upon by private financiers in multiple markets (and Congress) and the purely speculative 100 percent LTV, by definition the least diversified, i.e. you own the properties securing the loans. This standard is definitely not analogous to the concentrated pyramiding of singular corporate risks described in the Pecora Committee report, but it is definitely designed to put a positive pressure on housing values. In a depressed market, the FHA was Congress’s hedged-bet on housing.

The National Mortgage Association

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In addition to creating the FHA, the National Housing Act also established the framework for national mortgage associations (NMIs) which were to serve as investment trusts in support of FHA by drawing private investment capital into the housing market. NMIs would be authorized to raise equity and borrow money such that they could purchase and sell first mortgages subject to the same 80 percent LTV constraint as FHA. However, they were restricted from borrowing money unless the mortgages purchased were insured by FHA. Why? If any private equity investor was going to be allowed to use an investment trust to make leveraged bets into one market, in a post-1929 environment, it was going to have to do so for the public benefit in a fashion consistent with Congress’s own hedged macroeconomic bet. Incenting private

investors into FHA insured mortgages allowed for maintaining public control of the degree of speculation into capital appreciation. Though the government was engineering what it hoped to be a compelling set of investment options for the private investor markets, exactly zero NMIs were created in the four years following FHA’s creation. Private capital tends to be more opportunistic and less innovative after a financial crisis and, as a rule, generally not motivated by social welfare, as such, in order to fully affect its countercyclical strategy the government was forced to take additional proactive measures in 1938 by amending the National Housing Act. FHA’s authority to write insurance was expanded to allow for tiered LTVs beyond the standard 80 percent, based on housing price. While borrowers would continue to have access to an 80 percent LTV FHA mortgage for a home up to $20,000 in value, newly constructed homes worth $10,000 or less would be eligible for up to 86 percent LTV. Even 90 percent LTV was available should the new home be valued below $6,000. Though this option was designed primarily to encourage the development of low cost homes, it also acknowledges mortgage risk changes relative to overall housing prices and suggests a path the government might take to help it manage overall housing finance risk. As additional motivation for raising private capital, non-government owned NMIs would be allowed to buy and sell non-FHA insured first mortgages, yet, in keeping with the need to en-sure that private capital could not be used to drive asset prices beyond FHA’s controlled limits, those loans could not be in excess of 60 percent LTV. Ultimately, the first and what would be only NMI for the next 30 years had to be created by the government. So, in 1938, FHA authorized the Reconstruction Finance

Corporation, FHA’s original funding source and itself an independent agency of the U.S. government, to create the National Mortgage Association of Washington. This investment trust would be re-chartered as Fannie Mae 10 years later. Distilling the legacy of 1930s housing finance is relatively straightforward. In the wake of a market crisis, the government must be in a position to facilitate a counter-cyclical economic strategy. In its experiment to do so through FHA and Fannie Mae, the government was successful in creating what was a hedged-bet on housing prices. The public, i.e. homeowners and the government itself, would benefit from any capital appreciation through their equity ownership of either the homes being financed or the investment trusts providing the liquidity. Private debt

investors, or lenders, would benefit only by gaining access to bonds and loans that were structured to safely return their capital via highly diversified and/or insured collateral. Notwithstanding the soundness of this strategy at the time, without having established a mechanism to recognize the transition from recession to recovery then recovery to expansion, the continued existence of FHA and Fannie Mae would inevitably become a pro-cyclical influence in the housing market. Ryan W. Birtel is founder and managing director of Eolith Advisory Ltd., an independent consulting firm that provides economic and financial advisory services related to the real estate and structured finance markets. He may be reached by phone at (646) 707-1502 or e-mail ryan.birtel@eolitadvisory.com.

new to market continued from page 71

turnaround time through its Landmark Network integration. “Being able to order an appraisal from us, and then have the status and results automatically feedback into ReverseVision is a powerful tool for our clients,” said Erik Richard, Landmark Network’s CEO. “Users will be able to spend more time focusing on core tasks and less time tracking their appraisal submissions.”

Your turn National Mortgage Professional Mag-

azine 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: newsroom@nmpmediacorp.com 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 continued from page 16

and savings institution loans; PNC/Midland the top credit company, pension funds, REITs, and investment funds servicer; Prudential the top FHA and Ginnie Mae servicer; Wells Fargo the top for loans held in warehouse facilities; and Berkadia the top for other investor type loans. A primary servicer is generally responsible for collecting loan payments from borrowers, performing property inspections and other property-related activities. A master servicer is typically responsible for collecting cash and data from primary servicers and then providing that cash and data, through trustees, to investors. MBA also asked firms to provide information about loans on which they are the named special servicer–that is, where the firm stands ready to service the loan should special problems develop, such as delinquency. The largest named special servicers were LNR Partners, LLC, C-III Asset Management, CWCapital Asset Management LLC, and PNC/Midland. LNR Partners is the largest

special servicer for CMBS loans. The MBA survey also collected servicing volumes for loans on commercial/multifamily properties located outside the United States. Situs ranks as the largest master and primary servicer of non-U.S. commercial/multifamily mortgages, followed by LNR Partners.

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: newsroom@nmpmediacorp.com Note: Submissions sent via e-mail are preferred. The deadline for submissions is the 1st of the month prior to the target issue.


calendar of events N A T I O N A L

M O R T G A G E

P R O F E S S I O N A L

MARCH 2014

APRIL 2014

MAY 2014

SEPTEMBER 2014

Sunday-Tuesday, March 2-4

Thursday, April 3

Monday-Thursday, May 5-8

2014 NAMB Legislative & Regulatory Conference Hilton Garden Inn—Capitol 1225 First Street NE Washington, D.C. For more information, call (972) 758-1151 or visit www.namb.org.

2014 Maryland Association of Mortgage Professionals Annual Conference Annapolis Elks Lodge #622 2517 Solomons Island Road Edgewater, Md. For more information, call (410) 752-6262 or e-mail mamp@assnhqtrs.com.

American Land Title Association (ALTA) 2014 Federal Conference & Lobby Day The Grand Hyatt 1000 H Street NW Washington, D.C. For more information, call (202) 296-3671 or visit www.alta.org.

Thursday-Saturday, September 4-6

Sunday-Thursday, March 9-13

Thursday, April 3

Thursday-Saturday, May 15-17

2014 Regional Conference of Mortgage Bankers Associations Trump Taj Mahal Casino Resort 1000 Boardwalk Atlantic City, N.J. For more information, call (732) 596-1619 or visit www.mbanj.com.

Florida Association of Mortgage Professionals (FAMP) Palm Beaches Chapter 2014 Annual Trade Show Embassy Suites 1601 Belvedere Road West Palm Beach, Fla. For more information, call (561) 320-3267 or e-mail fambpb@bellsouth.net.

50th Annual NAPMW National Education Conference Seattle Airport Marriott 3201 S. 176th Street Seattle, Wash. For more information, call (800) 827-3034 or visit www.napmw.org.

Wednesday-Friday, March 12-14

Tuesday-Wednesday, March 18-19

JULY 2014

Thursday, April 17

Monday-Wednesday, July 7-9

23rd Annual Rocky Mountain Mortgage Lenders Expo Denver Marriott Tech Center 490 South Syracuse Street • Denver, Colo. For more information, call (303) 773-9565 or visit www.cmla.com.

Ultimate Mortgage Expo 2014 Hotel Monteleone 214 Royal Street • New Orleans, La. For more information, call (860) 922-3441 or e-mail info@agilityresourcesgroup.com.

Friday, April 25

Thursday-Friday, August 7-8

2014 Texas Mortgage Roundup Marriott Plaza San Antonio 555 South Alamo Street San Antonio, Texas For more information, call (860) 922-3441 or e-mail info@agilityresourcesgroup.com.

2014 Louisiana Mortgage Lenders Association Education Conference New Orleans Hilton Riverside 2 Poydras Street • New Orleans, La. For more information, call (225) 590-5722 or visit www.lmla.com.

AUGUST 2014

Tuesday-Friday, March 18-21 MBA’s National Technology in Mortgage Banking Conference & Expo 2014 JW Marriott Los Angeles LA Live 900 West Olympic Boulevard Los Angeles For more information, call (800) 793-6222 or visit www.mortgagebankers.org.

Mortgage Bankers Association of Georgia (MBAG) 2014 Annual Convention Hilton Sandestin Beach Golf Resort & Spa 4000 South Sandestin Boulevard Destin, Fla. For more information, call (478) 743-8612 or visit www.mbag.org.

To submit your entry for inclusion in the National Mortgage Professional Calendar of Events, please e-mail the details of your event, along with contact information, to newsroom@nmpmediacorp.com.

NAMB National 2014 Luxor Resort and Casino 3900 Las Vegas Blvd South Las Vegas For more information, call (860) 922-3441, e-mail vvalvo@agilityresourcesgroup.com or visit www.nambnational.com.

Thursday, September 18 Hawaii Association of Mortgage Brokers (HAMB) 2014 Annual Conference & Trade Show Japanese Cultural Center of Hawaii 2454 Beretania Street Honolulu, Hawaii For more information, call (808) 783-4442 or visit www.hamb.org. OCTOBER 2014

Wednesday-Saturday, October 15-18 American Land Title Association (ALTA) 2014 Annual Convention The Westin Seattle 1900 5th Avenue Seattle, Wash. For more information, call (202) 296-3671 or visit www.alta.org.

Sunday-Wednesday, October 19-22 MBA’s 101st Annual Convention & Expo Mandalay Bay Hotel & Casino 3950 South Las Vegas Boulevard Las Vegas For more information, call (800) 793-6222 or visit www.mortgagebankers.org.

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n Alabama Mortgage Professional Magazine n FEBRUARY 2014

National Reverse Mortgage Lenders Association Eastern Regional Meeting & Investment Forum “New HECM, New York” New York Times Square Hotel 300 West 44th Street • New York, N.Y. For more information, call (202) 939-1760 or visit www.nrmlaonline.org.

Tuesday, April 8 2014 Mortgage Matchmaker: The Business-Building Event for Mortgage Professionals River City Casino 777 River City Casino Boulevard St. Louis, Mo. For more information, call (860) 922-3441, e-mail info@agilityresourcesgroup.com or visit www.mortgage-matchmaker.com.

Saturday-Monday, September 13-15

NationalMortgageProfessional.com

American Land Title Association (ALTA) 2014 Business Strategies Conference The Omni Nashville Hotel 250 5th Avenue South Nashville, Tenn. For more information, all (202) 296-3671 or visit www.alta.org.

Friday-Sunday, May 16-18

Florida Association of Mortgage Professionals 2014 Convention & Trade Show Rosen's Shingle Creek 9939 Universal Boulevard Orlando, Fla. For more information, call (850) 942-6411 or visit www.famb.org.


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WHOLESALE DIRECT FREE PROCESSING - NO LENDER FEES

Y YOU OU ORIGINATE, ORIGIN NATE, T W WE EC CLOSE, LOSE, ITâ&#x20AC;&#x2122;S THA THAT AT S SIMPLE. IMPLE. 877.522.8737 www www.afrwholesale.com/wd .afrwholesale.com/w d Lender NMLS 2826. AFR Wholesale, a division of American Financial Resources, Inc. is a nationwide wholesale residential mortgage lender and an approved lending institution. The company is a GNMA issuer, FNMA seller/servicer, FHA Mortgagee, USDA National Lender and VA Automatic Lender. This information is provided to assist business professionals. This is not an advertisement extended to the consumer, as defined by Section 226.2 of Regulation Z. - Equal Housing Lender - Equal Opportunity Employer. Corporate office located at 9 Sylvan Way, Parsippany, NJ 07054. AB020714



Alabama Mortgage Professional Magazine February 2014