California Mortgage Professional Magazine August 2015

• Stated Loans on Residential and Commercial Loans • Brokers Always Protect • 1st & 2nd Position Loans • Quick turnarounds

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CALIFORNIA EDITION

California Association of Mortgage Professionals 1225 8th Street #425 v Sacramento, CA 95814 Phone #: (916) 448-8236 v Fax #: (916) 442-3616 Web site: www.ca-amp.org

Board of Directors Michele Velez Anthony Lombardo Cathy Warshawsky Brian Weide George Duarte

President President-Elect Treasurer Secretary Immediate Past President

Larry Korth Audrey Boissonou Anthony Lombardo Michael O’Connor Nyron McLean Frank Williams Rick Reith Ron Karp Derek Graham Tondra Hall Alan Nuttal Dawn E. Cychner Casey Fleming Nelson Otero

Central Valley Chapter East Bay Chapter Greater Sacramento Chapter Greater Ventura Area Chapter Inland Empire Chapter Los Angeles Metro Chapter North Bay Chapter North Los Angeles County Chapter Orange County Chapter San Diego Chapter San Francisco Peninsula Chapter San Gabriel Valley Chapter Silicon Valley Chapter Southern Los Angeles Chapter

Jon Kaempfer Scott Griffin Nick Barayga Richard Wang

Education Committee VP/Government Affairs VP/Membership Public Relations Committee

Phone # (650) 653-3082 (916) 422-5900 (408) 371-2172 (909) 483-3212 (510) 377-9059

E-mail michelle.velez@prospectmtg.com anthony@hi-techmortgage.com cathy@bayarealoan.com brianweide@prodigy.net gduarte@horizonfinance.com

State Representatives (559) 432-8221 (925) 788-1351 (916) 422-5900 (805) 409-0554 (714) 720-9354 (626) 688-8444 (415) 740-8834 (818) 907-5757 (949) 584-2570 (619) 220-6118 (650) 994-8705 (626) 653-1800 (408) 348-3442 (714) 373-5700

larryk@mvfs.com aboissonou@rpm-mtg.com anthony@hi-techmortgage.com michael@teamoconnor.com nhmclean@msn.com frank@capital-df.com rick@amex.net rkarp@kplselect.com derek.graham@title365.com tonda.hall@spm1.com nuttalla@aol.com decychner@cscaliforniacapital.com loanguide@sbcglobal.net notero@firstalliedfinancialservices.com

Committee Chairs (916) 486-6516 (310) 456-4494 (559) 490-0470 (408) 366-0311

jkaempfer@comstockmortgage.com scott@scottgriffin.com nick.g.bar@gmail.com richard@theloanstory.com

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The Ca California lifornia As Association sociation of Mo Mortgage rrttgage Professionals Professionals are ma making king iitt easier for you to gi give ve th this is in industry dustry becoming PA P AC contributions wi will a voice in th thee leg legislative islative arena. By becomi ng a member of the the $49 Club, Club, your PAC ll be aut automatically deducted monthly ward support inng federal omatically deduct ed on a m onthlyy basi basis. s. Y Yo Your our contributions go to toward supporting federaall shar view ew on o th the he is iissues sues confronting confr fronting our industry. industry. h e CAMP’s vi candidatess who share Yes, Y Yees, I w want Club Member ant to become a $49er Club Member

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Californian Sentenced to 45 Months for Role in Foreclosure Rescue Scam

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Christy Romero, Special Inspector General for the Troubled Asset Relief Program (SIGTARP), and Benjamin B. Wagner, U.S. Attorney for the Eastern District of California, have announced that Tamara Tikal of Rio Vista, Calif. has been sentenced by U.S. District Judge Troy L. Nunley to three years and nine months in federal prison for her conviction for conspiring to commit mail fraud in relation to a foreclosure rescue scam. Tikal was also ordered to pay $3,671,000 in restitution to victims of the offense.

“Tamara Tikal was sentenced to 45 months in federal prison for her role in a massive fraud scheme that robbed more than 1,000 struggling homeowners out of millions of dollars in savings with false promises of saving victims’ homes from foreclosure,” said Romero. “After Tikal’s husband and scam ringleader Alan David Tikal was twice jailed for his role in the scheme, Tamara Tikal continued operating the scam on his behalf, during which time many of their victims, many of whom didn’t speak English as their primary language, fell into foreclosure and lost their homes. In exchange for cash payments from victim homeowners, Alan David Tikal and his coconspirators exploited bankruptcy law as a way to illegally and temporarily halt foreclosure proceedings by mortgage lenders, including TARP recipients. Those who engage in fraud related to TARP will be brought to justice

by SIGTARP and our law enforcement partners.”

Tikal’s husband, Alan David Tikal, was convicted following a bench trial and sentenced to 24 years in federal prison. Tamara Tikal pleaded guilty to the conspiracy in August 2014, as did co-defendant Ray Kornfeld, who was sentenced to five years in federal prison.

According to Tamara Tikal’s plea agreement, between January 2010-August 2013, Alan David Tikal was the principal behind a business known as “KATN Trust,” which targeted distressed homeowners experiencing difficulties making their existing monthly mortgage payments. Many of the victims did not speak English. Alan David Tikal promised to reduce their outstanding mortgage debt by 75 percent, falsely claiming he was a registered private banker with access to an enormous line of credit and the ability to pay off homeowners’ mortgage debts in full. Homeowners were told that in return for various fees and payments, their existing loan obligations would be extinguished, and the homeowners would then owe new loans to Tikal in an amount equaling 25 percent of their original obligation. In reliance upon these misrepresentations, many of these homeowners stopped making payments on their existing mortgage loans and lost their homes to foreclosure as a result.

Tamara Tikal filled a variety of roles in the business, including paying the salaries of various employees, serving as a notary for various documents utilized in furtherance of the scheme, and opening and maintaining post-office boxes and bank accounts that received homeowner payments. She also communicated with individual homeowners, assuring them of the legitimacy of the program. The Tikals never made any payments to financial institutions on behalf of homeowners in satisfaction of their pre-existing mortgage debt obligations; the money for the purported “loan” payments was simply spent by the Tikals and their associates for personal use; and there was not a single instance in which a homeowner’s debt was paid, forgiven, or otherwise extinguished as a result of the mortgage relief program. In all, more than one thousand homeowners in California and other states were convinced to participate in the program. As a result of their participation, many homeowners became delinquent on their loans and ultimately had their homes foreclosed upon. Those homeowners paid more than $5.8 million in fees and monthly payments into the program. Of that, more than $2.5 million was paid into accounts controlled by the Tikals.

California Man Sentenced to Five-Plus Years Real Estate Fraud Christy Romero, Special Inspector General for the Troubled Asset Relief Program (SIGTARP), and Benjamin B. Wagner, United States Attorney for the Eastern District of California, has announced that Xue Heu of Modesto, Calif. has been sentenced to five years and three months in federal prison to be followed by three years of supervised release for investment fraud schemes in Fresno, Calif., and in Texas. United States District Judge Lawrence J. O’Neill also ordered Heu to pay $1,166,366 in restitution to victims of the two fraud schemes.

According to court documents, between August 2007 and October 2013, Heu solicited individuals to invest in real estate businesses that purchased and sold real estate. Heu claimed to be an officer of Liquid Assets & Land Investments Inc. and Capital Land Investments LLC. In furtherance of the scheme and to persuade the investors that the investment opportunities were legitimate, Heu gave investors fraudulent documents, such as forged and fictitious grant deeds, fraudulent HUD-1 settlement statements, and portfolio listings of properties he claimed he intended to purchase, including properties that had already been sold and were no longer available to purchase. In his plea agreement, Heu admitted to defrauding investors of approximately $412,896.

“Heu was sentenced to 63 months in federal prison for his role in a real estate fraud scheme that Heu and others advertised as a business selling ‘TARP-owned,’ foreclosed properties to individuals interested in investing in the real estate market,” said Romero. “Heu solicited investors through LinkedIn and guaranteed them a certain positive return on their investments. Participating investors were instructed to transfer funds to bank accounts set up and controlled by others involved in the fraud scheme, and Heu created sham deeds and paperwork to give the appearance of transferring ownership of the properties to the investors, authority that no one involved in the scheme possessed. Heu and others involved in the scam simply pocketed investors’ cash and used it for personal expenses. SIGTARP and our law enforcement partners will bring justice to those who exploit TARP through fraud.”

According to court documents, between Oct. 1, 2013, and Dec. 31, 2013, Heu and others executed a second scheme to defraud real estate investors. Heu, using the alias “Michael Chan,” purported to be a representative of the Troubled Asset Relief Program (TARP) and an authorized seller of property that had been foreclosed on by the U.S. government. Heu and a co-defendant lured investors into placing funds into escrow accounts established by another co-defendant and then converted the money to their own use. In his plea agreement, Heu admitted he was responsible for a loss to victims of $762,897. This case was originally charged in federal court in the Western District of Texas, San Antonio Division, and was transferred to the Eastern District of California for Heu’s guilty plea and sentencing.

New Report Details Silicon Valley Housing Crisis The San Jose metro market, the center of the nation’s high-tech industry, is facing a massive crisis in housing affordability, with less than onequarter of workers and less than half of households having the ability to buy or rent average-priced housing.

According to a new report issued by the Silicon Valley Competitiveness and Innovation Project, the median income in the San Jose metro market was $57,400 for individual workers and $91,500 for households. But the average rent for a two-bedroom apartment in this area was approximately $2,900 per month and the median home value there is approximately $925,000.

"Folks who have been living here for a long time are being priced out," said Janine Kaiser, project manager, in an interview with the San Jose Mercury-News.

"There are sweeping ramifications for residents in terms of quality of life. And this represents a key challenge for businesses," hampering their ability "to recruit new talent for their work forces and to the region."

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N A T I O N A L

M O R T

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V O L

Excellence Is the New Average: What It Takes to Achieve Success in Lending

By Carl Markman

36 NMP’s Mortgage Professional of the Month: Stan Middleman, Chief Executive Officer, Freedom Mortgage

By Phil Hall

A U G U S T

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A SPECIAL FOCUS ON “THE WHOLESALE & CORRESPONDENT MARKET” Mortgage Bankers: Proudly Selling Snake Oil Since 2008

By Andy W. Harris ..........................................................................................58 Banks vs. Brokers By Eric Weinstein ..........................................................61 The Heartbeat Strengthens for Small- to Mid-Sized Correspondents

By Joe Collins ................................................................................................62 TRID Implementation: Lessons From Wholesalers and Investors From an Outsourcer By Alice Alvey, CMB ..................................................64 Wholesale Differentiation in a Vanilla Environment By Dave Hershman..66

42 Who’s Who in the 2015 Wholesale Marketplace

FEATURES NAMB National By Nathan Pierce ..................................................................8 The Elite Performer: Business Casual By Andy W. Harris, CRMS ..............8 Communicate Your Way to Higher Sales With DISC? By Bubba Mills ....10 The Day the Baby Boomers Stop................................................................16 A/B Split Testing: An Important Key for Direct Mail Success

By K. Justin Restaino ....................................................................................18 NAMB Perspective........................................................................................20 A Voyage Into the Video Blogging Universe By Dave Sullivan..................24 Now Available: Credit Score Help From Rent Payments for Mortgage Lending By Terry W. Clemans ..............................................26 Why Non-Prime Loans Are Safer Than You Think By Tom Hutchens ......32

50 Lykken on Leadership: Seven Ways to be a Bad Leader

By David Lykken

56 Closing Disclosure: Deep Dive—Page Three

By Jonathan Foxx

How to Position Yourself for Your Next Career Move

By Dr. Marty Martin ........................................................................................32 OrigiNation: By Originators, For Originators By Andy W. Harris ..............34

V I S I T Company

O U R

Web Site

A Page

Agility Resources Group ...................................... www.agilityresourcesgroup.com ......................................58 American Financial Resources Inc. ...................... www.afrwholesale.com/wd-benefits ....................Back Cover Angel Oak Mortgage Solutions ............................ www.angeloakms.com ..................................................39 Brokers Compliance Group.................................. www.brokerscompliancegroup.com ..................................88 Caliber Home Loans.............................................. www.caliberhomeloans.com ............................................53 CallFurst.com ...................................................... www.callfurst.com ............................................................59 Carrington Mortgage Services, LLC ...................... www.carringtonwholesale.com ..............................31 & 64 Document Systems, Inc./DocMagic ...................... www.docmagic.com ........................................................7 Equity Prime LLC................................................ www.equityprime.com ..........................................65 & 73 FAMP ................................................................ www.myfamp.org ..........................................................37 First Guaranty Mortgage Corp. ............................ www.fgmc.com ..............................Inside Front Cover & 37 Flagstar Bank .................................................... www.wholesale.flagstar.com ..........................................17 Franklin First Financial, Ltd. .............................. www.franklinfirst financial.com/wholesale ......................69 Freedom Mortgage Corporation .......................... www.freedomwholesale.com ............................29, 55 & 75 HAMB .............................................................. www.hamb.org ..............................................................66 HomeBridge Wholesale ...................................... www.homebridgewholesale.com ....................................13 iServe Residential Lending, LLC .......................... www.joiniserve.com ......................................................19 LendingHome .................................................... www.lendinghome.com/nmp ............................................1 Listing Booster .................................................. www.listingbooster.com ................................................81 Lykken On Lending ............................................ www.lykkenonlending.com ............................................74

T G A G E

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

L U M E

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Saying NO to Top Performers Takes Courage and Skill

By Keith Bilodeau ..........................................................................................38 Digital Transaction Management By Stephen F. Bisbee............................38 Legal Updates: August 2015 By Melanie A. Feliciano Esq. ...................... 48 The Long & Short: The Business of Short Sales By Pam Marron ............52 Profit Opportunities Push Correspondents Toward Mandatory Delivery By Cari McCue ............................................................52 Just Ask Eric & Laura By Eric Weinstein & Laura Burke ............................54 Mortgage Technology Firms Are Entitled to Numerous Tax Credits for R&D Efforts By Linn Cook ......................................................................68 June Housing Sales Take Surprise Tumble By Phil Hall ..........................69 Swiping Your Way to Social Media Dominance By Mary McPhail............70 A Message From FAMP President David Kane ........................................76 NAPMW Report: August 2015 By Kelly Hendricks ......................................80 Secure Settlements Changes Brand Name to “Secure Insight” ............80 MBA’s Mortgage Action Alliance: A Message From MAA Chairman Fowler Williams ............................................................................................82 Write More Loans With Every Door Direct Mail By Blake Harp ................83

COLUMNS New to Market..............................................................................12 News Flash: August 2015............................................................14 Heard on the Street ....................................................................40 Outstanding Places to Work ......................................................84 NMP Calendar of Events ............................................................85 NMP Resource Registry..............................................................86

D V E R T I S E R S Company

Web Site

Page

MBS Highway .................................................... www.mbshighway.com/MNN ..........................................33 MoneyTips.com.................................................. www.moneytips.com/for-professionals ..........................CA8 Mortgage News Network (MNN) .......................... www.mortgagenewsnetwork.com ....................................11 NAMB National .................................................. www.nambnational.com ..........................................3 & 71 NAMB PAC ........................................................ www.namb.org ..............................................................27 NAPMW ............................................................ www.napmw.org ....................................................49 & 60 NAWRB ............................................................ www.nawrb.com ............................................................77 Paramount Residential Mortgage Group, Inc. ...... www.prmg.net ..........................15, 51 & Inside Back Cover PB Financial Group Corp..................................... www.calhardmoney.com ................................................63 PreApprovalLetter.com ...................................... www.preapprovalletter.com/lender ................................62 Radian Guaranty ................................................ www.radian.biz ............................................................67 RCN Capital ...................................................... www.rcncapital.com ......................................................35 REMN Wholesale ................................................ www.remnwholesale.com ......................................CA1 & 5 TagQuest .......................................................... www.tagquest.com ........................................................79 The Bond Exchange............................................ www.thebondexchange.com ..........................................50 The National Real Estate Post.............................. www.thenationalrealestatepost.com ..............................61 Titan List & Mailing Services, Inc. ........................ www.titanlists.com ..........................................................9 United Wholesale Mortgage ................................ www.uwm.com ................................................44, 45 & 47 WAMP .............................................................. www.mywamp.org ......................................................CA7

AUGUST 2015 Volume 7 • Number 8 FROM THE

Who needs wholesalers? You do and so does the mortgage industry!

Second NAMB Wholesale Summit set for Dallas on Sept. 19

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 VP-Sales & Marketing (516) 409-5555, ext. 316 beverlyb@nmpmediacorp.com

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

Phil Hall Managing Editor (516) 409-5555, ext. 312 philh@nmpmediacorp.com

Richard Zyta Social Media Ambassador (516) 409-5555 richardz@nmpmediacorp.com

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

ADVERTISING To receive any information regarding advertising rates, deadlines and requirements, please contact VP-Sales & Marketing Beverly Bolnick at (516) 409-5555, ext. 316 or e-mail beverlyb@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.

This month, we turn our attention to the wholesale and correspondent markets, including our always popular “Who’s Who in Wholesale” section.

I’m devoting this month’s column to promote NAMB’s Second Wholesale Summit, set for Saturday, Sept. 19 at the Crowne Plaza Downtown Dallas in Dallas, Texas. This Summit is a continuation of NAMB’s inaugural Wholesale Summit held back in March in Orlando, an event that brought together 15 of the nation’s top wholesale lenders who came together for a day-long agenda that covered how wholesale lenders can grow market share and explore marketing, compliance and profitability issues facing the marketplace. That initial Summit developed an extensive report that formed the foundation for an ongoing agenda for the wholesale participants to use as talking points and concerns for continued discussion.

Wholesale lending, as you know, is a market segment comprised of mortgage brokers, small correspondent lenders, smaller banks and credit unions. This market segment is currently at a very pivotal stage. NMLS data shows smaller companies exiting the business, while loan originator numbers are growing. This is not good news for wholesale lending overall. Now is the opportunity to shape an environment where small companies can operate compliantly, profitably and without fear. Coincidentally, the wholesale lenders who serve this market share the same desire.

The goal of NAMB’s Wholesale Summits is to gather the leaders and think tanks of this industry and chart a course to solve these problems. An exchange of ideas and concepts will bring us together as a unified force to help shape the future of wholesale lending. The future can be bright if all parties work in unison to formulate strategies and chart a course that will accomplish a mutual goal of success.

Hence my devotion of this month’s column to the NAMB Wholesale Summit and an appeal for those wholesalers not currently participating in the NAMB Wholesale Summit to step up to the plate and get off the sidelines and become an active participant in helping shape the future of wholesale lending. For wholesalers not currently part of the NAMB Wholesale Summit, there is still time to register as a Participant Sponsor for the event. Add your voice to the most important conversation about the direction and future of wholesale lending. Participant Sponsors may bring up to three executives to Dallas for the Summit, and will be an integral part of the day's discussions. Register today at http://tinyurl.com/qac6k4j.

Also attendee registration is available at the Second NAMB Wholesale Summit for mortgage industry supporters and professionals who wish to be able to listen to the proceedings in person, and network with NAMB’s leadership and Participant Sponsors during meals, breaks and receptions. Although attendee registrants will be in the meeting room during the Summit, they have "spectator capacity" only, and are not allowed to ask questions, make comments or otherwise engage with the participants during the Summit's agenda sessions. Visit http://tinyurl.com/qac6k4j to register as an attendee today.

So the answer to my opening question: Who needs wholesale? The answer is: We all do! Isn’t it nice to be needed?

Sincerely, Joel M. Berman, Publisher-CEO NMP Media Corp. • joel@nmpmediacorp.com

National Mortgage Professional Magazine is published monthly by NMP Media Corp. • Copyright © 2015 NMP Media Corp.

NATIONAL MORTGAGE PROFESSIONAL MAGAZINE’S

EDITORIAL CONTRIBUTORS Featured Editorial Contributors Rocke Andrews, CMC, CRMS

John H.P. Hudson, CRMS

Keith Bilodeau

Melanie A. Feliciano Esq.

Dr. Marty Martin

David Lykken

Stephen F. Bisbee

Blake Harp

Cari McCue

Pam Marron

Laura Burke

Kelly Hendricks

Bubba Mills

Linda McCoy, CRMS

Terry W. Clemans

Tom Hutchens

Dave Sullivan

Nathan Pierce

Joe Collins

David Kane

Eric Weinstein

Linn Cook

Carl Markman

Fowler Williams

John Councilman, CMC, CRMS

Jonathan Foxx

Donald J. Frommeyer, CRMS

Andy W. Harris, CRMS

Dave Hershman

Editorial Contributors Alice Alvey, CMB

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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

2015-2016 NAPMW National Board of Directors

NAMB 2014-2015 Board of Directors OFFICERS John Councilman, CMC, CRMS—President AMC Mortgage Corporation 10136 Avalon Lake Circle l Fort Myers, FL 33913 Phone: (239) 267-2400 l E-mail: jlc@amcmortgage.com Rocke Andrews, CMC, CRMS—President-Elect Lending Arizona LLC 3531 North Pantano Road l Tucson, AZ 85750 Phone: (520) 886-7283 l E-mail: randrews@lendingarizona.net Fred Kreger, CMC—Vice President American Family Funding 28368 Constellation Road, Suite 398 l Santa Clarita, CA 91350 Phone: (661) 505-4311 l E-mail: fred.kreger@affloans.com Rick Bettencourt, CRMS—Secretary Mortgage Network 300 Rosewood Drive l Danvers, MA 01923 Phone: (978) 777-7500 l E-mail: rbettencourt@mortgagenetwork.com Andy W. Harris, CRMS—Treasurer Vantage Mortgage Group Inc. 15962 SW Boones Ferry Rd., Ste 100 l Lake Oswego, Oregon 97035 Phone: (503) 496-0431, ext. 302 E-mail: aharris@vantagemortgagegroup.com

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Donald J. Frommeyer, CRMS—Immediate Past President/NAMB CEO American Midwest Bank 200 Medical Drive, Suite C-2A l Carmel, IN 46032 Phone: (317) 575-4355 l E-mail: donald.frommeyer@gmail.com

1851 South Lakeline Boulevard, Suite 104, Box 303 Phone: (800) 827-3034 • E-mail: napmw@napmw.org Web site: www.napmw.org

National President Kelly Hendricks (314) 398-6840 president@napmw.org

Treasurer Judy Alderson (918) 250-9080, ext. 300 nattreasurer@napmw.org

President-Elect Nikki Bell (678) 442-3966 preselect@napmw.org

Parliamentarian Frances Reinhardt (678) 331-1384 freinhardt@firstservicetitle.net

Vice President Cathy Kantrowitz (845) 463-3011 nvp1@napmw.org

Vice President Laurel Knight (425) 412-6787 nvp2@napmw.org

Secretary Windee Falla (281) 556-9182 natsecretary@napmw.org

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

2014-2015 Board of Directors

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DIRECTORS Kay A. Cleland, CMC, CRMS KC Mortgage LLC 2041 North Highway 83, Unit CPO Box 783 l Franktown, CO 80116 Phone: (720) 670-0124 l E-mail: kay@kcmortgagecolorado.com

Mike Brown President (908) 813-8555, ext. 3020 mbrown@cisinfo.net

Judy Ryan Director Credit Plus (800) 258-3488 judy.ryan@creditplus.com

John H.P. Hudson, CRMS Premier Nationwide Lending 1202 W. Bitters Road, Bldg. 1, Ste. 1205 San Antonio, TX 78216 Phone: (817) 247-4766 l E-mail: jhudson@pnlending.com

William Bower Vice President (800) 288-4757 wbower@continfo.com

Mike Thomas Director (615) 386-2285, ext. 285 mthomas@ciccredit.com

Maureen Devine Ex-Officio (413) 736-4511 mdevine@strategicinfo.com

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

Julie Wink Treasurer (901) 259-5105 julie@datafacts.com

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

Renee Erickson Conference Chair (866) 932-2715 renee@zipreports.com

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

Olga Kucerak, CRMS Crown Lending 110 Broadway, Suite 360 l San Antonio, TX 78205 Phone: (210) 828-3384 l E-mail: olga@crownlending.com David Luna, CRMS Mortgage Educators and Compliance 947 South 500 E, Suite 105 l American Fork, UT 84003 Phone: (877) 403-1428 l E-mail: david@mortgageeducators.com Linda McCoy, CRMS Mortgage Team 1 Inc. 6336 Piccadilly Square Drive l Mobile, AL 36609 Phone: (251) 650-0805 l E-mail: linda@mortgageteam1.com Valerie Saunders RE Financial Services 13033 West Lindburgh Avenue l Tampa, FL 33626 Phone: (866) 992-0785 l E-mail: valsaun@gmail.com John Stevens, CRMS Bank of England d/b/a ENG Lending 11650 South State Street, Suite 350 l Draper UT 84062 Phone: (801) 427-7111 l E-mail: jstevens@englending.com

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

Scott Ledbetter Director (801) 375-5522 sledbetter@propertysolutions.com

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1.800.649.1362

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NAMB National The Nation’s Largest Conference and Trade Show for Mortgage Professionals October 17-19, 2015 Luxor Hotel and Casino • Las Vegas, Nevada

THE

elite performer Business Casual

By Nathan Pierce

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Thousands of mortgage professionals will soon come together in Las Vegas, Nevada for NAMB National. NAMB— The Association of Mortgage Professionals cordially invites all mortgage professionals to attend this annual conference, the largest conference and trade show for mortgage professionals.

This year’s conference will focus on improving the mortgage lending industry by increasing the standards by which the industry conducts business. This will be done by offering more education sessions that will feature industry leaders chosen for their specific areas of expertise. Industry leaders, decision-makers, managers, loan originators, compliance officers, mortgage brokers, correspondent lenders, wholesale lenders, production staff members are all encouraged to attend.

The conference and trade show, taking place at the Luxor Hotel and Casino, will feature Don Mann, author of the autobiography Inside SEAL Team Six: My Life and Missions With America’s Elite Warriors as the keynote speaker. The chief economist at Fannie Mae has also been added to the lineup of special speakers. Andrea McArdle, the original voice of Annie on Broadway, will provide entertainment at the Awards Gala event. Separate tickets are available for the Gala at the time of registration.

Many areas of the country are experiencing a growing housing market, whether it is large or small growth, it can create challenges for any size organization. The obvious challenge is business expansion, but, the not so obvious challenge comes in the form of increased compliance management. With the Consumer Financial Protection Bureau (CFPB) and many states increasing the frequency and difficulty of audits it is clear that the industry must join together to overcome these challenges. NAMB National will feature a set of classes that will address how to get your “houses in order.” The conference will not only address how to prepare, but, will address what can be done to gain greater understanding, simplifying, and focusing on goals of decreasing the regulations that all mortgage professionals are facing, including businesses and individuals.

Registration has begun, visit NAMBNational.com or watch for e-mails being sent from various exhibitors offering FREE registration codes. Additional information can be found at the same Web address. A list of exhibitors can be found there along with the agenda which will be complete within the coming weeks. Check back often for additions that will be added regularly.

Don’t miss out on this exciting opportunity to better yourself and your business, register today!

Nathan Pierce is the chairman of NAMB National. He is a Certified Residential Mortgage Specialist (CRMS) and president of Advanced Funding Home Mortgage Loans in Salt Lake City, Utah. For more information, call (801) 272-0600 or e-mail npierce@advfund.com.

SPONSORED EDITORIAL

By Andy W. Harris don’t know about you, but I find myself taking things too seriously at the office sometimes or with business in general. At times and in certain settings, this may be appropriate, but all too often, it’s not. It’s like a battle of professional vs. casual and finally realizing I don’t even know where the line exists between the two anymore. I have come to realize that while each client or colleague might prefer a different approach, most just prefer that we are casual in business. That is, being professional, but also personable and not taking things too seriously.

Loosening up at the office can support relaxation and actually help you socially attract more clients, while also building a deeper relationship with colleagues.

We’ve all been there before. If we’re uptight or too serious, we might overreact when things go wrong, or become too sensitive and get irritated. At the end of the day, these behaviors produce results “Do not take life too that are certainly less productive than we had hoped for. What then is the pur- seriously. You will never pose of these behaviors if the outcome get out of it alive.” is negative? Issues will arise and how we deal with them is what matters.

—Elbert Hubbard Try relaxing this summer at the office. Give it a month by being intentional about it every day and see what happens. Yes, work hard of course, but don’t take things too seriously. Step outside and smell the fresh air and enjoy sunlight if you find yourself turning into a Diva. Small temporary issues you face are just that … small and temporary. The sun will rise and the sun will set. Enjoy both and find enjoyment and peace in everything you do. You’ll be surprised by the number of people you’ll attract in both new clients and new friends.

I

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

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Communicate Your Way to Higher Sales With DISC?

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By Bubba Mills his month’s article is all about communication. Let me start with a story: A woman was standing in front of the mirror and said to her husband: “Oh my love, I’m so fat and so ugly. I really need to hear a nice compliment.” Her husband replied, “You have great vision.”

Oh the trouble we can get into when our lips flap. Any married person can attest. Probably many mortgage professionals as well. Because mortgage lending is a people business, communication is the industry’s bedrock. And I can say this next sentence with certainty: Top producing mortgage lending are expert communicators.

If you want to join their ranks, you should jump at every opportunity to improve your communication skills.

This article can help, and to get the most from the article I only need you to remember four letters and their meaning: DISC. DISC is a tool you can use to quickly assess a person’s dominant person-

T

“Top producing mortgage lending are expert communicators.” ality. It’s based on work by psychologist William Martson.

Generally speaking, it turns out there are four primary types of personality styles out there: Directors, Interactors, Supporters and Compliants. The next time you’re talking to a prospect, you’ll be talking to one of those four types of people.

And when you understand which one you’re talking to you can be much more effective and more likely to get the result you want.

So, let’s dive into each and learn some practical tips you can start using in your work life.

Directors are direct. They want to make money, save time and be efficient. When you talk to directors, be short and to the point with closed questions. They seek productivity and

the bottom line. They’re motivated by new challenges and problems to solve.

They enjoy power and authority to take risks and make decisions. And they want freedom from routine and mundane tasks.

Interactors want, you guessed, interaction and lots of it. They want to have fun and they enjoy talking about themselves. When you’re talking to interactors, add humor and don’t labor on the details. They seek recognition and fun. They’re motivated by flattery, praise, popularity and acceptance and they want other people available to handle details.

Supporters are connectors. They want security, safety and a strong sense of belonging. When talking to supporters ask for their opinions and feelings and offer open-ended ques-

tions. They’re motivated by recognition for loyalty and dependability, and they don’t care for sudden changes in procedure or lifestyle.

They also like activities they can start and finish.

Compliants are thinkers. They’re always wondering how things work.

They want practicality, logic, fairness and a systematic approach. When talking to thinkers give facts, documentation and data. They seek accuracy.

They’re motivated by standards of high quality, limited social interaction, detailed tasks and logical organization of information.

Yes, understanding people, listening to their needs and wants and responding appropriately all take work and attention. But because mortgage lending is a people business, it’s simply a must. And the better at it you become, the better living you’ll make. I promise.

Bubba Mills is executive vice president of Corcoran Consulting & Coaching Inc. He may be reached by phone at (800) 957-8353 or visit www.corcorancoaching.com.

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Hash It Out with Frank Garay & Brian Stevens

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UWM Launches UClose for Same-Day Loan Closings and InterestOnly Financing Offering

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United Wholesale Mortgage (UWM) has announced the release of UClose, a tool that will allow mortgage brokers to close their loans within an hour after of receiving their clear to close.

This exclusive online tool will revolutionize the way brokers and correspondents close loans, as they will be taking control of the closing process, generating closing documents and scheduling the closing directly with their title company.

“UClose will give brokers complete control over the closing process, enabling them to take borrowers from clear-to-close to closing in just six clicks,” said Mat Ishbia, president and CEO of UWM. “It’s very important for realtors and borrowers to get to the closing table as quickly as possible, especially in a purchase market. We’ve created UClose so our brokers can get their clients to the closing table faster and more efficient than any other lender, and will always be the top choice of realtors.”

UClose was built strategically to comply with the upcoming TILA-RESPA Integrated Disclosure Rule (TRID), offering an even stronger advantage for brokers and correspondents when TRID goes into effect in October.

The launch of UClose continues UWM’s consistent push to deliver innovative, value-added technology to its partners. This latest tool follows the January release of UWM’s custom loan origination system, EASE (Easiest Application System Ever), and the enhancement of UTrack, which enables brokers and correspondents to provide borrowers and real estate agents with real-time access to track their purchase and refinance loans from submission through closing.

“UWM is committed to developing cutting edge technology to make the loan closing process faster, easier and more efficient for brokers and correspondents,” Ishbia said.

UWM has also announced an interest-only financing program available to

qualified borrowers who utilize UWM's extensive broker network for their mortgage needs.

"We expect the program to be an incredibly popular option for wellinformed borrowers, and in turn, a significant boom for mortgage originators," said Ishbia. "The purpose of the program is not to enable a consumer to afford a larger house; it's for savvy borrowers who can regularly afford a house on a 30-year fixed mortgage, but choose the interest-only option to save additional discretionary income."

In addition to a required 20 percent downpayment on the cost of a loan, UWM will only accept borrowers with minimum FICO scores of 720 and a 42 debt-to-income ratio to participate in the interest-only program. Borrowers will be required to begin paying down the principal of the loan after 10 years.

UWM is making interest-only financing more mainstream by broadening its reach to mortgage brokers, correspondents, small banks and local credit unions throughout the country. Large banking institutions have widely offered this option, but mostly restricted its availability to jumbo borrowers.

Ellie Mae Launches Latest Encompass Upgrade

Ellie Mae has announced that it has completed the release of its major new version of its Encompass all-in-one mortgage management solution across its entire client base of over 3,000 lending institutions. Encompass 15.1 was designed to ensure mortgage lenders are in compliance with the Consumer Financial Protection Bureau’s (CFPB) RESPA-TILA integrated mortgage disclosures (TRID) rule scheduled to take effect on Oct. 3, 2015. In addition to the new fields, forms and automation that have been added to address these new compliance requirements, the Encompass 15.1 release also includes new features for correspondent lending and secondary market-

ing, with specific new capabilities added to the Encompass product and pricing service.

Encompass 15.1 includes new Loan Estimate (LE) and Closing Disclosure (CD) input forms and workflow, new Fee Itemization and Management, Disclosure Tracking handling, Fee Variance and Change of Circumstance handling to help lenders manage RESPA-TILA compliance. Encompass also enables lenders to set the date when their loans will use new 2015 RESPA-TILA forms by default. Lenders will be able to switch to the new forms for loan applications taken on or after the effective date.

The new version of Encompass expands the ability to fully manage correspondent and third-party lending commitments, including commitment authority management and master commitment management. It also introduces a full solution for third-party fees and document management.

Encompass 15.1 contains major new tools to enhance product and pricing and secondary marketing activities, including historical pricing, worst-case pricing scenarios and automated rate lock capabilities.

“Despite the shifting of the effective date of the new regulations, we were ready and committed to providing our lenders with our new release, which we began delivering in June, as we know that compliance with RESPA-TILA is much more than adopting new forms. Lenders need real tools and resources to make the necessary changes to the loan production process and manage third-party relationships more effectively,” said Jonathan Corr, president and CEO of Ellie Mae. “The new release of Encompass provides new capabilities using our pricing and secondary solutions along with the necessary automation and resources required for a smooth transition to a post RESPATILA environment. Ultimately this major new version of Encompass is enabling our customers to increase productivity and efficiency.”

Veros Announces Sapphire Compatibility With FHA's EAD Portal

Veros Real Estate Solutions has announced that its Web-based, residential collateral valuation management platform, Sapphire, is ready to provide lenders with a direct connection to FHA’s Electronic Appraisal Delivery (EAD) portal. Veros offers the first and only appraisal-order interface providing direct connections to both FHA’s EAD portal as well as to the GSEs’ Uniform Collateral Data Portal (UCDP), enabling lenders to submit appraisals to either portal through a single system.

Sapphire is a SaaS-based property valuation management platform that addresses the breadth of valuation management needs in one intuitive, permissions-based platform. With the direct connection to EAD further strengthening its end-to-end solution, Sapphire continues to distinguish itself from the competition.

Whether a lender orders appraisals via a managed panel, AMCs or both, and whether the lender sells their loans to Fannie Mae, Freddie Mac, insures through FHA or holds in their own portfolio, Sapphire is equipped to manage the appraisal procurement and quality control process in a central system with highly auditable reporting.

“The Sapphire platform allows users to transition seamlessly through the appraisal order, management and quality control processes while combining flexible reporting and vendor management tools,” said David Rasmussen, senior vice president of operations for Veros. “This is a system designed to connect lenders to all their valuation providers and portals in an automated, while still highly controlled, manner.

Electronic submission of appraisals is mandated by the GSEs and will be mandated by FHA in the near future.

Customers using Veros’ proprietary solutions, such as Sapphire, can be con-

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EWSFLASH l AUGUST 2015 l NMP NEWSFLASH l AUGUST 2015 NMP NEWSFLAS NAMB Calls for End to Hidden Tax on Homebuying Consumers

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NAMB—The Association of Mortgage Professionals is urging its membership to contact their U.S. Senators to oppose inclusion of an extension of increased Fannie Mae and Freddie Mac guarantee fees, commonly referred to as “G-fees,” in the omnibus highway bill that may be considered on the floor of the Senate as early as this week.

Originally enacted in 2011 and set to expire in 2021, the increased G-fees have essentially become a hidden tax on consumers being used to pay for unrelated federal programs, such as highway funding, according to the NAMB. G-fees are not readily detectable by borrowers in their mortgage documents since they are incorporated into the underlying rates paid by borrowers.

"Much of the rationalization for the increase in the G-fees was to bring private sector participation back into the market to compete against these higher GSE fees," said John Councilman, NAMB president. "This belief has proven to be faulty thinking since the increases have not attracted private capital to any real extent."

According to Councilman, government-sponsored enterprises (GSEs) like Fannie Mae and Freddie Mac enjoy substantial protection from the many onerous laws and regulations present in the mortgage market that are not available to private investors and the higher G-fees only hurt homeownership rates.

"The only real result of these never-ending higher G-fees will be to discourage home ownership and to effectively price many more young and low to moderate income borrowers out of the market," said Councilman. "This is especially alarming given that rental costs are also making it difficult for the less affluent to find a place to live."

J.D. Power: Quicken Loans Ranks Highest in Mortgage Servicer Satisfaction In an industry that is highly regulated to protect consumer interest, mortgage servicers are spending a disproportionate amount of time and resources on at-risk customers, compared with customers who are current with their payment, adversely impacting satisfaction for the majority of their customers, according to the J.D. Power 2015 U.S. Primary Mortgage Servicer Satisfaction Study.

The Study, which has been redesigned in 2015, measures customer satisfaction with the mortgage servicing experience in six factors: new customer orientation; billing and payment process; escrow account administration; interaction; mortgage fees; and communications. Satisfaction is calculated on a 1,000-point scale.

For the second consecutive year, Quicken Loans ranked highest in primary mortgage servicer satisfaction, with a score of 834. Citizens ranked second with a score of 768, followed

by Capital One at 742.

The 2015 U.S. Primary Mortgage Servicer Satisfaction Study is based on responses from 5,922 customers who have had a mortgage on their primary residence for at least one year. The study was fielded in March-April 2015.

At-risk customers—those currently behind in their mortgage payments or concerned about keeping current during the next year—represent only 15 percent of the survey respondent pool. Despite being a relatively small percentage of the total population, this group has been a primary focus of such regulatory agencies as the Consumer Financial Protection Bureau (CFPB) and the governmentsponsored enterprises (GSEs)—Fannie Mae and Freddie Mac—that own or

guarantee the majority of conforming home loans. Mortgage servicers consider their primary “customers” to be the owner of the loan (i.e., GSEs and Investors) rather than the end borrower, who has limited power to decide which mortgage company services their loan.

“Bank mortgage servicers’ desire to retain and expand the broader relationship with the borrower has driven some improvement in customer service,” said Craig Martin, director of the mortgage practice at J.D. Power.

“Non-bank servicers have had less business incentive to improve the experience as their focus is on keeping borrowers paying their mortgage, not on delivering a better relationship. As non-bank servicers have gained an increasingly larger share of the market, they have tended to apply policies geared toward at-risk customers that are designed to avoid legal or regulatory actions.”

As a result of this polarity, there is a disproportionate amount of time and resources spent on at-risk customers, which diverts efforts to help improve the experience for the majority of customers, such as Web site upgrades. Enhanced self-service capabilities can improve satisfaction and at the same time help reduce servicing costs. When customers are able to resolve an issue entirely on their servicer’s Web site, satisfaction is 765, compared with 650 when they are not able to completely resolve the matter online.

Conversely, when customers aren’t able to resolve their issue completely via the website, 67 percent ultimately turn to a live agent to resolve the issue, which increases both the cost and the negative impact on satisfaction. An additional 14 percent of customers give up trying to resolve their issue with the company altogether, which might give them the impetus to turn to the CFPB or other regulatory agencies.

Satisfaction with Web site interaction is 750, which is 86 points below the average score for website interaction in the J.D. Power 2015 U.S. Retail Banking Satisfaction Study and 75 points below average in the J.D. Power 2014 U.S. Credit Card Satisfaction Study. Quicken Loans, Inc. is an exception in the mortgage servicing industry with a Web site interaction satisfaction of 868. More than one-fourth (26 percent) of mortgage customers indicate having had a sub-optimal self-service experience and having had to turn elsewhere for support, resulting in a 115-point decline in overall satisfaction.

ABA Survey: Dodd-Frank Limiting Bank Products and Services Growing regulatory compliance burdens have led nearly half of all banks to reduce their offerings of financial products and services, according to the American Bankers Association’s (ABA) 2015 Survey of Bank Compliance Officers. A combined 46.3 percent of respondents said their bank had cut offerings for loan accounts, deposit accounts or other services because of regulatory effects.

Additionally, 46 percent of bank compliance officers reported their institution had decided not to launch a product, open a new channel, or had held off on entering a new market—temporarily or permanently— due to compliance concerns.

“It’s clear that the compliance burden brought on by Dodd-Frank has had an impact not only on banks, but more importantly on the customers and communities they serve,” said Frank Keating, ABA president and CEO. “This regulatory overcorrection has limited the loans, products and services available to consumers.”

Further evidence of regulations’ effect on customers can be seen in the one-third (33.8 percent) of banks

that turned down otherwise creditworthy mortgage borrowers in an effort to comply with the Ability-toRepay Rule. The rule’s impact was felt most by banks with between $1 and $10 billion in assets. Approximately one-third (33.2 percent) of banks now make exclusively Qualified Mortgage (QM) loans.

The survey also reviewed trends in banks’ risk assessment processes.

More than 75 percent (76.6) of respondents perform enterprise-wide risk assessments, a majority of which are done annually. Results showed that as bank asset size increases, so does the percentage of institutions performing enterprise-wide risk assessments.

In other findings, an increasing number of banks are relying on social media monitoring as a portion of their consumer complaint management process. Just over 50 percent (51.3) of respondents use social media or other internet sites as a way to review comments about their bank—an increase from the 42.2 percent that did so in 2013.

The Web-based, biennial survey was conducted by the ABA from February through March 2015 to collect information about compliance officers and the compliance function practices at their bank. More than 450 financial institutions–78.5 percent of which reported to be community banks—participated in the 70question survey.

Millennials likewise favor developing communities where people do not need to drive long distances to work or shop.

“Realtors don’t only sell homes, they sell neighborhoods and communities,” said NAR President Chris Polychron, executive broker with 1st Choice Realty in Hot Springs, Ark. “Realtors aid in improving and revitalizing neighborhoods with smart growth initiatives, helping create walkable, urban centers, which is what more Americans want in their neighborhoods. While there is no such thing as a one-size-fits-all community, more and more homebuyers are expressing interest in living in mixedused, transit-accessible communities.”

As a whole, the survey found that Americans prefer walkable communities more so than they have in the past. Forty-eight percent of respondents reported that they would prefer to live in communities containing houses with small yards, but within easy walking distance of the community’s amenities, as opposed to living in communities with houses that have large yards, but they have to drive to all amenities. And while 60 percent of adults surveyed live in detached, single-family homes, 25 percent of those respondents said they would rather live in an attached home and have greater walkability.

When choosing a new home, respondents indicated that they

would like choices when it comes to their community’s transportation options. Eighty-five percent of survey participants said that sidewalks are a positive factor when purchasing a home, and 79 percent place importance on being within easy walking distance of places. Women in particular value walkability in their communities, with 61 percent indicating that having sidewalks with stores and restaurants to walk to is very important.

When it comes to respondents’ thoughts on transportation priorities for the government, 83 percent indicated that maintaining and repairing continued on page 16

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Millennials prefer walking over driving by a substantially wider margin than any other generation, according to a new poll conducted by the National Association of Realtors (NAR) and the Transportation Research and Education Center at Portland State University. The 2015 National Community and Transportation Preference Survey found that Millennials (ages 18-34) prefer walking as a mode of transportation by 12 percentage points over driving. Millennials are also shown to prefer living in attached housing, living within walking distance of shops and restaurants, and having a short commute, and they are the most likely age group to make use of public transportation.

The poll also found that Millennials show a stronger preference than other generations for expanding public transportation and providing transportation alternatives to driving, such as biking and walking, while also increasing the availability of trains and buses.

The Day the Baby Boomers Stop How to Target the Most Undervalued Housing Market

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I recently read an article on CNN Money that stated the homeownership rate amongst adults in the U.S is increasingly dropping and is now close to 60 percent. A majority of the current housing market is being propped by the Baby Boomers. That’s why Generation X (born between1965-1980) and the “Millennials” or Generation Y (born between1981-2000) are becoming the main focus of marketing campaigns nationwide. The Baby Boom generation is the nation’s largest living generation compared to Generation X and Generation Y. And these new generations aren’t buying homes or refinancing at the same rates as their predecessors.

The number of homeowners ages 35-39 has dropped significantly in the last 10 years. The lack of trading up activity in the market is increasing rental prices and making it harder to save for a downpayment. People ages 35-44 have “stagnant” wages and people ages 45-54 have the lowest wages since the end of the 1960s. So unless you’re up to speed on reverse mortgages, you better find a new way to market to these younger generations.

One thing we know for sure is that the younger generations are more technically savvy and have much more trust in the Internet. Have you read or heard of articles mentioning “multi-channel” marketing solutions. If the answer is “NO,” now is the time to do so. If you want to reach out to these generations, you have to reach out to them through multiple channels.

The crucial part of an effective multi-channel marketing campaign is getting in front of them online and in their homes. Telemarketing is all but illegal in the financial sector, so we have to utilize the vehicles we have available to us. That’s direct mail, online advertising (PPC-SEO-Social Media), Internet leads and e-mail marketing to attract the attention of qualified buyers.

Here’s the trick … you have to target the same person several different ways in order to build credibility and attract them to your business. Let them know you want to talk to them. Let them know that they are qualified. These younger generations have a much better grasp of their own credit situation, but they don’t understand what it takes to qualify or what programs are available to them to buy or refinance their home. Create a multi-channel marketing campaign that incorporates both an online and an offline (even a pre-screened credit offer) direct marketing approach and you’ll increase your results with these younger generations.

TagQuest client spotlight: Jason P., branch manager in Georgia Each month, we talk with our clients to see how their campaigns are going.

Here’s some feedback we received from Jason P., a branch manager from Georgia.

Marketing method: Direct mail l Volume: 5,000 pieces l Response rate: Over one percent l Results: More than a 20 percent conversion rate into working loans that will close Highlights of the campaign that worked well …

“Easy! It’s really turn-key.”

Highlights of the campaign that might appeal to others in the mortgage industry …

“Even with the Internet and all of the technology today, direct mail still has its place, and it can offer a better return-on-investment (ROI) than most other forms of marketing/advertising … you just have to do it the right way.”

Based in Medford, Ore., TagQuest Inc. is a full-service marketing firm developed throughout the ever-changing mortgage industry. Utilizing industry knowledge, marketing expertise, and technology we implement any or all aspects of your marketing and/or advertising campaigns. With a proven track record, more than 10 years in business, and decades of experience TagQuest knows what it takes to produce unprecedented results in today’s fast-paced mortgage environment.

For more information, call (888) 717-8980 or visit www.tagquest.com.

SPONSORED EDITORIAL

nmp news flash continued from page 15

roads and bridges should be a high priority, with expanding roads to help alleviate or reduce congestion as the next highest priority, at 60 percent.

While consumers’ top two concerns are related to driving, over half of survey participants stated that expanding public transit and providing convenient alternatives to driving should also be high priorities.

The survey of 3,000 adult Americans living in the 50 largest metropolitan areas was conducted by American Strategies and Meyers Research in May 2015 and analyzed by researchers at Portland State University.

Ellie Mae Awarded Patent for Encompass

llie Mae has announced that the U.S. Patent and Trademark Office has issued the company a patent for the Encompass mortgage origination and processing technology. The invention—U.S. Patent number 8,990,254 B2, titled "Loan Origination Software System for Processing Mortgage Loans Over A Distributed Network"—covers portions of the Encompass automation and loan origination system (LOS).

The LOS offers a comprehensive electronic form-based process that automatically generates and populates documents required during the course of a mortgage loan application process.

Specifically, the patent covers: Personabased user interface for loan officers, loan processors and underwriters; integrated contact management, marketing and pre-qualification tools; automated workflow and milestones; and individual and management-level loan pipeline views.

"Our Encompass technology offers a complete end-to-end solution to automate the mortgage origination process," said Jonathan Corr, Ellie Mae president and CEO. "This patented invention not only showcases Ellie Mae's technical leadership and expertise, it establishes an industry standard for the mortgage industry to follow. The Encompass technology serves as the foundation for our next generation solution, designed to bring more value to our customers by moving completely to the cloud to offer greater scalability, improved performance, productivity enhancements and the ability to use any device, anywhere."

CFPB Levies $700 Million Fine on Citibank Over Illegal Practices

NA and its subsidiaries to provide an estimated $700 million in relief to eligible consumers harmed by illegal practices related to credit card addon products and services. Roughly seven million consumer accounts were affected by Citibank’s deceptive marketing, billing, and administration of debt protection and credit monitoring add-on products. A Citibank subsidiary also deceptively charged expedited payment fees to nearly 1.8 million consumer accounts during collection calls. Citibank and its subsidiaries will pay $35 million in civil money penalties to the CFPB. “We continue to uncover illegal credit card add-on practices that are costing unknowing consumers millions of dollars,” said CFPB Director Richard Cordray. “In our four years, this is the tenth action we’ve taken against companies in this space for deceiving consumers. We will remain on the lookout for similar conduct and will address it as we find it.”

Citibank is a national bank and insured depository institution. Citibank, as well as its subsidiaries Department Stores National Bank, and Citicorp Credit Services, Inc. (USA), marketed or offered credit card add-on products to consumers nationwide. From at least 2003 through 2012, Citibank actively marketed and enrolled consumers in five debt protection add-on products: “AccountCare,” “Balance Protector,” “Credit Protection,” “Credit Protector,” and “Payment Safeguard.” These products promised to cancel a consumer’s payment or balance, or defer the payment due date, if the consumer experienced certain hardships, such as job loss, disability, hospitalization, and certain life events, such as marriage or divorce. Citibank also marketed and sold other add-on products— “IdentityMonitor,” “DirectAlert,” “PrivacyGuard,” and “Citi Credit Monitoring Services”—that offered credit-monitoring or credit-reportretrieval services. Citibank also offered “Watch-Guard Preferred,” a wallet-protection service that notified credit and debit card issuers if the consumers reported a card lost or stolen.

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 The Consumer Financial Protection is the 1st of the month prior to the target Bureau (CFPB) has ordered Citibank issue.

Wholesale

FHA Lender1

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NationalMortgageProfessional.com

Send us your FHA deals today.

Visit www.wholesale.flagstar.com to find an account executive near you.

1Source: FHA Neighborhood Watch, May 2015.

Member FDIC

Some restrictions may apply. All borrowers are subject to credit approval. Programs subject to change. The information provided is for dissemination to and for the use of real estate and financial business entities only and is not an advertisement for the extension of credit to customers.

n California Mortgage Professional Magazine n AUGUST 2015

Policy changes and near-historic low interest rates have made it an ideal time to purchase or refinance with FHA loans. With more than two decades of industry know-how, Flagstar Bank is a national leader—and a partner you can rely on.

A/B Split Testing: An Important Key for Direct Mail Success

By K. Justin Restaino

AUGUST 2015 n California Mortgage Professional Magazine n

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Marketers often focus on the various components that make up direct mail pieces—graphics, copy, choice of mailer and the like—and ignore the grittier details of campaign tracking. However, it is this tracking—and specifically, A/B split testing—that will allow you to improve the results of your direct mail marketing and increase your return-on-investment (ROI). While testing is often ignored by many marketers, it should be a vital component of any direct mail campaign. Testing enables you to determine which marketing pieces resonate more with your target market, rather than merely relying on guesswork.

In some ways, testing is similar to being a scientist in a laboratory— you might have a hypothesis about the results your scientific test is likely to generate, but by controlling certain variables, you can determine whether your hypothesis has merit. Sometimes the results are surprising, which is why testing is so important, not just for scientists but for marketers as well.

Most marketers who use testing rely on A/B split testing. A/B split testing occurs when mail pieces are separated into two distinct versions, with only one element different between them. For example, the mailers might be similar in all aspects, except for offering different headlines, graphics, or calls-to-action (CTAs).

In this way, you’ve isolated one critical part of your direct mail piece to test its effectiveness. This allows you to determine how you can enhance your mailer in future campaigns to yield the best results. A/B split testing is easier to conduct than you probably imagine. You simply create two versions of your mailer. They should be exactly the same, except for one critical element. Then, you would send one version of your mailer to half of your mailing list, and the other half of your list would receive the other version. You would track the results so you could determine which mailer generated a greater response rate. In this way, you could analyze which mailer was the most effective.

Remember that the more people you send the mailer to, the more confident you can be of the results. A sample size of 10,000 would yield greater confidence, for instance, than one of 1,000. However, if you are marketing to a smaller group of people, you can confirm the results by running the same test in multiple campaigns.

“A good marketer is always testing, always tracking, and always perfecting their skills. This is what sets apart a successful direct mail marketer from one who fails.”

Direct mail can be an excellent marketing strategy for mortgage brokers. It’s relatively inexpensive and can offer a high ROI if done well. To maximize your success, we recommend that you use A/B split testing. You can test a variety of elements—from the headline to the layout—to determine which features resonates the most with your audience. Think of direct mail as a continuous process of improvement. Each time you conduct a direct mail campaign, consider changing one item to see which version of your direct mail piece garners the best results. In doing so, you’ll increase your ROI, improve your response rate and acquire more clients.

K. Justin Restaino is vice president of Titan List & Mailing Services Inc. For more than 15 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.

SPONSORED EDITORIAL

new to market continued from page 12

fident that the expertise and experience that Veros implements in building and supporting the portals is equally applied to the development of its own technology.”

eLynx's Expedite Update Now TRID-Compliant

eLynx has announced the latest release of Expedite, its cloud-based platform for managing and delivering all loan documents, now compliant with the CFPB’s upcoming TILA-RESPA Integrated Disclosures (TRID) rule. Expedite is used by thousands of lenders and settlement services providers across the industry. Expedite's new functionality includes: Full document generation of Loan Estimate and Closing Disclosure documents; direct bi-directional integration with third party fee providers and title production systems that automates the collection of fee information from different sources; data extraction service that eliminates the need for manual data entry even when direct integration between lenders and settlement agents is not possible; fee determination features that allow lenders to compare the fees sideby-side, select the appropriate fees to include in the Closing Disclosure and document the different fees and actions in a fee reconciliation report; real-time alerts when there are potential compliance issues; a comprehensive, fully integrated audit trail that documents TRID compliance; and twostep authentication and other security enhancements.

“Our customers have had access to the new TRID-related features in a test environment for several weeks so they could prepare for the August implementation date. Now with the anticipated two-month delay by the CFPB, lenders may have extra time to perfect their processes and make sure their staff and partners are ready,” said eLynx President and CEO Sharon Matthews. ”Lenders who have worked hard to be ready by the original deadline shouldn’t have to derail their implementation plans if the CFPB decides to delay the implementation date. Lenders who are behind schedule or who don’t have confidence in their initial plans for TRID can use the extra time to test and if necessary, shore up their TRID plans. Either way, the ultimate beneficiaries are the borrowers, which is the whole point of the CFPB’s ‘Know before you owe’ initiative."

DST Announces Upgrades for Valuation and REO Disposition

Default Servicing Technologies LLC (DST), creators of the DispoSolutions REO management platform and the

ValuationSolutions enterprise collateral valuation management technology, has announced that the firm's software development team has released updates for both platforms that are available to users now. DST updates its software on a schedule and the changes made in the new release reflect change requests from current users and some additional functionality.

For DispoSolutions, the release adds new functionality to manipulate notes in custom tasks, allowing users more control over their individual workflows.

Both changes are expected to smooth workflows for servicers and asset management firms. Other new features add functionality for vendor management, specifically to help customers better work with REO sales agents.

"As an agile software developer, we have a responsibility to our clients to continue to update and refine our software on a regular basis," said Amy Bergseth, vice president of operations for DST. "In an industry that is changing rapidly, our programmers, project managers and QA personnel are working on something new for our customers all the time. Our development team is responding directly to the stated needs of our users and so we expect these changes to be well received."

DST's Web-based software is compatible with all mortgage servicing platforms and can be easily integrated into other legacy systems as required.

LenderLive's GuardianDocs Integrates With Calyx Point

LenderLive Network Inc. has announced that its GuardianDocs document preparation service is now seamlessly integrated with Calyx Software.

Now, users of Calyx Point can order and complete initial disclosures and closing packages without leaving Point.

Utilizing Calyx’s DirectConnect integration portal, GuardianDocs has created a complete interface for Calyx Point that streamlines the ordering process and supports the generation and fulfillment of application disclosures and the closing package. GuardianDoc’s complete and seamless interface alleviates the need to log out of the LOS and go to a production Web site to re-key critical information to complete the document order.

When lenders order the disclosures and closing documents within Calyx Point, all data is transferred to GuardianDocs. In the case of missing information required to prepare the documents, integrated messaging alerts the lender of the missing data and lets continued on page 34

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NAMB PERSPECTIVE The President’s Message: August 2015 NAMB Continues to Fight for You It has been a busy time over the past several months for NAMB’s legislative team in Washington, D.C. NAMB, along with other major

trade groups, had pushed for a holdharmless period for the new TRID disclosures. The Consumer Financial Protection Bureau (CFPB) responded that they would be “sensitive” to those who are making a good-faith effort to comply. Little did we dream the CFPB

The CEO Perspective A Message From NAMB CEO Donald J. Frommeyer, CRMS

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I want to hear from you about NAMB!!!

One thing I have always been able to say about our members is that you are never without an opinion. And that is exactly what I am after. As CEO of NAMB, it is my job to look ahead and help the board of directors look at potential changes that can help all of our members. And one of your jobs as a member is to make some positive suggestions that you would like to see made for the betterment of the association. So, I am asking you to take a few minutes and make some suggestions. I want to

know about the Web site, the committees, the programs, NAMB+, our designations, everything.

Now, I don’t want to take this as a complaint session. I want some constructive suggestions. I will also take some criticism, as long as it is positive. I want to know how we can make it better for you and your employees. What would you like to see offered by NAMB+ to help you in your daily routine? How can we help you in your everyday life?

What suggestions can help you understand what we do to make you better? I know that I am asking for you to spend a little time, but believe me, it will be worth it.

NAMB’s Delegate Council to Convene in Vegas

By Rocke Andrews, CMC, CRMS The first NAMB Delegate Council of the new year will be held at NAMB

National at the Luxor on Saturday, Oct. 17. At this meeting, we will take nominations from the Council to determine the members of the upcoming committee to accept nominations for the NAMB board and executive officers. This is the most

www.nationalmortgageprofessionalmagazine.com

would make a huge error by not timely submitting the final rule to Congress.

Perhaps they need a little sensitivity.

Then, Congress nearly decided to use G-fees to fund things like highway projects. NAMB and our fellow groups cried foul. The good news is that both Senate and House have abandoned what would have been a tax on homeowners. These are just a few of the battles we fight every day for mortgage originators and consumers in our

nation’s capital. The more members we have, the more effective we become. Make it a point to get someone to sign up today and make your profession more secure.

Sincerely,

Over the next year, one of my goals is to help with changes to bring NAMB into the 21st Century. As some suggestions, I think this year has been a good year as NAMB started a Diversity Subcommittee of Membership. Wendy has done an excellent job in getting this started, and I think it will really get better in the coming year.

Communications has increased to include not only our Facebook Page, but we now have a Twitter account and a Government Affairs blog. Some of these things did not exist until this year. So we are making some strides, but we want suggestions from you.

Now, we are looking for some suggestions also on our NAMB home page.

What do you think we are missing from it to make it better? We have some great volunteers who are devoting a lot of time to do this, but we want ideas. It is never going to be a $5 million Web page, but what items need to be there?

What headings would make it better for you? Do you visit the Web page often or just once a year? Do you ever use the “Borrower Tools” or the “Find a Member” section of the Web site?

So, you guys all know what I want.

And please, send me suggestions both good and bad. If you don’t like something, tell me. Send your responses to donald.frommeyer@gmail.com or nambceo@namb.org. I will put these comments together and present them for ideas. I really want your help. So please do what you always do, and that is giving me those ideas. Let’s all work together and make this happen.

And as always, thank you for being a member.

important order of business for the Delegate Council, so it is important that your NAMB state affiliate participates.

There will be a Delegate Council Conference Call on Friday, Aug. 14 to discuss the association’s bylaws changes and deliver reports from NAMB’s committees. On this call, we will discuss the requirements to serve on NAMB’s Delegate Council. Each state shall name two delegates who will serve for the coming year. Each delegate is to serve two years and most states stagger the terms. Most states have their president and president-elect serve on the Delegate Council, thus meeting the staggered term. Having served on a Delegate Council is a requirement for service on the national board. Each delegate must be an NAMB member in good standing. These delegates must be named 45 days before the Delegate Council Meeting, which would mean

by Sept. 11. Each state must be a NAMB member in good standing.

Delegates will be notified of the meetings at least 30 days in advance.

Proxies are not allowed, but alternates may be named by the state as long as NAMB is notified in advance.

At least 60 days in advance of the meeting there will be a call for agenda items from the states that they might want discussed at the meeting.

This year, we will most likely have the Annual Meeting at the end of Delegate Council to vote on any items before the membership.

As a delegate, please read the NAMB report in advance and be prepared to discuss and vote on any agenda items before the group. You are also expected to communicate the items discussed and report back to your state membership. The idea is for the delegates to discuss and get their state opinions prior to coming to the meeting and voting.

The primary purpose of the Delegate Council is to distribute information from NAMB back to their states and bring any state concerns or issues to the attention of NAMB, so please be sure your state participates.

John L. Councilman, CMC, CRMS NAMB President president@namb.org www.joinnamb.com

Donald J. Frommeyer, CRMS is chief executive officer for NAMB—The Association of Mortgage Professional.

He may be reached by e-mail at namb.ceo@namb.org.

Rocke Andrews, CMC, CRMS of Lending Arizona LLC in Tucson, Ariz. is president-elect of NAMB—The Association of Mortgage Professionals. He may be reached by phone at (520) 886-7283 or e-mail randrews@lendingarizona.net.

NAMB PERSPECTIVE

Are You A Mortgage Professional and Want a Free Trip to Las Vegas?

Tell us and the world what makes you a #MortgagePro!

By John H.P. Hudson, CRMS The ultimate goal of NAMB’s #MortgagePro Social Media Contest is to have fun and share “Our Story” as mortgage professionals with the rest of the world. Your friends, family, referral partners, politicians, and regulators all

need to hear about how much you love helping families with their dream of homeownership. They need to hear why small business is great for America. Or, simply what makes you and our industry “Professional.”

It never hurts to show potential clients what separates you from the pack.

Entering NAMB’s Social Media

Making Sure the Puzzle Pieces Fit

By Linda McCoy, CRMS

you are a mortgage professional. Send your stories to communications@namb.org.

association and NAMB is a good place to start.

member of the NAMB Board of Directors and serves as NAMB Industry Partners Committee co-chair. She may be reached by phone at (251) 650-0805 or e-mail linda@mortgageteam1.com.

Linda McCoy, CRMS is broker/owner of Mortgage Team 1 Inc. in Mobile, Ala., a

John H. P. Hudson is NAMB Communications Committee Chair, a member of the NAMB board of directors, and vice president of Mortgage Financial Services.

He may be reached by phone at (817) 2474766, e-mail jhudson@mfsus.com or follow John on twitter @JHPHudson.

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Why Do I Need NAMB? 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.

n California Mortgage Professional Magazine n AUGUST 2015

www.namb.org … JOIN TODAY!

NationalMortgageProfessional.com

With our current laws, rules and regulations, you cannot originate loans without a license. I have often thought that the old apprenticeship programs might be the best way to learn where you learn from an experienced professional. There are classes at schools and universities that can teach you what they have in the books. Most of what many of us have learned in our complex business came from trial and error.

When I first started originating, I met with a couple, took their application, gathered all I thought I needed and took it to the underwriter. She looked at everything very thoroughly, one piece of paper at a time. After about an hour, she told me she needed a few more documents. I quickly went back to the couple and collected the additional documents. I took them back to the underwriter and she reviewed it and said, “Now, I need a few more documents.” She explained that every time she looked at the new documents that I brought her, it caused more questions that needed to be addressed. This went on for weeks.

Each time, I would say, “This needs to be the last thing.” I finally asked her one day, “What is it going to take to get this loan approved.

She laughed because she just didn’t

like the loan. She stated, “If I come in and it’s on the ceiling, I’ll approve it.” She meant, “Never.”

Well, that night I got a very tall ladder and taped the whole file to the ceiling right over the top of her desk. She came in the next morning, drinking her coffee and looking at me sitting across her desk staring at her. Puzzled, she finally said “What?” I just looked up. She looked up too and looked back at me, smiled and said, “Approved.” True story!

That was my first loan. I learned so much about what the data was for. We did not just collect it, it had to make sense. One paystub review caused her to ask for more verifications and so on. I learned that the puzzle can be put together, but you cannot have missing pieces. It was my job to collect all the pieces and make sure they fit.

The changes in our industry over the last few years, created better, more informed and more professional loan officers. We, as an association, will help mentor those who want to enter our profession. You can learn from other loan officers who have been in the business. We encourage you to participate in NAMB’s Webinars and classes. Ask questions. Attend state and national conventions. You can join in on conference calls. We talk about membership, government affairs and education. I think joining your state

Contest is as simple as using the hashtag “#MortgagePro” in your Facebook and Twitter posts, or sending us a video telling the world what makes you a #MortgagePro! You may be the lucky winner of a trip for two to NAMB National 2015 in Las Vegas!

And remember, I don’t care if you are a mortgage broker or a mortgage banker,

NAMB PERSPECTIVE Why Are Fannie And Freddie Still in Conservatorship?

By John L. Councilman, CMC, CRMS Conservatorship is a power that the courts normally give to someone when a person is disabled or incompetent to handle their own affairs. It can be for a limited time or indefinitely. Usually, it is for a limited time if there is any prospect the person will recover.

Congress decided that the governmentsponsored enterprises (GSEs) were not capable of properly running their own affairs when it put the GSEs in conservatorship. The Federal Housing Finance Agency (FHFA), their regulator, became their conservator with the power to manage all of their business. One of the FHFA’s first steps was to replace all of their management and board mem-

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bers. This displayed a complete lack of confidence in their leadership.

Now that we have had all officers appointed by the FHFA, the boards appointed by FHFA, and with the FHFA in the driver’s seat as regulator, we must wonder what else the FHFA is accomplishing by keeping the GSEs in conservatorship. They admit that they do not manage the GSEs’ day-to-day operations. Their oversight is generally by periodic audits which they could do as a regulator. There must be a reason for this total power.

In the document titled “History of Fannie Mae & Freddie Mac Conservatorships,” the FHFA states: “Long-term, continued operation in a government-run conservatorship is not sustainable for Fannie Mae and Freddie Mac because each company lacks capital, can-

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 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: l Be an NAMB member l Meet the requirements of the SAFE Act l Pass a national criminal background check l Attend eight hours (or equivalent) of professional development education each year l Attend two hours (or equivalent) of ethics training every other year or each license renewal cycle l Provide professional references l Subscribe to NAMB’s Best Business Practices l Agree to NAMB’s Code of Ethics l Must be renewed annually

not rebuild its capital base, and is operating on a remaining, finite line of capital from taxpayers. Until Congress determines the future of Fannie Mae and Freddie Mac and the housing finance market, FHFA will continue to carry out its responsibilities as Conservator.”

This document is found on FHFA’s Web site, so it must represent their current thinking. Analyzing the statement, “each company lacks capital, cannot rebuild its capital base” is almost laughable. Fannie Mae repaid the government every penny it advanced and billions more. The capital base could easily be rebuilt if the U.S. Treasury was not siphoning off all of the profits.

It appears Congress is very clear what it wants to do, fund government spending with the profits of Fannie Mae and Freddie Mac. The nasty part of that is that homeowners are actually subsidizing other government programs.

In its Strategic Goals for 2015-2019, the Federal Housing Administration (FHA) sets forth three primary goals for its conservatorship: 1. Preserve and conserve assets 2. Reduce taxpayer risk from Enterprise operations 3. Build a new single-family securitization infrastructure When we look at these three goals, it is curious to see how well FHFA is performing them. If FHFA’s goal is to preserve assets, why aren’t they screaming as the Treasury takes all of the profits of the two GSEs? Why are they purposely depleting the assets of Fannie and Freddie to the point where neither will have any net worth by the year 2018?

FHFA lists under this category nothing more than making certain the GSEs business operations are carried out efficiently which has very little to do with preserving assets. A recent FHFA Inspector General report says the FHFA’s auditors aren’t even qualified to make certain the GSEs are operating under FHFA’s directions.

The next goal of the conservatorship is to reduce taxpayer risk. We must understand that the government did not have an explicit guarantee to take on the risk of Fannie and Freddie. They chose to do so back in 2008 and steadily increased their ownership rights to the GSEs up until 2012. The very fact that other securitizers of loans are pushed out of the market by the GSEs’ dominance keeps taxpayers at risk.

Private capital cannot compete against the federal government which has no profit incentive since it operates at the expense of taxpayers. Current laws and regulations are so onerous that private capital is not willing to take the risk that government can avoid since enti-

ties in federal conservatorship cannot be sued. FHFA’s only answer here is to create risk sharing with private capital.

That still puts the GSEs at the center of the lending business. The shared risk is not a robust sharing that greatly reduces taxpayer risk.

Apparently still living under the presumption that Fannie and Freddie are not sustainable, FHFA is working to create a single mortgage security for the two. They also are building common standards for securitization. This would essentially push all mortgage activity into this paradigm. Even private capital is expected to work through it. The sad part of this vision is that this security platform becomes the entire mortgage industry. In the event of a catastrophe, this system will likely go down with even more disastrous results than what occurred previously. This will be particularly true since it is likely to be laden with political agendas that often are at odds with safety and soundness.

The Housing and Economic Recovery Act of 2008 (HERA) was designed to bring the housing GSEs out of conservatorship. That conservatorship was not meant to be a long-term solution.

Nonetheless, it looks to have become just that.

It seems quite clear that Fannie and Freddie are irreplaceable with anything that could accomplish all of the mixed goals they attempt to meet. On one hand, they are charged with risk-based operation. On the other, they are charged with housing goals that are not consistent with minimizing risk. On top of all of that, they have become a cash cow for the federal government that the Treasury Department is not keen to relinquish. There are too many people that have a stake in the continuance of the GSEs for them to disappear. The answer seems to have become essentially nationalizing them as government-owned. If that is the future, we should get used to the idea that the government will be the nation’s lender.

The politicians would hate that because they would have to put all of the GSE’s liabilities on the government’s list of liabilities. They made them quasi-government agencies to prevent that.

With so many adjustments to laws that need to be made for that to be the case perhaps it’s time to either formalize them and take on their debt as a nation or set them free as shareholderowned. No matter which is chosen, it is time to stop the never-never land of conservatorship.

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

NAMB PERSPECTIVE

getting toknow

Rick Bettencourt Jr. appreciates the concept of going the extra mile and doing more than your fair share. In his work as a branch manager at Mortgage Network in Danvers, Mass., Bettencourt has become an indefatigable champion of the Department of Veterans Affairs’ (VA) lending products. He is a Certified Military Housing Specialist (CMHS), as well as holding NAMB’s Certified Residential Mortgage Specialist (CRMS) designation. In his service to NAMB—The Association of Mortgage Professionals, Bettencourt is the organization’s secretary and a member of the board of directors, as well as the immediate past chairman of the association’s Government Affairs Committee. He also served on the board of directors of the Massachusetts Mortgage Association (MMA) and as the chairman of that group’s Education Committee.

National Mortgage Professional Magazine recently spoke with Bettencourt regarding his trade association work and his career achievements.

NMP: What does your role as NAMB’s secretary entail?

Rick Bettencourt: As a member of NAMB’s Executive Board, it is my duty to ensure the content on the Web site is upto-date and beneficial to our constituents. I work with our legal counsel in relation to the organization’s contracts and with the NAMB+ partners.

When did you first get involved with NAMB? I began as an NAMB member in 2002.

At the time, Massachusetts had the Massachusetts Mortgage Association (MMA) and there was full reciprocity between the two groups, as if you signed up for MMA membership, you were instantly a member of NAMB as well.

And how has NAMB membership helped your career?

NAMB created opportunities for me to learn so much more about the business—both in the primary and secondary markets—and to work with unbelievable mortgage professionals from all over the country. The relationships I’ve built helped me more than you might

the country. My dream and passion is to reach out to veterans and educate them on the benefit they earned.

Rick Bettencourt Jr. NAMB Secretary B Y

P H I L

H A L L

think, and being in NAMB has helped me to build my credibility and integrity when I deal with my clients.

association. I’d love to be a part of it as long as the constituents continue to vote me in as a director.

Let’s talk about your work on NAMB’s Government Affairs Committee.

In serving on the Government Affairs Committee, I met with the Consumer Financial Protection Bureau (CFPB), the Federal Housing Administration (FHA) and Fannie Mae and Freddie Mac. It is very convenient for me to fly from Boston to Washington, D.C.—it’s only a 45minute flight, and I’ve done seven to nine trips a year to lobby or work with our lobbyist, Roy DeLoach.

Can you see yourself as NAMB’s president?

I would like to be NAMB’s president someday. Am I ready for it now? No. I learn something new every day. I consider myself to be a new member—to run NAMB as efficiently as Don Frommeyer or John Councilman takes years of experience.

There are more than a few mortgage professionals that are not big fans of the CFPB. What is it like to deal with that agency and with its director, Richard Cordray?

They have been very open to our discussions and concerns, and our experience with them has always been very positive— we never had any contentious situation.

Director Cordray has been amicable and polite in our meetings. He is also one of the most prolific note-takers I’ve seen.

You have to remember that the CFPB had a job to do that is based on the Dodd-Frank Act. It is difficult to make changes to rules when the rules are as big as the Qualified Mortgage.

What do you see as your future in NAMB? I love the association very much. I don’t really see myself not participating in our

Are you currently still active with the MMA? I would say the MMA is in a state of static flux right now. It is on my bucket list … I would love to bring it back to where it was.

Let’s switch the focus to your work with Mortgage Network, where you are active in the VA loan market. Why are you pursuing that particular product?

Fifty-five percent of my business is with the military which is unique because there are no active bases here in Massachusetts. I come from a military family and tried to get into the service, but I have severe asthma. I want to work with this community because they did more for us than we did for them. Since Operation Iraqi Freedom, we lost almost 5,000 men and women and they were all volunteers. I felt I had to give back.

Massachusetts has the lowest VA utilization in the country, but it has the biggest state-funded veteran program in

Are you also active in the reverse mortgage market?

Our policy is to have reverse mortgages handled by one specialist—in this case, Lyn Coffin. I’m a huge fan of the reverse mortgage. It’s not for everyone—there is a lot of stigma and misinformation about it, like the VA program. When you find the right seniors who know how to use it with full understanding of the product’s ramifications, that is phenomenal.

What is your local housing market like today?

There are some communities outside of Boston where a house can go for $155,000. But only two to three miles away, houses go for $2-$3 million.

Boston needs more housing. As land and resources become more and more scarce from an acreage standpoint, where can we g but up? I believe we will see an increase in large developments.

We could see a vast number of people move to Berkshires, where there is still ample amount of land, but will they want to do drive two to three hours to their jobs?

Once see rates creep up, end of 2015 and into 2016, it will get very, very busy.

We will see people who were thinking of buying start to say, “We better get off this fence … rates are going up!”

How do you think your local housing market will react if the Olympics come to Boston in 2024?

I’m all for the Olympics coming to Boston, although the infrastructure needs some updating to handle it. I don’t know if it will have an impact on the mortgage market—maybe for extremely temporary reasons, like housing the personnel to build Boston up for the International Olympic Committee’s okay.

But the ones who will really benefit will be the landlords renting properties out.

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

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A Voyage Into the Video Blogging Universe A chat with Frank Garay and Brian Stevens of The National Real Estate Post

By Dave Sullivan The National Real Estate Post is one of the most popular video shows in the mortgage industry. Special correspondent for National Mortgage Professional Magazine Dave Sullivan recently sat down with Frank Garay (pictured left) and Brian Stevens (pictured right) to talk about how they got started in the video blogging space and what they have learned over the last eight years.

NMP: You were both originators for a number of years before you started video blogging, correct?

Frank Garay: Yes. NMP: How did you start working together?

Garay: I was doing video for my loan officers. I had about 50 loan officers at the time and they were starving to death in 2007. They were all relatively new, and I had been in the business for 20 years at that point and knew how to

get through a tough market. I was trying to teach them to motivate them to do the right thing.

NMP: So your videos were originally for your loan officers?

Garay: Yes, the videos were for my personal loan officers and video blogging was just stumbled upon accidently one day and then I started to do it every day.

That was back on July 2, 2007. I had my brother helping me with the video end of things for about six months. We even-

tually stopped when he didn't make it in the industry, so then my branch was folded into the corporate office. I needed somebody else to help me with this daily video. At that point, we weren’t getting very many views, just around 100 a day. My boss at the time suggested Brian Stevens, and I said “Yeah, but I hate that guy!” My boss said “He doesn’t like you either.” So he put us together, and that's how we got connected.

Brian Stevens: On my side of things, I had basically ruined my business in 2009.

I had a couple of dollars in my pocket and was feeling pretty smart at the time.

When the money stopped, I realized I was not as smart as I thought I was. By the time the mortgage crisis rolled around when everybody was suffering with their business, my business was flourishing, as the span of 2007-2008 were my best two years. I was really focused on my purchase business and trying to fix the problems that I had. That is when the market started falling apart.

I always had a default rate that was probably a little bit higher than some of my colleagues in the office. It wasn’t from fraud at all, but it was from aggressive originations.

I was taking a loan application one day and my boss came to me and said, “I need to talk to you after you’re done.”

I asked, “What is it?”

He said, “Well, I need to talk with you.”

I am thinking “Tell me now! Why the hell are you interrupting me in the middle of an application?”

I am thinking … this is going to be a

heavy, this has to be huge. Did my default ratio come in too high this month?

I said, “Tell me now! Are you going to fire me?” Just imagine my clients sitting there while all of this was going on.

NMP: It is like telling you customers “Can you guys come with me, I am switching companies!”

Stevens: So he takes off, Frank [Garay] comes in and says “Howdy partner,” and I thought … he wants me to be part of that stupid show? Whatever … I'm not getting fired so I agreed to do it. Neither one of us went skipping along into this relationship, but it's been a fantastic ride. What we've learned is that we work well together in small areas, I mean we had to do that … we're basically like prison cellmates!

NMP: What strategies have worked best for you to grow your viewing audience?

Garay: The same strategy we have always had, which is never stop doing what we do. We tell people that the only reason that Brain and I have had success in the real estate video blogging space, is that

at now and say, “Boy, am I glad we did that!”?

Garay: This is easy for me. Through our show, we were presented with the opportunity to get out of our local area and travel. Every time we traveled somewhere and visited new places for speaking engagements, it was a huge deal for us. It may not be when we are performing our duties at the event, but outside of that, it was the networking opportunities before and after our presentation. We have come across countless opportunities and multiple contacts that have been so instrumentally important to our success.

I shared this at a local board breakfast recently. We tend to operate in the walls

NMP: Is there a move you made over the last three years that you look back

continued on page 28

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n California Mortgage Professional Magazine n AUGUST 2015

NMP: Was that the moment you realized it was going to change your lives.

Stevens: Yes.

and it will pay off in a big way as long as you are consistent—at least once a week, preferably two or three times a week if you really want to gain some traction Stevens: I agree with Frank completely.

What I would add as another mistake is whoever is recording the video or writing the video. It's the inability to understand that there needs to be compelling reason for the recipient to open the message. If your past clients, family or friends aren't buying or refinancing a house right now, why would you send them information about rates every week? That becomes a boring message and you are effectively training them to ignore you.

NationalMortgageProfessional.com

NMP: When did you realize it was going to be more geared toward other loan officers and real estate professionals in the business?

Stevens: I think what happened was it was Frank's model at first. He wanted to have a little sales nourishment for five minutes and a little industry news for about five minutes. At that point, he was sending it to real estate agents also.

When I jumped in, it wasn't just intended for his loan officers … it was developing into its own little voice.

We were going to San Diego for the California Association of Mortgage Brokers Annual Convention. It was a fairly large robust event and we were doing blogging for $20-$40 per day. I mean we were making very little money at it, but we had decided that this is what we wanted to do.

When we went down to the Convention, someone said, “Well there is a real nice lunch … you two go and get some free lunch.” We were very in appropriately dressed at the time.

Garay: We were wearing shorts and flipflops.

Stevens: I walked in there with a t-shirt.

On the shirt, and this will sound really terrible, so please don't take it the wrong way, was Charles Manson with Charlie's Angels coming out of his hair. I had no idea what I was getting into. We were sitting in the back and everyone was turning around looking at us. I was just embarrassed beyond belief that we came so inappropriately dressed. Then when the speaker stopped and they were done giving each other awards, everybody wanted to come back and take a picture with us. That was the moment when I knew we were on to something.

we are just too stupid to stop doing it.

Day after day, we go into the office and say, “I so hate you again right now, I don't want to be near you and I don't like being here,” yet we do it anyway.

Stevens: I think a lot of it is tenacity. If there is one thing that we can get across to the people, is that you just have to keep at it. It certainly is not our brains or good looks, so it must be our tenacity.

Garay: The biggest mistake people make is that they do one video or blog post and the Brinks Truck doesn’t show up and dump a big pile of money at their feet.

Now there are several other smaller mistakes people make, but the biggest mistake is that people just give up. Video blogging, in particular, is really like any other form of social media, it can pay off

Now Available:

26

Credit Score Help From Rent Payments for Mortgage Lending

By Terry W. Clemans Fannie Mae, Freddie Mac and the U.S. Department of Housing & Urban Development (HUD) are still requiring credit score models based on consumer spending habits from prior to the 2008 mortgage crisis. They are considering a switch to one of the newer score models that factor rental payments and other “alternative credit” accounts into the score, as long as the data is in the credit bureau’s files to be scored, but that’s another issue. While this new score evaluation process continues, there are new developments that allow for mortgage lenders to help consumers get the credit they are due for their rental payment histories, regardless of the score model required to be used.

Over the past few years, there has been an increasing awareness of the importance of rental and alternative credit data (which could be almost any monthly obligation the consumer makes, including rental payment histo-

ry) and the impact this has on a consumers financial life when it is taken into consideration for a credit score.

Necessity, being the mother of invention and recognizing how long it takes federal bureaucracy to make big decisions, inspired business minds to find new ways to solve some of the problems associated with consumers with no credit scores. This group is often referred to as “credit invisibles,” and have low credit scores due to a lack of traditional credit data. One of these options is bypassing the backlog on upgrading the mortgage automated underwriting systems reliant on decade-old credit scores to help the credit invisibles.

This is a huge development for a lot of consumers. Experian estimates there are 64 million Americans with insufficient or no credit history. A 2014 study by the Corporation for Enterprise Development (CFED), titled, “Treading Water in the Deep End, Findings From the 2014 Assets and Opportunities Scorecard,” estimates that more than half of Americans have credit scores from 500-649. Experian research also

reported that the younger Millennial generation has an average credit score of 628, on the fringe of the prime to sub-prime lending cutoff.

As mortgage professionals, you know better than anyone how these findings impact a consumer trying to obtain a mortgage. Loan approval, and/or higher interest rates for the loan if approved, are found in those ranges. On a daily basis, you see the cost of credit invisibles to mortgages, the average lifetime cost of a low- or no-credit score was calculated at $201,712, more than Americans with a good credit score over a lifetime, according to Liz Weston of MSN Money. To most credit invisibles, $200,000 is several years of wages and can kill the upward mobility of an entire family.

To assist in solving this problem, the National Consumer Reporting Association (NCRA) has partnered with industry leaders in developing this new program to assist mortgage lenders in getting those rent payments added to their credit report in a fashion that can be scored, so that Fannie Mae’s DO/DU

and Freddie Mac’s LP underwriting systems can use them for loan approval.

This is available today from many credit reporting agencies (to find a participating NCRA member, visit NCRAInc.org) and can be completed even when the landlord is not reporting the history on the original credit report.

The Rapid Rent Reporting process to make this happen is similar to that followed by the mortgage credit reporting agency for credit rescore programs. The mortgage credit reporting agency will first have to verify the rental history with the landlord. The information will be sent to Pasadena, Calif.-based Scorewise for the Rapid Rent Reporting program. After further conformations for data accuracy an “open” account (think the traditional American Express card—it is a common example of an “open” account) will be reported with the rental information on the consumer’s credit report. Listed as an open account, this impacts whatever credit score model is used to calculate the consumer’s TransUnion credit file.

While this only impacts the

TransUnion file currently, Experian is a potential addition in the near future.

The costs associated with this process are similar to those associated with the credit rescore process, only these fees can be directly charged to the consumer (unlike rescore fees) and are a great value for the potential benefits.

Rapid Rent Reporting can make the difference in the loan being approved or not, and for some consumers, the lift from the new rental trade line could have the potential to save them more in interest payments each month than the cost of the service.

Earlier in March, the Washington, D.C. non-profit Credit Builders Alliance (CBA), a group focused solely on helping other non-profits assist consumers build credit histories, released a pilot study conducted with the financial support of the Citi Foundation in collaboration with Experian. They worked with eight affordable housing providers to document the credit score impact when adding a rental history record to the file of 1,255 low-income consumers. After isolating the impact of including rental payment history on participants’ credit reports, the CBA found:

NAMB would like to thank the following Mortgage Professionals for their generous contributions to NAMBPAC in 2015!

NAMBPAC is the non-partisan political action committee for NAMB, The Association of Mortgage Professionals. This fund is used to support both Richard Abazia Tanner Allen Todd Allen Chuck Anderson Rocke Andrews Mike Aon Joseph Archer John Ardito Joe Ashton Mark Atanasoff James Bagnell Karen S. Barnes Roshe Barooni Jim Barry Dave Beach Allycyn Bennett Joel M. Berman Rick Bettencourt Jr. Jeannine Bland Kenneth Blaudow Audrey Boissonou Douglas Braden David Bradley Tiffany Bradley Andy Brikho Andrea Buck Michael Burroughs Mark Cahoone

Kenneth Campbell Joseph Cannarozzi Terry Casey Dana Chahidi Jim Chapman Eric Chauhan Alan Cicchetti Brent Coleman Ruben Concepcion John Councilman Ronald Crary Dawn Cychner Tom Cychner Brady Day Keith DeLatte Michael Delzer Ray DeMar Donald DeRespinis Michael Desantis Bruce Dittmer James Dorney Jeffrey Drawdy Tammy Engel Jim Ezell Ginny Ferguson FAMP FEDERAL PAC Antonina Friedland Don Frommeyer

Mary Jane Galbiso Jill Gallagher Rick Gilbert Gregory Graham Victoria Greer Martin Hackford Steve Hakes Kelly Haney Mark Harcrow Andy Harris Melissa Hayes Lisa Hernandez Howard Howland John H. P. Hudson Marvin Hudson David Hughson Ed Irwin Erik Janeczko Peaches Jensen Ryan Jones Jon Kaempfer David W. Kane, Jr. Jason Kauffman Michael Kanuka Mike Kelso Kevin Kennedy Jonathan Kimura Edmund King

The term “alternative” was not yet coined, and talking about the value of this data back in the mid-1990s was much different than the discussions of today. Nothing like mountains of credit-related fraud and missed underwriting opportunities to change the course. Hopefully, we have learned from those mistakes and can transform into a new business model that can recapture this information into the underwriting process without further delays.

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.

Republican and Democratic Congressional candidates who fight for meaningful consumer protections, a strong mortgage market, and fair competition. NAMB supports the operation of NAMBPAC as authorized by, and in accordance with, federal law.

Linda Knowlton Michael Kopiecki Fred Kreger Marci LaBorde Shane Lester Kim Lewis Bobbie Lindner Anthony Lombardo David Luna Lisa Lund Kelly Lynch Angela MacKinnon Paul Marsh Steve Matthews Linda McCoy John McCully Ashby McDonald Howard Miselman Joe Moody Jim Morris Vernon Morrison Vicki Murphy Roberty Murray Elena Neis Gary Ogami Matt Oliver Donald Opeka William Ormond

Dennis Oshiro Raymond Oshman Sean O'Sullivan Norm Ottley Jim Pair Carrie Panacek Carlos Pazos Chris Peck Dawn Pemberton Richard Petano Jill Pfeiffer Claude Phillips Nathan Pierce John Porter Dean Rathbun Kathy Raven Donald Rizzo Jeanine A. Robbins Heather Rose Joan F. Ruth Hartley Sappol Valerie Saunders Gary Schiller Julia Schloss Guy Schwartz Lisa Severseike Jeff Shealey Chris Shedd

Mark Sheridan Ann Shipley Shawn Sidhu Timothy Simko Kane Smeltz Chris Smith Lynette Staley Mitch Stam Marc Starr John G. Stevens Marvin Stockert Diana Tardif Donald Thomas Douglas Turner Forrest Van Benthuysen Casey Van Winkle Dan Van Winkle Michelle Velez Debbie Villarreal Bryan Ward Irving Webb Charles West Kimber White James Wilson Edward Zadeh Benita Zimmerman

For additional information about NAMBPAC, please feel free to contact me or visit namb.org.

John G. Stevens, CRMS • 2014-2015 NAMBPAC Chair John@JohnGStevens.com Note: Contributions received between January 1, 2015 and June 30, 2015. * Federal Election Law requires NAMBPAC to use its best efforts to collect and report the name, address, occupation and employer of everyone who contributes $200 or more in a single year. If your contribution to NAMBPAC in 2015 is less than $200, your name may not appear on this list, but NAMBPAC is still very grateful for your generous support!

27

n California Mortgage Professional Magazine n AUGUST 2015

It is important to note that individual results will always vary and that there are some distinctive differences in the CBA pilot program and the Rapid Rent Reporting available. The CBA results were based on the added rent trade line going on the Experian file versus the TransUnion file.

Another difference is that the scoring model used in the CBA was VantageScore, and the Rapid Rent Reporting process can impact any credit scoring model. Also, note that 21 percent of the consumer files saw no increase or a slight decrease. While every situation is different, the message from all the research has been clear—alternative credit data, specifically rental history data, is very valuable when factored into the decision.

The Policy and Economic Research Council (PERC) an international credit reporting research organization based in Durham, N.C. PERC’s mission is to help the financially underserved, and the group has spearhead many of the

cation and utilities to help build credit, instead of the more untraditional data. At the end of the day, the results were the same, solving the problems associated with the “credit invisibles” through the common consensus of the research that shows the power of alternative data.

Issues like this one have always been an area of concern for NCRA. NCRA is a business trade association with an understanding of credit reporting issues deep into the weeds, along with an understanding of solutions.

In NCRA’s (NAICRA back then) first credit reporting study, the association found that the then new technology tri-merge credit reports would create a loss of this important alternative data.

NationalMortgageProfessional.com

l All residents participating in the pilot who initially had no credit score had either a high non-prime or prime score with the inclusion of their rental payment history. l A large majority (79 percent) of participants experienced an increase in credit score, with an average increase of 23 points. l A small number of pilot participants (14 percent) experienced no change in their credit score after including the rental trade line, and an even smaller number (seven percent) experienced a decrease in credit score. l More than half (55 percent) saw an increase average of 32 points. These were participants who had the fewest trade lines and longer rental histories.

largest studies on credit invisibles over the past several years. In conjunction with the findings of the CBA, they reviewed all of the major studies on this subject from the last few years.

From the CFED study earlier cited, the Federal Reserve, Consumer Financial Protection Bureau (CFPB), prior PERC studies, and many others, have been published elevating this issue to the forefront. There is also federal legislation pending to try to solve this complex issue. On July 13, Rep. Keith Ellison (D-MN) and Rep. Michael Fitzpatrick (R-PA) introduced The Credit Access and Inclusion Act of 2015, with 14 bi-partisan co-sponsors and counting. The bill has a little different focus, looking at telecommuni-

video blogging universe continued from page 25

AUGUST 2015 n California Mortgage Professional Magazine n

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28

of our local city. When you don’t get outside of that local area, you don’t experience opportunities outside of that small area.

A chamber of commerce meeting is a great example. You can attend those meetings and do some networking. If that is the only meeting you are attending, you are going to see the same people over and over again … eating a wiener in a blanket with the same guy with a plastic glass of Chardonnay every time.

When you venture outside of your city, things start to happen. When I was originating, I had my daughter assisting me, we started going to the chamber meetings that were 20 miles outside of our local area. We started making wonderful contacts with people who were outside of my geophysical area and were doing business with them.

I am in Vacaville, not far from Sacramento, Calif. I would Google “Sales Networking Opportunities Sacramento” and could not believe all of the different events that were taking place. They were all 100 percent geared toward networking with people. If you are in Illinois and Google “Networking Events Chicago,” you are going to get pages of this stuff. If you start traveling and explore areas outside of your local area, you will be blown away by the opportunities that you will find.

Getting back to your question … getting out of town to network has singlehandedly brought us to the level of success that we have today.

NMP: So the speaking engagements became secondary to the networking you were able to do while at these events?

Garay: Yes, that is 100 percent correct.

The speaking engagements brought us somewhere where we wound up connecting with a company or person, and that was a huge benefit toward our success.

NMP: People see how successful you are and they don’t realize that you probably went through a time when you were going to either kill each other or when you thought the business was going to fail. Could you please share with us a time when you thought maybe you were not going to make it?

Garay: There were a couple of times in particular. We were partners with three other guys and at that time branded as Think Big Work Small (TBWS). We decided that we were all going to break up and we got very little money, and they got the TBWS brand. We received the rights to the show and the subscriber database. Then, we had to completely rebuild. Bear in mind, prior to this, we were the main engine that built and developed the TBWS Rate Alert. So we started over as “The National Real Estate Post” and had to figure out how to monetize and find a way to make money again. We only had enough money for a few months and if that ran out, we would have been finished.

It was a very challenging time for us.

What we did to overcome this was … number one, we had belief that what we were doing was special and had value.

There were many times Brian and I have come to the point of killing each other, but we always knew that we were better together than apart. We really have a great partnership.

After we re-branded, we just went to town, brainstorming on how we could monetize quickly and make it the best value for our clients. We just rolled up our sleeves and worked 12-14 hour days. We had always done that, but now we just turned it up a notch. We barely survived for the first several months, but we did and never stopped. Now, we have now gone far beyond what we achieved with Think Big Work Small.

NMP: It is amazing how the fear of poverty energizes you.

Garay: It sure does!!!

NMP: If you were new as a real estate professional or a loan officer, what would you do to make it in today’s marketplace? What advice would you give to someone just entering the industry?

Garay: There is so much out there about how to get started and create a thriving business. My recommendation is to tap into something. Ask your peers for a good system, who is a good coach. Look for a system like Listing Booster. There are lots of them out there that can take a 100 percent green loan officer or real estate professional and take them from brand new to hero.

You need to remember that you have to follow the instructions of the system.

There is never going to be a 100 percent perfect system for every person in every market. There will always be adjustments that need to be made or modifications. If you ever hear yourself saying, “I tried it and it did not work,” the truth is that you probably did not work it right. I encourage young people and new people to get into the business. I have my stepson right now getting involved in the mortgage business … he is 23 and just graduated from college. I am going to coach him from zero to hero. I told him you have to do what I tell you, you have to do it every day and don’t ever stop doing it. It will work and I know he is going to be very successful. You can beat out the top producer in your office because they are set in their ways.

NMP: So true, just work the system and adapt. Where do you think your daily show will be in the next five years?

What would you like to see it grow into?

Garay: We never dreamed that the show would last this long. We thought that this would last only two years. Five years into the future is a good number. I hope that

the show is still doing extremely well from a viewership and subscriber perspective. The show has really become a staple of the real estate industry.

I hope it will stick around forever. Five years from now, I would like to see the show still going strong, but maybe syndicated out to other sources. Five years from now, Brian and I may not be hosting it. We may want to have a couple of other hosts who could take it over who would be even more entertaining than we are now.

NMP: What are you working on next?

Garay: The main thing we are working now is MoveTube, that was a derivative of Listing Booster, that was a byproduct of our speaking engagements. All of this came from speaking engagements and traveling. We found our partner Kevin, and he had a product that we were a good fit to partner with. We launched Listing Booster and did very well and added MoveTube to it. The big picture for us, and the most important part of our business, is MoveTube.

The National Real Estate Post and Listing Booster’s market is comprised of lenders and real estate agents. We can do a lot better by reaching out to consumers. We are the first company to have property search on a smart TV. There is no one else doing that and to have this feather in our cap is a big deal. We are now racing to make MoveTube not only the first, but the best on all the platforms. We will continue to work on improving MoveTube to the point that it not only helps consumers, but helps lenders and real estate professionals as well. MoveTube will connect all of them together through the TV. It is a super exciting product.

Dave Sullivan is special correspondent for National Mortgage Professional Magazine and marketing director for Credit Technologies Inc. He may be reached by phone at (248) 891-2205 or email dsullivan@credittechnologies.com.

NMP Daily is the mortgage industry's source for news, insights, trends and tips.

It keeps subscribers informed of the regulatory and legislative updates, latest industry happenings and breaking news about the mortgage technologies and services.

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Excellence Is the New Average: What It Takes to Achieve Success in Lending

By Carl Markman

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I would prefer to have just that headline be printed in the center of this page and leave it at that, but the great people at National Mortgage Professional Magazine have told me it needs to be at least 1,000 words and I don’t want to disappoint them!

I travel coast to coast as a part of my job and all across the greater housing industry, I hear people complaining.

Homebuyers are frustrated that prices are too high, the entire process is too slow or the affordable homes on the market don’t match their vision of the “American Dream.” The industry itself is upset too. Contractors aren’t working enough, originators aren’t making enough, small banks cannot compete with the big boys and (almost) everyone thinks there is too much regulation. The one thing our industry’s complainers seem to have in common is that they all feel no one is making enough money.

Except for those who are making enough money. I don’t hear anything from those people because they are too busy to complain. While I’m not hearing them complain, I can tell you what I am seeing from them.

In every market there are people who are achieving success. Some not as much as 10 years ago, but regardless, they’re doing pretty well. In lending, some are

achieving it simply by catering to the military community for VA loan needs.

Others are turning gravel pits into gold mines with renovation products. And some are just networking more.

The one thing they all have in common is that they’re exaggerating every part of their business to deliver an exemplary level of customer service. The successful people are making the extra effort to exceed expectations. They are standing out. It doesn’t matter what bank or realty firm they’re working for because they themselves are standing out. They’re allstars wherever they go.

Whether you’re on the frontlines as an originator or real estate agent, or acting as ‘the guy behind the guy’ somewhere on the wholesale side, you now need to provide a level of customer service that exceeds expectations. It doesn’t matter if you’re an underwriter or originator, you need to treat the person you’re dealing with, even internal colleagues, as a customer. Make their job easier and it will come back and benefit you later on.

Average just isn’t good enough anymore if you want to be remembered.

Think about things that stand out to you. By nature, they’re probably not what many would consider average. To stand out in our industry in a positive way, you need to exaggerate your level of customer service compared to those around you.

The phrase “work smart, not hard”

gets batted around quite a bit. Well, that was the old normal. Normal is average. Average blends in and gets by, but the average player also gets cut from the team when someone better comes along. To see success now, you now need to work smart and hard. You need to stand out.

Excellence is the key to success. Doing your job is what we all expect, but if you want success, you’re going to need to be excellent at your job. You can no longer just show up. Excellence needs to be your new normal.

I can attribute a few things to the reason that excellence needs to be the new average.

Realistically, we are all selling the same products. The branding may be different, but we all have access to renovation products, VA loans, conventional, etc. We all can turn files around in a day if we want to. So what’s going to set you apart from the competition? What can you own? Again, your personal level of customer service is the one thing within your control. This can make you stand out.

Modern technology has us connected all of the time. In many ways it has leveled the playing field. We can be more productive, market ourselves better and stay in touch easier. From Yelp and LinkedIn, to Snapchat and Periscope, every couple of months there seems to be a new way to stay connected and market

our own business and personal brands.

But modern technology has also brought along an increased need for speed. Millennials are used to being able to make purchases from their phones as they walk down the street. They shop around and move quickly to make decisions. They’d buy homes using Amazon Prime if they could and absolutely despise that they cannot just plug in their e-mail address and a credit card number for a pre-approval.

When it’s so easy for someone to find another lender, real estate agent, contractor, etc., how do you keep them from looking around? Memorable customer service.

People want things to be easy. They will not only come back to you, but they will also refer their friends, if they have had a great experience. They will talk about good experiences and complain loud and clear about the bad ones. No one talks about the middle or average.

I want to reiterate that offering a great customer experience does not equate to working directly with the borrower. You should be treating the people you work with and report to as your customers.

You need to be exceeding their expectations too.

There are so many things out of our control in this industry, but you can control how you interact with your customers. Is there a chance there is going to be a delay? If so, let them know. Is

there an unexpected change? Let them know.

Think about if you were a server in restaurant dealing firsthand with customers. If things are backed up in the kitchen, you’d want the staff there to let you know as soon as possible so you could let your customers know. Right? Or would you prefer to wait an hour to tell your table their entrées are going to be another hour longer.

Customer service goes beyond the brand … it is the brand

extra effort to exceed expectations.

They are standing out.” unhappy, the coach hears about it and changes are made.

Think of the real estate agent and the originator as the stars of the team.

They’re the top players, but they also need support. And as they become more successful, they’re also in the position of choosing the team that is going to support them. They’re making recommendations for the people they want to work with and referring their

favorite players for new positions when they become available. And their favorite players are the ones that exceed expectations.

I’ll use myself as an example as I close this one out. I know when I’m looking to hire or promote, I look for people who are more than just cogs in the wheel. Being a cog is important, but I want more than that. I need people who are looking to help make the wheel

better in one way or another.

Improving the wheel may be out of their control, but what I want to see is they’re at least trying to get us moving faster.

Look at your company as a machine. The parts that work the best receive care and attention they deserve and when the time is right, are kept around as other upgrades are made. The average and underperforming parts get tossed out as soon as something better comes along.

Carl Markman is director of national sales for REMN Wholesale and is always looking for ways to make his machine run faster. He can be reached by e-mail at cmarkman@remn.com.

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n California Mortgage Professional Magazine n AUGUST 2015

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Look at how other industries, with roughly the same product, have used an excellent customer experience has helped them succeed.

Not to dwell on food, but when I’m in our offices on the West Coast, I always try to stop by In-N-Out at least once a trip to grab a burger. Ever been?

People rave about it. Quality of the food aside, the smiles on the faces of the employees there are contagious.

Their associates operate in a loud, hectic, sweaty environment, and still manage to put forward a tremendously positive attitude. Name another major fast food restaurant people feel the same way about. They are few and far between.

Target versus Wal-Mart is another great example. Are some of the products they carry better than others? Sure.

But do the associates at one of those stores have a reputation for being more helpful than at another? Definitely.

Does that lead people to walk through their door more, when given the choice? Absolutely. You can get a roll of paper towels and picnic tumblers anywhere.

Exceeding expectations can cause a chain reaction you don’t always feel, unless you come up short. We live in a world where the quarterback gets on the Wheaties box, but we all know it takes a full team effort to get him to the Super Bowl. When the offensive line fails to deliver, the quarterback usually gets sacked. When the quarterback is

“The successful people are making the

Why Non-Prime Loans Are Safer Than You Think

By Tom Hutchens When non-prime (or non-QM) lending returned to the market again early last year, it wasn’t welcomed back with open arms. Many critics were concerned that these products were the same as the sub-prime loans that led to the housing crisis and were afraid that history would repeat itself. In fact, sub-prime and non-QM are quite different. New regulations have helped to ease non-QM loans back into the market. Skeptics are starting to come around and realize that things truly are different this time, as non-QM products are proving to be much less risky than their predecessors.

Unlike the sub-prime loans of 2006, today’s loans have guidelines in place to alleviate risk. Here is a breakdown of what’s different today versus the past:

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l Skin in the game: Higher downpayment requirements mandate that borrowers provide a significant contribution towards closing the loan.

Borrowers with the riskiest credit profiles are required to put down the highest downpayments to further compensate for that risk. This practice of ensuring prudent loan-to-value (LTV) ratios makes the chances of default much less likely. l Ability-to-repay (ATR): ATR is one of the many regulations that resulted from the Dodd-Frank Act. ATR requires that originators look at a potential borrower’s complete financial picture to make sure their existing debt obligations plus the new loan amount won’t surpass a reasonable percentage of their income. Despite popular belief, nonQM loans still need to adhere to ATR standards. l No prepayment penalties: Today’s sub-prime loans do not come with a pre-payment penalty on them. At any time, a borrower can refinance to a conforming loan without having to pay a penalty on their existing loan. l Appraiser independence regulation (AIR): Another result of Dodd-Frank Act regulations, AIR ensures that appraisers are truly independent and the LTV is accurate. Prior to Dodd-Frank, appraisers worked for the loan originators. This was a clear conflict of interest, as there was often incentive to have a property appraised for more than its true value. l Better credit scores: The average credit score of sub-prime loans in 2006 was 580. Today’s non-QM loans’ credit scores average 660. The credit quality of these loans has increased significantly in the new era. l Protection for brokers: There is even an additional layer of protections for the brokers of these loans. That’s because the originators, such as Angel Oak Mortgage Solutions, are held responsible for the loan’s performance.

Although non-QM mortgages fall outside the QM safe harbor, the next generation of non-QM lending is very safe. In fact, Angel Oak Mortgage Solutions has yet to have a single loan default. The challenge with these new regulations, however, is that they require a well-documented, manual underwriting process. It’s not something that can be automated. But capable lenders with expertise in due diligence procedures stand to take advantage of bringing these products back to market while avoiding risk.

Tom Hutchens is senior vice president of sales and marketing at Angel Oak Mortgage Solutions, an Atlanta-based wholesale lender currently licensed in 24 states. Tom has been in the real estate lending business for nearly 20 years. He may be reached by phone at (855) 539-4910 or e-mail info@angeloakms.com.

How to Positio for Your Next Career Move

By Dr. Marty Martin ave you thoughtfully planned out your next career move? Most people have not. While they may have a vague idea of what their profession will look like in the future, they aren’t sure how to position themselves for optimum growth. But because the work world is changing so rapidly, planning your path and positioning yourself for the next advance is a critical step all professionals must take.

Of course, since no can foretell the future, planning often involves ambiguity— and that’s where the challenge lies. Most people have a low tolerance for uncertainty, so they don’t bother creating a plan. And while it’s true that neither you nor anybody else, not even experts, can predict the future, you can map out possible scenarios. Doing so increases your ability to adapt to changing situations and helps you see future opportunities others may miss.

The following are some suggestions for making your plan as realistic as possible so you can properly position yourself for future success.

H

Conduct research on the current and future job market You can find many online resources to help you better understand which professions and industries are growing, which are shrinking, and which are evolving into something different. One is the Occupational Outlook created by the Bureau of Labor Statistics (BLS). The other is O*NET Online, which is a partner of the American Job Center Network. Both of these resources will give you an accurate overview of a variety of professions, including both current and future trends. Use this information as a way to gauge job growth (or possible shrinkage) in your industry.

Read magazines that focus on future trends

SPONSORED EDITORIAL

There is an entire profession focused on future studies in which people called Futurists analyze trends in particular areas and make educated predictions about where we as a society are heading. Sometimes, the predictions focus on a key area or profession, such as healthcare or robotics. Other times the predictions are more

on Yourself general. The World Future Society is the leading futurist organization. In addition to their website and blog, they publish a magazine called The Futurist. Read some current issues or subscribe to it so you can keep up-todate on upcoming career and industry trends.

Develop a written vision for your career spanning a short-term, medium-term and long-term horizon Using the information you gather about the probable future of your profession or industry, combined with what you know or personally see going on around you, create a vision for what your career could look like in five years, 10 years and 15 years.

Granted, as you extend the timeline, you increase the level of uncertainty, but the goal is not perfection. The goal is to give you a vision of what’s possible so you can start positioning yourself for that future vision today.

Map out more than one path to get to your destination as depicted by your career vision

The more detail you can give the various paths you outline, the better.

While there’s no need to go overboard with a 50-page document, you should detail each path as much as you can, including timelines, new skills or training you’d need, resources that would help you at key junctures, etc. Some

Dr. Marty Martin is the director of the Health Sector Management MBA Concentration and Associate Professor in the College of Commerce at DePaul University in Chicago. He may be reached by phone (630) 715-6270 or e-mail drmartymartin@gmail.com.

Why choose MBS Highway?

BARRY HABIB— THE ORIGINATOR OF THE MARKET ADVISORY SERVICE Daily guidance and insights from Mortgage Market expert Barry Habib. He closed over $2 Billion in production as a Loan Originator, called the bottom of the Housing Market and currently provides sales and market training to thousands of Loan Originators across the country.

STATE OF THE ART, USER FRIENDLY WEBSITE We've taken great pride in building a website that uses new technology, and enhances the user experience. No matter where you are on our site, you'll always have market data in sight. Never miss a lock alert with our real time market news and alert system.

EASILY SHAREABLE CONTENT With a touch of a button members are able to share charts showing the latest economic and housing data.

REAL ESTATE DATA & INSIDER CONTENT Show the housing opportunity in your local market to customers and real estate agents. We will provide you with affordability levels, appreciation, resale volume, new construction, and job growth…updated monthly and easily shared. There is also additional content from Art Cashin, Kiplinger letters, and much more.

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Engage in scenario planning by fully detailing the various paths to your vision

It’s your future … plan it While all this may seem like a lot of

your own career and ability to earn a living, not society, not the government, not your employer, not your family, and not your friends. The safety nets of yesteryear are slowly disappearing. That means it’s up to each of us to ensure our future employability. The better you position yourself for the next advance, the better your ability to respond to a changing job market and reach your career goals.

NationalMortgageProfessional.com

With your vision of what reasonably could happen, write out what you deem the most logical path to reach that vision. Then, write out an alternate path that is just as viable, but perhaps not what you deem as ideal.

For example, maybe in one path you continue working in your current organization, helping to shape the future of your position. And perhaps in an alternate path you open your own firm, go to work for a competitor, or become an outsourced employee to your firm (as a freelancer or consultant, for example). Feel free to come up with several paths to the vision. Of course, you have no idea which path will actually transpire. But when opportunities present themselves from any of the outlined paths, you’ll be able to recognize them and act on them because you’ll have already done some planning. As a result, you’ll find yourself a step ahead of everyone else. Sometimes it’s those little steps that position you the best.

people naturally think in pictures and graphs, so they create a series of diagrams. Other people think in the narrative form. Regardless of your preferred style, you need to capture the information, record it, document it, share it, and then continuously refer to it and update it as things change.

work for something that may or may not transpire exactly as you plan, it really only amounts to about three hours a week of planning time.

Chances are you spend more time than that watching television or surfing the Internet for fun. What if you took a few minutes from those activities and spent it reviewing the Occupational Outlook, reading articles about what the future may hold, reviewing your scenarios, sending out emails and connecting with people who may be able to help you, going to certain social and networking events, etc.? What could that do for your professional outlook?

Remember, you are responsible for

new to market continued from page 18

By Originators, For Originators

By Andy W. Harris, CRMS

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I’m excited to introduce and be involved with this new monthly column titled “OrigiNation.” This will be exclusively written by and for mortgage loan originators … those of us in the trenches sharing our stories of what we’re experiencing first-hand in this crazy residential lending climate of today.

This is an active column, meaning that we strongly encourage your participation! It’s time to share your stories, discuss topics you wish to be covered, and share anything else you might want to discuss regarding residential mortgage origination. We all have things we want to open up about, ask questions on or just throw out there for debate … let’s hear them.

To have your stories or topics considered in future editions of “OrigiNation,” please e-mail me with “OrigiNation” in the Subject Line at aharris@vantagemortgagegroup.com. These can be confidential or your name and company can be referenced if you wish.

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.

them enter it in the messaging utility in the Calyx system. If nothing is missing, the documents come back complete and are instantly placed into Calyx’s eLoan file document repository. The entire ordering process can be completed in three to four minutes, according to lenders using the GuardianDocsPoint interface. In comparison to using a partial interface, lenders can expect to reduce their doc drawing time by at least 60 minutes per file.

“Data integrity is essential to create compliant documents and to have a true system of record; the LOS should house the source data, rather than your doc provider’s Web site. This will take on even greater importance in the new TRID environment,” said Jonathan Kunkle, president of GuardianDocs.

“Our partnership with Calyx has allowed us to build a DirectConnect interface that streamlines document ordering and management, removes duplicative data entry, and eliminates steps that can create errors. As a result, users will see significant productivity gains and have greater assurance of compliance.”

Dennis Boggs, executive vice president of business development for Calyx said, “GuardianDocs has developed the tightest integration of any vendor using our DirectConnect platform. We are pleased to work with a cutting-edge document services and technology provider like GuardianDocs to build an advanced interface that allows our lender clients to order and complete their initial disclosures and closing packages without ever having to leave our system.”

LoanLogics Launches New Investor Module for Correspondent Acquisitions

LoanLogics has announced the release of LoanHD Investor Module for Correspondent Loan Acquisition, a software-as-a-service (SAAS) and portal technology developed to automate an investor’s purchase of loans from correspondent sellers and address all aspects of loan acquisition, from correspondent application workflow and approval process, to pricing and management of the transaction, through loan funding and servicing on-boarding.

The Module makes it possible for investors and correspondents to access all the services they require in one, integrated platform. LoanLogics’ capabilities for automated document and data processing, as well as audit rules automation, are fully-integrated with this new Investor Module, delivering benefits related to improving the number of loans per person per day that can be completed in the pre-funding review

process. In addition, missing documents or data are identified automatically up-front, well before the audit review begins.

“The LoanLogics LoanHD Investor Module for Correspondent Loan Acquisition breaks new ground in the mortgage industry. We deliver a complete, automated solution that eliminates the need for lenders to license multiple systems requiring additional customization and expensive integrations that then need to be maintained,” said Brian K. Fitzpatrick, CEO and president of LoanLogics. “Nor do investors and correspondents have to address CFPB vendor management requirements across multiple providers—such as loan-origination systems, pricing and product eligibility engines, due diligence providers, Web portal technology and reporting and analytics—because the Module delivers all these capabilities on a single, integrated platform.”

Informative Research to Bundle CoreLogic's Risk Management Offerings

Informative Research has entered into a business relationship with CoreLogic for the value-added resale of its LoanSafe Risk Manager suite to Informative Research clients nationwide. The arrangement enables CoreLogic fraud and collateral analysis products to be coupled with Informative Research’s sophisticated, consultative approach to data tool usage and the high service and support standards for which the company is renowned. The LoanSafe Risk Manager suite from CoreLogic takes its place among other signature Informative Research solutions, including credit reports, credit score management tools, settlement and valuation services, advisory services and portfolio risk management tools.

“LoanSafe from CoreLogic stands head and shoulders above other fraud detection tools, particularly given the enormous pool of unique consortium based fraud data it utilizes,,” said Stan Baldwin, Informative Research chief operating officer. “It is by far the best product of its type and the only one that meets our uncompromising standards for accuracy and performance.

The combination of CoreLogic product excellence and Informative Research’s unmatched support and customer service, provides lenders with a tremendously powerful resource for combatting loan fraud."

“The LoanSafe Risk Manager suite is considered the gold standard of mortgage risk detection tools,” said Baldwin. continued on page 82

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Stan Middleman

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Chief Executive Officer Freedom Mortgage

BY PHIL HALL

n 1990, Stan Middleman, a former insurance and annuities salesman turned mortgage broker, launched Mount Laurel, N.J.-based Freedom Mortgage. Now celebrating its silver anniversary, Freedom Mortgage is licensed in all 50 states plus the District of Columbia and Puerto Rico.

During the past two years, the privately-held Freedom Mortgage has seen substantial expansions to its operations. In 2013, Middleman, current CEO of Freedom Mortgage, created another company, Cherry Hill Mortgage Investment Corporation, a real estate investment trust (REIT), with the goal of creating a new source of liquidity for his lending operations. The REIT raised an impressive $130 million in its initial public offering. Also in 2013, Freedom Mortgage

I

“The opportunities that exist in today’s market are greater than ever before.

It is up to us to take advantage of these opportunities as they present themselves.”

expanded into commercial real estate lending, placing its focus on first mortgage originations from $2 million to $10 million in size for commercial mortgage-backed securities (CMBS) execution.

Last year, Freedom Mortgage acquired a pair of mortgage companies: BluFi Lending, a regional lender serving California and Nevada, and Continental Home Loans (CHL), serving New York and New Jersey.

National Mortgage Professional Magazine spoke with Middleman

about his career and his success in the mortgage marketplace.

NMP: Freedom Mortgage is celebrating its 25th anniversary in business this year. What have been the most important changes in the industry since you began the business?

Stan Middleman: We went from paper files to paperless files, and we are more regulated now than we ever have been. Also, the number of employees it took to close a file in early 1990s is vastly

different than today.

All of the activity we are involved with now is done much quicker and we are more efficient than ever. The technology that is now in place gives us much more confidence in our data. I believe our industry has never been as user-friendly as it currently is today.

The best is in front of us, not behind us. It is great to work hard and see so many people blossom in their careers.

Over the past quarter-century in business, what have been your most significant triumphs and challenges?

I don’t think I’ve had the highest of highs and lowest of lows. Every day, you put one foot in front of the other … I cannot say there was any particular triumph or challenge that was monumental. Surviving the mortgage meltdown is a pretty

L OF THE MONTH big deal … we grew our business post-crisis. That was a very big opportunity.

What makes Freedom Mortgage different from the competition?

There are lots of reasons to do business with us. We have correspondent business, wholesale business and conduct business relationships with customers in our portfolio. We deal in traditional referrals and direct-to-consumer as well. Each has a different value proposition. We offer a fair value in terms of price and service. I don’t know if Freedom Mortgage is as different as we are diligent, determined and consistent. Those are the types of things that make a company great.

What do you look for when seeking out new members of the Freedom Mortgage team?

It is always nice to work with someone who has the right skill set and believes in themselves. I look for someone with a good personality, someone you can trust and depend on—the kind of people you want to be around and can trust your children with.

Learn more at www.myfamp.org 37

First Guaranty Your Success Our lending products and services are just a few ways that FGMC can help you succeed.

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Outside of the office, how do you spend your leisure time?

I like to spend time at our summer house at the Jersey Shore and pursue the seasonal activities there. But one great thing in my position is that it allows me time to think of what new opportunities I can create and how I can grow the business.

Ultimately, what is your goal for your businesses?

To make Freedom Mortgage all it can be. The opportunities that exist in today’s market are greater than ever before. It is up to us to take advantage of these opportunities as they present themselves.

Phil Hall is managing editor of National Mortgage Professional Magazine. He may be reached by email at philh@nmpmediacorp.com.

First Guaranty Mortgage Corporation® (FGMC), is a National Approved Single Family Issuer for Ginnie Mae; an Approved Fannie Mae MBS Issuer; Approved by HUD; an FHA Approved Lending Institution; Approved for VA; and Approved by USDA. FGMC provides a full spectrum of lending products and services throughout the 47 states and the District of Columbia, where licenses are held.

Wholesale

fgmcwholesale.com

Correspondent

fgmccorrespondent.com

Capital Markets fgmccm.com

Retail

fgmc.com/joinus

Warehouse Lending fgmcwarehouse.com

This information is solely for mortgage professionals and should not be provided to consumers or third parties. Information is subject to change without notice. This is not a commitment to lend and there is no guarantee that all borrowers will qualify. All loans are subject to credit, underwriting, and property approval. Other restrictions may apply. FGMC is not acting on behalf of HUD, VA, FHA or any other agency of the federal government. First Guaranty Mortgage Corporation (Company NMLS ID 2917) is licensed by the Department of Business Oversight under the California Residential Mortgage Lending Act; Regulated by the Division of Real Estate in the State of Colorado; Licensed by the Delaware State Bank Commissioner to engage in business in this State under License No. 2403 (renewed through 2015); Georgia Residential Mortgage Licensee; Illinois Residential Mortgage Licensee; KansasLicensed Mortgage Company; Licensed by the Mississippi Department of Banking and Consumer Finance; Licensed by the Nevada Division of Mortgage Lending to make loans secured by liens on real property; Licensed by the New Jersey Department of Banking and Insurance; Licensed Mortgage Banker – NYS Department of Financial Services, Licensee No. B500800 (d/b/a FGMC In Lieu of True Corporate Name First Guaranty Follow us on: Mortgage Corporation); Rhode Island Licensed Lender. For complete corporate and branch licensing information, visit www.fgmc.com or www.nmlsconsumeraccess.org.

n California Mortgage Professional Magazine n AUGUST 2015

What is the story behind starting Cherry Hill Mortgage Investment Corporation?

A major difficulty in the financial crisis and during the post-crisis period was finding liquidity–it is the lifeblood of the industry. REITs, in general, will provide another source of liquidity to industry. Cherry Hill invests in mortgage-backed securities (MBS), whole loans and mortgage servicing rights. We were able to establish the REIT and help it come into existence, and then take it public on the New York Stock Exchange (NYSE). That was a very exciting event.

What do you see as the nearterm future for housing?

The volume of activity is okay.

There is a lot of latent demand for homeownership. My expectations are that purchase activity will increase and continue to grow.

We are at the beginning of an economic upturn and are coming out of the doldrums. I see people living in houses they can afford, which will give them the opportunity to grow their own personal wealth.

NationalMortgageProfessional.com

Is it correct to assume that you do not have a high turnover rate?

We have given out a lot of 25-year anniversary gold watches! That is a testament to the number of people who choose to stay with us at Freedom Mortgage. We went from employee number one in 1990 to being well on our way to 4,000 today—you really cannot grow a company if the people you have leave every 15 months.

You are also serving on Fannie Mae’s Advisory Board and previously served on Freddie Mac’s Advisory Board. What do you see as the future for the government-sponsored enterprises (GSEs), which are going into their seventh year under federal conservatorship?

The GSEs serve an extremely important function in providing liquidity to our industry. Those agencies enable companies like ours to foster homeownership.

Without the GSEs, our job becomes infinitely more difficult.

As for a solution to the state of the GSEs, it is very difficult for Congress not to kick this can down the road. When the GSEs are feeding the Treasury as much as they do, it is hard to say, “Oh, stop that!” There is certainly not a lot of urgency for it.

Saying NO to Top Performers Takes Courage and Skill

By Keith Bilodeau

AUGUST 2015 n California Mortgage Professional Magazine n

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In last month’s issue, I touched on the topics of leadership and management, and the sometimes conflicting expectations of these roles. I discussed the notion that the hiring manager may be misaligning the candidate’s innate strengths (Leadership vs. Task Management) with the role being filled and then being disappointed with less than desired results. This philosophy can extend to all aspects of career development across all areas of an organization. It’s often thought that the “Best Employee” is also the best candidate for promotion because they’ve demonstrated commitment and worked their way up. In fact, management can feel obligated to promote that top performer, but unless they have demonstrated skills in task management or leadership (whichever is most important to the success of the new role), it may be in the best interest of the business, NOT to promote them, but instead provide them with proper mentorship or training in preparation for future opportunities.

We see this all too often with salespeople. A top salesperson wants that promotion to sales manager, and in some cases they are the right person for that job; but often times they are not. What makes them a great salesperson can be overpowering characteristics that may not transition well into a sales manager role, but yet the mistake of promoting them continues to occur. Top salespeople are often aggressive, competitive, impatient and even selfish, with sometimes larger-than-life personalities. The management team can feel a sense of obligation to accommodate that salesperson so they don’t lose them to a competitor. We know that a sales manager requires a certain skill set, including recruiting, mentoring, planning and organization, skills that are often very weak in a top salesperson.

There is nothing worse than to promote that salesperson, pat them on the back, and leave them to do a job with little to no training or support. If the promoted employee is successful, they often end up unfulfilled because they miss the thrill of sales and then become overwhelmed with restrictive and administrative tasks. Then imagine everyone’s surprise when both employee and employer become disappointed.

If you manage people—one or 100—there are—or will be—times when a promoted employee is not meeting your expectations. Throughout my management career, I have tried to implement the following checklist.

These few questions must be able to be answered with absolute assurance.

Too much is at stake.

1. Does the employee clearly understand what is expected of them?

2. Has the employee been given the proper training and tools to perform their duties?

3. Does the employee have the aptitude to perform the job they were hired to do?

4. Does the employee have the “attitude” to succeed in the new role?

If you answered “No” to any of the above then it’s your fault. It is now your responsibility to cure the above, or help to find a role they are suited for.

Keith Bilodeau is senior vice president of Wholesale Production at Freedom Mortgage. With more than 30 years of experience in capital markets, operations and production, Keith offers unique expertise in helping mortgage professionals grow their business by leveraging Freedom Mortgage’s technology and programs. He may be reached by e-mail at keith.bilodeau@freedommortgage.com or visit www.freedomwholesale.com.

Lender NMLS ID: 2767. Freedom Mortgage Corporation, 907 Pleasant Valley Avenue, Suite 3, Mount Laurel, NJ 08054.

SPONSORED EDITORIAL

Digital Transaction Management How this accelerating trend will enable digital asset compliance for the mortgage industry

By Stephen F. Bisbee The Consumer Financial Protection Bureau’s (CFPB) notice of the extended deadline for implementation of the complex TILA-RESPA Integrated Disclosure (TRID) requirements is another reminder of the importance of compliance throughout the mortgage loan process. Under TRID, a lender will have significantly greater accountability and be required to provide greater transparency in the Loan Estimate and Closing Disclosure process. However, TRID is really just the beginning.

As the mortgage industry is rooted in traditional, hard-copy, multi-party financial service processes, digital transformation has been slow and very limited in scope. But—incited by the industry’s and regulators’ desire for advanced, real-time compliance and auditability—the demand for digital capabilities are expected to spur the utilization of Digital Transaction Management (DTM) across multiple industries into a $30-billion market by 2020, according to a study conducted by Aragon Research.

The increasing adoption of DTM for mortgage assets provides several benefits, including: l Managing the interactions between all parties of the loan process in a thorough and auditable manner to reduce the risk for the lender; l Providing a more informative and

transparent home-buyer experience to improve customer satisfaction; l Managing the assets as transferable records within the secondary market; and l Providing security and auditability to assure proof and verification of the final disposition of documents.

The biggest advantage of the digitization of mortgages is certified compliance. DTM ensures the accuracy and consistency of data transition in the document workflow for mortgage transactions. This not only keeps the document set orderly by allowing the process to move faster and in a more efficient manner, but it delivers upon consumer expectations that federal compliance requirements will be met.

Deep and verifiable detail As the components of digital tracking are far more comprehensive than paper processes, DTM capabilities are nearly endless—including encryption, digital tamper seals, transaction information availability, integrity checks and detailed auditability—where users can track every action taken with a document. This level of referenceable detail and data removes human error and the highly-unreliable process of paper trails.

Full system integration By digitizing the mortgage process, lenders can ensure that no aspect of continued on page 49

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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.

Angel Oak Home Loans Expands in the Sunshine State

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Angel Oak Home Loans continues its national expansion with the opening of multiple branches across the state of Florida. Angel Oak is helping to stimulate growth in the Florida mortgage community, building upon its development and hiring. The new Angel Oak Florida locations are located in Orlando, Jacksonville, Tampa Bay and Miami-Ft. Lauderdale areas.

Angel Oak delivers a range of unique loan programs, such as Home$ense, Investor Cash Flow, Portfolio Select, FHA loan programs for first-time homebuyers, and jumbo mortgage loan programs for higher than conventional mortgage loan amounts. Angel Oak's particularly unique Home$ense program helps prospective homeowners with less-than-perfect credit still recovering from the economic downturn to obtain mortgage loans, even after a short sale, foreclosure, or deed in lieu.

Angel Oak Home Loans also offers specialty loan programs for clients to take advantage of foreclosures, short sales, and investment property opportunities on the market.

"We are truly thrilled about our national expansion and excited about building the brand in Florida. Our lending philosophy is founded upon a tenet of providing innovative portfolio loan programs, while consistently delivering an exceptional client experience, for both our clients and referral partners," said Whitney L. Fite, president of Angel Oak Home Loans. "Credit standards are very tight right now by historical standards, meaning a lot of deserving people who are safe borrowers are finding it difficult to get the home mortgage loans they need. We're expanding across the nation to help clients receive the mortgage they deserve."

"In a lot of ways what we're doing is trailblazing, providing distinct opportu-

nities for new clients," said Bill Dickens, licensed area manager heading the regional direction in the state of Florida. "I'm excited how we're fueling growth and allowing people to achieve the dream of homeownership in Florida."

Franklin First Announces Launch of Wholesale Lending Division

Franklin First Financial Ltd. has announced the launch of a new Wholesale Lending Division to meet the needs of mortgage brokers in the 39 states they are currently licensed.

“I’ve heard many horror stories from brokers about substandard service from many wholesale lenders and knew Franklin First’s infrastructure would fill the void in great service with the right leadership, which I’m happy to say that I’ve found in Ken Turner and Andrew Russell,” said Franklin First President and Owner Frederick Assini.

Ken Turner, VP of Wholesale Lending, has a 25-year track record of success in running wholesale mortgage companies, including eight years as president of Wholesale Lending at Allied Mortgage Group, and 10 years as branch president at Decision One/HSBC. Turner has a strong emphasis on customer service and building relationships with the mortgage broker community. He has always been avid supporter of the mortgage broker industry. Ken has been a Gold Sponsor of the NYAMB—The New York Association of Mortgage Professionals for three years, and was a board member of the Pennsylvania Association of Mortgage Brokers (PAMB) for many years. Ken is presently chairman of the Pennsylvania Mortgage Bankers Association (PMBA) as well as a Board

Member of the MBA of Greater Philadelphia Chapter for five years.

“The decision to come to Franklin First Financial Ltd. to launch their Wholesale Lending division is one that I’m very excited about,” said Russell, vice president of operations of the Wholesale Division at Franklin First Financial. “Franklin First Financial has the tools and resources that will ensure success of our Account Executives and the brokers they serve.”

Flagstar Posts Strong Second Quarter

Flagstar Bancorp Inc., the Troy, Mich.based holding company for Flagstar Bank FSB, reported second quarter net income of $46.4 million, up from the first quarter’s net income of $31.5 million and $25.5 million in the fourth quarter of 2014.

Flagstar Bancorp’s second quarter net interest income increased $7.6 million, or 12 percent to $72.5 million, up from to $64.9 million for the first quarter. Net interest margin improved four basis points to 2.79 percent for the second quarter, up from 2.75 percent for the first quarter.

Average loans held-for-investment totaled $4.9 billion for the second quarter, increasing $0.6 billion, or 15 percent, compared to the first quarter.

Within the company’s product lines, warehouse lending grew $349 million, or 56 percent, while residential first mortgage loans increased $221 million, or 10 percent.

On the servicing side, Flagstar Bancorp’s net return on the mortgage servicing asset (including the impact of economic hedges of mortgage servicing rights) increased to $9.3 million for the second quarter, compared to a loss of

$2.4 million for the first quarter. The net return on the mortgage servicing asset was 14 percent in the second quarter, an increase from the first quarter 2015, which the company credited as being primarily due to a “net hedge gain from falling market implied volatility, increased servicing fee income, and a decrease in anticipated run-off speeds due to higher mortgage rates.”

On the depository side, the company’s average interest bearing deposits were $6.1 billion in the second quarter, increasing $144 million or two percent from the prior quarter. Retail deposits rose $159 million, or 3 percent, led by growth in savings deposits, while the average noninterest bearing deposits increased $224 million, or 16 percent, which Flagstar Bancorp attributed to seasonal growth in company controlled mortgage escrow deposits.

"We're pleased with the strong results we demonstrated in the quarter, thanks largely to growth in banking revenue, solid mortgage revenue, and continued expense discipline," said Alessandro P. DiNello, president and chief executive officer of Flagstar Bancorp. "We posted positive operating leverage as net interest income grew 12 percent and noninterest income rose seven percent. We also continued to de-risk the balance sheet and improve our efficiency ratio.

Loan administration income increased to $6.8 million for the second quarter 2015, as compared to $4.3 million in the first quarter 2015.

The increase was primarily due to slower prepayments in the Company's mortgage servicing portfolio during the second quarter 2015.

"Our sale of a large portion of interest-only loans during the quarter was a major accomplishment,” said DiNello. “We sold $386 million of interest-only loans, nearly half the portfolio, along with $70 million of lower performing loans. Our execution in connection with these transac-

Informative Research Starts Dallas Operation Center

Mortgage Network Inc., d/b/a MNET Mortgage in New York has opened a new branch office in New York City’s

New American Funding, a national mortgage banker headquartered in Southern California, has announced the addition of two retail branches in El Paso, Texas. The El Paso-East location will be led by Stephen Sepulveda and El Paso-West branch will be managed by Tania Guzman.

“We lead the way in educating consumers about mortgage lending," said New American Funding President Patty Arvielo. "The El Paso branches bring a particularly good understanding of how to best serve Spanish speaking consumers and overcome frequent home mortgage challenges for Latinos. We’re celebrating the addition of these remarkable teams.”

With more than 80 retail branches across the U.S., New American Funding’s expansion into El Paso marks the company’s sustained growth in the industry. The branches will provide mortgage services

OSTRANDER

Mortgage Professionals to Watch

l Parkside Lending has announced that Matthew Ostrander, cofounder, majority owner, chairman and CEO of Parkside Lending LLC, has been re-elected as president of Residential Real Estate at the California Mortgage Bankers Association (CMBA) for the 20152016 term.

l Mike Wheeler has joined Academy Mortgage as district manager where he will help lead the growth in loan officers and branches in the company’s North Valley District, which encompasses the Sacramento, Calif. area. Stephen Marrs and Chris Terry have also continued on page 48

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Mortgage Network Expands Into the Big Apple

New American Funding Add Two New El Paso Branches

Guild Mortgage had its best six months in history for the period ending June 30, 2015, with loan volume up more than double from the 2014 period and continued strength in the purchase loan market.

Loan volume reached $6.7 billion during the first half of 2015, up 111.7 percent from the same period of 2014. Guild closed 29,180 loans during the 2015 first half, up 89.9 percent from 15,365 in the 2014 period. The average loan amount reached $229,878, up 11.5 percent from $206,235 the previous year period.

“We have seen strong growth in our existing branches and also gains in market share in California and the Northwest from two key acquisitions in late 2014,” said Mary Ann McGarry, president and CEO of Guild. “Homebuyers also seem to be choosing independent mortgage banking companies in exploring the broadest array of loan options. Since mortgages are our only products, Guild professionals can help in ways that aren’t typically available to non-specialists—a distinct competitive advantage as evidenced by our strength in the purchase loan business.”

McGarry said Guild purchase loan business reached $4.4 billion in the first half of 2015, or 66.1 percent of all loans. The company had 224 branch and satellite offices in 25 states as of June 30, 2015, compared with 189 offices in 23 states in the 2014 period. In addition, Guild had correspondent banking relationships with credit unions and community banks in 40 states as of June 30, 2015. In September 2014, Guild acquired Comstock Mortgage, a Sacramento, Calif.-based independent mortgage banking company with 15 offices. In October 2014, Guild acquired Northwest Mortgage Group based in Portland, with eight branches in Oregon.

During the first half of 2015, Guild closed $1.46 billion in loans in California, up 164.9 percent from $552 million in the 2014 period. Guild volume in its northwest region, including Oregon and Washington, reached $1.74 billion, up 123.2 percent from $780 million. The company also enjoyed strong growth in its Southwest region (Arizona, New Mexico and Nevada), with loans totaling $632.9 million, double the $316.5 million recorded in the 2014 period.

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Informative Research has opened a new operations center near Dallas’ DFW International Airport. According to the company, the new facility is designed to heighten service levels for customers throughout the region and provide completely secure, redundant data and voice systems for Informative Research clients nationwide.

The new facility is now providing disaster recovery capabilities and will become a complete backup facility next month.

"The new Dallas area facility is a completely staffed location, which means that expert people are available when our customers need to speak to a real person, regardless of a crisis situation,” said Stan Baldwin, Informative Research chief operating officer.

Guild Mortgage Records Landmark First Half of 2015

Results in the first half of 2015 build on four straight years of strong growth for Guild as it expanded from its Western base into the Southwest and Southeast.

From 2010 to 2014, Guild increased its number of branches and satellite offices from 75 to 224. Loan volume in the same period jumped from $4.1 billion to $7.4 billion. Servicing volume increased from $6.4 billion in 2010 to $17 billion at the end of 2014.

Based on results through the first half of 2015, McGarry said she anticipates having loan volume of $12 billion and servicing volume of $20.8 billion for the 2015 year.

“The key to success is our ability to maintain our collegial, professional and community-oriented culture and focus on customer service as we grow,” said McGarry. “The professionals who join us from the other firms have similar cultures and are helping build on that tradition.”

WHEELER

Virginia Credit Union has selected Secure Settlements Inc. (SSI) to handle independent risk evaluation, rating, monitoring and reporting of settlement agents who wish to close VACU members’ mortgage loans. The credit union is now utilizing the SSI Closing Guard tool to evaluate settlement agents who close mortgage loans with VACU. A team led by Jeff Coward, Virginia Credit Union vice president of mortgage lending, selected SSI and began using the new tool in May 2015.

“We are pleased to work together with Virginia Credit Union in managing these critical vendor issues to provide the highest level of scrutiny for consumer protection and overall loan quality assurance,” said SSI President Andrew Liput.

A member-owned financial cooperative serving more than 237,000 members, Virginia Credit Union provides a variety of affordable banking services, loans, mortgages, and free financial education resources. Virginia Credit Union is federally insured by the National Credit Union Administration (NCUA) and is an equal housing opportunity lender.

to consumers and Real Estate Agents facilitating home purchase loans in the El Paso area.

“It’s an exciting time for our team," said Sepulveda. "Our productivity is soaring because we’re focused on integrity and dedicated to the task at hand."

Guzman said, "We don’t just do things quickly, we do things the right way and we pay attention to the details. Since we don’t have the hassle of bank overlays to deal with, we can focus on giving our clients what they need. We strive to earn their business by earning their trust."

MARRS

Virginia Credit Union Partners With SSI to Handle the Evaluation of Settlement Agents

Manhattan borough, focusing on helping borrowers with all of their home financing needs, providing a full range of mortgage products that include conventional, non-conventional, government and reverse mortgage loans. The new office will be managed by Rob Slifer, who has 25 years of mortgage banking experience and is licensed in New York, New Jersey and Massachusetts. Prior to joining Mortgage Network in January of this year, Slifer served as vice president, New York regional manager for Eastern Bank.

“The opportunity to help expand Mortgage Network’s presence in the New York market is really special,” Slifer said. “As a direct lender that sources funds from more than 40 providers, Mortgage Network offers borrowers more mortgage options than any lender I know. I look forward to continuing to help borrowers in the New York and Boston areas with all their home financing needs.”

Slifer said the New York’s housing market is growing stronger.

“Mortgage rates remain low and home prices in general are showing steady growth,” Slifer said. “At the same time, prices can vary greatly from city to city and borough to borough. To come out ahead, it’s important for borrowers to have access to as many options as possible and to find a lender with the broadest market experience.”

Brian Koss, executive vice president of Mortgage Network, said, “We chose Rob to lead our New York office because of his extraordinary knowledge of the region and his extensive knowledge of mortgage products. Rob’s track record of serving borrowers in New Jersey, New York and Boston has given him a unique understanding of the nuances of each market. With his leadership, we are confident that our new location will be a success.”

TERRY

tions was strong and drove a $10 million after-tax net allowance release and a sizeable drop in nonperforming loans.

Who’s Who in the

2015

Wholesale Marketplace 42

Company Name

[INSERT: Florida_Capital_Logo]

Web site

Specialty or Niche

State(s) Licensed In

AAG.com/Wholesale

HECM reverse mortgage lender

AFRWholesale.com

Renovation and manufactured

AngelOakMS.com

Sub-prime, non-QM, non-agency & non-prime

CaliberWholesale.com

Portfolio lending

EquityPrime.com

FHA, VA, purchase, jumbo & refinance mortgages

FGMC.com

Conventional, FHA, VA & USDA

Nationwide, except for AK, HI & NH

FLCBMTG.com

Jumbo, EPP, FHA & VA

Nationwide, except for AK & HI

Nationwide, except MA & NH

Nationwide

Licensed in 24 states

Nationwide

All states, except HI, AK, NV, OK, MO, MS, WV, VT & ME

W H O ’ S Company Name

W H O

I N

T H E

2 0 1 5

W H O L E S A L E

M A R K E T P L A C E

Web site

Specialty or Niche

State(s) Licensed In

INSERT: Franklin_First_Logo]

FranklinFirstFinancial.com/Wholesale

FHA, VA, USDA, Fannie Mae, Freddie Mac & non-agency

Nationwide, except AK, AZ, AL, HI, KY, LA, MS, MO, NV, WI & VA

[INSERT: Freedom_Mortgage_Logo]

FreedomWholesale.com

FHA, VA, conventional & jumbo

Licensed in all 50 states

[INSERT: Homebridge_Logo.eps]

HomeBridgeWholesale.com

Fannie Mae, Freddie Mac, FHA, VA, USDA, jumbo, mini-correspondent, 203(k)/ HomeStyle Renovation loans, 24-hour underwriting & same-day docs

[INSERT: LandHome_Logo]

LHFSWholesale.com

21-day purchase guarantee, Nationwide, except KS & MO two-day broker approval, turnkey reverse mortgages, manufactured housing, non-QM loans & renovation loans

[INSERT: PRMG_Logo]

PRMG.net

FHA/VA & conventional

[INSERT: Parkside_Logo]

ParksideLending.com

Experience the power of caring with a lender that offers common sense underwriting and exceptional customer service

[INSERT: REMN_Wholesale_Logo]

REMNWholesale.com

Same-day turn times

[INSERT: Ridgewood_Logo]

RidgewoodBank.com

Jumbo to $3.5 million, condominiums, co-ops, portfolio lender, no FICO score on non-MI loans, no add-ons up to $2 million, and free 70-day rate lock at application (conditions apply)

[INSERT: SPM_Logo]

SPMC.com

FHA, agency paper, condo products & jumbos

USA Direct Funding

USADirectFunding.com

Streamlines, agency, jumbo to 85 percent with no MI. Closing loans eight days prior to requested close date.

[INSERT: UWM_Logo.eps]

UWM.com

Number one conventional wholesale lender in the country, purchases, conventional, lender-paid MI, instant funding & technology leader

Nationwide, except MA & NE

CA, AZ, AL, AK, AR, CO, CT, DE, DC, FL, GA, ID & IA

Nationwide, except NV, MO & HI

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Nationwide

OR, WA, ID & CA

Nationwide

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All states except AK

NationalMortgageProfessional.com

NY & CT

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YOUNITED

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n California Mortgage Professional Magazine n AUGUST 2015

they’re never more than 12 feet away from someone who does. Plus, UWM AEs carry a maximum of 20 clients

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l LenderLive Network has announced that Sharif Mahdavian has joined the firm as vice president of business development for the company’s Due Diligence Division.

GRANT

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.

l LDWholesale, a division of loanDepot LLC, has announced the addition of two new account executives, Giovanna Coviello and David McEntee. l Guardian Mortgage Company has announced that Marcia F. Phillips, the company's current president and chief executive officer since 1988, has retired from those positions and will become vice chairman of the company’s board of directors.

Russell Anderson has been named Guardian's new president and CEO.

l LRES has announced that Nick Grant has been hired as its new senior vice president of sales.

BOLGER

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l ClosingCorp has announced that James Bolger has joined the company as chief financial officer, where he will lead and manage the company's financial affairs, including fiscal reporting, budget planning, capital SPONSORED EDITORIAL

FLOWERS

financing and shaping the company’s growth strategy.

l Guild Mortgage has named Jordan Flowers as branch manager for its Kirkland, Wash. branch.

FOLKEMER

New Mexico security instrument changes to mortgage The Fannie Mae/Freddie Mac Deed of Trust uniform instrument for New Mexico (Form 3032), in use since 2008, will be changing to a mortgage form, effective Nov. 1, 2015.

According to Fannie Mae Announcement SEL-2015-05, the current New Mexico Deed of Trust accommodated both judicial and non-judicial foreclosures under applicable state law. With the recent expansion of the state’s Home Loan Protection Act and prohibition on non-judicial foreclosures for most residential properties, Fannie Mae and Freddie Mac have decided to change Form 3032 from a deed of trust form back to a mortgage form as the single form of security instrument in New Mexico. The revised security instrument (mortgage) provides for judicial foreclosure. The mortgage form is available on Fannie Mae’s website, in addition to updated instructions for the document.

The Announcement encourages lenders to begin using the New Mexico mortgage form immediately, but mandatory use of the New Mexico mortgage is required for mortgage loans with note dates on or after Nov. 1, 2015.

Accordingly, lenders are advised to begin updating its conventional, New Mexico security instruments to match the updated Form 3032 (in mortgage form) and make them available not later than Nov. 1. Additionally, note that lenders may want to review the New Mexico security instruments used for FHA and VA loans, as well as for home equity lines of credit to determine whether these security instruments need to be converted to a mortgage.

COVIELLO

TRID Rule delayed until Oct. 3, 2015 On July 21, the Consumer Financial Protection Bureau (CFPB) published its final rule moving the effective date of the TILA-RESPA Integrated Disclosure (TRID) Rule from Aug. 1, 2015 to Oct. 3, 2015.

In addition to delaying the effective date of the TRID Rule, please note that the final rule includes technical corrections to two provisions of the TRID Rule, as well as to some of its Official Interpretations. One correction clarifies that lender credits should be included in the calculation of Line (K)(3), the “Closing Costs Paid at Closing” under the “Summaries of Transactions” Table of the Closing Disclosure. The other correction clarifies what should be displayed in the “Adjustments and Other Credits” in the “Final” column under the “Calculating Cash to Close” Table of the Closing Disclosure.

joined Academy Mortgage as branch managers, overseeing all loan origination and employee development in the company’s Greater Detroit Area Branch.

MCENTEE

By Melanie A. Feliciano Esq.

continued from page 41

MAHDAVIAN

Legal Updates: August 2015

heard on the street

l Michael Folkemer has joined Mortgage Network Inc. as a senior loan officer in the company’s York, Pa. branch office, where he will be responsible for serving borrowers and homeowners throughout the York, Harrisburg and Lebanon areas. l Inlanta Mortgage has added the origination team of David Hartman and Eric Johnson to co-manage Inlanta's branch in Green Bay, Wis. l Stonegate Mortgage Corporation has announced that Scott Houp has been appointed to the role of senior vice president, third-party origination, Eastern Division Manager. l Primary Residential Mortgage Inc. (PRMI) has named Burton Embry the company's new chief compliance officer. l GSF Mortgage has promoted Bobby Roberts to the role of area manager in Bolivar, Tenn., where he will be responsible for managing and developing GSF's presence in the area. GSF has also announced the addition of Ray Rau as mortgage loan originator in the company's St. Petersburg, Fla. branch office. GSF has added Jim Donovan and his team in St. Louis where he will serve as branch manager, and joins the firm with 11 years of mortgage industry experience. GSF has announced the addition of Tim Bailey as branch manager in Nashville, Tenn., joining GSF with more than 30 years of industry experience. l WFG National Title Insurance Company has appointed Michael Supple to serve in the role of sales representative in its New England Agency Group. l RealtyTrac has announced it has appointed Rob Barber as CEO for its rapidly expanding data file licensing business to continue building on the company’s double-digit revenue growth cultivated over the last three and a half years. l Stewart has announced that Genady Vishnevetsky has been hired as

l

l

l

l

l

l

chief information security officer (CISO).

Dallas-based residential mortgage originator PrimeLending, a PlainsCapital Company, has announced the addition of Phyllis McDaniel as a senior loan officer at the PrimeLending office in Sedona, Ariz., bringing more than 16 years of mortgage industry experience to her new position.

Veteran mortgage professional Beth Santella has joined Mortgage Network Inc. as a loan originator in the company’s Braintree, Mass. branch office.

Home Point Financial Corporation has announced that Ty Kern is joining the company as senior managing director, production acceleration where he will identify and integrate production expansion opportunities for the Home Point platform.

HomeTrust Bancshares has announced that it has hired Kristin Powell as senior vice president, director of Mortgage Lending.

Castle & Cooke Mortgage has opened a new branch office in Anaheim, Calif., offering borrowers a full suite of loan products with exceptional customer service, to be managed by Michael Otto who has nearly 20 years of mortgage banking experience in Southern California.

The Consumer Financial Protection Bureau (CFPB) has announced that Meredith Fuchs will serve as Acting Deputy Director after the recent departure of Deputy Director Steve Antonakes.

l WFG National Title Insurance Company has named Margherita Ciampa-Coyne as agency support manager for the New England region of its agency division where she will focus on collaborating with WFG agents, determining their needs in order to strengthen and build the agency relationship. l The U.S. Department of Housing & Urban Development (HUD) has announced the appointment of Richard K. Green as Senior Advisor on Housing Finance in the Office of Policy Development and Research (PD&R). l Guild Mortgage has named Gina Durosko as the district manager for Western Washington, as part of Guild's Northwest region.

Your turn 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.

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digital transaction management continued from page 38

Real-time capabilities Most notably, DTM adoption allows lenders to work globally with mortgage documents without lag, as all additions or revisions are made immediately and shown in real-time to the customer. Regulators are able to conduct audit procedures on any contract or asset with a much higher level of efficiency and ease by auditing an asset digitally within a few minutes, rather than the typical paper process of weeks. These real-time capabilities help to consolidate hundreds of pieces of paper and streamline tedious processes—ensuring compliance no matter how large or complex the asset.

Through DTM adoption, the mortgage industry can lean on traceable details, cross-organizational integration of assets and real-time proficiency to guarantee compliance—a standardization of the process that is universally unavailable with paper processes.

Stephen F. Bisbee serves as president and CEO of eOriginal Inc., a provider of digital transaction management (DTM) solutions. Bisbee is a founder of eOriginal and is co-inventor of the eOriginal technologies. He may be reached by phone at (866) 364-3578.

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“As the mortgage industry is rooted in traditional, hard-copy, multi-party financial service processes, digital transformation has been slow and very limited in scope.”

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their agreements or disclosures are lost. Through full digital integration, documents can be managed and protected throughout their lifecycle— from the signing ceremony through an e-signature vendor, to post-signature needs with a secure vaulting vendor and pledging or collateralizing in the secondary market with a banking or financial system. This single digital audit trail, crossing each organization seamlessly, offers lenders and buyers assurance in both the asset’s security and compliance.

LYKKEN ON

leadership

Seven Ways to Be a Bad Leader

By David Lykken

thrive or falter. I spend a great deal of my writing, speaking and consulting dealing with issues of leadership, and it is no surprise that many others in our industry to the same. Not only is solid leadership foundational for the success of our individual organiza-

n the mortgage industry, as in other industries, great leadership can make the difference between whether or organizations

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LY S U O

Are you really going to keep paying way too much for your state mortgage license bonds?

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tions, but it is absolutely essential for the survival of our industry. If we are going to withstand the increasingly overbearing regulatory environment, as well as the rocky nature of the economy, we’ve got to foster great leadership within our organizations.

In the past, I’ve discussed at length the key characteristics of great leaders. There are many qualities leaders must develop and many actions they must take to ensure they are sufficiently inspiring their people and representing the industry in a positive way. But, in this article, I want to discuss leadership characteristics from a somewhat different perspective.

Instead of what we can do to become great leaders, I want to talk about what we can do to prevent ourselves from becoming poor leaders. Instead of “how to lead,” I want to talk about “how not to lead.” Here are some common leadership blunders to avoid …

First, if you really want to make your people resent working for you, you will tell them to do things that you wouldn’t be willing to do yourself. Now, I’m not saying that you have to do their work for them.

There’s a reason why you are an executive—you are responsible for making the more critical, high-level decisions. And, that can be time-consuming. However, if you’re telling people to do things you’ve never done or wouldn’t even know how to do, they may start to think, “Why should I take orders from you?” Players like to play for coaches who once played the game. Soldiers like to fight for generals who once fought in battle. When you can show you battle scars, people will respect you enough to work hard for you.

Secondly, if your goal is to create a

hostile work environment, then you should probably complain about anything and everything. Negativity is a deadly virus that can spread quickly if you aren’t careful to contain it. Especially in light of the regulatory environment we find ourselves in, it’s important as leaders that we resist the temptation to complain about our circumstances. However much pressure we may feel from compliance, the economy, technology, or anything else, we should be careful not to vent these frustrations out on our people. If we start complaining, they start complaining.

And, we don’t want to foster a culture of complaining. People rarely get anything done when they’re too busy complaining about how hard it is to do it.

A third way to be a bad leader would be to set unclear expectations.

The most frustrating thing for employees to deal with is not knowing what is expected of them to do their jobs or who to report to for the results. Yet, this happens again and again in our organizations. We will a position and we don’t give any need to be involved in what our people are doing and how their doing it. If there are kinks in the workflow, we need to know about it right away so that we can direction until the time comes for the performance review.

As leaders, we promptly correct it.

Oftentimes, the failures in organizations can be chalked up to failures in communications—people just don’t understand what is expected of them.

If you really want to be a horrible leader, a fourth thing you could to is set unrealistic goals. Setting expectations is good, but those expectations have to be reasonable. On the one

“There are many qualities leaders must develop and many actions they must take to ensure they are sufficiently inspiring their people and representing the industry in a positive way.” want your employees to improve, you’ll need to show them where they go wrong so they can fix it. If you want to be a bad leader, though, that’s all you will do. If you want to keep your employees, you’ve also got to reward your employees for the good work they’ve done. Your people aren’t working for you simply to avoid punishment; they’re also hoping to

be rewarded for their efforts.

The bottom line … if you want to be a bad leader, disrespect the people who are following you. If you want to be a great leader, show your people you care about them—in the end, that’s what it all boils down to.

David Lykken is 40-year mortgage industry veteran who has been an

owner operator in three mortgage banking companies and a software company. David hosts a successful weekly radio program, “Lykken on Lending,” that is heard each Monday at noon (Central Standard Time) by thousands of mortgage professionals.

He may be reached by phone at (512) 501-2810 or by e-mail at dlykken@mbs-team.com.

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hand, you want to give people enough work to challenge them. If the work is too easy, they will get bored and feel unmotivated.

However, if the work is too difficult, they will probably get sloppy trying to finish in time or simply give up altogether. You’ve got to find the right balance that keeps people engaged and, at the same time, gives them the confidence that they can be successful. When goals are unattainable, people don’t tend to take them seriously. When they are challenging but achievable, people thrive in reaching them. If you want to be a good leader, make your people work to achieve the results, but make it actually possible for them to achieve.

If you want to be a bad leader, set whatever goals you like—regardless of whether or not your people can reach them.

A fifth way to be a bad leader would be to leave issues unresolved.

Many times in the workplace, there will be disagreements among employees either in terms of how work ought to be done or in terms of personality differences. As leaders in our organizations, the responsibility falls on us to be mediators in conflicts and to help employees work out their issues with one another. If you want to show your employees that you’re a bad leader, just ignore the issues they are experiencing with one another. Turn a blind eye, barricade yourself in your office, and do whatever it takes to avoid confrontation. You’d be surprised how many executives do just that when issues arise in the workplace. When issues are allowed to fester between employees, though, productivity suffers. No organization can move forward if its individuals are pulling in different directions. If issues aren’t addressed head on, they will come out in the work.

If you want come across as a poor leader, a sixth thing you could to is to constantly discourage and threaten your employees. A workplace built on the foundation of fear will inevitably collapse under the pressure. If your people don’t feel valued, they will only bother working when you are watching them. Also, your turnover will be through the roof, because your people will always be looking for somewhere else to work. If, however, you want your employees to stick with you through the difficult times and put their best effort into their work, you’ll treat them with respect. You’ll encourage them in their work and show compassion when they’re struggling. You can use meetings as an opportunity to criticize your employees for their failures or to praise them for their efforts; it’s up to you.

A seventh and final way to be a bad leader is to punish failures, but fail to reward successes. Related to the last point, this has to do with how you give your employees feedback after they’ve done their work. If you

The Long & Short: The Business of Short Sales

There’s Nothing We Can Do ... If Your Mortgage Is Underwater

By Pam Marron

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If you are underwater on your mortgage and have a non-Fannie Mae or non-Freddie Mac conventional first mortgage or a second mortgage, there is no refinance option available. Ironically, a modification is available, but only if you have a hardship or are delinquent.

Every call is the same.

Underwater homeowners current on their mortgage ... but with a conventional first mortgage that is not backed by Fannie Mae or Freddie Mac, and sometimes with a second mortgage ... call their mortgage companies inquiring about a refinance. “There is nothing we can do,” is the common response because the homeowner is in an underwater property.

HARP 2 is available for underwater homeowners who have a Fannie Mae or Freddie Mac conventional mortgage.

There are no refinance options for conventional mortgages that are not backed by Fannie Mae or Freddie Mac and for second mortgages or home equity lines of credit (HELOCs) of underwater homeowners. A modification can only be considered if the underwater homeowner is in distress.

Something is wrong when the option for betterment of underwater home52 owners is only present when hardship or delinquency exists first.

A refinance option for performing portfolio loans, second mortgages and HELOCs of underwater homeowners who are current on their mortgage, have stayed in their home, and who do not have a hardship, is needed now.

Otherwise, more distressed home sales will come.

More than 7.1 million underwater homeowners still exist across the United States. Come on mortgage bankers … you know about this!

1. Mortgage bankers have known there is no refinance option for non-Fannie Mae/non-Freddie-Mac mortgages for years. A program was introduced to assist this large group of underwater homeowners in 2012 by the Obama Administration, but did not make it through Congress: “Call on Congress to give every responsible homeowner the opportunity to refinance: Millions of Americans who try to refinance are given the runaround from the bank even though they are current on their payments.”

2. In April 2015, RealtyTrac provided a map to show where 3.3 million resetting interest only HELOCs were located. Fifty-six percent or 1.8 million of these HELOCs are on underwater homes.

3. Last week, another article, “How to Stay Afloat in the Coming HELOC Reset Tidal Wave,” warned that resetting HELOCs to the tune of $150 billion over the next 48 months, combined with a near-certain increase in short-term interest rates over that same time period, could be bad for institutions who hold these assets.

The solution to keeping underwater homeowners in their homes 1. Article in number three above suggested offering a streamlined refinance opportunity to one group, while offering an “extension of terms” to another as the best course of action.

2. Develop a pro-active program geared to performing, current homeowners in distressed property, rather than a reactive program focused on a distressed homeowner with a distressed property.

3. Make a program with criteria similar to HARP 2, the only refinance option continued on page 82

Profit Opportunities Push Correspondents Toward Mandatory Delivery

By Cari McCue Many mortgage companies used to follow a best efforts commitment option on delivering correspondent loans, but in recent years, the trend has moved toward a mandatory delivery process as lenders seek to maximize profits.

The appeal of mandatory delivery is twofold. Lenders can earn more with mandatory delivery than they can with best efforts. Second, mandatory delivery allows for a better management of a mortgage company’s loan pipeline.

There are pros and cons of each method, which we’ll take a look at in more detail …

Mandatory delivery of correspondent loans: Pros 1. A pricing premium: Loans delivered under the mandatory delivery process typically earn about 30 basis points more than a loan delivered under the best-efforts process as investors are willing to pay more for guaranteed delivery.

2. Price certainty: Even if the mortgage market becomes volatile, the correspondent can lock in a specific price.

3. Loan pipeline management: Under the mandatory process, a correspondent lender is committing specific loans under certain prices.

Mandatory delivery of correspondent loans: Cons 1. Penalties can be very costly: Loans that fail to deliver may be subject to a pair-off fee, which can be very costly.

2. Staffing: Mandatory generally requires higher staffing levels.

3. Sophisticated technology: Technology requirements are generally more sophisticated under the mandatory delivery method.

4. Added costs and complexities: Mandatory delivery typically requires

the cost of using a hedging company, which can be cost prohibitive to smaller mortgage operations.

Best efforts delivery of correspondent loans: Pros 1. No penalties: Correspondents won’t incur borrower-driven fallout risk if they cannot deliver the loan on the expected delivery date.

2. Less complicated: The best efforts commitment is easier to execute and doesn’t require a hedging company.

3. Lock in the loan price: Correspondents can lock in a competitive price.

Best efforts delivery of correspondent loans: Cons 1. Market volatility: Instability in the marketplace can be a major issue.

2. Reduced earnings: Mortgage lenders won’t make as much money under this system.

Conclusion To be sure, the profits and the competitive advantages that come from hedging loans have played a big part in the industry’s move toward mandatory delivery commitments.

Still, mandatory delivery may not be the solution for all lenders and all pros and cons should be weighed carefully in the context of the correspondent lender’s size, financial strength, and technological and operational abilities.

Cari McCue, Guardian Mortgage’s chief operating officer, is an accomplished executive with more than 20 years in mortgage banking. As an industry leader, she has been a key factor in growing Guardian Mortgage rapidly, ethically and responsibly. Cari founded the company’s Correspondent Division in 2012.

In addition to her role with Guardian, Cari is also a member of the Board of Directors for the Texas Mortgage Bankers Association (TMBA).

FFinancing inancing to to help mor more e homebuy homebuyers ers achie achieve ve their dr dreams. eams.

As a broker, you’re always looking for that unique edge that will help you stand out from the competition and provide more solutions to more buyers. Caliber Home Loans, Inc. has the answer.

We’re pleased to introduce Caliber Portffolio o Lending: Lendin a suite of five specialty products designed ed fo or borrowers facing specific challenges or barriers to home ownership. They may not qualifyy for o Agency or Government loan products, but can demonstrate ability to repay. All Portffo olio LLending products are available as fixed-rate loans or ARMs. o borrowers recovering from a recent bankruptcy, foreclosure or short sale. Borrowers may qualify without FRESH S TAR A T: Created for START: seasoning requirements and a minimum 580 FICO score.

HO HOMEOWNER’S MEOWNER’S A ACCESS: CCESS: Serves borrowers with a history of 30-day or 60-day late mortgage payments. Higher DTIs up to 60% may be allowed with compensating factors. Minimum 620 FICO score.

JUMBO JUMBO AL ALTERNATIVE: LTERNA T AT TIVE: For borrowers with 660 and higher FICO scores. Loans up to $2 million are available. Asset depletion qualifying is allowed.

FOREIGN N NA ATIONAL T : Designed ffoor non-U.S. citizens shopping pping ffo or a second home or investment property. No FICO required; minimum NATIONAL: 680 FICO if score is available. Borrowers may finance two properties.

INVESTMENT PRODUCT: PRODUCT T: This product finances investment properties without Agency limitations. Minimum FICO 620. Unlimited INVESTMENT numbers of financed properties are allowed.

More about Caliber A national mortgage lender with headquarters in Irving, Texas. Our core streng ths include our innovative mortgage solutions, customer and sales-centric culture, proprietary loan origination system, and entrepreneurial management team.

To find o out more about Caliber Portfolio Lending, contact your Account Executive, email us at NewClientInquiry@caliberhomeloans.com or visit us online at www.CaliberWholesale.com.

Caliber Home Loans, Inc., 3701 Regent Boulevard, Irving, TX 75063 (NMLS #15622). 1-800-401-6587. Copyright©2015. g All Rights Reserved. Equal Housing Lender. For real estate and lending professionals only and not for distribution to consumers. This communication may contain information that is privileged, confidential, legally privileged, and/ /or exempt from disclosure under applicable law. Distribution to the general public is prohibited. Caliber Home Loans, Inc. is required to disclose the following license information: Alaska Mortgage Lender License No. AK15622; Arizona Mortgage Banker License No. 0923637; Licensed by The Depar p tment of Corporations under the California Residential Mortgage Lending Act, F inance Lender Licensee; CO: Regulated by the Division of Real Estate; DE: Licensed by the Delaware State Bank Commissioner, License 5202 expires 12/ /31; Georgia Residential Mortgage Lender License No. 7330; Illinois Residential Mortgage Licensee No. MB.0004043, by the Illinois Division of Banking, 320 West Washing ton St., Spring field, IL 62786, (217) 782-3000; Kansas-licensed mortgag g ge comp ompany, License Number SL.0000796; Minnesota: MN-MO- 40149066, This is not an offer to enter into an agreement. Any such offer may only be made in accordance with the requirements of Minn. Stat. Section 47.206 (3) and (4); ( ) Licensed by the Mississippi Department of Banking and Consumer F inance; Montana Mortgage Lender License No. 15622; Licensed by the New Hampshire Banking Department; NV: 3753 Howard Hughes Parkway, Suite 257, Las Vegas, NV 89169, ((702)) 784-5975; Licensed mortgage banker n.s.--N.J. Department of Banking; Licensed Mortgage Banker-NYS Department of Financial Services; Ohio MBMB.850184.000; Oregon Mortgage Lender License ML-324; Rhode Island Licensed Lender; VA: NMLS ID # 15622 (www ww.nmlsconsumeraccess.org); ) Washing ton Consumer Loan Company License No. CL-15622.

Just Ask

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By

Eric Weinstein & Laura Burke nowledge is power. Power translates to success, whether it is dollars in your pocket, stronger leadership, increased bottom lines or peace of mind, we are here for you.

This month, we are introducing a new column for questions relating to starting a business, managing a business, training, networking, tax-related issues, corporate security policy, fraud alerts and compliance. All answers are for informational purpose only, and are not intended to practice law, or are meant to provide tax advice or tax opinions. After reviewing our information, we both recommend seeking legal counsel or the advice of a tax professional.

K

Please e-mail us at JustAskEricandLaura@gmail.com to voice any questions or problems. We are here for you!

Betsy from Tampa, Fla. asks …

Can you have two FHA loans? My customer already has one in Puerto Rico and now is moving to Florida and he wants another FHA loan without paying off the first one.

Eric & Laura’s reply to Betsy …

Reprinted from the FHA Handbook 4155.1: 4.B.2.c-d: To prevent circumvention of the restric-

tions on FHA-insured mortgages to investors, FHA generally will not insure more than one mortgage for any borrower (transactions in which an existing FHA mortgage is paid off and another FHA mortgage is acquired are acceptable). Any person individually or jointly owning a home covered by a mortgage insured by FHA in which ownership is maintained may not purchase another principal residence with FHA mortgage insurance except under the situations described below. Properties previously acquired as investment properties are not subject to these restrictions.

FHA will not insure a mortgage if FHA concludes that the transaction was

designed to use FHA mortgage insurance as a vehicle for obtaining investment properties, even if the property to be encumbered will be the only one owned using FHA mortgage insurance.

We do not object to homebuyers using FHA mortgage insurance more than once if compatible with the homebuyer's needs and resources as follows: A. Relocations. If the borrower is relocating and re-establishing residency in another area not within reasonable commuting distance from the current principal residence, the borrower may obtain another mortgage using FHA

k Eric & Laura the FHA insured mortgage on the previous residence or terminate ownership of that property before acquiring another FHA insured mortgage.

Eric and Laura both believe your client would fit the exception for relocation, and should be able to have two FHA loans.

Sonya from Detroit asks ‌ I have a thought-provoking question. I recently told a client I could not pre-approve her based on the items listed below. Now she tells me she's closing on her home tomorrow with another lender.

How can that be?

1) She did not want to give me her divorce decree.

2) Her mother gives her $1,000 in cash every month to just “help her out� and she wanted to use that as income.

3) Her business income shows losses for the last two years, but she insists it is a “cash business.�

Larry in Ohio asks ‌ I have a client with a tax lien on their credit report. Can my client still purchase a house? It is only against them personally since they don’t own any other properties.

Laura’s reply to Larry ‌ I don’t believe any lender would accept them as qualified borrowers, even if their credit scores were still high somehow. An IRS tax lien takes precedence over all other liens, so as soon as they purchased the property, the IRS would move to file the lien against their new property, in front of the lender’s lien. So on a purchase, this isn’t going to happen.

I have seen on refinance situations where after a lot of effort, the IRS will agree to subordinate their lien to the lenders first in order to make it easier for the taxpayer to continue to pay off the IRS tax lien.

Remember, the IRS is the only government entity allowed to tote guns, tell its clients whatever is necessary to

Eric’s reply to Larry ‌ No ‌ they can’t.

Disclaimer: All answers are for informational purpose only, and are not intended to practice law, or provide tax advice or tax opinions. After reviewing our information we recommend seeking legal counsel or the advice of a tax professional.

Eric Weinstein worked in banking, on the commercial real estate side until 1991, when he fell in love with residential lending. He may be reached by phone at (703) 505-8692 or e-mail eweinstein4u@gmail.com. Laura Burke is an author and trainer with 20-plus years of experience in the mortgage marketplace. She may be reached by e-mail at lauralynnburke@gmail.com.

Eric & Laura welcome your questions, please send your inquiries to JustAskEricandLaura@gmail.com.

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Eric’s reply to Sonya ‌ That’s odd! She sure put in a lot of work with you doing an application and such for a loan she must have already gotten an approval on and was working with another loan officer all along.

Here’s one possible scenario: She is lying! You are probably the third loan officer to turn her down and she said that just to screw with you. There are no magical loans or loans other lenders can do that you cannot. Just have confidence in yourself.

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Laura’s reply to Sonya ‌ Perhaps she furnished the missing information to the other loan officer, such as a divorce decree with usable alimony or child support; of which you did not have information.

The money her mother gave her every month is documentable and could be used as a gift towards the downpayment.

I am not sure I understand your statement above about showing losses and cash business. Cash businesses are reportable, taxable income. If what you are trying to say here is that it is a Considerations in determining the paper loss, such as depreciation, then eligibility of a borrower for one of yes, that loss can be added back in to these exceptions are the length of time income to reduce loss or a positive the previous property was owned by income.

Therefore, without seeing all of the the borrower and the circumstances facts, it puts you in the dark and at a that compel the borrower to purchase another residence with an FHA insured complete loss ‌ chalk it up and move mortgage. In all other cases, the pur- on as it’s not worth your time to think chasing borrower either must pay off about.

get their money, garnish your wages and withdraw money from your bank account without a court order. It’s simple, “You don’t mess with the IRS!�

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insured financing and is not required to sell the existing property covered by an FHA insured mortgage. The relocation need not be employer mandated to qualify for this exception. Further, if the borrower returns to an area where he or she owns a property with an FHA insured mortgage, it is not required that the borrower re-establish primary residency in that property in order to be eligible for another FHA insured mortgage.

B. Increase in family size. The borrower may be permitted to obtain another home with an FHA insured mortgage if the number of legal dependents increases to the point that the present house no longer meets the family's needs. The borrower must provide satisfactory evidence of the increase in dependents and the property's failure to meet the family's needs. The borrower also must pay down the outstanding FHA mortgage (secondary liens do not need to be paid off or paid down) on the present property to a 75 percent or lower loan to value (LTV) ratio. A current residential appraisal must be used to determine LTV compliance. Tax assessments, market analyses by real estate brokers, etc., are not acceptable as proof of LTV compliance. C. Vacating a jointly owned property. If the borrower is vacating a residence that will remain occupied by a co-borrower, the borrower is permitted to obtain another FHA insured mortgage.

Acceptable situations include instances of divorce, after which the vacating exspouse will purchase a new home, or one of the co-borrowers will vacate the existing property.

D. Non-occupying co-borrower. A nonoccupying co-borrower on property being purchased with an FHA insured mortgage as a principal residence by other family members may have a joint interest in that property as well as in a principal residence of their own with an FHA insured mortgage.

(See HUD Handbook 4155.1 for additional information). Under no circumstances may investors use the exceptions described above to circumvent FHA's ban on loans to private investors and acquire rental properties through purportedly purchasing "principal residences.�

Closing Disclosure: Deep Dive–Page Three

By Jonathan Foxx

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This is the fifth article of a six-part series devoted to TILA-RESPA Integration Disclosure.

Although the series, structured as White Papers, was initially established with four parts, I have added a fifth Part and a sixth part to discuss additional features of the Closing Disclosure. In this fifth part, I will discuss Page Three. The sixth and final part of the series will provide an outline of Page Four and Page Five. Through a review of important highlights, I invite you to join me in a deep dive into the intricate features of the Closing Disclosure.

In the first article, I discussed the mission of TILA-RESPA Integration and the Loan Estimate (LE).1 The second article introduced and treated the numerous features of the Closing Disclosure (CD).2 These two articles (viz., on the Loan Estimate and Closing Disclosure, respectively) were accompanied by separate, detailed tables to be used for certain itemized categories and action requirements. In the third article, I provided the salient features of the Loan Estimate, in considerable detail.3 In the fourth article, I took you through Page One and Page Two of the Closing Disclosure.4 I would suggest that you read all the articles in this series in order to better understand the TILARESPA Integration Disclosure (TRID) rule promulgated by the Consumer Financial Protection Bureau (CFPB).

The series on TILA-RESPA is meant to be informative, though it is not intended to be comprehensive.

It is always prudent to research areas of particular interest with respect to the regulatory mandates. If assistance is needed, Lenders Compliance Group is a resource, and we recently established two proactive paths toward a TRID knowledgebase: (1) We established the TEAM TRID task force,5 a relatively inexpensive, cost-effective way to get TRID integration implementation done efficiently (viz., TeamTRID.com); and importantly (2) We established TRIDHotline.com,6 an entirely free online service, manned by our task force, to assist people with their questions about TRID. We want to listen to their compliance needs.

Please consider my analysis carefully. Follow along with a copy of the Closing Disclosure. I will provide, where helpful, some information as SUGGESTED GUIDANCE. Allow several hours to consider this explication. And as I have admonished all along, make notes, raise questions, and seek answers from competent compliance professionals!

Hopefully, you will have read the previous four articles. Now we will continue a detailed review of the third page of the Closing Disclosure. As indicated above, a forthcoming sixth article will further elucidate the Closing Disclosure analyses for Page Four and Page Five.

Page Three TILA requires the Closing Disclosure to contain two tables:7 “Calculating Cash to Close” and “Summaries continued on page 72

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“Distraction from the truth and ignorance might be something common in the general media, but it’s unacceptable in an industry with such a large financial impact on consumers.”

Mortgage Bankers: Proudly Selling Snake Oil Since 2008 Despite the rumors, mortgage brokers are alive, well and thriving

By Andy W. Harris, CRMS

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If you are a residential mortgage loan originator, this is the most important thing you’ll read all year. How’s that for an opening line? The following information is meant only for those that originate loans directly with consumers. Take a deep

breath, have an open mind, and step outside of our industry for a moment to look in. Forget all of the exterior noise and the things we’ve gone through as in industry for the last several years. In fact, let’s just mentally start from scratch with a clean

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slate. I will ask challenging questions and address topics to help you think for yourself and accept how things work, instead of being told what to think or say. Sadly, I do believe ignorance is at its highest historical level in our industry among originators and real estate agents relating to how the mortgage channels work in the primary market.

We each have an independent responsibility and duty to consumers to not misrepresent the truth, yet thousands across the country do this daily either intentionally or unintentionally.

Retail lenders spend millions of dollars each year to distract you from reality.

Distraction from the truth and ignorance might be something common in the general media, but it’s unacceptable in an industry with such a large financial impact on consumers. We choose where we place our license and how we conduct business. So yes, we have a responsibility to understand the truth. Our clients deserve the truth without deception or the manipulating of facts or titles when selling our services to the public.

Competition is critical and certainly you choose what channel you believe is best suited for your business.

So what is the truth retail mortgage lenders fight tooth and nail to conceal?

The truth is that mortgage brokering has been around for decades and is alive, well, and thriving. Originators are moving in great numbers back to the wholesale lending channel to work for their clients exclusively rather than a retail lender.

Originators are finally realizing that their lack of options and higher margins produce an unnecessary barrier which benefits their employer more than their clients or careers. I call the last eight years “The Era of Retail Recruiting.” Independence and exclusively working for your clients has advantages beyond what I can type through this text, especially in today’s lending climate. Getting a mortgage loan through a mortgage broker has, is, and will continue to be the best way for consumers and originators to go.

Ask yourself these questions: l What is a retail mortgage lender without originators? It’s a trick question … l Why have retail lenders spent millions on recruiting and bashing wholesale

since 2008? l Why do many retail lenders go to such great ethical lengths to recruit, such as violating compensation rules, Section 8 of RESPA, originator compensation rules and fair lending? l Why are there so many retail lender employers, in such a short span of time, on most mortgage originators resumes? l Why would a mortgage originator intentionally charge their clients more (through significantly higher rates and fees) and make less? l Why would a mortgage originator steer all their clients to one lender? l Why do most originators not care or pay attention to significant changes in our industry? l Why are most originators with years or decades of experience continuing to work in entry-level origination positions, focused on a job rather than their career? l With mortgage bankers losing business (a growing trend) to mortgage brokers, don’t they question that?

What causes them to shrug it off?

Many mortgage originators that choose to work for a lender (what some refer to as “Bankers”) are experts at drinking the Kool-Aid served to them by their employer. They have perfected the art of drivel. The problem with our industry Kool-Aid is that it’s laced with snake oil when sold to the public. Many of these “bankers” drink it so heavily that they seem to now inject it to absorb faster, losing all sense of reality when selling services to real estate agents and consumers or when defending objections. Snake oil is an expression that refers to any product with questionable or unverifiable quality or benefit. So, what are common examples of the snake oil quotes or claims told by many lender-employed originators?

I’m a direct lender No, actually you’re not. If you’re a direct lender, than I’m Gandalf. Listen, most loans are backed, guaranteed or insured

by Fannie Mae, Freddie Mac or Ginnie Mae. All residential origination is thirdparty origination (TPO). I’m pretty sure these agencies don’t originate loans

directly to the public and I’m pretty sure you don’t work for them. If you fund off warehouse lines, you’re an indirect lender. A line of credit does not make you a bank. It is surprising regulators still allow the term “lender” in these examples. Most mortgage brokers are more agency “direct” with their investors than lender-employed originators, but they don’t use this title. Even if closing in portfolio-held by an originator’s employer, wholesale lenders offer the same programs in nearly every case (commonly with less overlays).

I feel important using the title “Mortgage Banker” What exactly does that mean? If you’re employed by a correspondent lender, they are actually defined as a “non-bank.” You also cannot say you are a mortgage bank under advertising rules, but the “er” is

okay for the originator to add on? Look, everyone knows this is to try and appear like you are somehow lending your own money, having control or making decisions. You don’t and you’re not. Have you ever heard of a buy-back? That’s not control and that’s not your money, no matter what channel you’re in regarding agencybacked loans. You’re not a bank and you must grasp this reality. If you think about correspondent filtering and overlays, a mortgage broker is more of a “banker” than an employee of the lender claiming to be in many cases. Again … non lenderemployed originators (i.e. mortgage brokers) do not use these false titles to the public.

computer, not a human. So all channels and originators have “in-house” underwriting if they have an Internet connection. If someone needs a human to manually underwrite their file, than this may or may not have to do with originator competency. Either way, this claim exposes that the originator has few options or choices with underwriting and that the underwriter’s salary is built into their rate sheet more profoundly. Mortgage brokers not only have the ability to compare and choose, but can also speak directly with very experienced underwriters, comparing all details, personalities, overlays, location and styles. I’d choose the outhouse underwriting.

I have “in-house” underwriting

I am a banker “and” a broker

This one is one of my favorites. Most residential loans are primarily approved by a

Sorry … you’re not. You are either one or the other. Although you can “broker”

loans as a lender-employed originator, please do not call yourself a broker. It is a misrepresentation to the consumer as you are not a “true” broker when sending your leftovers. Your employer will steer everything possible to your credit lines for higher margin and to not comply with anti-steering (which they should be either way). They will also increase the lender-paid margin between the wholesale lender and the company as much as possible to avoid their employees brokering more for better pricing. Many retail lenders also pay less to the originator when brokering loans which violates compensation laws.

Brokering this way is “not” true brokering. You do not have the operations for true brokering with credit line influence and steering … period! continued on page 60

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www.callfurst.com

continued from page 59

“Bankers” have more control I read this beauty of a statement with some drivel to follow by someone that wrote in to Rob Chrisman. I replied to Rob and he shared my thoughts in his recent newsletter:

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“I could not disagree more with comments about brokers ‘losing control’ over the loan or process when submitting to a wholesale lender. This is actually opposite of the truth providing our ability to choose. If I need something executed or an exception from a wholesale lender, it is a much different interaction than if this lender employed me. They want our business and then want us happy, so quality ‘good’ Mortgage

Brokers have the advantage. If I have a bad experience with turn-times, communication, an underwriter, you name it ... I have the ability to correct that mistake on any future files and we set expectations together as business partners.”

To protect the sanctity and the future of our industry, every originator in the country should stop selling this common snake oil. Here are a few clear benefits to mortgage brokers and their clients over “bankers:” l Independence produces clarity. You see the entire industry and not just what your employer wants you to see.

Multiple lenders, overlays, policies, pricing, the list goes on.

l Lenders compete in all areas for your business and they are your business partner. If you have an issue, you address it differently than if they employed you. NO corporate politics. l You have a full underwriting, sales and operational team with each lender designated to your success and helping you execute every loan file, every day. l Faster execution by comparing turntimes, operations and table-funding options. l Fewer and lower requests for seller concessions due to larger lender credits. Clients are able to negotiate better prices and terms on their new home purchase. l Wholesale lending is the most costeffective and efficient way for a lender/investor to get their product to market. Lender comparison and analysis simply results in lower rates and fees to your clients. l You have less overlays, more programs, agency-direct investors, and operational choice with what investor you choose for a specific client and situation (priceless I can assure you). l The appetite for wholesale is strong based off the quality of originations. It will get better and better as the years progress along with new non-QM investors and programs entering the market. l Separating and perfecting origination and processing from underwriting and funding (dual company audits perfecting their gifts), allows for the most compliant and organized loan file. l You work with the most qualified and experienced people on the mortgage business (my opinion regarding wholesale lenders and their staff). l With regulatory changes behind us, using a mortgage broker is the safest and most transparent and compliant way to get a new residential mortgage if operated properly.

Wholesale operations as a mortgage broker does require more qualified and experienced staff due to the number of investors and must be operated in a compliant and organized way, just as with any other channel. If you’re considering making the change, you must know what is required. You might consider getting mentored or working with a reputable mortgage broker in your market if making the transition from lender-employment or if re-entering the wholesale space. A lot has changed over the years

and brokering is nothing like it was before, but much better. Now is the best time in history to cut the influence from anyone other than your client and your own analytical due diligence with industry awareness.

So why should you listen to me?

I have written about the future of wholesale and correspondent lending since the 2008 collapse, defending wholesale against inaccurate industry media with a fearbased agenda (recruiting, net branching, mini-core, etc.). All of my predictions during these volatile times have come to fruition and my opinions have confirmed to be factual. My vision has done great things for my own successful business as a mortgage broker. I have worked in all channels of this industry and know for certain that wholesale origination (if operated properly) is the best platform, on all levels, for consumers and originators in the primary mortgage market. I’m in the thick of it, day in and day out, as a successful originator and business owner. In other words, I’m not some nonoriginator disconnected from reality with hidden special financial interests or selfserving reasons to influence or recruit anyone. What I do sell is the blunt truth and it’s free of charge.

True mortgage brokering is available for those who are qualified and embrace the opportunity. The “era of retail recruiting” is coming to an end simply from awareness. I feel a sense of duty to share this with the industry from all the steering and overcharging most consumers have been positioned with providing the majority are now “bankers.” I also feel the need to share with the great originators out there. For whatever reason many are unaware of the opportunities to better serve their clients or how to make wiser and more informed career decisions. It is not in my best interests to share this with local competitors (by the way, if you’re a “banker” in Oregon or Washington, please ignore all of this). If you’ve caught yourself selling snake oil in the past, there is a different way. There is a better way … it has been around for decades and it’s called “wholesale lending.”

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.

“… as an experienced loan officer, I no longer rely on the company namesake for business. Almost all my customers are referrals now.”

Banks vs. Brokers

By Eric Weinstein

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, which in 2003, grew to one of the largest mortgage broker companies in the United States. Eric is semiretired, doing mortgages by referral only.

He may be reached by phone at (703) 5058692 or e-mail eweinstein4u@gmail.com.

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come from. Suddenly, you are required to bring in more business, but your compensation seems to be getting less and less, and your bonus quotas getting higher and higher. Brokers tend to pay a higher split, so you make more per deal.

More per deal reduces the amount of loans you need to do to make a decent living. This is especially true in the lean times. When there are less deals out here, lender loan officer turnover goes up. Loan officers can weather the storm better. That’s because as a broker, I am not paying for the owner’s private jet and the 10 levels of executive vice presidents between me and the boss. Also, having lower prices helps you get business.

Not so that I sound so one-sided, let’s talk about the benefits of working at a bank.

There is some sort of myth among real estate agents that you can get a tougher loan approved or loan closed extra fast because you are “friendly” with the underwriter or closer since you work at the same place. If you actually work at a lender or a bank, you know nothing is further from the truth. Still, it is a good myth to foster, since it gets you more business. I tend to send most of my business to a few places. Even though I can get the same expedited service when needed, it doesn’t sound as good coming from a broker rather than from a bank employee.

If you work for a “famous” bank, there is some instant credibility from the company logo on your card. That’s nice and yes, it will get you some extra business.

Most real estate agents and borrowers have never heard of the company where I work. It’s like having a card which reads “Joe’s Bar and Grill and Mortgage Company.” But as an experienced loan officer, I no longer rely on the company namesake for business. Almost all my customers are referrals now. I doubt any of them even know the name of the company that holds my license. All they know is that Eric Weinstein is doing the loan.

may not rule the Earth like we did, but we are still around.

Only you can decide what is best for you. For me, “Shriiiiiiik”, or whenever sound a dinosaur made back then.

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Banks vs. brokers … don’t get me started. I have been a broker for more than 20 years now. Call me a dinosaur. I owned a large broker shop who flirted with being a lender for a while. I worked at a federally-chartered bank for a bit, but now I am back home being solely a broker. I just cannot stay away from being a broker. It is just so much better.

To decide which is better, you have to look at it from the customer’s point of view. At a bank or acting as lender, we only had a few correspondent relationships, because much more than that would drive the underwriter crazy remembering all the rules, nuances and overlays of each particular lender. As a broker, we have about 50, and we are a very small shop. At my old company Carteret Mortgage, we were a much larger shop and had more than 300. The feeling was that you never want to say to a real estate agent, “No, we don’t do that type of loan.” At the bank, I found myself saying that a lot. As a loan officer, that phrase actually costs you money. To a real estate agent or a borrower, that means, “Go on to the next loan officer,” and many times, they never look back.

Good luck trying to get business from that person again. All they will remember is that you were not helpful.

Conversely, I have done tough deals for real estate agents before and they have sung my praises in real estate agent meetings, referrals and edible fruit arrangements. Saying “yes” just gets you more business.

Let’s face it … being a lender is a numbers game. You need to have high volume to pay the overhead. Who do you think is set up better, a nationwide wholesaler or a medium size lender? As a loan officer, you might not care about the profitability of the company where you work, but you should. The company’s profit is directly related to your commission split. If their overhead is large, guess whose split suffers? Lenders tend to forget where their loans actually

There was a time when brokers did 80 percent of the mortgage business and banks did 20 percent. After the financial meltdown, mortgage brokers became the “Bill Cosby” of the industry and the government tried to regulate us out of business. I may be a dinosaur, but I still believe in the mom and pop model of doing business versus the “Big BankGive-Them a Bailout” model we have today.

There was a time when I thought the financial meltdown was the killer asteroid to come and make all of us broker dinosaurs extinct. Now I realize, many dinosaurs are still around, like the alligator. We may not be as big as we were. We

“Correspondent lending, to be sure, isn’t without its share of challenges and risks, but if done well, it can offer an opportunity for mortgage lenders to grow profits, while providing much-needed liquidity to the secondary market.”

The Heartbeat Strengthens for Small- to Mid-Sized Correspondents

By Joe Collins

opportunity. Correspondent lending, to be sure, isn’t without its share of challenges and risks, but if done well, it can offer an opportunity for mortgage lenders to grow profits, while providing much-needed liquidity to the secondary market.

Emerging trends Competition is on the rise among small- to mid-sized correspondent investors, as more players seize opportunities for increasing production and servicing in a more efficient manner. New, smaller players began entering the correspondent channel about four years ago as an opportunity to grab market share, and some of these correspondents

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have since exploded in size.

Regulatory risk, to be sure, has reduced the allure of mortgage lending in general, especially for the national players who have spent years dealing with the fallout of the financial crisis, including settlements over servicing issues and legacy loan problems.

But where some see risk, others see

Several trends have impacted the growth of the correspondent business. First, many of the nation’s big banks exited the wholesale space over the past few years, and smaller wholesalers entered to fill that void and work with mortgage brokers.

While that was occurring, mortgage brokers began to reposition themselves as small non-delegated correspondents. Small- to mid-sized correspondent investors took advantage of this trend by reaching out via their correspondent divisions and working with these newly-transitioned mortgage bankers.

It should be noted here that there are requirements for mortgage brokers who are transitioning into mortgage bankers: l They’ll need an established warehouse line of credit. l They’ll need a document preparation company to help with the closing process. l They’ll need a fulfillment firm to help with post-closing and compliance.

closers. The correspondent business is more scalable and, as a result, more cost-effective.

Correspondent investors can also easily achieve a strong geographical disbursement of loans, which adds security to a mortgage company’s servicing portfolio. One downturn in an individual market, for example, won’t disrupt the entire portfolio.

Bankers selling into the correspondent channel are able to promise a closing in a certain number of days and have greater control of that. They are better able to meet their deadlines—a benefit to them and to their customers.

As the correspondent channel becomes more crowded, however, it’s important for mortgage companies to differentiate themselves from the pack. Below are some suggestions that can help them do that.

1. Consistent service levels What sets you apart from the competition?

Turn-times are critical. What are you able to promise and produce? If you promise a 48hour turn time or less, do you consistently achieve that? Are your turn-times below industry standards? Are mortgage bankers able to call up your shop and get their questions quickly answered to keep the process moving, or is there too much bureaucracy?

It’s always better to give direction to a loan officer or processor on potential issues early Mortgage brokers are making this change in the loan process then waiting 30 days to for the better pricing that can be found in find out a loan may not work. the correspondent space. They are also able to control more of the critical parts of the 2. Competitive pricing loan transaction such as the closing. This Are you competitively priced? A corresponcontrol means they are able to offer better dent investor may find it easier to be comservice to their customers. Brokers, con- petitively priced when they are dealing with versely, have to rely on the wholesaler to smaller to mid-sized non-delegated underclose and fund the loan, which, in some writing companies. It may be harder to comcases, could cause bottlenecks and closings pete on price with the larger delegated customers. Mortgage companies may find that a to be missed.

Now, as these trends emerge more fully, non-delegated customer allows for greater an increasingly crowded correspondent field control and a greater role in the process. means investors will need to work harder to 3. Simplify your process differentiate themselves from the pack.

Sometimes the market seems overly compliThe benefits to growing cated. Try to keep it simple. Some compathe correspondent channel nies have a separate sheet for a servicing From an investment standpoint, loan pro- release premium and a separate price sheet duction in a correspondent channel can be and you have to use both to come up with grown with a fraction of the personnel costs the net price of the loan. Lending to agency required of the retail side. There is no loan guidelines without a significant number of origination, only a loan purchase, so there’s overlays can also keep make the process less no need for loan officers, processors or complicated and keep costs down. Do you

have different prices for different loan amounts? One way to simplify is to have one price no matter the size of the loan amount, although the drawback to that method is you may leave some money on the table as you have the possibility of earning more by adjusting the price based on loan size. Typically, most correspondents pay more for a bigger loan and worse for a smaller loan. In order to keep things simple for our clients, Guardian Mortgage has chosen to offer one price, regardless of loan amount, to borrowers in order to treat everyone fairly.

As the marketplace becomes more crowded for correspondent lending divisions, the most competitive and professional companies will rise to the top. Where does your company fall on the spectrum? Is your service, pricing and process where it needs to be?

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5. Regulatory impacts The new TILA-RESPA Integrated Disclosure (TRID) rule implementation deadline is looming, but really affects the retail side more than the correspondent side of mortgage lending. Still, a correspondent investor’s customers may be faced with TRID challenges and correspondents will need to be sure, before they buy a loan, that all the timing requirements in TRID were met. In addition, the Consumer Financial Protection Bureau (CFPB) wrote a policy guidance outlining supervisory and enforcement issues pertaining to the trend of mortgage brokers becoming mini-correspondents. The letter essentially outlines how the business should be handled in that mini-correspondents still need to do all the things involved in putting together the loan together for the investor. The investor doesn’t get involved in the transaction other than underwriting the loan.

Division and has been in the mortgage industry for more than 39 years.

He joined Guardian in 2012 and was

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4. Manage third-party risk One way to manage risk is to underwrite every file. Every file should get a thorough review. Third-party vendors can help a mortgage lender’s correspondent division validate information in the loan file such as Social Security Numbers and employment history. A purchase review department should be checking to make sure that the loan was closed correctly and that all disclosures and timings of disclosures were correct. For companies that service loans, statistics should be able prove whether you’ve got a good system in place. Are your delinquencies from the correspondent business low?

Joe Collins serves as vice president of business development for Guardian Mortgage’s Correspondent Lending

“The view from the street at this point indicates the new standards in wholesale are shaping up to give less control and flexibility for brokers and that correspondents can expect a tougher pre-purchase review process.”

TRID Implementation: Lessons for Wholesalers and Investors From an Outsourcer

By Alice Alvey, CMB Lenders in the wholesale and correspondent business are preparing to facilitate a customer who must deliver on time and accurate services to a borrower, in a newly engineered process—and make money.

Most managers on all sides of the origination, funding and purchasing table, are spending every minute working on policies, procedures, and training for the new rules that will go live overnight Oct.

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2. Their focus is on operational steps and meeting compliance requirements. Without a doubt, this is causing more than a few sleepless nights thinking through the numerous known and unknown challenges.

What will the new standard be?

One of the most significant unknowns is whether the company’s capabilities will match customer expectations. Then, even if they meet their goals, which of their competitors will set higher service levels and meet those? Will there be an even newer standard in the loan process that hadn’t been anticipated? What will real estate agents and borrowers expect in the application to closing timeline?

These are questions to answer within your organization and then develop the systems to meet these service level goals.

TRID procedures, for all business channels, are being designed from the depths of the rule’s challenges and building outward. This has been a necessary approach in order to start designing the “new normal.” This approach starts with the negative and works to overcome the problem. System capabilities and staffing are driving an outcome, or more likely the realization, that results in a process with limitations. With each limitation comes a potential barrier to service levels.

The optimistic procedure designers have high hopes that originators armed with early disclosures and communication skills will set the gold standard in service level agreements that beat the competition.

This has the classic over promise and under deliver written all over it.

The view from the street at this point indicates the new standards in wholesale are shaping up to give less control and flexibility for brokers and that correspondents can expect a tougher pre-purchase

review process. In both cases, the borrower could be the loser.

Service lessons from outsourcing As wholesalers and investors set rules and determine controls under TRID, customer service level agreements (SLAs) should be redefined at the same time. There is nothing that hits the bottom line as much as a service problem. Customers and the sales team lose confidence in the company’s ability to get it right the next time. Operations associates become negative as exceptions are made to policies in order to put out the fires. To avoid this all too common cycle in mortgage lending, take a look at how outsource providers manage change of this magnitude.

Outsource service providers are accustomed to big changes. Every client is unique and so is every project. Project implementation usually involves learning a new Loan Origination Software (LOS), completely new procedures for every step from application through servicing, company specific policies and most importantly communication styles, and customer service level expectations. It’s not only learning the new ways of the client but redesigning internal procedures and systems to match, conduct internal quality assurance, track and report. The process requires a clear road map to ensure success in quality and ultimately customer service. Wholesalers who follow a similar road map will build long term value for their brokers and gain efficiency by improved quality and communication during the loan process. Investors conducting pre-purchase loan reviews can develop a business partnership that spends fewer resources on low risks tasks.

The roadmap for successful includes four critical components: l Pre-Implementation Phase l Implementation of Best Practices

l Governance Structure l Post-Implementation This outsourcing roadmap aligns with TRID implementation in any model that must work with a business partner who has the direct borrower contact.

Pre-implementation

The implementation for TRID is a challenge with everyone at the starting line on Oct. 3. In a typical outsourcing road map, implementation can be a phased in approach with a ramp up plan. The ramp up

The ramp up plan for each group will identify their specific SLAs and the right training and quality assurance measures to match. Then each group will require a specialized support team or escalation support model.

Investors purchasing from correspondents have an opportunity to consider ramp up and ramp down plans in the pre-funding review process. The knowledge transfer should be easier than it will be for wholesale, but nonetheless an important process. There may be different SLAs for varying groups of correspondents. As consistent quality metrics are met, the quality assurance process can be modified to fit a lower risk model supplemented by targeted reviews. The feedback loop here is critical for process improvement and cost reduction. Systems should accommodate a real-time and automated rebuttal process. Reporting should also be real-time with regularly scheduled reviews between key stake holders.

The implementation phase should be a defined period of time.

This will vary by service and product, but should cover from receipt of the loan to successful delivery, insuring or boarding in servicing, depending upon your business.

With this in mind, the time frame and may range from 45 days to 90 days or longer for new construction.

Project managers should be assigned for each group to track that SLAs are being met and change management is working. Client advocates, business unit owners and front line managers need regular meetings to close gaps, reconcile changes, and evaluate customer service levels.

No matter how much technology you have, nothing beats the value of getting everyone in the same room to work through process improvement. The ability to work together under a clear governance structure will make are break the success. The responsibility to make this work rests squarely on those with a title and not with those on the front line.

The post-implementation phase measures the success of the other phases through daily reports, feedback and scorecard results. From the information collected, the governance structure facilitates process improvements, new knowledge to transfer, and continuous updating of procedures and training.

In the end ‌ being the one who holds the money and makes the rules, only gets you on the playing field. Execution pays the bills.

Alice Alvey is senior vice president at Indecomm, leading the IndecommMortgage U division, Internal QA and Compliance. She is also the author of Indecomm’s FHA Practical Guide and VA Practical Guide. She may be reached by e-mail at alice.alvey@indecomm.net.

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Implementation and ramp-up

1. Those who currently exhibit consistent quality with high volume; 2. Those with inconsistent quality and measurable volume; and 3. Those who will just plain require extra support and are worth it.

Governance structure and post-implementation

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This pre-implementation phase for TRID, in wholesale and correspondent, is not just about publishing policies, procedures and checklists or holding a few Webinars. The lender or investor holding the money must establish their promised service levels for turn times, based on a set deliverable. These goals must be mutually agreed to by both parties, and clearly understood. The service level agreements include detailed checklists questions to ensure important details aren’t missed in complex scenarios.

The pre-implementation phase must also include a walkthrough of the process. Most people are visual learners and there is nothing like actually touching the keys and moving the mouse to start solidifying an understanding of the process. This process walkthrough includes every screen, every document, and includes review of escalation procedures and key contacts for problem solving. WebEx sessions can accommodate the first stage but ultimately at least two team members should have an opportunity to shadow an expert and touch the process at the source.

The more dedication there is to the pre-implementation phase, the smoother implementation will be.

Wholesalers should be identifying how they can reach their brokers on a very intimate level. It is an opportunity for every account manager to become a trusted adviser and help the brokers truly understand their new roles and responsibilities.

phase is the time to obtain true knowledge transfer, control production, and execute a feedback loop through reporting and reviews.

For wholesalers, a ramp up will need to be a part of the pre-implementation stage. The ramp up plan can include on boarding training and support specifically designed for the brokers based on their capability and need. Most wholesalers can classify their brokers into three or four groups. Three will be easier to work with in TRID planning. The three broker groups are generally:

“If you truly want to differentiate yourself from your competition, how are you going to do this? Perhaps you could be the best of the best in all three—product, price and service.”

Wholesale Differentiation in a Vanilla Environment

By Dave Hershman The secret of great companies is to differentiate themselves from others in the same market. The history our country shows that companies have gained major market share through differentiation. Remember Dominos Pizza’s delivery guarantee of 30 minutes or less to your door?

No one was worried about how good the pizza tasted or how much it cost. Just get it to us quick.

My favorite was the car company, Jaguar. When I grew up, everyone wanted to own a “Jag”—they were a cool status symbol. After a decline in the 1990s, Jaguar was

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purchased by Ford Motor Company. They set up to improve the brand and differentiate it by showing that it was indeed a foreign car even though it was owned

by Ford. So, what did they do?

They had commercials narrated by someone with a British accent and the changed the pronunciation of the car from “Jaguar” to “Jag-u-ar.”

Basically, without changing the car or the name, they just made it sound more European. What a novel idea!

So what does this have to do with mortgages and especially the wholesale sector? Traditionally, wholesale companies have competed to differentiate themselves in three areas: Products, price and service.

This is not too far from where companies in other industries have ventured, including the retail side of the industry. The problem with this equation is: l If all companies are making one of these three claims, you are no longer differentiating yourself.

For example, if one-third of the companies are featuring price, the “best price” sector is crowded. l Unless you have a portfolio to feature a “non-QM” unique product, everyone is really competing in the same product space. The vast majority of loans in America are either VA, FHA or conforming. Is your FHA loan better than everyone offering the same product? l The service issue has gotten really complex with onerous quality control (QC) standards. The tougher the government makes it to close loans, the harder it will be to deliver great service. Plus, these standards raise costs and thus pricing. Of course, TRID will make the equation even more difficult.

The good news is that less efficient lenders may not figure out the TRID service equation and thus

may decide to leave the wholesale business. On the other hand, TRID could accelerate the transition from brokers to lenders if implementation becomes onerous, leaving fewer wholesalers to chase less business.

If you truly want to differentiate yourself from your competition, how are you going to do this?

Perhaps you could be the best of the best in all three—product, price and service. But we are thinking the generalists will rule the day in this regard, again making it crowded instead of a differentiator.

How about focusing on becoming a partner with your broker clients instead of a vendor? In order to do that, you need to add value to their business. Even the term “value” is not always clear and thus we need to define what we mean more specifically. First, we are not talking about Wal-Mart value, which is lower pricing on basic goods. Second, what we are talking about is added value. In this case of real added value, the nature of the value is determined by what our clients really need and want, not what we are interested in. The best example would be training mortgage brokers. Is your training: l Focused upon featuring how to do business with you and your products specifically? l Focused upon helping the broker produce more income and/or make their business more efficient?

Think about this carefully.

Because if you are focused solely on your own needs, then your training does not add incremental value. If you are focused on helping the broker increase their business and efficiencies, then you are adding value. Of course, you can integrate product and service aspects into the equation.

The next question is: How do you help the broker increase their

business and efficiencies? To determine how you are going to do that, you must be an expert in the retail business. Also, you must have tools that will facilitate these objectives.

Technology, training and marketing are all tools that may be offered or combined to put a value package together.

There is one particular area where I believe there is an opportunity for a significant value proposition which can provide important synergy for the broker and lender.

Synergy means that value added will benefit both the broker and the wholesale entity together.

The opportunity lies in the application process. For decades sales managers and wholesale companies have complained that brokers don’t take great applica-

tions and don’t expertly manage their clients, and thus their pipelines. This inefficiency raises costs to the wholesale company because they are on the receiving end. It also raises the cost and stress levels for the broker.

More importantly, the broker is losing referral business if they are not managing the process well. It is hard to garner referrals if you are not exceeding expectations.

Furthermore, it is even harder to see the many opportunities to increase referral business exponentially during the process, if the process is muddled and chaotic. In a recent program, I identified more than 10 points of opportunities to garner more business from one application as one sees the transaction as having a sphere of its own

(a micro-sphere). If one is struggling to get the loan closed, not one of these opportunities will be apparent.

That is the problem with trying to teach loan officers to take a more complete application and successfully manage expectations.

They see a loan as a task to get through in order to receive a paycheck instead of the opportunity to expand their business. My experience of teaching one without the other is fruitless. You must make the connection in order to successfully change behavior.

There are many ways to add value to the businesses of your clients in order to differentiate yourself. However, I can think of no topic that adds more value than the application process. For the

wholesaler, you will receive better applications and at the same time are enhancing the business of your clients. For the broker, they have less stress in their lives and they have opened the door to an unlimited amount of business development opportunities. More importantly, you have lowered your own costs while differentiating yourself.

What is not to like?

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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Deciding to purchase a home can be daunting for many first-time homebuyers.

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Help potential borrowers get off the fence.

Mortgage Technology Firms Are Entitled to Numerous Tax Credits for R&D Efforts One of the best kept secrets of the IRS

By Linn Cook

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It’s hard for a mortgage technology company to keep its head above water under normal circumstances. The technology space is highly competitive and running a sustainable and profitable business is extremely hard to do. But when you throw in a major economic recession and follow that up with massive regulatory change that requires an extensive technology retrofit, it’s no wonder that more than a few companies have decided to call it quits. Amidst the calamity, there is one place that mortgage technology companies can look for help. And believe it or not, that place is the Internal Revenue Service (IRS).

Let me explain: In 1981, the Reagan Administration unveiled a series of economic reforms that sought to shore up a deteriorating U.S. economy. One of these reforms was a temporary IRS tax provision called IRC 41, also known as the Research and Development (R&D) Tax Credit. It allowed manufacturing and technology-related companies to lower their tax liability and incentivize them to invest in innovation and domestic job creation.

Three decades and 17 congressional extensions later, the R&D tax credit is now one of the most valuable and successful tax breaks available to businesses. More than 15,000 corporations received $10 billion-plus in R&D tax credits in 2012. Companies such as Apple, HP and Tesla all benefit tremendously from this tax break. America has become the innovation juggernaut that it is today in no small part to the R&D tax credit.

But ask the chief financial officer of many mortgage technology companies and chances are they have never heard of the R&D tax credit. A simple lack of awareness prevents these companies from tapping into millions of unclaimed tax credit dollars—recovered tax revenue that can be used to hire more employees, purchase new equipment, or, more apt to the current mortgage industry environment, fund

TRID and compliance-related development projects.

Mortgage technology companies are particularly good beneficiaries of the R&D tax credit due to the fact that employee salaries and wages comprise up to 80 percent of the credit. The payroll of a typical mortgage technology company is filled with programmers, developers, software engineers, product designers—highly-skilled and highlypaid employees.

But it’s not just about the programmers and developers. Wages for employees who are indirectly involved with product development, such as executive officers, managers, technical support, and even sales and marketing staff, also qualify for the R&D tax credit.

And to top it off, even U.S.-based subcontractor expenses are included, albeit at a 65 percent rate.

When taken as a whole, some mortgage technology companies will have 60-70 percent of their overall wages

qualify for the R&D tax credit.

Compare this to a typical manufacturing firm, where only 10-20 percent of wages might qualify. This means that a $5 million software company might receive the same amount in R&D tax credits as a $25-$30 million manufacturing firm.

One of our clients is a software firm with $10 million in annual revenues.

Their R&D tax credit was more than $170,000 for the last tax year. Not a huge amount, but this was the result of only one year on the federal R&D tax credit program. When a company initially claims the R&D tax credit, the IRS allows amending tax returns for up to three prior tax years, essentially doubling or tripling the amount of the credit.

Additionally, 33 states have their own R&D tax credit programs. There is a lot of variability among states and some are more generous than others.

One of the better state R&D tax credit

program is in California, where the rate is 15 percent of qualified expenses and companies are allowed to amend up to four prior tax years.

As a result, many California companies receive a larger tax credit from the state than from the IRS. It would not be unreasonable to expect a Californiabased mortgage technology company with $10 million in revenues to qualify for upwards of $500,000 in R&D tax credits for a multi-year, federal and state tax credit study.

Consider the amount of money that’s already been spent on TRIDrelated compliance. This type of development is particularly frustrating because it doesn’t expand the scope of a product, improve performance or net new customers. It is a business imperative that must be undertaken, like it or not.

The R&D tax credit provides some measure of relief because it enables mortgage technology companies to recover at least a portion of their compliance related costs. Moreover, the R&D tax credit is a recurring benefit, not just a one-time deal. Companies realize lowered tax liability year after year, providing funds to offset other costs, implement new development initiatives or create a rainy day fund to address issues similar to TRID. There’s no question that the R&D tax credit provides a clear-cut benefit for mortgage technology companies during the best of times. However, its value is even more evident during this period of forced TRID development. Be tax-savvy and leverage the tax code to your advantage. The R&D tax credit is a legitimate opportunity for mortgage technology companies to create an innovative advantage now and well into the future.

Linn Cook is vice president of sales and marketing at Apex Advisors. Linn was involved in the mortgage technology industry for 15 years and now advises companies on utilizing various federal and state tax codes to improve their financial position. He can be reached by e-mail at linn@apexadvisorsus.com.

June Housing Sales Take Surprise Tumble

By Phil Hall

below the revised May estimate of $400 billion.

While the construction data would appear to give the impression of stagnation, the new “Advance Read of July Trends” from Realtor.com plays up the concept of a healthy residential market.

“It’s typical to see a slackening in the pace of market activity during this time of year, due to back to school and the dog days of summer,” said Jonathan Smoke, chief economist at Realtor.com.

“Increasing median days-on-market suggests the market is finding more of a

balance, but demand is still strong. This bodes well for more moderate price appreciation in the months ahead.”

Smoke acknowledged that recent data reports have shown a market in flux in a month-by-month measurement—with existing home sales up and new home sales and pending home sales down. Nonetheless, he insisted that all numbers point to a strong future.

“We have reviewed the data and takcontinued on page 80

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ranklin First Financial Wholesle is committed to providing the best programs, pricing and service to the broker community. We offer a full line of products including FHA, USDA and conforming programs. Our team will work hard to help you get your loans to closing fast!

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The month of June saw sales of new single-family houses drop unexpectedly to a seven-month low, according to data released by the U.S. Census Bureau and the U.S. Department of Housing & Urban Development (HUD).

June’s single-family house sales were at a seasonally adjusted annual rate of 482,000, 6.8 percent below the revised May rate of 517,000, but 18.1 percent above the June 2014 estimate of 408,000. The median sales price of new houses sold in June was $281,800 and the average sales price was $328,700.

The seasonally adjusted estimate of new houses for sale at the end of June was 215,000, which represents a supply of 5.4 months at the current sales rate.

The decline in sales in June contradicted predictions that housing sales would remain in ascension this year.

Brent Nyitray, director of capital markets at Stamford, Conn.-based iServe Residential Lending, saw the 482,000 figure as a “strange number, given what we are seeing in housing starts/building permits, and numbers from the homebuilders.” Nyitray added that the $281,000 median new home price was down 1.8 percent from May, a fact that was absent from the press release on from the federal government.

Dr. Anthony B. Sanders, distinguished professor of real estate finance at George Mason University in Fairfax, Va., used his Confounded Interest blog to view the housing data through the spectrum of the Family Feud TV game show.

“New home sales remain at early 1991 levels,” Dr. Sanders wrote. “Survey says: This is an awful economic recovery.”

Yet Ward McCarthy, chief financial economist at Jefferies LLC in New York, told Bloomberg News that these numbers may not stand up to later review.

“Of all the housing numbers, this is probably subject to the most revision,” said McCarthy. “I don’t think you want to hang your hat on it necessarily.”

EverBank Executive Vice President of Home Lending Tom Wind said, "It would’ve been tough to have another month of gains after last month’s robust new home sales reading. You never want to see the data regress, but we remain optimistic that we’re still on a long-term upward trajectory.”

The latest construction spending numbers released by the U.S. Census Bureau of the Department of Commerce found a scant 0.1 percent increase in June, with a seasonally adjusted annual rate of $1,064.6 billion. Still June’s level was 12 percent higher on a year-over year basis, and the first half of 2015 saw $482.7 billion in construction spending, which is 8

percent above the $446.8 billion for the same period in 2014.

Spending on private construction was at a seasonally adjusted annual rate of $766.4 billion, a miniscule 0.5 percent below the revised May estimate of $770 billion, while residential construction was at a seasonally adjusted annual rate of $371.6 billion in June, an equally miniscule 0.4 percent above the revised May estimate of $370.0 billion.

Nonresidential construction was at a seasonally adjusted annual rate of $394.8 billion in June, 1.3 percent

Swiping Your Way to Social Media Dominance

BY MARY MCPHAIL

eal estate agents are minding the housing market trends, showing houses on weekends, balancing their personal lives and trying to grow their production. If only there were some form of actionable easy take away marketing strategy they can deploy. When it comes to market domination, the brand is only one component that factors into a favorable public perception. Real estate agents need to break away from the brand-defining space and create a platform that blends in their corporate brand with their personal brand.

R

communicate with potential buyers and sellers. Keeping pace with consumers’ changing media habits without feeling that ache of mobile inadequacy because you’re still having difficulty posting a message on Facebook is still very much a common thread for many. It’s important to see social tools as a way of exposing who and what one really is. Consumers crave relationships where businesses view them as individuals—and respond in a transparent manner. Giving the client an authentic experience that only you can deliver is truly inspiring. Don’t just present something for them to “buy,” but rather, if you can have them “buy into” something, it is your ticket to referral business. Why is this easier said than done? Because real connections need to

be firmly anchored in your everyday business approach.

Rule of thumb when using this medium for business purposes: Social media is about visuals. Visuals are shortcuts to the brain. You need to attract your audience in an immediate, compelling and relevant way. Photos are easy to share among your followers, and remember to use content that is engaging. Facebook, Twitter, LinkedIn, Instagram and Pintrest can get “noisy” and even fast-paced at times with cyber-chatter, so post things that are meaningful to your audience not the recipe of the day. Change your headers, refresh content and moreover, post when it matters. Social media creates a personality of sorts, so choose carefully when posting.

Where should you start? First, chunk down your marketing process into small tasks, but first learn to adapt to your audience and create a marketing strategy that aligns with your overall goals. Stay the course and don’t be afraid to try something new.

Transforming your digital outlook will give you a competitive edge, but I am from the school of thought that providing superior customer service and true value will outweigh any online or social media presence.

Mary McPhail is assistant vice president and marketing director for Westbury, N.Y.based Mid-Island Mortgage Corp. She can be reached by phone at (516) 348-0602 or e-mail mary@mortgagecorp.com.

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There’s a true dichotomy within the digital world as it pertains to real estate agents—they either practically live on their mobile devices or they’re hoping that the virtual world is a fad that will soon disappear. Unfortunately, the fact remains that 90 percent of prospective homebuyers begin their search online, so when it comes to making your impression upon the audience you’re seeking to attract, you must embrace the digital world.

Online home search engine titans such as MLS, Zillow, Trulia and Realtor.com have invested in non-traditional means of marketing to serve buyers and sellers (even FSBOs). You may have noticed that they use radio, TV, online ads and content marketing, such as blogs, informational feeds, and current events to attract more viewers to their respective Web sites.

Social media plays a huge part in their reach to direct their audience to their end goal, which is their Web site. Social media giant Facebook offers a service called Page Engage to assist real estate agents in posting their listings directly on their personal page. Taking advantage of these services or even replicating this model and scaling it down to a compact size to align with your goals will yield a decent return. I am not saying to ignore your corporate brand.

In fact, use it to your benefit. Many brokers offer a turn-key marketing solution that agents can easily tap into to create an online presence. However, this is not where the outreach effort should end.

Remember, regularity with which we complete a marketing idea is what makes it successful. That being said, use online software to its fullest potential to assist you in your consistency exercises, such as scheduling e-mail drip campaigns to your past and current clients, business networking, referral programs and create a personal style or signature that represents only you. Being more authentic and human gives you a personal edge that is rarely seen, yet very much appreciated.

You can accomplish this online on your Web site and via social media, but mostly in your personal interactions. This is where you will find the most successful form of engagement.

Millennials are naturally drawn to this form of behavioral consistency. Millennials are typically tech savvy, intentional and decisive and are cynical about brands, but not about people with ideas.

Creativity is at the heart of this demographic. They are now 25 percent of our total population. A quarter of them are parents and six million have household incomes above $100,000. So, if you are looking to grow your business, learn the triggers of the Millennial market, but don’t ignore the Generation X or Baby Boomer segments. Gen Xer’s laid the political, intellectual, social, creative and personal ground upon which the Millennials of today walk, talk and text.

The challenges go beyond one’s lack of digital intelligence. It’s all about how you

closing disclosure continued from page 56

of Transactions.”8 For transactions without a seller, the creditor or settlement agent may substitute a “Payoffs and Payments” table for the Summary of Transactions table and place it before the alternative Calculating Cash to Close table.9

excess amount of closing costs above the limitations on increases in closing costs (i.e., above the zero or 10 percent tolerance), if applicable, along with language stating that the increase exceeds the legal limits by the dollar amount of the excess.

Calculating Cash to Close Table

Alternative calculating Cash to Close Table “Calculating Cash to Close” may be used as a table for use in a transaction11 without a seller when the Loan Estimate was disclosed with the optional “Calculating Cash to Close” table.12

Suggested guidance l The dollar amount of any excess amount of closing costs, if applicable, must reflect the different methods of calculating excess amounts under TILA.13 l Because certain closing costs, individually, are subject to the limitations on increases in closing costs under Regulation Z14 (i.e., origination fees, transfer taxes, and charges paid by the consumer to an affiliate of the creditor, which are subject to the zero percent tolerance rule), while other closing costs are collectively subject to the limitations on increases in closing costs15 (i.e., recordation fees and fees paid to an unaffiliated third party if the creditor permitted the consumer to shop for the service provider, which are subject to the 10 percent tolerance rule, the creditor or closing agent must calculate subtotals for each type of excess amount and then add the subtotals together to yield the dollar amount disclosed in the table.16 l The calculation of excess amounts above the limitations on increases in closing costs takes into account the fact that the itemized, estimated closing costs disclosed on the Loan Estimate will not result in charges to the consumer if the service is not actually provided at or before consummation, and that certain itemized charges listed on the Loan Estimate under “Servicers You Can Shop For” may be subject to different limitations depending on the circumstances.17 l The creditor or closing agent must refund to the consumer any excess amounts at consummation or within 30 days after consummation.18

Elements of standard calculating Cash to Close Table Total closing costs The first row of the standard “Calculating Cash to Close” table discloses a comparison of the consumer’s estimated and actual “Total Closing Costs (J)” amounts, Item J from the Closing Cost Details on the Loan Estimate and CD. If the actual amount on the CD differs from the estimated amount on the LE (unless the difference is due to rounding), the creditor or closing agent must state “YES” under the subheading “Did this change?” and that the consumer should “See Total Loan Costs (D) and Total Other Costs (I).”

The creditor or closing agent also must state the dollar amount of any

Closing costs paid before closing The second row in the standard “Calculating Cash to Close” table (and the third row in the alternative table), labeled “Closing Costs Paid Before Closing,” discloses a comparison of the estimated and actual amounts of the “Total Closing Costs” paid before consummation of the transaction. The figure for the Loan Estimate column is $0 because the Loan Estimate does not have an equivalent disclosure. The actual “Closing Costs Paid Before Closing” amount that appears in the third (“Final”) column is the amount disclosed on page 2 of the Closing Disclosure in the “Borrower-Paid/Before Closing” column for “Closing Costs Subtotals (D+I).” If the actual amount is

General description TILA requires the creditor to disclose the “cash to close;” that is, the total amount of cash or other funds the consumer must provide at consummation, and how the creditor determines that amount. The “Calculating Cash to Close” table generally mirrors the format of, and updates the amounts shown on, the “Calculating Cash to Close” table in the Loan Estimate. The purpose of this table is to provide the consumer with a three-business-day window before closing to make arrangements to have the necessary funds available for the consummation of the transaction.

The table on the CD includes a row not included on the Loan Estimate, labeled “Closing Costs Paid Before Closing,” and additional information under the column with the subheading “Did this change?”10

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Standard calculating Cash to Close Table The standard “Calculating Cash to Close” table consists of four columns and nine rows. The columns are for the (1) components of cash to close, (2) the estimated amounts of cash to close (from the Loan Estimate) and its components, (3) the cash to close and its components without rounding (Final), and (4) a “Did this change” (Yes or No).

different from the $0 Loan Estimate amount (unless the difference is due to rounding), the creditor or closing agent must answer “YES” under the fourth column subheading “Did this change?,” and state “You paid these Closing Costs before closing.” The language is intended to remind the consumer that he or she paid certain transaction closing costs before consummation and that those costs will be subtracted from the actual cash to close amount.19 Closing costs financed The third row of the standard “Calculating Cash to Close” table discloses a comparison of the “Closing Costs Financed (Paid from your Loan Amount)” figure from the “Calculating Cash to Close” table on the Loan Estimate and the actual “Closing Costs Financed” amount. If the actual amount is different from the Loan Estimate amount (unless the excess is due to rounding), the creditor or closing agent must state “YES” under the fourth column subheading, “Did this change?,” and that the consumer included these closing costs in the loan amount, which increased the loan amount.20 Downpayment and funds from the borrower The fourth row of the standard “Calculating Cash to Close” table discloses a comparison of the “Downpayment/Funds from Borrower” figure from the “Calculating Cash to Close” table on the Loan Estimate and the actual “Down Payment/Funds from Borrower” on the Closing Disclosure.

Downpayment and Funds from Borrower are related concepts, but Down Payment applies to a purchase transaction while Funds from Borrower relates to a transaction other than a purchase. In a purchase transaction, the actual amount of the “Downpayment\Funds from Borrower” is the actual amount of the difference between the purchase price of the property and the principal amount of the credit extended, stated as a positive number.21 In a transaction other than a purchase, the actual amount of “Downpayment\Funds from Borrower” is determined by subtracting the principal amount of the credit extended from the total amount of all existing debt being satisfied in the real estate closing and disclosed pursuant to Regulation Z22 (i.e., as Adjustments in Section K on Page 3 of the Closing Disclosure)— except to the extent the satisfaction of the existing debt is disclosed under “Other Costs” on page 2 of the Closing Disclosure. If the calculation yields a positive number, then the positive number is disclosed; otherwise, $0.00 is disclosed. If the actual amount of “Down Payment\Funds from Borrower” is different from the amount on the Loan Estimate (unless the difference is due to rounding), the creditor or closing agent must state “YES” under the fourth column subheading, “Did this

change?,” and state that the consumer increased or decreased the payment, as applicable, and also that the consumer should see the details disclosed under Section K or L, as applicable.

Deposit The fifth row of the standard “Calculating Cash to Close” table discloses a comparison of the “Deposit” amount shown on the Loan Estimate’s “Calculating Cash to Close” table and the actual “Deposit” amount. The actual “Deposit” amount is the same amount shown on line 01 under Section L (Paid Already by or on Behalf of Borrower at Closing). If the actual “Deposit” amount is different from the Loan Estimate “Deposit” amount (unless the difference is due to rounding), the creditor or closing agent must indicate “YES” under the fourth column subheading, “Did this change?,” and state that the consumer increased or decreased this payment, as applicable, and that the consumer should see the details disclosed under Section L.23 Funds for borrower The sixth row of the standard “Calculating Cash to Close” table discloses a comparison of the “Funds for Borrower” amount shown on the Loan Estimate’s “Calculating Cash to Close” table and the actual “Funds for Borrower” amount. This amount is intended to generally represent the amount to be disbursed to the consumer or used at the consumer’s discretion at consummation, such as in cashout refinance transactions. The determination of whether the transaction will result in “Funds for Borrower” is determined by subtracting from the total amount of all existing debt being satisfied in the real estate closing (disclosed as Adjustments in Section K on page 3 of the Closing Disclosure), except to the extent the satisfaction of this existing debt is disclosed under “Other Costs” on page 2 of the Closing Disclosure), the principal amount of the credit extended, excluding any amount disclosed under Closing Costs Financed (Paid from your Loan Amount). The exclusion of any amount disclosed under Closing Costs Financed is necessary because that amount of credit extended has already been accounted for in the Calculating Cash to Close table. If this calculation yields a negative number, then the negative number is disclosed; otherwise $0 is disclosed.24 If the actual amount of “Funds for Borrower” is different from the estimated amount (unless the difference is due to rounding), the creditor or closing agent must indicate “YES” under the fourth column subheading, “Did this change?,” and whether the consumer’s available funds from the loan amount increased or decreased, as applicable.

Seller credits The seventh row of the standard “Calculating Cash to Close” table discloses a comparison of the “Seller Credits” disclosed on the Loan Estimate’s

“Calculating Cash to Close” table to the actual amount of Seller’s Credits disclosed on line 05 of Section L on the Closing Disclosure. The “Final” amount must reflect any change, following the delivery of the Loan Estimate, in the amount of funds given by the seller to the consumer for closing costs or for allowances for items purchased separately, as distinguished from payments by the seller for items attributable to periods before consummation (which are considered “Adjustments and Other Credits” separately disclosed on lines 08 through 11 of Section L). If the actual amount of “Seller Credits” is different from the Loan Estimate amount (unless the difference is due to rounding), the creditor or closing agent must indicate “YES” under the fourth column subheading, “Did this change?,” and state: “See Seller Credits in Section L.25 Adjustments and other credits The eighth row of the standard “Calculating Cash to Close” table discloses a comparison of the “Adjustments and Other Credits” disclosed on the Loan Estimate’s “Calculating Cash to Close” table to the actual amount of “Adjustments and Other Credits” (for example, prorations of taxes or homeowners’ association fees, utilities used but not paid for by the seller, rent collected in advance by the seller from a tenant for a period extending beyond consummation, and

interest on loan assumptions). This category also includes generalized credits toward closing costs given by parties other than the seller. The actual amount equals the total amount of the adjustments and other credits due from the consumer at consummation (the amounts disclosed in Section K), reduced by the total amount of the adjustments and other credits already paid by or on behalf of the consumer at consummation (i.e., the amounts disclosed in Section L).26 Suggested guidance l If the actual amount of “Adjustments and Other Credits” is different from the Loan Estimate amount (unless the difference is due to rounding), the creditor or closing agent must indicate “YES” under the fourth column subheading, “Did this change?,” and state that the consumer should see the details disclosed under Sections K and L. l If the calculation yields a negative number, the creditor or closing agent must disclose it as a negative number. If the “Final” amount of “Cash to Close” yields a negative number, the creditor or closing agent must disclose it as a negative number. The label “Cash to Close” must be in boldface type.

Cash to Close The final row

of

the

standard

“Calculating Cash to Close” table discloses a comparison of the “Cash to Close” amount from the Loan Estimate to the actual “Cash to Close” amount from the bottom line of the Summaries of Transactions table on page 3 of the Closing Disclosure. The two “Cash to Close” amounts also are the sums of the respective amounts disclosed in the “Loan Estimate” and “Final” columns of the “Calculating Cash to Close” table.27

labeled “Closing Costs Paid Before Closing,” along with additional information under the column with the subheading “Did this change?” The “YES” or “NO” answers to this subheading must be in capital letters and in boldface. In the event of a “YES” answer, certain words in the narrative text also must be displayed more prominently than other disclosures, as indicated below and in model Closing Disclosure form H-25.29

Suggested guidance If the “Final” amount of “Cash to Close” yields a negative number, the creditor or closing agent must disclose it as a negative number. The label “Cash to Close” must be in boldface type.

Loan amount The first row of the alternative “Calculating Cash to Close” table must state the Loan Amount—in the first column, under “Loan Estimate,” the Loan Amount disclosed on the Loan Estimate; and in the second column, under “Final,” the Loan Amount disclosed on the first page of the Closing Disclosure. Then, in the third column, under “Did this change?,” the creditor must indicate either “Yes” or “No.” If the answer is “Yes,” the creditor must state, as applicable: “This amount increased” or “This amount decreased,” or “You increased this amount” or “You decreased this amount.”30

Elements of the Alternative Calculating Cash to Close Table Alternative Calculating Cash to Close Table—general description I have mentioned that there is an alternative “Calculating Cash to Close” table for use with a transaction without a seller for which the creditor has provided the optional alternative “Calculating Cash to Close” table on the Loan Estimate and/or the alternative “Costs at Closing” table on page 1 of the Closing Disclosure.28 Like the standard table on the Closing Disclosure, the alternative table mirrors the Loan Estimate’s alternative table except for updating the amounts and including a row not included on the Loan Estimate,

Total closing costs The creditor must complete this row of the alternative “Calculating Cash to Close” table according to the same instructions described above for the continued on page 74

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closing disclosure continued from page 73

corresponding row of the standard table.31 Closing costs paid before closing The creditor must complete this row of the alternative “Calculating Cash to Close” table according to same instructions described above for the corresponding row of the standard table.32 Total payoffs and payments The fourth line, “Total Payoffs and Payments,” discloses the total of all payments to third parties not otherwise disclosed in the “Loan Costs” and “Other Costs” tables earlier on page 2 of the Loan Estimate and Closing Disclosure, as negative numbers. In the third column, under “Did this change?,” the creditor must indicate either “No” or “Yes.” If the answer is yes, the creditor must also state: “See Payoffs and Payments (K).”

www.LykkenOnLending.com

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Suggested guidance l Examples of these payments include, but are not limited to: n Payoffs of existing liens secured by the property such as existing mortgages; n Deeds of trust; n Judgments that have attached to the real property; n Mechanics’ and materialmen’s liens; n Local, state and federal tax liens; n Payments of unsecured outstanding debts of the consumer; and n Payments to other third parties for outstanding debts of the consumer (but not for settlement services) as required to be paid as a condition for the extension of credit.33 l The dollar amounts generally are shown to two decimal places, unless otherwise required. As a result, any “Final” amount is shown to two decimal places unless otherwise required. Any “Loan Estimate” amount is shown to the nearest dollar amount,34 to match the corresponding estimated amount disclosed on the Loan Estimate. For this reason, a “Final” amount could be a larger number that its corresponding “Loan Estimate” amount when, in fact, the apparent increase is due solely to rounding. Accordingly, each statement of a change between the “Final” amount and “Loan Estimate” amount must be based on the actual, non-rounded estimate that would have been shown on the Loan Estimate if it had been shown to two decimal places rather than a whole dollar amount.35 Cash to close to or from consumer The fifth item in the optional “Calculating Cash to Close” table is the

absolute value of the sum of the previous four lines disclosed with a statement of the estimated amount due to or from the consumer—as “Cash to Close From to Borrower” (boldface type required) under the “Loan Estimate” and “Final” columns. In the third column of this row, the creditor must list as “Closed Costs Financed (Paid from your Loan Account)” the sum of the amounts disclosed as the final “Loan Amount” and the final “Total Payoffs and Payments,” but only if this sum is greater than zero and less than or equal to “Total Closing Costs (Borrower-Paid)” (line J) minus “Closing Costs Subtotals” (D+I) on page 2 of the Closing Disclosure. If applicable, the creditor must use this disclosure: “Closing Costs Financed (Paid from your Loan Amount): $.”

Summaries of Transactions We now move to the second section on Page Three, entitled Summaries of Transactions. Regulation Z generally requires the rest of page 3 of the Closing Disclosure to contain the “Summaries of Transactions” table, which summarizes the consumer and seller portions of the transaction.36 The heading “Summaries of Transactions” must appear as a tab with upper rounded corners and a black background, along with the statement in boldface type, “Use this table to see a summary of your transaction.”

The creditor or closing agent may separate the Closing Disclosure into two disclosures, one reflecting the consumer’s costs and credits only and one reflecting only the seller’s costs and credits; that is, for the consumer’s disclosure, the seller’s side of the “Summaries of Transactions” would be left blank, and for the seller’s disclosure, the borrower’s side would be left blank or deleted.

By allowing this separation of consumer and seller costs, it seems clear that the Bureau sought to balance privacy concerns and more restrictive state law requirements with the mandated combination of the existing TILA and RESPA disclosures, consistent with the previous RESPA settlement statement requirements in RESPA.37 Even if the consumer and seller are given separate disclosures, a creditor may still prepare, or require the settlement agent to prepare, a complete Closing Disclosure to document compliance and to evaluate the transaction in accordance with governmental loan program and secondary market requirements to underwrite the loan.38 The creditor or closing agent may attach additional pages to the Closing Disclosure to add lines, as necessary,39 to accommodate the complete listing of all items required to be shown in the continued on page 76

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A Message From Florida Association of Mortgage Professionals President David Kane

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As my term as president of the Florida Association of Mortgage Professionals (FAMP) winds down, I looked back at a few of the goals we set for the year.

The first came courtesy of the Florida Office of Financial Regulation (OFR) beginning their plan to audit each licensee over the next seven years. In addition, our Administrative Rules, 69V–40, are being revised and will also include new disciplinary guidelines which contain more than 30 potential violations with different degrees of fines and disciplinary actions. We set out to inform our members about the audit process and the details of the new disciplinary guidelines. We attended chapter meetings statewide to give as much information and details as possible to help our members prepare themselves for the upcoming audits. As the audit process and the changes continue, we will continue keeping our members informed and up-to-date.

The second goal was, and still is, to keep our members informed about the changes coming due to TRID. Now we know we have a few extra months to be ready. Some needed the time, some didn’t, but it gives us all a little extra breathing room. As Oct. 3 approaches, one can only hope that the Consumer Financial Protection Bureau (CFPB) will give a few months of delayed or restrained enforcement to allow the industry to get real world experience with the new forms, processes and timelines. We, as an association, support NAMB's effort toward this goal. Only time will tell how the CFPB will approach enforcement of TRID. Regardless, we will continue to prepare our members with Webinars, e-mails and live exchanges at FAMP’s chapter meetings.

I am often asked, “Why should I join the FAMP?” The information our members received on these two items alone are well worth the cost of membership. In fact, information I have received from FAMP over the years has taught me everything I know about being compliant and being confident that I have the most up-to-date information on state and federal laws and regulations. This year, we were able to reduce our prices for our eight-hour NMLS-approved CE classes for members. We have benefits that give you discounts from companies like Acuclix, Webgreeter, Tactile Finance and Mortgage Currency, and are adding more. For more information on FAMP benefits, legislative efforts and to join the oldest mortgage broker association in America, visit MyFAMP.org.

This year, our “55 Years Strong” Annual Convention and Trade Show will be held at the Omni Orlando Resort at ChampionsGate, from Aug. 2629. This is a “must-attend” event for mortgage professionals. We kick-off with our golf event on Wednesday at the National Golf Course at ChampionsGate. Then, we move on to fantastic breakout sessions on Friday and Saturday, luncheons with great speakers on both Thursday and Friday, and of course, our Trade Show on Friday and Saturday with even more exhibitors than we had last year. Tie this all in with being able to complete your eight hours of required NMLS-approved CEU classes on Thursday or Saturday presented by our outstanding instructors. To top off the event, we are bringing back our Friday night Award and Installation Gala. Come join us to celebrate “FAMP 55 Years Strong! To register, visit MyFAMP.org.

David Kane, a regional manager at Security National Mortgage Company is statewide president of the Florida Association of Mortgage Professionals (FAMP). He may be reached by phone at (239) 851-7671 or e-mail kanejrdj@aol.com.

SPONSORED EDITORIAL

closing disclosure continued from page 74

Summaries of Transactions table and to include customary recitals and information used locally in real estate closings (for example, a breakdown of payoff figures, a breakdown of the consumer’s total monthly mortgage payments, an accounting of debits received and check disbursements, a statement stating receipt of funds, applicable stipulations between the consumer and seller, and the date funds are transferred).

The creditor or closing agent should place a reference such as “See attached page for additional information” in the applicable section of the Closing Disclosure.

Summary of Borrower’s Transaction Due from borrower at closing Next to the label “K. Due from Borrower at Closing,” presented on a gray background, the creditor or closing agent is required to disclose the total amount due from the consumer at closing.40 This amount is calculated as the sum of the items that follow in Section K, including: l Sales Price of Property, on line K01, which is the contract sales price of the property being sold in a purchase real estate transaction, excluding the price of any tangible personal property if the consumer and seller have agreed to a separate price for those items.41 l Sale Price of Any Personal Property Included in Sale, on line K02 (if the consumer and seller agreed to a separate price for personal property items).42 l Closing Costs Paid at Closing (from item J in the Closing Cost Details on page 2 of the Closing Disclosure), on line K03.43 l Adjustments to these items, on lines K05 through K06.44 l Adjustments for items paid by the seller in advance, on lines K08 through K15.45 Line K03 provides a subtotal of the closing costs paid by the consumer at closing, from Item J on page 2 of the Closing Disclosure. Lines K05 through K07 must include a description and the cost of any additional items (Adjustments) owed by the consumer not otherwise disclosed in Sections K and L (such as any balance in the seller’s reserve account held in connection with an existing loan, if assigned to the consumer in a loan assumption; any rent the consumer would collect after closing for a period prior to closing; or the treatment of a security deposit), all of which do not have a parallel amount disclosed under Seller’s Transaction.46 Lines K08 through K15 must include adjustments for items paid by the seller in advance, beginning with

City/Town Taxes on line K08,47 County Taxes on line K09,48 and Assessments on line K10.49 On each of these lines K08 through K10, the creditor or closing agent must indicate the period for which the consumer is responsible for reimbursing the seller for the item and the prorated amount due from the consumer at closing. Lines K11 through K15 must include any other adjustments for items paid by the seller in advance,50 such as additional taxes, flood and hazard insurance premiums for which the consumer is being substituted as an insured under the same policy, mortgage insurance in loan assumptions, planned unit development or condominium association assessments paid in advance, fuel or other supplies on hand purchased by the seller that the consumer will use when the consumer takes possession of the property, and ground rent paid in advance.51 Suggested guidance l For purposes of this disclosure, personal property is defined by state law and could include items such as carpets, drapes, and appliances.52 l Manufactured homes are not considered personal property.53 Paid already by or on behalf of borrower at closing Regulation Z requires the creditor or closing agent to itemize in Section L the amounts paid by or on behalf of the consumer prior to closing, labeled “L. Paid Already by or on Behalf of Borrower at Closing.”54 With the label, the creditor or closing agent must disclose the total amount paid by or on behalf of the consumer prior to closing, calculated as the sum of the items that follow in Section L. The creditor or closing agent must disclose the amount of the Deposit on line L01,55 the Loan Amount on line L02,56 any Existing Loan(s) Assumed or Taken Subject to on line L03,57 any Seller Credit on line L05, 58 other credits and adjustments,59 and then “Adjustments for Items Unpaid by Seller.”60 Calculation of borrower’s transaction At the bottom of the “Borrower’s Transaction” section of “Summaries of Transactions,” the creditor or closing agent must include the label “CALCULATION” with a gray background. Underneath appear three lines for “Total Due from Borrower at Closing (K),” “Total Paid Already by or on Behalf of Borrower at Closing (L),” and “Cash to Close qFrom qTo Borrower” with the associated dollar amounts.61 Items paid outside closing The creditor or closing agent is

required to designate amounts paid outside closing with the phrase “Paid Outside of Closing” or “P.O.C.”62 Any charges not paid from closing funds but otherwise disclosed as part of Borrower’s Transaction must be marked “paid outside of closing” or “P.O.C.” with a designation of the person making the payment. 63 Charges paid outside closing are not included in computing totals under Borrower’s Transaction, although they reduce the relevant component(s) of the items being added to determine cash to close.

“City/Town Taxes” on line M09, “County Taxes” on line M10, and “Assessments” on line M11.69 l For the items on lines M09 through M16, the creditor or closing agent should include the period in which the consumer is responsible for reimbursing the seller for prepaid amounts (if applicable), and the prorated amount due from the consumer at closing.

Due from seller at closing If a seller is involved in the transaction, the creditor or closing agent must disclose the total amount due Suggested guidance from the seller at closing, using the To be safe, creditors and closing label “N. Due from Seller at Closing.”70 agents that choose to use the phrase The amount is the sum of items disrather than the abbreviation should closed in Section N of the “Seller’s capitalize the words in the phrase Transaction” side of the “Summaries “Paid Outside of Closing,” because of Transactions” table, excluding the main text of the regulation pre- items paid from funds other than vails over the Comment.64 closing funds.

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Summary of Seller’s Transaction Below this amount, the creditor or Summary of seller’s transaction— closing agent must disclose on: General l Line N01, the amount of any excess The right side of “Summaries of deposit disbursed to the seller Transactions” addresses the “Seller’s before the closing, labeled “Excess Transaction.”

The “Seller’s Deposit.”71 Transaction” is not completed when l Line N02, the “Closing Costs Paid at no seller is involved, such as in a refiClosing (J),” 72 from the subtotal nance transaction. The “Seller’s amount listed under Item J in the Transaction” roughly mirrors the Seller-Paid at Closing column of “Borrower’s Transaction.” the Closing Cost Details. l Line N03, the existing loans Due to seller at closing assumed by or taken subject to at If a seller is involved in the transacclosing, labeled “Existing Loan(s) tion, the creditor or closing agent is Assumed or Taken Subject to.”73 required to disclose the total amount l Line N04, the payoff amount of a due to the seller at closing, using the first mortgage loan, labeled 65 label “Due to Seller at Closing.” This “Payoff of First Mortgage Loan.”74 amount is the sum of the items dis- l Line N05, the payoff amount of a closed in Section M of the “Seller’s second mortgage loan, labeled Transaction” side of the “Summaries “Payoff of Second Mortgage of Transactions” table, excluding Loan.”75 items paid from funds other than l Line N08, any “Seller Credit,” for closing funds. instance, the total amount of Below this amount, the creditor or money the seller will provide as a closing agent must disclose on: lump sum at closing to pay for loan costs and other costs, desigl Line M01, the amount of the real nated borrower-paid at or before estate contract sale sales price of closing under Loan Costs and Other the property being sold, labeled Costs, not including costs disclosed “Sale Price of Property,” excluding as seller-paid at or before closing the price of any items of tangible under Loan Costs and Other Costs.76 personal property if the consumer l Lines N06, N07, and N09 through and seller have agreed to a sepaN13, the description and amount rate price for those items.66 of any and all other obligations l Line M02, the sale price of any required to be paid by the seller at personal property included in the the real estate closing, including sale but excluded from the Sale any lien-related payoffs, fees, or Price of Property, labeled “Sale obligations.77 Price of Any Personal Property l Lines N14 through N19, Included in Sale”.67 “Adjustments for Items Unpaid by l Lines M03 through M08, the Seller,” beginning with City/Town amount of other items to be paid Taxes on line N14, County Taxes on to the seller by the consumer line N15, and Assessments on line under the contract of sale or other N16.78 agreement, such as charges not listed on the Loan Estimate or Suggested guidance items paid by the seller prior to l Any excess deposit disbursed to the closing but reimbursed by the conseller by a party other than the 68 sumer at consummation. closing agent must be disclosed on line N01 if the party will provide l Lines M09 through M16, “Adjustments for Items Paid by continued on page 78 Seller in Advance,” beginning with

box, and an optional “Confirm Receipt” signature section. The three tables are labeled “Loan Calculations,” “Other Disclosures,” and “Contact Information.”

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the excess deposit directly to the seller. Any amounts of the deposit disbursed to the seller prior to closing must be disclosed on line N01.79 Any real estate commissions disclosed under Section H of Other Costs in the Closing Cost Details on page 2 must be the full amount of the commission, regardless of the party who holds the deposit.

The amount of any outstanding balance or balances of any lien(s) the consumer is assuming or taking title subject to, and which is to be deducted from the sales price, must be disclosed on line N03 (more than one lien can be included in the amount).80 If third or fourth loans are secured with liens on the property, they are disclosed as Adjustments on lines N17 through N19.

The Seller Credit amount must include other obligations of the seller to be paid directly to the consumer, such as credits for issues identified at a walk-through of the property before closing.81 Adjustments would include any and all other obligations required to be paid by the seller at closing, including any lien-related payoffs, fees, or obligations.82 The satisfaction of existing liens by the consumer that are not deducted from the sales price are disclosed under Adjustments as paid outside of closing (P.O.C.).83 Escrowed funds held by the closing agent for payment of invoices related to repairs, water, fuel, or other utility bills received after closing that cannot be prorated are disclosed under Adjustments (on lines N18 through N19).84

Calculation of seller’s transaction At the bottom of the Seller’s Transaction column of the “Summaries of Transactions” table,85 requires the creditor or closing agent to include the label “CALCULATION” with a gray background. Underneath appear three lines for “Total Due to Seller at Closing (M),” “Total Due from Seller at Closing (N),” and “Cash From To Seller” with the associated dollar amounts.

As I stated above, the creditor or closing agent to designate amounts paid outside closing with the phrase “Paid Outside of Closing” or “P.O.C.”86 Thus, any charges not paid from closing funds but otherwise disclosed as part of Seller’s Transaction must be marked “paid outside of closing” or “P.O.C.” with a designation of the party making the payment. Charges paid outside closing are not included in computing totals under Seller’s Transaction.

In the next and final article in this six-part series, I will discuss Page Four and Page Five of the Closing Disclosure. Page Four contains three tables, which require completion depending on the type of loan product: (1) a “Loan Disclosure” table, which addresses various requirements in or arising from the legal obligation, including assumption, demand feature, late payment, negative amortization, partial payments, security interest, and escrow account information; (2) the Adjustable Payments (AP) table that also appears on page 4 of the Loan Estimate, as applicable; and the Adjustable Interest Rate (AIR) table that also appears on page 4 of the Loan Estimate, as applicable. Page Five includes three tables, a “Questions?”

Jonathan Foxx is president and managing director of Lenders Compliance Group, Brokers Compliance Group, Servicers Compliance Group and Vendors Compliance Group, national companies devoted to providing regulatory compliance advice and counsel to the mortgage industry. He may be contacted by phone at (516) 442-3456, by e-mail at jfoxx@lenderscompliancegroup.com or visit www.LendersComplianceGroup.com.

Footnotes 1—Foxx, Jonathan, RESPA/TILA Integration— Part I: Overview and Loan Estimate, pp. 28-54, National Mortgage Professional, October 2014.

2—Foxx, Jonathan, RESPA/TILA Integration – Part II: Closing Disclosure and Action Plan, pp.

26-50, National Mortgage Professional, December 2014.

3—Foxx, Jonathan, Loan Estimate: Deep Dive (Part III), pp. 40-75, National Mortgage Professional, June 2015.

4—Foxx, Jonathan, Closing Disclosure: Deep Dive–Pages One and Two (Part IV), pp. 40-82, National Mortgage Professional, July 2015.

5—www.teamtrid.com 6—www.tridhotline.com 7—Regulation Z § 1026.38(i)–(k).

8—For description of the Closing Disclosure form, see Annotated forms for TILA-RESPA Integrated Disclosure, December 2013, Consumer Financial Protection Bureau.

9—Page 3 of form H-25(J) in Appendix H of Regulation Z illustrates this option.

10—Regulation Z § 1026.38(i). Also see §?1026.38(e) for transactions without sellers.

11—Regulation Z § 1026.38(e).

12—Regulation Z § 1026.37(h)(2).

13—Regulation Z § 1026.19(e)(3)(i) and (ii), also as illustrated by Comment 38(i)(1)(iii)(A)-1.

14—Regulation Z § 1026.19(e)(3)(i).

15—Idem.

16—Comment 38(i)(1)(iii)(A)-2.i.

17—Comment 38(i)(1)(iii)(A)-2.ii and iii.

18—Regulation Z § 1026.19(f)(2)(v).

19—Regulation Z § 1026.38(i)(2), and Comment 38(i)(2)(iii)(B)-1.

20—Regulation Z § 1026.38(i)(3).

21—Regulation Z § 1026.38(i)(4).

22—Regulation Z § 1026.38(j)(1)(v).

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

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.

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23—Regulation Z § 1026.38(i)(5), and Comment 38(i)(5)-1.

24—Regulation Z § 1026.38(i)(6).

25—Regulation Z § 1026.38(i)(7).

26—Regulation Z § 1026.38(i)(8), and Comment 38(i)(8)(ii)-1.

27—Regulation Z § 1026.38(i)(9).

28—Regulation Z § 1026.38(e).

29—Comment 38(e)-2.

30—Comments 38(e)-5, 38(e)(1)(iii)(A)-1.

31—Comment 38(e)(2)(iii)(A)-1 and -2.

32—Comments 38(e)(3)(i)-1 and 38(e)(3)(iii)(B)-1.

33—Comment 37(h)(2)(iii)-1.

34—As required by Regulation Z § 1026.38(t)(4)(i)(C).

35—Comment 38(e)-3.

36—Regulation Z § 1026.38(j).

37—Regulation X § 1024.9(a)(6).

38—Regulation Z § 1026.38(j), (k), and Comment 38(j)-1.

39—Comment 38(j)-2.

40—Regulation Z § 1026.38(j)(1).

41—Regulation Z § 1026.38(j)(1)(ii).

42—Regulation Z § 1026.38(j)(1)(iii).

43—Regulation Z § 1026.38(j)(1)(iv).

44—Regulation Z § 1026.38(j)(1)(v).

45—Regulation Z § 1026.38(j)(1)(vi).

46—Comment 38(j)(1)(v)-1 and -2.

47—Required by Regulation Z § 1026.38(j)(1)(vii).

48—Required by Regulation Z § 1026.38(j)(1)(viii).

49—Required by Regulation Z § 1026.38(j)(1)(ix).

50—Required by Regulation Z § 1026.38(j)(1)(x).

51—Comment 38(j)(1)(x)-1 incorporates instructions for RESPA HUD-1 settlement statement lines 106-112 contained in Regulation X, Appendix A. See also Regulation Z § 1026.38(j)(1).

52—Comment 38(j)(1)(ii)-1.

53—Comment 38(j)(1)(ii)-1.

54—Regulation Z §?1026.38(j)(2).

55—Required by Regulation Z § 1026.38(j)(2)(i).

56—Required by Regulation Z § 1026.38(j)(2)(iii).

57—Required by Regulation Z § 1026.38(j)(2)(iv).

58—Required by Regulation Z § 1026.38(j)(2)(v).

59—Required by Regulation Z § 1026.38(j)(2)(vi).

60—Required by Regulation Z § 1026.38(j)(2)(vii)–(xi).

61—Regulation Z § 1026.38(j)(3), Comments 38(j)(3)(iii)-1 and -2.

62—Regulation Z § 1026.38(j)(4)(i).

63—Comment 38(j)(4)(i)-1.

64—Idem.

65—Regulation Z § 1026.38(k)(1)(i).

66—Required by Regulation Z § 1026.38(k)(1)(ii).

67—Required by Regulation Z § 1026.38(k)(1)(iii).

68—Required by Regulation Z § 1026.38(k)(1)(iv).

69—Required by Regulation Z § 1026.38(l)(1)(v) through (ix).

70—Required by Regulation Z § 1026.38(k)(2)(i).

71—Required by Regulation Z § 1026.38(k)(2)(ii).

72—Required by Regulation Z § 1026.38(k)(2)(iii).

73—Required by Regulation Z § 1026.38(k)(2)(iv).

74—Required by Regulation Z § 1026.38(k)(2)(v).

75—Required by Regulation Z § 1026.38(k)(2)(vi), as applicable.

76—Required by Regulation Z § 1026.38(k)(2)(vii).

77—Required by Regulation Z § 1026.38(k)(2)(viii).

78—Required by Regulation Z § 1026.38(k)(2)(ix) through (xiii).

79—Comment 38(k)(2)(ii)-1.

80—Comment 38(k)(2)(iv)-1.

81—Comment 38(k)(2)(iv)-2.

82—Comment 38(k)(2)(viii)-1.

83—HUD’s RESPA Roundup, December 2010.

Also see Comment 38(k)(2)(viii)-2 84—Comment 38(k)(2)(viii)-3.

85—Regulation Z § 1026.38(k)(3).

86—Op. cit. 63.

Direct Mail Voice Personalize Your Marketing www.direct-mail-voice.com

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info@tagquest.com

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www.TagQuest.com

NAPMW REPORT A U G U S T

2 0 1 5

Beyond the Business How a network of Care Helped me Save my Son

By Kelly Hendricks any of us joined NAPMW for similar reasons— educational opportunities, a friend brought us in or an employer asked that we get more involved in a trade association. For one reason or another, NAPMW was a good fit to foster personal and career growth. It is an association dedicated to the advancement and education of women. Within our local associations, we meet, educate and network, but what happens outside of our meetings is what, in my opinion, is the true strength of NAPMW. Don’t get me wrong, NAPMW has afforded me the opportunity to grow as both an individual and in my career by providing me the skills necessary to participate and lead an organization, but it’s beyond the business of the association that has kept me dedicated for so many years.

I cannot think of a better example than this past week, and what a crazy week it has been. It started with the usual hustle and bustle of juggling the kids’ schedule and making my way off to work. This week was especially harried, as Evan, my 14-year-old son, was off at scout camp in New Mexico and it would be a week before he was off the trail and I was able to talk with him.

I made my way through my normal Monday routine and headed off to my weekly chapel visit. I look forward to this hour of solitude and quiet time I don’t often find any other time of the week. As I made my way home, I started planning my next day in my mind, what to do with my 10-year-old for the day since his big brother, aka babysitter, was off on his great adventure. But when I walked in the door I saw a look of concern on my husband’s face, and I knew it was something about Evan and camp.

I sat down at the kitchen table to find out Evan had injured himself climbing a mountain at Philmont Scout Ranch and had been taken off the trail and now occupied a tent hospital at base camp. Evan was nearly 900 miles away and all I knew is he had hurt his leg and had to go over two miles on crutches down a mountain before they could safely get him on an ATV and off to medical attention. There I was, with so many questions and few answers, wondering what I could do. Shortly after, we received a phone call from a fourth year resident at camp who calmed me down, a little, and said we would re-evaluate Evan in the morning to see if they could get him back on the trail.

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Secure Settlements Changes Brand Name to

“Secure Insight” Secure Settlements Inc. (SSI), a data intelligence analysis and reporting firm focused on managing closing table risk, has announced that the company will change its brand name to “Secure Insight” effective immediately. The change has been in development for the past year and reflects the company’s expanding product and services lines. The corporate name will remain and continue to be used for legal and certain business purposes.

“We are proud to announce that, effective immediately, Secure Settlements will be known as ‘Secure Insight,’” said SSI President Andrew Liput. “Our new logo, which maintains our well-known lock symbol, has been redesigned to reflect our expanded role in the compliance and risk management vendor space. This brand name change has been over a year in planning and reflects our company’s growth beyond its original mission to evaluate, monitor and report on settlement agent risk. Today, several years after our launch, we offer a suite of tools to assist lenders with the management of third party service provider risk and employee screening.

VendorCheck offers our clients a total third-party vetting tool, while SafeChekUSA offers employee screening to meet federal and state data privacy and consumer protection expectations. Of course our signature products ClosingGuard and QuickCheck remain the industry’s best and most reliable settlement agent vendor management and monitoring compliance tools.

With our new brand name, ‘Secure Insight,’ we are much more than just settlement agent vetting!”

SSI monitors thousands of title companies, settlement agents, real estate law firms and other professionals through its proprietary technology and the mortgage industry’s only shared nationwide database. The database is accessed daily as a fraud prevention tool by state and federal banks, mortgage lenders and credit unions throughout the United States.

The helpful touch of NAMPW friends Tuesday morning rolled around and the news was not good. I found myself trying to figure out how to get to New Mexico as soon as possible.

There I was in my office talking to my son who was scared and in a tent hospital with no one he knew. I rushed off to pack and get to Evan. The fastest way I could find was a three-and-a-half hour drive to Kansas City to catch a train to Raton, N.M. The train left at 10:45 p.m. and that is when the stress really set in. Driving to an unfamiliar city, at night, was not a good thing for me. My vision is marginal at best in daylight and the thought of driving at night trying to find a train station was overwhelming. But off I went.

It was then that I remembered a lunch I had the day before with fellow NAPMW member Karen Hacke. She was leaving Tuesday for sales calls in Kansas City and that is when my struggles started to ease. I also knew another NAPMW member, Lisa Renfrow, who called Kansas City home. I gave Lisa a call to find out how far her house was from the train station and if she was available for me to stop by for the evening, awaiting my train. Lisa had already made plans to have dinner with Karen so continued on page 82

june housing sales tumble continued from page 69

ing into account less than perfect seasonal adjustment techniques at a very seasonal time for housing and the differing baseline metrics used in the various indicators, we’re comfortable that the market remains strong despite of these recent mixed signals,” said Smoke.

Realtor.com also released its “Hotness Index” of markets that snagged the most views per listing on its Web site, with California’s San Francisco-Oakland-Hayward corridor snagging the first spot again. Twelve California markets were included in the Hotness Index top 20 listing, and Smoke

paid particular attention to Yuba City, which came in at 14th in its first appearance in the top 20 section of this index.

“The city stands out with one attribute most of California lacks—affordability,” he said, adding that Yuba City also ranked as California’s fifth-least expensive market, thanks in large part to its quantity of affordable housing opportunities.

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

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MBA’s Mortgage Action Alliance A Message From MAA Chairman Fowler Williams he Mortgage Action Alliance (MAA) is a free, voluntary and non-partisan nationwide grassroots lobbying network dedicated to strengthening the industry’s voice and lobbying power in Washington, D.C. and state capitals across America. The policies and legislation the industry faces impact our day-to-day jobs in tangible ways. We have a right and duty to join that conversation.

MAA members are making progress on issues that are important to the health and strength of our industry.

Last month, the House passed HR 1408—The Mortgage Servicing Asset Capital Requirements Act. The legislation, which was introduced on a bipartisan basis by Reps. Ed Perlmutter (D-CO) and Blaine Leutkemeyer (R-MO) would require the Board of Governors of the Federal Reserve System, the Office of the Comptroller of the Currency (OCC), the Federal Deposit Insurance Corporation (FDIC), and the National Credit Union Administration (NCUA) to jointly conduct a study, in consultation with state banking regulators, to determine the appropriate capital requirements for mortgage servicing assets for banking institutions.

These federal banking agencies would have to report the results of the joint study to Congress within six months following enactment of the bill. A version of this legislation was also included in the regulatory relief package introduced by Sen. Richard Shelby (R-AL) and approved by the Senate Banking Committee earlier this year. Incoming Mortgage Bankers Association (MBA) Vice Chairman Dave Motley, CMB, president of Colonial Savings, had testified in support of this provision back in April at a Banking Committee hearing on mortgage credit access.

In part because of the support of the industry, this common-sense legislation passed the House of Representatives on a voice vote. Getting involved with MAA allows industry professionals to play an active role in how laws and regulations that affect the industry and consumers are created and carried out by lobbying and building relationships with policymakers. It only takes a moment to get started, and you do not have to be a member of MBA to enroll. The larger the group, the louder the voice!

If you would like to run an MAA campaign, please contact Annie Gawkowski at (202) 557-2816 or e-mail agawkowski@mba.org to receive an Enrollment Campaign Kit and learn more about how you can engage your colleagues and employees in MBA’s advocacy programs.

Real estate finance industry professionals who wish to join or learn more about MAA can do so at MortgageActionAlliance.org. If you have any questions regarding MBA’s advocacy programs, please contact MBA’s Director of Political Affairs Annie Gawkowski at (202) 557-2816 or e-mail agawkowski@mba.org.

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Fowler Williams is chairman of the Mortgage Bankers Association’s Mortgage Action Alliance. He is also president of Atlanta, Ga.-based Crescent Mortgage.

He may be reached by phone at (800) 851-0263 or e-mail fwilliams@crescentmortgage.net.

napmw report continued from page 80

I had a place to go for the four hours I had to wait. Lisa and Karen went to work finding the best place for me to wait, which happened to be Karen’s hotel. Karen called ahead to the hotel and there was a key waiting for me so I could freshen up before my 13-and-a-half hour train ride began. They took me to dinner, finding a restaurant only a mile from the train station so I could easily find my way, and spent the evening taking my mind off my son. Lisa showed up with a bag of goodies for my trip: A pillow, blanket, snacks and plenty of magazines to occupy my time.

As the time drew near for my train to depart, they pointed me in the right direction and gave me the last bit of support a mom would need, a warm hug and words of encouragement.

The next two days were the hardest I

have dealt with, but after 27 hours of train rides and a drive back from Kansas City to St. Louis, Evan and I were both home safe and sound. Although it was just dinner and a bag of stuff to some, it was the support and encouragement outside of our careers that drives the passion of so many within NAPMW. It is the celebration of success, both business and personal, the words of encouragement, the kinds words and acts in times of need that go beyond the business of the association and inspire so many of us in all aspects of our lives.

Kelly Hendricks is president of the National Association of Professional Mortgage Women (NAPMW). She may be reached by phone at (314) 398-6840 or email president@napmw.org.

new to market continued from page 34

“It is a perfect fit with our other data and technology products designed to make mortgage origination more efficient while reducing credit and collateral risk. We are very pleased to team up with CoreLogic for this unique reseller relationship and to make this essential product available to our network of clients across the country. We are in a time when oversight, transparency and loan quality have never been more critical, and it is crucial that all parties involved over life of the loan have complete confidence that every effort has been made to uncover fraud."

Your turn National Mortgage Professional Magazine invites you to submit any information promoting new “niche” loan programs, new products or any other announcement related to the introduction of a new program, to the attention of: New to Market column Phone #: (516) 409-5555 E-mail: 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.

the long and short continued from page 52

available for Fannie Mae and Freddie Mac underwater homeowners who are paying on time. Interesting stats on HARP from the Federal Housing Finance Agency (FHFA), published in the May 2015 Refinance Report (07/23/15): l Year-to-date through May 2015, borrowers with loan-to-value (LTV) ratios greater than 105 percent accounted for 24 percent of the volume of HARP loans. l In May 2015, eight percent of the loans refinanced through HARP had an LTV greater than 125 percent. l Year-to-date through May 2015, 28 percent of HARP refinances for underwater borrowers were for shorter-term 15- and 20-year mortgages, which build equity faster than traditional 30-year mortgages. l Year-to-date through May 2015, HARP refinances represented 13 or more percent of total refinances in Florida and Georgia, more than double the six percent of total refi-

nances nationwide over the same period. l Borrowers who refinanced through HARP had a lower delinquency rate compared to borrowers eligible for HARP who did not refinance through the program.

4. Offer a refinance option with a shortened mortgage term which leads to equity sooner for already performing underwater mortgages. This is a is a win-win for the mortgage lender and the underwater homeowner, and can result in loyalty from homeowners who will return.

Pam Marron (NMLS#: 246438) is senior loan originator with Innovative Mortgage Services Inc. (NMLS#: 250769) in Tampa Bay, Fla. She may be reached by phone at (727) 375-8986, e-mail pmarron@tampabay.rr.com or visit HousingCrisisStories.com, CloseWithPam.com or 8Problems.com.

Write More Loans With Every Door Direct Mail

BY BLAKE HARP 83 would upgrade to using rollerblades, so they could cover more houses.

The key to this form of promotion is that it was really cheap! Far cheaper than buying a mailing list and purchasing postage or buying online advertising.

Two years ago, the post office rolled out with a new program called Every Door Direct Mail. It trumps delivering flyers door to door, and costs the same. It delivers flyers or postcards door to door on the routes the post office carriers regularly deliver mail to, which is usually a few streets in a neighborhood. So this form of marketing is most powerful for businesses wanting to saturate a particular part of town, buying and selling real estate is one of those businesses.

Real estate agents use EDDM to promote a house in a neighborhood that they have sold, sending postcards or flyers to other neighbors, hoping that they will turn to them when they need to sell their house in the future.

Mortgage professionals find that EDDM works best when they are promoting their refinance services to a neighborhood, where refinancing is a desirable option.

What is so great about EDDM? From flyers to postcards Do you remember when people used to pass out flyers from door to door? Many businesses would make a flyer and canvass a neighborhood that would be most profitable.

Some people would start a business and try to promote it by going door to door. They would find out this wasn't an efficient method. So, they would start to use flyers and deliver them door to door. Then they

It’s cheap and cost-effective! The greatest cost when doing direct mail of any kind is the postage. EDDM reduces the postage costs by about 10 cents per piece, or by about a third.

Also adding to the cost savings, is the freedom of not needing a mailing list. You simply go online and select what streets you would like your mailers to go to. The post office helps you out by giving certain demographics (average members in household, average household income, average age) of the

EDDM postcards This postcard (see pic below) is a little different than usual, there is no mailing panel because the postcard is not specific for each recipient. Instead, the mailing panel is smaller, has specific verbiage that must be included, and is oriented in a different direction than on other postcards.

Setting up your mailing campaign In a YouTube video (https://goo.gl/4g4FXX), I go through the USPS every door direct mail Web site and show you how easy it is to select your mailing area.

Now that you know the benefits of Every Door Direct Mail, you can approach real estate agents, giving them the opportunity to get free advertising, and in the end, generating more business for you!

Blake Harp handles business development for Paragon Printing & Mailing, a direct mail company in Austin, Texas. He may be reached by phone at (512) 821-0222 or e-mail blake@paragonprinting.com.

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Every Door Direct Mail real world applications

houses in each carrier route to help you with your selection.

Lastly, it is one of the only types of direct mail campaigns you can do all on your own, without any extra help. If you have the time and determination, this would be the best project to venture into DIY direct mail. Otherwise, any printing and mailing business can easily handle this sort of project.

NationalMortgageProfessional.com

Mortgage professionals need to have a good network of real estate agents to get new clients. They provide opportunities for loans to be made, and mortgage professionals allow customers to buy the house the real estate agent is selling. It’s a win-win relationship across the board.

Recently, I have been surprised to see the amount of mortgage professionals giving away free advertising to real estate agents in exchange for their loyalty down the road in the buyers journey. What sort of free advertising do these agents prefer? Every door direct mail.

Why Every Door Direct Mail (EDDM)? Because it is cost-effective for the mortgage professional, and designed to be most effective for real estate agents.

I am going to talk about the specifics of the Every Door Direct Mail program, and show you how to effectively get the ball rolling on a new campaign.

outstanding

n a t i o n a l

m o r t g a g e

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p l a c e s

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Equity Prime Mortgage

REMN Wholesale

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Equity Prime Mortgage is focused on creating an outstanding work environment. We consider each and every employee as a true partner to our success. This approach, combined with Equity’s industryleading technology and turn times ensures we deliver exceptional service levels to our branches, referral partners and customers alike.

Although REMN Wholesale has over 1,000 employees, it feels like a “Mom and Pop”-style company. We encourage our team members to grow and we train and promote each individual to their full potential.

As a national company, REMN provides many opportunities for employment from coast to coast.

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Built by originators for originators, PRMG was born from a vision of creating a company with a unique culture focused on the successes of the producer. We understand what it takes to be a successful originator and cultivate new business every day.

Voted the #1 place to work in Metro Detroit, UWM is looking for A players to join our talented team. Our business is driven by our culture, and our people are our greatest asset. If you’re looking for the opportunity of a lifetime, apply to UWM today!

Attention Recruiters, Business Development Managers and HR Professionals national mortgage professional’s

Freedom Mortgage (844)-380-8450 www.freedomwholesale.com Freedom Mortgage is dedicated to fostering homeownership in America. A number one ranked lender1, we offer exceptional opportunities for career growth and development. Our employees are dedicated to providing the kind of service excellence, expertise and cutting-edge technology support that have helped us successfully meet the needs of our customers and business partners for 25 years.

1. Number one, overall volume. Scotsman Guide’s Top Mortgage Lenders, 2014.

outstanding places to work

We are pleased to announce a new package that will give your firm the recruiting tools to instantly shift your recruiting efforts into high gear using a multimedia, market-saturating approach. We will utilize the most successful methods that our clients have been using to find, identify and place top talents for your company. We have designed these packages with the concept of making it less expensive to give you the ability to reach more people.

NATIONAL MORTGAGE PROFESSIONAL MAGAZINE 1220 Wantagh Avenue • Wantagh, New York 11793-2202 516-409-5555 • Fax: 516-409-4600 • E-mail: advertise@NMPMediaCorp.com

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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

AUGUST 2015

Thursday, September 24

Thursday-Friday, October 29-30

Thursday, December 10

Monday-Wednesday, August 17-19

Originator Connect 2015 Mohegan Sun Casino & Resort 1 Mohegan Sun Boulevard Uncasville, Conn.

For more information, call (860) 922-3441 or visit OriginatorConnect.com.

Virginia Association of Mortgage Brokers 27th Annual Convention Hilton Garden Inn Richmond Innsbrook 4050 Cox Road • Glen Allen, Va. For more information, call (804) 285-7557 or visit VAMB.org.

2015 Texas Holiday Networking Party DoubleTree by Hilton Hotel Dallas– Campbell Centre 8250 North Central Expressway Dallas, Texas.

For more information, contact Beverly Koondel at (516) 408-5555, ext. 316 or e-mail beverlyk@nmpmediacorp.com.

National Association of Women in Real Estate Businesses (NAWRB) 2015 Annual Convention Renaissance Long Beach Hotel 111 East Ocean Boulevard Long Beach, Calif.

For more information, call (949) 559-9800 or visit NAWRB.com.

Thursday-Friday, August 20-21 Louisiana Mortgage Lenders Association (LMLA) 2015 Education Conference The Hilton New Orleans Riverside Hotel 2 Poydras Street • New Orleans, La. For more information, call (225) 590-5722 or visit LMLA.com.

OCTOBER 2015

NOVEMBER 2015

Friday-Sunday, October 2-4

Monday-Wednesday, November 16-18

60th Mortgage Bankers Association of the Carolinas (MBAC) Annual Convention & Trade Show Hilton Head Marriott Resort and Spa 1 Hotel Circle Hilton Head Island, S.C. For more information, call (704) 557-0204 or visit MBAC.org.

National Reverse Mortgage Lenders Association 2015 Annual Meeting & Expo The Palace Hotel 2 New Montgomery Street San Francisco, Calif.

For more information, call (202) 939-1784 or visit NRMLAOnline.org.

Wednesday-Saturday, August 26-29 2015 Florida Association of Mortgage Professionals (FAMP) Convention & Trade Show Omni Orlando Resort at Champions Gate 1500 Masters Boulevard • Orlando, Fla. For more information, call (850) 942-6411 or visit MyFAMP.org.

Wednesday-Thursday, November 18-19 Wednesday-Friday, October 7-10

SEPTEMBER 2015

Wednesday-Friday, November 18-20 Thursday, October 8

MBA's Risk Management, QA & Fraud Prevention Forum 2015 Omni Dallas 555 Lamar Street • Dallas, Texas For more information, call (800) 793-6222 or visit MBA.org.

Florida Association of Mortgage Professionals Miami Chapter 2015 Trade Show Miami Airport Convention Center 711 NW 72nd Avenue • Miami, Fla. For more information, call (305) 333-0130.

2015 Mortgage Bankers Association Accounting and Financial Management Conference The Roosevelt New Orleans 130 Roosevelt Way • New Orleans, La. For more information, call (800) 793-6222 or visit MBA.org.

Saturday-Monday, October 17-19

DECEMBER 2015

2015 NAMB National Conference The Luxor Resort & Hotel 3900 South Las Vegas Boulevard Las Vegas For more information, call (860) 719-1991 or visit NAMBNational.com.

Wednesday-Friday, December 2-4 MBA 2015 Independent Mortgage Bankers Conference Omni Nashville 250 5th Avenue S • Nashville, Tenn.

For more information, call (800) 793-6222 or visit MBA.org.

Sunday-Wednesday, October 18-21 Sunday-Tuesday, September 20-22 MBA's 2015 Regulatory Compliance Conference Grand Hyatt Washington 1000 H Street Washington, D.C. For more information, call (800) 793-6222 or visit MBA.org.

Mortgage Bankers Association Annual Convention and Expo 2015 San Diego Convention Center 111 West Harbor Drive San Diego, Calif.

For more information, call (800) 793-6222 or visit MBA.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. * Looking for additional exposure at key industry events?

Call 516.409.5555, ext. 4 to discover how to maximize your event coverage.

Tuesday, December 8 2015 California Holiday Networking Party Atrium Hotel 18700 MacArthur Boulevard • Irvine, Calif.

For more information, contact Beverly Koondel at (516) 408-5555, ext. 316 or e-mail beverlyk@nmpmediacorp.com.

JANUARY 2015

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Sunday-Wednesday, January 31-February 3 MBA's 2016 CREF/Multifamily Housing Convention & Expo Hyatt Regency Orlando 9801 International Drive Orlando, Fla. For more information, call (800) 793-6222 or visit MBA.org.

FEBRUARY 2016

Tuesday-Friday, February 16-19 MBA's 2016 National Mortgage Servicing Conference & Expo Hyatt Regency Orlando 9801 International Drive Orlando, Fla. For more information, call (800) 793-6222 or visit MBA.org.

SEPTEMBER 2016

Friday-Monday, September 23-26 NAMB National 2016 The Luxor Resort & Hotel 3900 South Las Vegas Boulevard Las Vegas For more information, call (860) 719-1991 or visit NAMBNational.com.

OCTOBER 2016

Sunday-Wednesday, October 23-26 Mortgage Bankers Association 2016 Annual Convention Hynes Convention Center 900 Boylston Street • Boston, Mass.

For more information, call (800) 793-6222 or visit MBA.org.

n California Mortgage Professional Magazine n AUGUST 2015

Arizona Association of Mortgage Professionals 2015 Education and Fall Expo Phoenix Convention Center, West Building 100 North 3rd Street • Phoenix, Ariz.

For more information, call (623) 972-6180 or visit AZAMP.org.

2015 Mortgage Star Conference Canyons Resort 4000 Canyon Resort Drive Park City, Utah For more information, call (860) 719-1991 or visit Mortgage-Star.net.

NationalMortgageProfessional.com

American Land Title Association 2015 Annual Convention Westin Copley Place Boston 10 Huntington Avenue • Boston, Mass.

For more information, call (202) 296-3671, visit ALTA.org.

Wednesday-Friday, September 9-11

Wednesday-Thursday, September 16-17

Tuesday, December 15 2015 Florida Holiday Networking Party The Holiday Inn Hotel & Suites 5905 South Kirkman Road Orlando, Fla. For more information, contact Beverly Koondel at (516) 408-5555, ext. 316 or e-mail beverlyk@nmpmediacorp.com.

ABC WHOLESALE LENDER

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BROKERS COMPLIANCE GROUP 167 West Hudson Street – Suite 200 Long Beach | NY | 11561 members@brokerscompliancegroup.com www.BrokersComplianceGroup.com Division of Lenders Compliance Group, BCG is the first and only mortgage risk management firm in the U.S. devoted to supporting the unique compliance needs of residential mortgage brokers.

Leveling the Playing Field for Mortgage Brokers Low Cost Monthly Membership Includes: • Free Weekly Hotline • Access to Subject Matter Experts • Policies and Procedures • Webinars *Special Pricing* • Quality Control • Exam Readiness • Licensing • Legal Reviews

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AUDIT DEFENSE AND RESPONSE

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

CFPB Audit Preparation and Defense

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We provide required CFPB manuals and customized policies.

Our fees are less than the big national firms that don’t call you back.

With us you receive 3 months FREE

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:

AUGUST 2015 n National Mortgage Professional Magazine n

NationalMortgageProfessional.com

of Q & A Hot Line support.

Available in all 50 states. We have hands-on experience with regulators and audits. No theories here; we were Bankers.

If you find yourself in federal court, we can handle that as well.

Contact Nelson Locke at (800) 656-4584.

Or you may email us at nl@lockelaw.us

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

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.

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.

All inquiries will be kept strictly confidential. This is not an offer for legal services, but rather for his expert review and opinion about your particular compliance situation. All fact patterns are different so the results will vary. No guarantees are expressed or implied. Licensed by California and Federal Bar. NMLS 149450.

CONTINUING EDUCATION

EDUCATION

BONDS & LICENSING

Mortgage Seminars MortgageSeminars.com 248-403-8181 The Bond Exchange www.bondedwithnamb.org (501) 224-8895 LOWEST-COST STATE MORTGAGE LICENSE BONDS Support NAMB in supporting you!

Online surety bond applications, instant underwriting approval, and credit card payments administered through The Bond Exchange NAMB's exclusive partner provider for state license surety bonds.

The Bond Exchange is a national surety agency specializing in servicing mortgage license bonds for thousands of mortgage professionals across the country.

Low prices and fantastic service. You really can have them both at the same time!

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!

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.

BOOTS ACROSS AMERICA TOUR 2014-2015 Beverly@BootsAcrossAmerica.org Certified Military Home Specialist Beverly Ray Frase "Training Boots on the Ground" Since 2009 • Trained 3,000 CMHS course grads • Trained for Depts of HUD, Treasury & more • 20+ years' experience in real estate & finance, military life COMING TO YOUR CITY!

MARKETING

WHOLESALE/CORRESPONDENT LENDERS

WHOLESALE LENDERS

Contac t: info@afr wholesale.com

888.664.2101 TagQuest www.myharpleads.com TagQuest.com 888-717-8980 TagQuest is a full service marketing firm created specifically for the ever changing mortgage business. We have tested and proven campaigns for FHA -VA - HARP - CONVENTIONAL loan types.

TagQuest knows what it takes to generate quality leads whether through direct mail marketing, telemarketing, internet leads, data lists, tracking systems, or any combination thereof. TagQuest will brand your company, prepare targeted marketing campaigns that generate interest in your company, and most importantly, show you how to turn sales leads into repeat customers.

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

CLOSE MORE LOANS WITH:

FREE PROCESSING - NO LENDER FEES ** •Co nvent io nal •USDA •Manufac tured Housing •One -Time Close Construc tion •Freddi e Mac Open Acces s and Fannie Mae D U R P •VA and FHA, FHA 203(k) and 203(h) Rehab loans •Jumbo loans up to $2,000.000 Lender NMLS:2826 - 9 Sylvan Way, Parsippany - NJ, 07054 - *See website for details: www.afrwholesale.com Equal Housing Lender. Equal Opportunity Employer. **No Lender fees by AFR. Third party fees may apply.

AB071114

Online Marketing

WHOLESALE LENDERS

Holiday Networking Parties

Return!

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HomeBridge Wholesale is a national wholesale lender offering Conventional, Government, Jumbo, and Renovation Loans. 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.

HOLIDAY HO H OL LIID ID DA DAY A AY Y NETWORKING N NET NE ET E T TW W WO OR RK RKIN KIIN K ING PARTY PA P AR A RT R TY T Y CA • FL • TX

Now Hiring Wholesale Sales Managers/Account Executives Nationwide Please send resumes to Marketing@HomeBridge.com

PRIVATE FINANCING

REMN Wholesale www.remnwholesale.com 866-933-6342 REMN has FHA, USDA, 203k, VA and Conventional solutions to fit the needs of your customers. But, at REMN, our most valuable product is our people. The REMN Sales and Operations Teams give you - and your loans - the time and attention that you deserve. Even better, at REMN, same-day approvals are guaranteed.* You can rely on us to get the little, yet vital, things taken care of on time.

Interested in joining our Wholesale Division?

Send your resume to aerecruiting@remn.com

Tuesday, December 8, 2015 Atrium Hotel Irivine, CA Thursday, December 10, 2015 Doubletree Hotel Dallas Dallas/Fort Worth, TX Tuesday, December 15, 2015 Holiday Inn & Suites Orlando, FL

n National Mortgage Professional Magazine n AUGUST 2015

The only thing better than a closed loan is a free party

NationalMortgageProfessional.com

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

AUGUST 2015 n California Mortgage Professional Magazine n NationalMortgageProfessional.com

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www.BrokersComplianceGroup.com