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MARCH 2010 O



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Your source for the latest on originations, settlement, and servicing

Connecticut Association of Mortgage Brokers PO Box 187 O Wallingford, CT 06492 Phone #: (888) 66-CTAMB O Fax #: (888) 66-CTAMB Web site: O E-mail:

Gilbert Ginsburg Georgette Natera Joseph Ferraro Carl Bulgini III

CTAMB OFFICERS Phone # President (203) 679-0732 Vice President (203) 367-6000 Treasurer (203) 481-7142 Secretary (860) 388-5626


Connecticut Real Estate Agent Pleads Guilty in Short Sale Scam

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O MARCH 2010


For more information, visit

AAMB welcomes NAMB to beautiful Phoenix! Come see the new NAMB President and the new NAMB Board installation, while participating in some great networking opportunities. State delegates can also participate in the NAMB Delegate Council Meeting. O

Nora R. Dannehy, U.S. Attorney for the District of Connecticut, announced that ANNA McElaney, a licensed real estate agent residing in Norwalk, Conn., pleaded guilty before United States Magistrate Judge Holly B. Fitzsimmons in Bridgeport, Conn. to one count of bank fraud stemming from her involvement in a “short sale” mortgage fraud scheme. A short sale transaction involves a mortgage holder or lender entering into an agreement to release its mortgage or lien on real property in exchange for payment of less than the total amount owed on the underlying debt. Many short sale transactions are legitimate. According to court documents and statements made in court, McElaney worked with Sergio Natera, also a real estate agent, to defraud Regions Bank, which held two mortgages on a residential property in Bridgeport. On Dec. 5, 2007, McElaney, who was a listing agent for the property, received an offer to purchase the property for a price of $132,500. However, McElaney and Natera subsequently directed communications to Regions Bank that the highest offer to purchase the property was for $102,375 by BOS Asset Management LLC, an entity that Natera controlled. The bank agreed to a short sale of the property for the lower price, and released its mortgages on the property. On June 9, 2008, Natera, through BOS Asset Management, sold the property for $132,500 to the original bidder on the property, and Natera and McElaney retained the difference in the two sale prices. McElaney is scheduled to be sentenced by U.S. District Judge Janet C. Hall on May 10, 2010, at which time she faces a maximum term of imprisonment of 30 years, a fine of up to $1 million, and an order of restitution. Natera pleaded guilty to one count of bank fraud on Feb. 11, 2010. He awaits sentencing. In July 2009, the U.S. Attorney’s Office and the Federal Bureau of Investigation announced the formation of the Connecticut Mortgage Fraud Task Force to investigate and prosecute mortgage fraud cases and related financial crimes occurring in Connecticut. In addition to investigating past mortgage fraud schemes, the Task Force will focus on emerging crime trends that are associated with the growing tide of foreclosures, including foreclosure rescue schemes, and short sale schemes. The Connecticut Mortgage Fraud Task Force includes representatives from the U.S. Attorney’s Office; Federal Bureau of Investigation; Internal Revenue Service–Criminal Investigation Division; U.S. Postal Inspection Service; U.S. Department of Housing and Urban Development, Office of Inspector General; Federal Deposit Insurance Corporation, Office of Inspector General, and State of Connecticut Department of Banking.

Thursday, June 24, 2010 Friday, June 25, 2010

CT 1

CT 2

MARCH 2010 O


SAFE Smart … Testing, Education and Licensing: The Devil is in the Definition By Paul Donohue, CRMS


Forward on Reverse: HECM at 20: Leaders and Pioneers in U.S. Reverse Mortgage Series (VII) … The Engineers of Reverse Mortgage Securitization By Atare E. Agbamu, CRMS


FHA Insider: FHA Continues to Drop the Hammer: Is Your Company Next? By Jeff Mifsud


Fighting Predatory Lending With Automation By Fred Gooch


Value Nation: Is More Regulation the Answer?


By Charlie W. Elliott Jr., MAI, SRA

The Secondary Market Overview: From Bonds to Production … The Good Faith Estimate and Rate Risk By Dave Hershman


Ask Tommy: Your QC Expert By Tommy A. Duncan, CMT


NMP Mortgage Professional of the Month: Bruce Lawner, Senior Vice President of Wholesale, Presidents First Mortgage Bankers


A View From the C-Suite: Five Keys to Helping First-Time Homebuyers By David Lykken


Knowledge is King: Embracing First-Time Homebuyers With eEducation By Cary Reines


Working With First-Time Buyers By Dave Hershman


The Decade of the First-Time Homebuyer By Mike Lesmeister, CRMS


First-Time Homebuyers Need to Realize the Opportunity is Now! By Laura Lynn Burke


Trend Spotter: Why Your Attitude Matters By Gibran Nicholas


Regulatory Compliance Outlook: March 2010—“Intent to Proceed” and the New GFE By Jonathan Foxx


Experian Announces New Requirements for Brokers and Net Branch Companies By Terry W. Clemans











The NAMB Perspective




O MARCH 2010


March 2010 Volume 2 • Number 3



Your source for the latest on originations, settlement, and servicing

1220 Wantagh Avenue • Wantagh, NY 11793-2202 Phone: (516) 409-5555 / (888) 409-9770 Fax: (516) 409-4600 Web site: STAFF Eric C. Peck Editor-in-Chief (516) 409-5555, ext. 312 Andrew T. Berman Executive Vice President (516) 409-5555, ext. 333 Domenica Trafficanda Art Director Karen Krizman Senior National Account Executive (516) 409-5555, ext. 326

SUBSCRIPTIONS To receive subscription information, please call (516) 409-5555, ext. 301; e-mail or visit Any subscription changes may be made to the attention of “Circulation” via fax to (516) 409-4600. Statements of fact and opinion in National Mortgage Professional Magazine are the responsibility of the authors alone and do not imply an opinion on the part of NMP Media Corp. National Mortgage Professional Magazine reserves the right to edit, reject and/or postpone the publication of any articles, information or data. MO

This month’s Mortgage Professional of the Month We have been giving a lot of focus to the retail channel in the last few Mortgage Professionals of the Month columns. Our readers have asked for more wholesale leaders and we have delivered. This month, we spotlight Bruce Lawner, senior vice president of wholesale for Presidents First Mortgage Bankers in Melville, N.Y. Bruce is a guy who has had ample experience in the retail channel, from origination to managing large teams. He has been having great success growing the wholesale channel of Presidents First since its inception only two years ago. Read more about Bruce on page 26 of this issue.

More reverse mortgage industry leaders share their success ... We have been featuring the HECM at 20: Leaders and Pioneers in the U.S. Reverse Mortgage Industry Series by Atare E. Agbamu, CRMS for the last seven issues. Atare has done an amazing job of identifying the individuals who have shaped the reverse mortgage industry, from the origination end to securitization. This month, he profiles the deal manager who helped put the first securitization for non-HECM mortgages, Joe Kelly, and mergers and acquisitions specialist Michael McCully. You can read Atare’s interview with Joe and Michael on page 4 of this issue.

How are we as an industry doing? This month in Tommy Duncan, CMT’s “Ask Tommy: Your QC Expert” feature, you will learn some very suprising stats on how we are doing as far as the quality of work being done when putting together our loans from application, to credit, to appraisals, and more. Tommy compares year-to-year data, and bank versus non-bank to act as an annual quality control report card on the industry. Tommy has given his full report on his Web site,, however you can find some highlights of this report on page 22.

Dealing with negative equity As the housing market continues to be plagued with negative equity, your attitude matters! This month’s installment of the Trend Spotter column by Gibran Nichols focuses on “Why Your Attitude Matters,” as Gibran imparts some advice on how to coach your borrowers’ attitude on negative equity and put it into a more positive perspective.

Upcoming Webinar with the FREE and LOW-COST lead expert I have been hearing from a handful of mortgage professionals who have been following national trainer, Ron Vaimberg’s proven strategies on how to generate an unlimited amount of leads on a zero dollar budget. I have known Ron personally for many years, and I called in a favor. I asked Ron to put together a Webinar for readers of National Mortgage Professional Magazine that will provide them some basic tools and strategies to start their own free marketing campaigns that will deliver leads within minutes after the Webinar. Oh, here’s the kicker, I asked Ron to make the Webinar FREE for our readers. After hours of talks and flat out begging, Ron AGREED! So, on Wednesday, April 28 at 1:00 p.m. EDT, Ron Vaimberg will present “Generate an Unlimited Amount of Leads for $0.00 a Lead.” For more details and sign-up info, visit

There’s a lot more … I’m trying to keep this message to under 600 words, however, that’s hard when we’ve got some great content that I want to boast about in this letter. More on FHA (the hammer will fall on more companies), credit reporting (big changes that brokers and branches better know about), a strong message from National Association of Mortgage Brokers President Jim Pair, and much more follow in this month’s issue. Sincerely,




MARCH 2010 O

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 The deadline for submissions is the first of the month prior to the target issue.

As we near the expiration of the first-time homebuyer tax credit, we wanted to share with you some articles to help you capture the first-time homebuyer. This section starts off strong on page 32 with an article from David Lykken sharing “Five Keys to Helping the First-Time Homebuyers” in his special installment of View from the C-Suite. David’s article is followed by Cary Reines’ focus on education as a tool in helping the first-time buyer attain their dream of homeownership. Dave Hershman also shares his insights on identifying the needs of the first-time homebuyer and helps connect them with other experts in your market. Mike Lesmeister, CRMS shares what he sees as trends of the firsttime homebuying market. I think we can all argee with with the trend continuing, based on the Mortgage Bankers Association’s (MBA’s) purchase market currently forecasted at $745 billion for 2010, going up to $907 billion in 2012, as the first-time homebuyer will plays a pivotal role in this market beyond the expiration of the tax credit. The section is wrapped up by a piece by Laura Lynn Burke giving details that every originator should know about the first-time homebuyer tax credit. Just because the tax credit deadline is April 1st, it doesn’t mean your marketing to the first-time buying market should end as well.



ADVERTISING To receive any information regarding advertising rates, deadlines and requirements, please contact Senior National Account Executive Karen Krizman at (516) 4095555, ext. 326 or e-mail

Embracing the first-time homebuyer




Jennifer Moeller Billing Coordinator (516) 409-5555, ext. 324

A Message From NMP Media Corp. Executive Vice President Andrew T. Berman




National Mortgage Professional Magazine is published monthly by NMP Media Corp. Copyright © 2010 NMP Media Corp.

Andrew T. Berman, Executive Vice President NMP Media Corp.

The National Association of Mortgage Brokers

National Association of Professional Mortgage Women

7900 Westpark Drive, Suite T-309 O McLean, VA 22102 Phone: (703) 342-5900 O Fax: (703) 342-5905 Web site:

P.O. Box 140218 O Irving, TX 75014-0218 Phone: (800) 827-3034 O Fax: (469) 524-5121 Web site:

NAMB Board of Directors Officers President—Jim Pair, CMC Mortgage Associates Corpus Christi 6262 Weber Road, Suite 208 Corpus Christi, TX 78413 (361) 853-9987 President-Elect—William Howe, CMC, CRMS Howe Mortgage Corporation 9414 E. San Salvador Drive, #236 Scottsdale, AZ 85258 (602) 200-8100 Vice President—Michael D’Alonzo, CMC Creative Mortgage Group 1126 Horsham Road, Suite D Maple Glen, PA 19002 (215) 657-9600 Secretary—Ginny Ferguson, CMC Heritage Valley Mortgage Inc. 5700 Stoneridge Mall Road, Suite 150 Pleasanton, CA 94588 (925) 469-0100

Directors Joe Camarena The Mortgage Source 10120 Southwest Nimbus Avenue, Suite C-7 Portland, OR 97223 (503) 443-1060 O

Walt Scott Excalibur Financial Inc. 175 Strafford Avenue, Suite 1 O Wayne, PA 19087 (215) 669-3273 O Don Starks D.C. Starks Mortgage Associates Inc. 141 South Main Street O Bourbonnais, IL 60914 (815) 935-0710 O

Senior Vice President Sharon Patrick, MML, CMI (386) 985-1620 Vice President/Northwestern Region Jill M. Kinsman (206) 344-7827 Vice President/Western Region Tim Courtney (760) 792-5620

Vice President/Southeastern Region Jessica Edmonston (919) 414-3028 Secretary Laurie Abisher, GML, CMI (661) 283-1262 Treasurer Kay Talley, MML (919) 846-4294 Parliamentarian Hulene Bridgman-Works (972) 494-2788

Vice President/Central Region Candace Smith, CMI (512) 329-9040

National Credit Reporting Association Inc. 125 East Lake Street, Suite 200 O Bloomingdale, IL 60108 Phone #: (630) 539-1525 O Fax #: (630) 539-1526 Web site:

2010 Board of Directors Marty Flynn—President (925) 831-3520, ext. 224 Tom Conwell—Vice President (248) 473-7400 Daphne Large—Treasurer (901) 259-5105

Sanford (Sandy) Lubin—Director (805) 481-3155 Judy Ryan—Director (800) 929-3400, ext. 201 Tom Swider—Director (856) 787-9005, ext. 1201

Mike Brown—Director (800) 285-6691

Terry Clemans—Executive Director (630) 539-1525

Susan Cataldo—Director (404) 303-8656, ext. 204

Jan Gerber—Office Manager/Membership Services (630) 539-1525 James Sutton—NCRA Legal Counsel (972) 680-2665

O MARCH 2010

Olga Kucerak Crown Lending 8700 Crown Hill Boulevard, Suite 804 O San Antonio, TX 78209 (210) 828-3384 O

President-Elect Gary Tumbiolo, CMI (919) 452-1529

Vice President/Greater Northeast Region Colleen-Therese McKeever, CMI (646) 584-8332


John Councilman, CMC, CRMS AMC Mortgage Corporation 2613 Fallston Road O Fallston, MD 21047 (410) 557-6400 O

President Liz Roberts-Fajardo, GML (702) 498-8020 O

Treasurer—Don Frommeyer, CRMS Amtrust Mortgage Funding Inc. 200 Medical Drive, Suite D Carmel, IN 46032 (317) 575-4355

National Board of Directors

William Bower—Director (800) 288-4757

Donald J. Unger—Director (303) 670-7993, ext. 222

NCRA Staff

Nancy Fedich—Director (908) 813-8555, ext. 3010


MARCH 2010 O



The Devil is in the Definition


Do you know who in your organization must be licensed as a “Mortgage Loan Originator?” It’s a vital question that will affect processors, underwriters, how you communicate with your borrowers and how you supervise your employees. The Secure and Fair Enforcement for Mortgage Licensing Act (SAFE Act) did away with our old notions of just who must be licensed. On this point, the devil is deep in the definition. The SAFE Act defines a “Mortgage Loan Originator” (MLO) as an individual who, “Takes residential mortgage loan applications” and “Offers or negotiates terms of a residential mortgage loan for compensation or gain.” It broadens the definition further, stating an originator is an individual who “Assists a consumer in obtaining or applying to obtain a residential loan by, among other things, advising on loan terms (including rates, fees and other costs), preparing loan packages, or collecting information on behalf of the consumer.” This seems clear, until you go deeper. Administrative or clerical tasks, are defined to mean the “receipt, collection and distribution of information common for the processing or underwriting of a loan” and “communicating with a consumer to obtain this information.” Clearly, a loan processor or underwriter would not fall under the definition of MLO if they only perform these duties and are employed by a licensed mortgage lender or mortgage broker. But there is a catch … Loan processor or underwriter, is defined as, “An individual who performs these clerical or support duties at the direction of, and subject to the supervision and instruction of, a state-licensed loan originator.” The first class of originators I taught this to had these silly grins, like self-important Cheshire cats. “Do you mean we are in charge of our processors and underwriters?” they asked. “Well, not so fast.” I answered. This means the licensed originator will be held responsible for the work of the processor or underwriter if, in fact, they supervise such activity. The key concept is that a licensee must directly supervise the processor or underwriter or they must be licensed.

HUD’s proposed rule The U.S. Department of Housing & Urban Development (HUD) recently extended the public commentary period until March 5 on a proposed rule interpreting responsibilities under the SAFE Act. This rule defines what it means to take an application and broadens the definition of originator, which impacts: I I I I

Loan modification specialists Unsupervised processors and underwriters Housing counselors or other third parties influencing a consumer’s loan decision Independent contractors that perform clerical and support duties

HUD interprets the lack of supervision by a licensed originator that triggers the need for a license. Therefore, all processors or underwriters acting as independent contractors must be licensed.

A SAFE-Smart tip Look closely at your employed processors and underwriters. To avoid the need for their licensure, be certain they are supervised by a licensed originator. Read HUD’s proposed rule to ensure you’re in compliance ( It may be time for your processor, underwriter or those who supervise them, to become licensed. Be SAFE-Smart out there. Paul Donohue, CRMS is a 23-year industry professional and founder of Abacus Mortgage Training and Education. Paul served on two NMLS working groups, establishing the new national education protocols. Go to to find out more about your obligations for testing, education and licensure, or call (888) 341-7767.

HECM at 20: Leaders and Pioneers in the U.S. Reverse Mortgage Industry Series (VII)

The Engineers of Reverse Mortgage Securitization Lehman Brothers lives in U.S. reverse reverse mortgages and other HELOCs mortgage history. The Federal Housing (home equity lines of credit) into a real Administration’s (FHA) home equity estate mortgage investment conduit conversion mortgage (HECM) has had (REMIC), a common structuring vehicle. Fannie Mae’s deep pockets as a second- In 2007, Kelly’s deal was nominated for ary market source of cash for reverse the Total Securitization’s North American mortgage lenders since its inception in RMBS Deal of the Year. Michael McCully was responsible for 1989. And since 2007, Ginnie Mae has the acquisition, manageopened HECM to world ment and sale of Financial investors through its Freedom at Lehman HECM mortgage-backed Brothers between 1999 security (HMBS). and 2004. McCully’s extenFor the proprietary sive portfolio company (non-HECM) reverse mortmanagement experience gage market to take off, a and strategic advice helped strong Wall Street cash the management team machine was needed. build the company into Lehman Brothers stepped one of America’s largest in and the securitization originators and servicers of of non-HECM reverse reverse mortgages by 2004, mortgages in the U.S. was “There existed an when it was sold to born in 1999. opportunity to lend IndyMac Bank FSB. Among others, the A Cornell University ecoLehman securitization the credibility of a nomics graduate, McCully team included veteran global mortgage structured finance expert, franchise in Lehman led teams of investment bankers to buy, sell and Joe Kelly, and mergers Brothers to a operate portfolio compaand acquisitions specialstruggling asset class nies during the last 10 ist Michael McCully, cowith unlimited years of his 20-year career founders of New View potential.” at Lehman Brothers. Advisors, a Wall Street —Joe Kelly The following are the boutique specializing in reflections of Joe Kelly reverse mortgages. A Wharton MBA and frequent indus- and Michael McCully on the first securitry speaker, Joe Kelly was the deal man- tization of reverse mortgages in the U.S. ager and chief designer of the 1999- and their roles in it: pioneering securitization and four subsequent jumbo reverse mortgage secu- At Lehman Brothers in 1999, you pioritizations through 2007 during a 14- neered the securitization of reverse mortgages in the U.S. secondary maryear career at Lehman Brothers. During the 1999 securitization ket. What attracted you to reverse process, it became clear that the deal mortgages as an asset class, and why lacked a solid legal framework, yet Kelly did you commit to them? successfully structured the transaction as We were attracted to the reverse morta FASIT (Financial Asset Securitization gage industry because it combined our Investment Trust), a rarely used and now multiyear expertise in mortgage defunct, structuring tool. He later successfully lobbied Congress to wrap continued on page 6

HUD advances fight against loan mod scams through online reporting tool

To view your company’s DCR and CR, go to the Neighborhood Watch Web site

continued on page 10

• Rapid Rescore (NO DOC) • Score Increasing Tools • Monthly Credit Score Monitoring (SCORE WATCH) • Instant Credit Reports • Same Day Credit Supplements Here’s what our customers are saying: “My loan officers have been closing more loans by running credit reports through PCS’s credit scoring services”

Learn more about our services by calling, Lorenzo Pugliano, President and CEO at 631-299-2084.

O MARCH 2010

continued on page 6

“… A mortgagee’s default and claim rate within a HUD field office jurisdiction is compared to the overall default and claim rate of the entire HUD field office jurisdiction. Before HUD terminates the underwriting authority, it will consider mitigating issues raised by a mortgagee during its informal conference and in its written response. HUD’s evaluation of mortgagees on the basis of HUD field office jurisdiction coincides with the manner in which FHA approves mortgagees to operate. This method of evaluation recognizes that local market conditions and events may contribute to higher defaults and claims.”

(set up by FHA to make company data public) at Click on the “Early Warnings” tab and then on “Single Lender.” Type in your company’s name and click “Submit” to get the data. Any company with a CR of 150 percent or less is considered acceptable. If, however, your company or the lender you sell loans to has a CR higher than 200 percent, be prepared for the possible termination of underwriting authority of FHA loans. By way of example, take Gold Star Mortgage Financial, a recently named Inc. 500 company out of Ann Arbor, Mich. and led by Chief Executive Officer Daniel Milstein, one of the country’s top originators. Gold Star originated 2,249 FHA loans in the most recent performance period and has a 4.45 percent DCR in a jurisdiction with a 5.03 percent DCR, so Gold Star’s CR is 88 percent (4.45 divided by 5.03). This puts them within the top percentile in the country, anything under 100 percent is outstanding. Try looking up some companies that are known to do risky FHA loans and check out their CR. I’d suspect that since Mortgagee Letter 2010-03 came out, many companies in fear of losing their Direct Endorsement (DE) are working tirelessly on loss mitigation efforts to get their CR down and to prevent their termination. A loan officer recently contacted me about moving to a different lender and


The Federal Trade Commission (FTC) moved to protect distressed homeowners from the promoters of bogus foreclosure rescue and mortgage modification services by proposing a new rule that would forbid companies to charge up-front for these services. Instead, companies could only collect payment after providing services. “Homeowners facing foreclosure or struggling to make mortgage payments shouldn’t have to contend with fraudulent ‘companies’ that don’t provide what they promise,” said FTC Chairman Jon Leibowitz. “The proposed rule would outlaw up-front fees so companies can’t take the money and run.” According to the Notice of Proposed Rulemaking, historic levels of consumer debt, increased unemployment, and an unprecedented downturn in the housing and mortgage markets have contributed to high rates of mortgage loan delinquency and foreclosure. This mortgage crisis has launched an industry of companies purporting, for a fee, to obtain mortgage loan modifications or other relief for consumers facing foreclosure. The FTC has brought 28 cases in this area, and state and federal law enforcement partners have brought hundreds more. Generally, these cases charged that companies do not provide the services they promise and that they misrepresent their affiliation with the government and government housing assistance programs, including the Making Home Affordable Program. The FTC notice seeks public input, particularly from attorneys and other professionals, on a proposed rule that would require mortgage relief companies to make good on their promised results before charging or accepting payment from consumers. Under the proposed rule, companies could not be paid until they had a documented offer from a mortgage lender or servicer that lives up to the promises they have made. “Far too many homeowners have

Mortgagee Letter 2010-03 contains information about the procedures that the Federal Housing Administration (FHA) will follow for terminating the underwriting authority of lenders with a high default and claim rate (DCR). Many loan officers are unaware of what a DCR is, let alone and where to find out what their company’s DCR is. The DCR is the sum of the loans in default and claim divided by the total loans originated within a 24-month period (or what FHA calls a “Performance Period”). The compare ratio (CR) is the lender’s DCR divided by the DCR within a U.S. Department of Housing & Urban Development (HUD) field office jurisdiction. To understand how the FHA uses the CR, here is a quote from the Code of Federal Regulations 24 CFR 202.3: O

The U.S. Department of Housing & Urban Development (HUD), in partnership with the Loan Modification Scam Prevention Network, has announced the launch of The Loan Modification Scam Prevention Network, a national coalition of public and private enterprises, is led by the Lawyers’ Committee for Civil Rights Under Law. Fannie Mae, Freddie Mac, the Homeownership Preservation Foundation, and NeighborWorks America assist the Lawyers’ Committee in leading the coalition’s fight against loan modification scams. “Troubled homeowners lose time and money when they are tricked by con artists who promise to help but never do,” said John Trasviña, HUD Assistant Secretary for Fair Housing and Equal Opportunity. “This initiative combines the collective energies of public and private enterprises to strengthen the ability of law enforcement to prosecute scammers and protect homeowners.” The Network developed to provide homeowners with a single destination to report alleged scammers. Complaints filed online are added to a national complaint database and forwarded to the appropriate law enforcement agencies for review. The Network estimates that the Web site will assist approximately 50,000 homeowners affected by scams. Additionally, HUD has directed its local fair housing and housing counseling grantees to begin reporting alleged loan modification scams via the Web site. Prior to the launch of, federal, state and local government agencies could not share complaint data with nonprofit organizations. The new system allows for improved analysis of trends across jurisdictional lines and will likely lead to an increase in private enforcement action filings. For more information, visit or

FTC proposes rule barring mortgage relief companies from charging upfront fees

FHA Continues to Drop the Hammer: Is Your Company Next?


forward on reverse

continued from page 4

MARCH 2010 O



finance, corporate finance and capital markets with a product that had a clear and tangible benefit to society. There existed an opportunity to lend the credibility of a global mortgage franchise in Lehman Brothers to a struggling asset class with unlimited potential. We believed it would become a mainstream product with sufficient education, secondary markets distribution and innovative product development.


structuring work involved. We also had to design a reserve fund feature to fund the borrower advances. Finally, we had to use an unusual “FASIT” tax structure, as reverse mortgages were not yet eligible for REMICs.

What is a prepayment curve? What are the factors that go into its design? What is a reserve fund feature? And what is FASIT? The prepayment curve is a measureDo you still hold that belief in the ment of the rate at which loans pay off unlimited potential of reverse mort- over time. For reverse mortgages, the gages? Why? most significant variable We still believe that is generally borrower reverse mortgages are an age, but the reverse essential financial prodmortgage prepayment uct that will grow dracurve predicts the rate of matically in numbers and payoffs using empirical importance over the next data regarding mortality, several years. The recent mobility and refinancing. financial crisis took away In a securitization, a mortgage alternatives for reserve fund is an amount seniors and has reduced of cash or securities that wealth, thus increasingly provides cash for the bormaking reverse mortrower’s credit line draws. “The recent financial gages the last, best alter“FASIT” stands for native to supplement crisis took away mort- Financial Asset Securitization income. The demographInvestment Trust, a tax vehigage alternatives for ic wave is too strong and cle designed to accommoseniors and has the need is too great, and date the securitization of reduced wealth, thus we also believe that revolving asset types, such increasingly making necessity being the mothas home equity lines of reverse mortgages the credit or HELOCs. With a er of invention, the industry can adapt to the last, best alternative to few exceptions, like the supplement income. changes in the financial SASCO 1999-RM1 transacmarkets. The demographic wave tion, the FASIT was rarely used. In 2004, FASITs were is too strong and the How was the experidisallowed by Congress, need is too great …” ence of creating the and reverse mortgages —Michael McCully first reverse mortgage and other HELOCs were securitization for your allowed, for the first time, investors, for Financial Freedom, for to be securitized using the more popular Lehman Brothers, and for you? real estate mortgage investment conduit The SASCO 1999-RM1 securitization or REMIC tax vehicle. required a great deal of work to create the valuation and credit analysis frame- How informed were investors about work required to securitize a new asset reverse mortgages as an asset class class. There were no rating agency crite- when you began, and how educated ria and very little historical data regard- are they today? ing prepayments, mortality, mobility, Investors were either uninformed, or crossover losses and other critical vari- worse, disinclined to invest because of ables. Investors had to analyze actuarial the bad publicity surrounding reverse risk, territory unfamiliar for most of mortgage fees and contingent interest. them. Financial Freedom had to learn But a small number of enlightened how to service loans in a securitization investors were smart enough to grasp for the first time, while simultaneously the relative value story of stable predealing with a major acquisition. payments and credit protection. The Lehman Brothers had to commit a lot of relatively low LTVs [loan-to-values] of resources to make it all work, including jumbo reverse mortgages and the very the two of us, Craig Corn, Jim Mahoney, conservative rating agency criteria also Al Benedetti and many others. helped give them comfort. With each successive securitization, the number of Without a model, what were some investors grew a little larger. structural challenges you faced, and how did you overcome them? How has the secondary market for The modeling challenges were consid- reverse mortgages evolved since your erable. The standard structuring model pioneering work? Where is it headed? had no “reverse gear.” We had to con- No securitized reverse mortgage classes struct a prepayment curve (which have suffered any ratings downgrades turned out to be very accurate), so continued on page 9 there was a lot of programming and

news flash

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paid upfront fees to bad actors who promised loan modifications but never delivered,” said Treasury Secretary Timothy Geithner. “I commend the FTC for proposing a strong set of safeguards to protect consumers from these predatory practices.” The proposed rule also would bar providers from telling consumers to stop communicating with their lenders or mortgage servicers, and from misleading them about key facts such as: The likelihood of getting the results they want, and how long it will take; their affiliation with public or private entities; payment and other existing mortgage obligations; and refund and cancellation policies. In addition, the proposed rule would require providers to tell consumers that they are for-profit businesses, the total amount consumers will have to pay, that neither the government nor the consumer’s lender has approved their services, and that there is no guarantee that the lender will agree to change their loan. The proposed rules would apply to for-profit companies that, in exchange for a fee, offer to work with lenders and servicers on behalf of consumers to modify the terms of mortgage loans or to take other steps to avoid foreclosure on those loans. The proposed rules generally exempt entities that own or service mortgage loans. Attorneys would have a limited exemption from the proposed advance fee ban if they represent consumers in a bankruptcy or other legal proceeding. For more information, visit

FHFA announces oneyear extension of HARP Federal Housing Finance Agency (FHFA) Acting Director Ed DeMarco has announced the extension of the Home Affordable Refinance Program (HARP), a refinancing program administered by Fannie Mae and Freddie Mac, to June 30, 2011. The program is a key component of the Administration’s Making Home Affordable Program announced in February 2009. The HARP program expands access to refinancing for qualified individuals and families whose homes have lost value. The program was set to expire June, 2010. “FHFA has reviewed the current market situation and the state of mortgage insurance availability and has determined that the market conditions that necessitated the actions taken last year have not materially changed,” said DeMarco. “Accordingly, to support and promote market stability, and to encourage lenders and other mortgage market participants to fully adopt the HARP program, including the implementation of the October 2009 expansion of loan-to-value ratios (LTVs) to 125 percent, FHFA is authorizing the

extension of HARP until June 30, 2011.” In 2009, Fannie Mae and Freddie Mac purchased or guaranteed more than four million refinanced mortgages. Of this total, 190,180 were HARP refinances with LTVs between 80 percent and 125 percent. The HARP began in April 2009 and has grown over the past few months. For more information, visit

HUD launches new Office of Sustainable Housing and Communities U.S.Departmentof Housing& Urban Development (HUD) Secretary Shaun Donovan has announced the launch of HUD’s new Office of Sustainable Housing and Communities (OSHC). The office will be overseen by HUD Deputy Secretary Ron Sims who won national recognition for turning King County, Wash. into a model for sustainable communities. OSHC is designed to help build stronger, more sustainable communities by connecting housing to jobs, fostering local innovation and building a clean energy economy. Funded by Congress for the first time in HUD’s 2010 Budget, OSHC is a key component of the Obama Administration’s Partnership for Sustainable Communities. “Through our new Office of Sustainable Housing and Communities, we will begin to tie the quality and location of housing to broader opportunities such as access to good jobs, quality schools, and safe streets,” said Donovan. “By working with DOT, EPA and other federal agencies, and with Deputy Secretary Sims’ guidance, we will finally begin to meet the needs of today without compromising the futures of our children and grandchildren.” Under the management of Director Shelley Poticha, the OSHC will be the focus of all of HUD’s sustainability efforts. The average household spends more than half of its budget on housing and transportation, which have become American families’ two single biggest expenses. With OSHC as lead, HUD will work to improve access to affordable housing and transportation options, saving money for American families while allowing them more time to spend at home and less time traveling. The office will also invest in energyefficient homes and buildings, in renewable energy, and in next-generation infrastructure to lay the foundation for the clean energy economy America needs to compete and create jobs in the 21st century. To meet that goal, OSHC will strengthen HUD’s Energy Efficient Mortgage product and other energy retrofit financing optionsfor both single family homes and multi-family rental housing—through a $50 million Energy Innovation Fund. continued on page 8

Fighting Predatory Lending With Automation By Fred Gooch

Easing the compliance burden

Fred Gooch is general counsel and vice president of compliance for Idaho Falls, Idaho-based DocuTech Corporation, a provider of compliance services and documentation technology for the mortgage industry. He may be reached by email at

• Tax Return Verification (4506 tax transcript done in less than 24 hours in most cases) • Flood Certification Report • Automated Valuation Model (AVM) Reports • Verification of Employment (VOE) Here’s what our customers are saying: “By using PCS’s VOE service, I was able to move the cost onto the HUD1 and virtually get the VOE’s done at no cost to my company” “PCS’s high level of customer service ensures that my loans close on TIME!”

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Learn more about our services by calling, Lorenzo Pugliano, President and CEO at 631-299-2084.


The challenge lenders face is perfecting a process that eliminates the risk of failing to properly disclose the terms of the loan upfront and catches potential high-cost loan terms prior to closing. For easing the cost and time spent on disclosures, lenders should look into eDisclosure systems. These systems are easy to implement and nearly all borrowers have the capabilities to receive, sign and return the disclosures. More importantly, from a compliance standpoint, electronic disclosure systems offer monitoring and reporting on the status of all disclosures. These reports provide a paper trail to verify the receipt and acceptance of the disclosure. On the back end, lenders should seek automated high-cost lending and predatory lending review systems that flag suspicious applications prior to reaching the closing table. This enables lenders to make corrections to loans that would trigger HPML regulations, as well as other predatory lending laws, in enough time to issue revised disclosures and ensure the loan closes correctly. The best systems will pull data directly from the loan origination software (LOS) to eliminate time-wasting and risky data reentry. First Bank Mortgage from Augusta, Ga. implemented an automated document and high-cost loan software because the headaches associated with manual predatory lending checks became too much. “The old system was very manual,” said Leslie Kromke, mortgage officer for

First Bank Mortgage. “We literally had to enter everything from the final HUD report into the system, which created a huge margin of error. Since the final high-cost lending and predatory lending check is run at the closing table, we had to find a method that would not leave our customers wasting time waiting on a computer program to run.” The lender now uses a Web-based tool that compares loan-level data to applicable laws, regulations and investor requirements. The system is also configurable for state and local regulations in addition to the federal laws. According to Kromke, the most significant benefits to using an automated system to manage predatory lending compliance are the speed and accuracy of the checks. “The old system added more than five minutes to the end of each closing,” said Kromke. “With HCL/PredCheck, we can run the compliance checks and generate the reports in less than a minute.” Kromke also said the improved accuracy saves the lender potential regulatory punishments or loans returned by investors. “In addition to the regulatory agencies, investors run their own checks to ensure compliance with HCL and predatory lending laws,” said Kromke. “Our software makes it easy to generate the reports we need to prove compliance on all loans and improve our cash flow with increased sales on the secondary market.” As First Bank Mortgage’s experience shows, lenders can still close profitable loans with the new rules affecting lenders today. Lenders must use technology that eliminates data entry, provides strong tracking and reporting capabilities and is updated to comply with new regulations at all levels. The ones who do will be able to close more loans and remove the fear of a high cost loan or improper disclosure slipping through the cracks. O

We have entered a new era of predatory offered to consumers by a representative lending regulation and compliance for sample of creditors for mortgages that lenders. Since the beginning of 2009, law- have low-risk pricing characteristics. The makers have proposed and passed sever- APOR for a broad range of types of transal regulations that attempt to prevent the actions is published in a table updated at rash of risky, and in some cases, predato- least weekly, along with the methodolory, loans that have rocked the mortgage gy used to derive these rates. In order to determine which loans are industry over the past few years. The reason for these rules lies in the covered, one must look at the definitions of “consumer credit” and “prinemotional nature of a cipal dwelling.” “Consumer home purchase. Once a credit” is defined by the regbuyer has mentally comulation as “credit offered or mitted to buying a home, extended to a consumer primost will follow through marily for family, or houseeven if fees rise or terms hold purposes.” The meanchange between the initial ing of “principal dwelling” is disclosure and the closing clarified in the commentary table. While the vast majorto Regulation Z and is generity of lenders treated borally understood to mean rowers with fairness and owner occupied real properrespect, a few unscrupulous ty. Thus loans that are not lenders engaged in these extended primarily for famideceptive practices, know“Lenders must use ing that most borrowers technology that elim- ly or household purposes are excluded, and so are loans would still sign the higherinates data entry, that are not occupied by the cost loan, rather than walk provides strong owner. Construction loans, away from their new home. tracking and report- reverse mortgages, bridge New lending regulations ing capabilities and loans and home equity lines fall under two umbrellas— of credit are also excluded clarifying what constitutes a is updated to comply higher priced, high-cost or with new regulations from the HPML regulation. HPMLs are subject to predatory loan and reformat all levels.” the following restrictions: ing the rules to disclose the costs of a mortgage. To avoid penalties for inadvertently funding a O Repayment ability: Lenders are prohibited from extending credit based on the high-cost loan or messing up a disclosure, consumer’s collateral without regard to lenders must understand what the rules the consumer’s repayment ability. mean. More importantly, they need to implement systems to reduce the risk of O Prepayment penalties: Prepayment penalties are prohibited unless the funding a high-cost loan and improve the penalty will not apply until two distribution of initial disclosures. years following the closing. A penalty will not apply if the source for the Defining higher priced prepayment funds is a refinancing loans by the lender or its affiliate. On Oct. 1, 2009, the Federal Reserve implemented a new section of Regulation O Escrows: A lender may not extend a mortgage secured by a first lien on a Z designed to regulate the closed-end subprincipal dwelling unless an escrow prime mortgage market—the “higheraccount for property taxes and mortpriced mortgage loan” (HPML) rule. The gage insurance premiums is estabrule establishes triggers for categorizing lished before closing. loans as HPML and sets forth special rules and restrictions that apply to loans that While this regulation is specifically tarfall into the category. The rule helps protect consumers from deceptive and abu- geting sub-prime loans, since there is no sub-prime mortgage market to regulate sive lending practices. HPMLs are defined as a “mortgage at this time, the actual impact is another where certain annual percentage rate (APR) compliance concern for all lenders. thresholds are met.” An HPML occurs when the mortgage for a principal dwelling has Disclosing the costs an APR that exceeds the average prime of a loan offer rate for a comparable transaction by Since the beginning of the year, lenders 1.5 or more percentage points for loans have had to use the new Good Faith secured by a first lien on a dwelling, or by Estimate (GFE) for all mortgage transac3.5 or more percentage points for loans tions subject to the Real Estate Settlement Procedures Act (RESPA). The rule that mansecured by a subordinate lien. The thresholds are based on the dates that GFEs must be delivered to the “average prime offer rate” (APOR). The borrower no later than three business days APOR is defined as an APR that is derived after a lender receives an application has from average interest rates, points and not changed. However, the contents of the other loan pricing terms currently document have changed significantly.

While the old GFE was primarily concerned with disclosure of settlement costs to the borrower, the new GFE summarizes the loan terms and is geared toward aiding the borrower in shopping for settlement services. The purpose of the GFE goes far beyond the disclosure of settlement charges currently being disclosed. This new document is intended to give the borrowers a disclosure of loan terms in addition to the settlement service charges. Ultimately, the document gives the borrowers a tool to use in shopping for a loan. However, it has caused lenders to change the way they handle disclosures and comply with predatory lending rules.


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By Charlie W. Elliott Jr., MAI, SRA

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Is More Regulation the Answer?


Whether you are a real estate attorney, that requires so much government interagent, appraiser or lender, you have, no vention? Is it because there is an overabundoubt, felt the effects of mortgage loan gov- dance of crooks in the business? Who is realernment regulation, in recent years, and ly benefiting from this regulation? Is it those particularly, in recent months. Even among purportedly being protected? Is the public those whom have been less affected in the benefit commensurate with the cost? Are past, there is the constant threat of addition- government lobbyist culprits gaining excesal regulation coming down the pike. Over sive control by promoting the special interthe past three or four decades, we have seen ests of one group over another under the growing government regulation creeping guise of protecting the public? We could go into our industry at practically every level of on and on with the whys and about the jusgovernment. Not only is the federal govern- tification. When asked, most politicians claim that it is to protect the ment involved, but every public interest. Suffice it to state has also found it necessay, the system is a mess. sary to get its finger into the Our system is already burpie, and some cities are dened with excessive and even beginning to get in on ineffective controls, supposthe act. edly designed to protect the Examples of the types public, while costing it an of additional regulation arm and a leg in unnecesinclude, new laws requirsary fees and administrative ing banks to be very specifcosts. ic about closing fees, even Further, the regulations before all of the facts are that we have in place are, in known about the borrower and the borrower’s proper- “What is so wrong with many cases, not being enforced … case in point … ty; regulations prohibiting our business model the recent financial meltmortgage brokers from that requires so much down. With all of the reguordering appraisals; laws government interven- lation that we have in place, requiring mortgage brokers to register at the fed- tion? Is it because there we are implementing new eral level and attorneys to is an overabundance of levels of regulation with the follow different guidelines crooks in the business?” same or similar language, which has not proven to for closing statements. protect us in the past. It Further, national appraisal management companies (AMCs) are now required to already is and has been illegal for mortregister, follow strict and varying guide- gage professionals to commit fraud for lines and pay high fees in many states. decades, yet many honest and responsible Most states, as well as the federal govern- professionals are being saddled with addiment, are expected to follow suit. For a tional onerous and burdensome regulanational AMC, registering at the federal tion, designed to accomplish the same level and in each state would require 51 objective. An analogy would be that of the airregistrations, 51 different sets of rules and 51 sets of fees. The fees alone are expect- line industry. The honest and faithful ed to run into the hundreds of thousands flying public continues to be burdened of dollars for each national AMC, which with additional inconveniences, such as can only mean higher costs to the con- that of not being able to carry a bottle sumer. All of this regulation is in addition of shampoo on a plane. Meanwhile, terto, and on top of, other regulations, rorists, who pay cash for a ticket, carry no which, if properly implemented, should luggage and have bombs in their underwear, are allowed to board, even though already be protecting the consumer. they are on suspected terrorists lists.

Why is this necessary? What is so wrong with our business model

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HUD will also make available an Affordability Index that measures the costs of where a home is located in relation to jobs, schools and transportation. Congress provided $150 million to HUD for a Sustainable Communities Initiative. Of that amount, $100 million is available for regional integrated planning initiatives through HUD’s Sustainable Communities Planning Grant Program. To demonstrate HUD’s commitment to listening and learning, Secretary Donovan also announced today that a description of the future grant program is available for comment, including through an interactive Wiki, on HUD’s Web site. For more information, visit

NAHB finds housing affordability near recordhigh levels for fourth consecutive quarter

Nationwide housing affordability, bolstered by favorable interest rates and low house prices, closed out the year near its highest level since the series was first compiled 18 years ago, according to the most recent National Association of Home Builders/Wells Fargo Housing Opportunity Index (HOI). The HOI showed that 70.8 percent of all new and existing homes sold in the final quarter of 2009 were affordable to families earning the national median income of $64,000, slightly higher than the previous quarter and near the record-high 72.5 percent set during the first quarter of 2009. Affordability during the final quarter of the year was up from 62.4 percent during the fourth quarter of 2008. “Favorable mortgage rates and sliding house prices that have now started to stabilize nationally have both contributed to a record year for housing affordability in 2009,” said NAHB Chairman Bob Jones, a home builder from Bloomfield Hills, Mich. “With interest rates still hovering at low levels and the economy beginning to rebound, the federal housing tax credit will encourage even more first-time and repeat home buyers to enter the market and help further stabilize housing and the economy by creating new jobs, stimulating home sales and reducing foreclosures.” Indianapolis was the most affordable major housing market in the country during the fourth quarter, a position the metro area now has held for four and a half years. More than 95 percent of all homes sold were affordable to households earning the area’s median family income of $68,100. Also near the top of the list of the most affordable major metro housing markets were Detroit-Livonia-Dearborn,

Mich.; Dayton, Ohio; YoungstownWarren-Boardman, Ohio-Pa.; and Akron, Ohio. Five smaller housing markets posted even higher affordability scores than Indianapolis, with Kokomo, Ind., which historically has had a favorable incometo-house price ratio, outscoring all others. In Kokomo, 98 percent of homes sold during the fourth quarter of 2009 were affordable to median-income earners. Other smaller housing markets near the top of the index included Monroe, Mich.; Flint, Mich.; Lima, Ohio; and Bay City, Mich., respectively. New York-White Plains-Wayne, N.Y.N.J., continued to lead the nation as its least affordable major housing market during the fourth quarter of 2009. The New York metro area has occupied this position for seven consecutive quarters. Slightly less than 20 percent of all homes sold during the final quarter of 2009 were affordable to those earning the New York area’s median income of $64,800. The other major metro areas near the bottom of the affordability scale included San Francisco; Honolulu; Santa Ana-AnaheimIrvine, Calif.; and Los Angeles-Long BeachRedwood City, Calif. San Luis Obispo-Paso Robles, Calif. was the least affordable of the smaller metro housing markets in the country during the fourth quarter. Others near the bottom of the chart included Santa Cruz-Watsonville, Calif.; Ocean City, N.J.; Napa, Calif.; and Santa BarbaraSanta Maria-Goleta, Calif. For more information, visit

MBA: Only 13 percent of non-bank commercial/multifamily debt to mature in 2010 The Mortgage Bankers Association (MBA) has released the results of its 2009 Commercial Real Estate/Multifamily Survey of Loan Maturity Volumes. The survey indicates that the volume of commercial and multifamily mortgage debt maturing in 2010 and 2011 is relatively low. Of the $1.45 trillion balance of outstanding mortgages held by non-bank investors, only 13 percent of the total ($183.9 billion) will mature in 2010 and seven percent ($99.8 billion) in 2011. The survey also found that maturities vary considerably by the type of investor holding the loan. “Commercial and multifamily mortgages tend to be long-term loans, often for 10 years or more,” said Jamie Woodwell, MBA’s vice president of commercial real estate research. “The fact that a disproportionate share of commercial and multifamily mortgages were made in 2005, 2006 and 2007 means that for most investor groups, only a fraction of the balance will be maturing in the next couple of years.”

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because the rating agency criteria are very conservative. For example, AAArated reverse mortgage bonds must be able to withstand a drop in home values exceeding 30 percent. Had the rating agencies applied this standard uniformly to all rated mortgage transactions, the mortgage securitization market would not have experienced anything close to the depth of collapse we witnessed in 2008. Because 98 percent of reverse mortgages were never securitized, but rather portfolioed by Fannie Mae, the secondary markets are still in their infancy, or at best, in their adolescence. The market needs true market-clearing pricing, data and supply for it to become fully accepted. As HECM mortgage-backed securities gain broad acceptance and other new securitization vehicles are introduced, more investors will take interest in the asset class. When that happens, we believe that true secondary markets pricing and execution will become the norm for reverse mortgages. What are some lessons you have learned about reverse mortgagebacked securities (RMBS) and investors’ attitude toward them? We learned that reverse mortgages are not immune to the vagaries of the market. Like other asset classes, they can get a bit frothy. During the height of the mortgage bubble in 2005-2007, pricing of HECMs became irrational, and the whole loan HECM securitizations sold during the pre-HMBS era did not deliver a lot of value to investors. The market lost sight of HECM’s inherent value. What makes Ginnie Mae’s HECM mortgage-backed securities (HMBS) a better value proposition for investors? HMBS provides: (1) a “full faith and credit” layer of credit guarantee, (2) the superior liquidity and execution of the Ginnie Mae securitization program, and (3) insulation from other risks (borne by the HMBS issuer) of tax and insurance defaults, credit line and other advances.

What prospects and challenges do you see for RMBS after the Great Recession of 2008-2009? We believe the key to success for reverse mortgages is the establishment of a lower LTV, low-cost product with zero upfront fees in exchange for lesser proceeds. For 20 years, HECM proceeds have been calculated assuming four percent annual home price appreciation—it is time for that to be recalibrated with our current market environment. The main lesson from the “great recession” of 2008-2009 is that we— individuals, corporations and governments—borrowed too much and now must deliver. This is also true for reverse mortgage borrowers. FHA’s recent actions are a first step in this direction. What is your favorite reverse mortgage story? The first National Reverse Mortgage Lenders Association (NRMLA) Conference we attended in Naples in 1999 was particularly revealing. The following year’s conference in Dallas was the first time we witnessed significant audience participation, and it was very good. Author and columnist, Atare E. Agbamu, CRMS is director of reverse mortgages at Minneapolis-based AdvisorNet Mortgage LLC. A member of the BusinessWeek Market Advisory Board, Agbamu is author of Think Reverse! and more than 130 articles on reverse mortgages. Through his advisory firm, ThinkReverse LLC, Agbamu advises financial professionals, institutions and regulators across the country. In a 2007 national report on reverse mortgages, the AARP cited Agbamu’s work. He can be reached by phone at (612) 436-3711 or (612) 2039434, and e-mail at or Visit author Atare E. Agbamu’s blog at for his thoughts and insights on the reverse mortgage marketplace.

• We make FHA and HVCC compliance easy with our tools built around your business • We work with YOUR appraisers • Online automated appraisal ordering Here’s what our customers are saying: “PCS appraisal management services allowed me to create a virtual firewall between the loan officers and the appraisers, yet still maintain a high level of quality, fast, and accurate appraisals”

Learn more about our services by calling, Lorenzo Pugliano, President and CEO at 631-299-2084.

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The Nationwide Mortgage Licensing System and Registry (NMLS) has begun processing federal

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NMLS announces federal criminal background check processing for LOs

criminal background checks for mortgage loan originators. All individuals applying for a Mortgage Loan Originator License through NMLS on or after Jan. 25, 2010 will be required to submit fingerprints to NMLS and request a national criminal history background check with the Federal Bureau of Investigation (FBI) as part of the application process. Additionally, all existing state-licensed mortgage loan originators must provide fingerprints to NMLS and request a national criminal background check prior to a date established by their state regulator. Providing criminal background check processing through NMLS fulfills one of the mandates of the Secure and Fair Enforcement for Mortgage Licensing Act (SAFE Act). The SAFE Act requires all mortgage loan originators to submit fingerprints to NMLS in order for state mortgage regulators to obtain criminal history information. The SAFE Act also mandates minimum criminal history standards be incorporated into state law. Consistent with the goal of NMLS to improve mortgage supervision through the sharing of information between state regulators, the SAFE Act authorized the Conference of State Bank Supervisors (CSBS) to be a channeller with the FBI so that a single background check can be received on a mortgage loan originator and reviewed by all states that regulate this individual. This process is more costeffective and greatly improves upon the current system of criminal background check review which relies on each state requesting a separate background check—often at different timeframes and through various processes that left states reviewing different information on the same individual. Through NMLS, all state regulators that supervise a mortgage loan originator or are considering an application for licensure will have access to the most up-to-date criminal history records check from the FBI. As part of the functionality in NMLS to process criminal history background checks, NMLS contracted with a firm to establish a national network of NMLSapproved electronic fingerprint capture sites. NMLS has partnered with Business Information Group’s Fieldprint unit to deliver this nationwide coverage. Business Information Group (BIG) has made more than 700 NMLS-approved electronic fingerprint capture sites available for mortgage loan originators to schedule an appointment through their NMLS account. Fingerprints captured electronically are cleaner and have a much lower error rate which will greatly reduce the need for mortgage loan originators to have prints retaken if they cannot be read by the FBI. Mortgage loan originators not located within a reasonable commuting distance to an NMLS approved fingerprint capture site will have the option to O

MBA’s 2009 survey collected information directly from servicers on the maturity years of more than $1.5 trillion in outstanding mortgages, including $1.45 trillion of non-bank commercial/multifamily holdings. Only small shares of the commercial and multifamily mortgage debt held by life insurance companies, Fannie Mae, Freddie Mac or FHA, or in fixed-rate commercial mortgage-backed securities (CMBS) will be coming due in 2010 or 2011. Greater shares of mortgages held in short-term and floatingrate commercial mortgage-backed securities (CMBS) and by credit companies, warehouse facilities and other investors will mature in 2010 and 2011. “Investor groups’ maturity schedules are generally designed to match their liabilities,” said Woodwell. “Many maturing mortgages have built-in extension options, and most investor groups and servicers have considerable discretion in how they deal with loans that may not be able to immediately refinance at maturity.” Based on MBA’s survey, of the $1.45 trillion balance of outstanding mortgages held by non-bank investors, 13 percent of the total ($183.9 billion) will mature in 2010 and seven percent ($99.8 billion) in 2011. Commercial/multifamily mortgage maturities vary significantly by investor group. Just two percent ($4 billion) of the outstanding balance of multifamily mortgages held or guaranteed by Fannie Mae, Freddie Mac, FHA and Ginnie Mae will mature in 2010. Life insurance companies will see seven percent ($17.5 billion) of their outstanding mortgage balances mature in 2010. Among loans held in CMBS, 12 percent will come due in 2010, including seven percent of the $650 billion of loans in fixed-rate conduit CMBS and 72 percent of the $54 billion of loans in floating rate and large-borrower CMBS. Thirty-two percent ($69 billion) of commercial mortgages held by credit companies and other investors will mature in 2010. The bank lending market tends to be distinct from the more institutional commercial/multifamily mortgage market represented by life insurance companies, Fannie Mae, Freddie Mac, FHA and the CMBS market. The large number and diversity of banks and thrifts also means that while the report presents information on more than $100 billion of commercial and multifamily mortgages held by banks and thrifts, those results are not believed to be generalizable. The dollar figures reported are the unpaid principle balances as of Dec. 31, 2009. Because most loans pay down principle, the balances at the time of maturity will generally be lower than those reported. For more information, visit


fha insider

wanted my opinion. I directed him to the Neighborhood Watch Web site, where we discovered the lender he was considering had a CR in excess of 300 percent! Needless to say, I advised him to look elsewhere. If you’re the owner of a company and have a low CR, use this as a recruiting tool to instill confidence prospective employees that they’ll be working for a solid company that writes good loans. If you have a high CR, it’s time to dust off your quality control plan, update it and get your staff focused on writing quality loans. Here are the seven things you need to know about the changes from this Mortgagee Letter: 1. The effective date of this policy is Jan. 21, 2010. 2. This change allows HUD to terminate the underwriting authority of lenders with high DCRs. Previously, HUD only had authority to terminate loan origination approval authority. 3. Every three months, HUD will review the previous 24 months of DCRs on all FHA-insured single family loans and analyze the performance of every mortgagee. 4. HUD will target lenders with a DCR that exceeds 200 percent of the DCR within the geographic area, and also those which exceed the national DCR.

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value nation


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5. HUD will take underserved areas into consideration and compare a mortgagee’s performance to the field office’s average DCR for similar loans.

have prints taken in card format and submitted to BIG for manual scanning. For more information, visit

6. To lessen the effect this policy will have on lenders with small volume, HUD will establish a minimum DCR and only analyze lenders that exceed this minimum DCR.

Embrace Home Loans raises $20,000 for Haitian earthquake relief

7. Mortgagees may appeal within 30 calendar days of the date of receipt of the proposed termination notice. Since FHA is putting the hammer down, it may have you reeling a bit. But remember, a healthy and solvent secondary market, which includes Ginnie Mae, is vital to your origination practice. Go FHA! Jeff Mifsud founded Southfield, Mich.based Mortgage Seminars LLC in 2004, has been an FHA originator for 13 years, is a contributor to and is a former FHA underwriter. Jeff may be reached at (877) 342-9100 or e-mail Visit author Jeff Mifsud’s Web site at for tips and information on FHA loans and details from some of the nation’s top FHA specialists.

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Is more regulation the answer? In a nutshell, the answer to that broad question is “No.” Is better regulation and stricter enforcement is the answer? Yes. Our government has a responsibility to provide simple ground rules that are fair, not only to consumers, but also to all of the stakeholders in a transaction. In order to curtail excessive cost to the consumer and to support some semblance of a free market, regulation should be kept to the minimum required to protect the public interest. Regulation should be simple and economical. Processes should be developed not only to protect the public, but also to do so in a manner consistent with efficiency and common sense. The ground rules must not be developed along the lines of feathering the nest of special interest. They must only be to protect the public interest. That means that if we have too many professionals to service the legitimate demands of the industry, some of us should get out. Regulation designed to encourage the continuation of making loans to people who do not qualify for them, just to create a few phony jobs, makes no sense and should be stopped. Much more attention should be directed toward doing a better job of enforcing and tweaking the regulations that we already have in place. Up until and through the

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mortgage meltdown, all major banks were being audited, and their mortgage portfolios were being evaluated for soundness. Unfortunately, much of the new regulation that we are seeing today goes far beyond that which is required to protect the public interest, while current regulations are not being adequately enforced. It is driven far too often by industry insiders, lobbyists, bureaucrats, labor unions, trade associations, large corporations or influential individuals, seeking to protect their own special interest. Most, if not all, of the burden of complying with excessive regulation is borne by the consumer, taxpayer and small business. Paradoxically, the very people whom the regulation is designed to protect usually pay a hidden price and receive little or no protection. We are already paying a high price for protection, which we are not getting. Adding additional layers of regulation will be adding insult to injury. We were already paying for this service as taxpayers. Were we getting our moneys worth? I would say hardly so. Charlie W. Elliott Jr., MAI, SRA, is president of Elliott & Company Appraisers, a national real estate appraisal company. He can be reached at (800) 854-5889, e-mail or visit his company’s Web site,

Newport, R.I.-based Embrace Home Loans recently organized and held an auction, in lieu of holding its annual sales meeting, to raise funds for earthquake relief in Haiti. Raising more than $20,000, contributions will go towards Partners with Haiti to support Haitian orphanages. “To raise such a large volume of money illustrates how giving and caring our employees are,” said Dennis Hardiman, chief executive officer and founder of Embrace Home Loans. “Not only is the local community very important to us, but we’re also devoted to helping those outside our immediate reach to better the lives of others, especially those affected by such devastation as the people of Haiti have been. As implied by our name, we continuously embrace the global community and strive to improve the quality of life for our neighbors and friends. Through this event, we hope that our contribution will help make a difference.” Auction items were donated by employees, which included YankeesRed Sox tickets, Boston Celtics tickets, a sport fishing trip in Florida, use of an RV for a week, use of a vacation home in Florida for a week, use of convertible for a weekend, Taylor Swift concert tickets and more. The company normally holds its annual company sales meeting during this time each year. Given the tragic events that occurred in Haiti, the company decided to forgo its annual meeting and instead use it as an opportunity to raise donations and create awareness about the dire need in Haiti. For more information, visit

HUD unveils 2011 budget proposal U.S. Department of Housing & Urban Development (HUD) Secretary Shaun Donovan unveiled the Department’s fiscal year 2011 budget proposal, following President Barack Obama’s presentation of his Administration-wide budget. The HUD budget focuses on fiscal discipline, creating jobs and builds on the administration’s first year accomplishments by proposing reform

in HUD’s housing and community development programs to make them more streamlined, efficient, and accountable. HUD’s budget proposal seeks to make targeted investments in people and places—instead of policies and programs—to effectively support HUD’s mission while being accountable to the American taxpayer. Approximately $6.9 billion in projected FHA and Ginnie Mae receipts contribute to the FY 2011 proposed $48.5 billion budget total and to the administration’s deficit reduction plans. Net of the $6.9 billion in projected FHA and Ginnie Mae receipts the Budget proposes overall funding of $41.6 billion, five percent below fiscal year 2010, and makes difficult decisions to cut funding for a number of programs. “After a year of progress, we no longer confront an economy or a Department in crisis,” said HUD Secretary Donovan. “But much work remains, in much changed fiscal circumstances. Now that the economic crisis has begun to recede, President Obama has committed to reducing the federal deficit. HUD’s fiscal year 2011 budget reflects that fiscal discipline. With the Recovery Act and fiscal year 2010 funding having stabilized HUD’s programs after years of slow starvation, the time has come to begin transforming them-to make HUD’s housing and community development programs more streamlined, efficient, and accountable.” The targeted investments in the FY 2011 budget will enable HUD programs to: O House more than 2.3 million families in public and assisted housing (more than 58 percent elderly or disabled); O Provide voucher assistance to 78,000 additional families (more than 47 percent elderly or disabled); O Assist nearly 5.5 million households, over 200,000 more than at the end of fiscal year 2009; O More than double the annual rate at which HUD assistance creates new permanent supportive housing for the homeless; and O Create and retain 112,000-plus jobs through HUD‘s housing and economic development investments in communities across the country. HUD’s FY2011 Budget will help strengthen the nation’s housing market to bolster the economy and protect consumers. The budget will reflect $6 billion in profit for the Federal Housing Administration (FHA), generated thanks to the FHA reforms announced by FHA Commissioner David H. Stevens. Those policy changes will strengthen the FHA’s capital reserves, while enabling the agency to continue to fulfill its mission to provide access to homeownership for underserved communities and support the nation’s housing market

recovery. Due to FHA and Ginnie Mae receipts, the total HUD budget will be $48.5 billion, compared to $46.9 billion in FY 2010. For more information, visit

Wells Fargo/Wachovia, PNC/Midland and Berkadia lead MBA’s national rankings of commercial/multifamily servicing volumes The Mortgage Bankers Association (MBA) has released its year-end ranking of commercial and multifamily mortgage servicers as of the end of Dec. 31, 2009. On top of the list of firms is Wells Fargo/Wachovia Bank with $473.8 billion in U.S. master and primary servicing, followed by PNC Real Estate/Midland Loan Services with $322.9 billion, Berkadia Commercial Mortgage with $217.9 billion, Bank of America Merrill Lynch with $131.7 billion, KeyBank Real Estate Capital with $128.5 billion, and GEMSA Loan Services LP with $102.3 billion. A primary servicer is generally responsible for collecting loan payments from borrowers, performing property inspections and other property-related activities. A master servicer typically serves in a fiduciary capacity and is generally responsible for collecting cash and data from primary ser-

vicers and then providing that cash and data, through trustees, to investors. Unless otherwise noted, MBA tabulations that combine different roles do not double-count loans for which a single servicer performs multiple roles. Wells Fargo/Wachovia Bank, PNC/Midland, Berkadia, and Bank of America Merrill Lynch are the largest master and primary servicers of commercial/multifamily loans in U.S. CMBS, CDO and other ABS; GEMSA Loan Services, PNC/Midland, Prudential Asset Resources, Northmarq Capital, and Northwestern Mutual are the largest servicers for life companies; PNC/Midland, Wells Fargo/Wachovia Bank, Deutsche Bank and Berkadia are the largest Fannie Mae/Freddie Mac servicers. TriMont Real Estate Advisors ranks as the top master and primary servicer of commercial bank and savings institution loans; GEMSA the top credit company, pension funds, REITs, and investment funds servicer; PNC/Midland the top FHA and Ginnie Mae servicer; Wells Fargo/Wachovia the top for mortgages in warehouse facilities; and Berkadia the top for other investor type loans. MBA also asked firms to provide information about CMBS loans on which they are the “named special servicer,“ that is, where the firm stands ready to service the loan should special problems develop, such as delinquency. The leading-named special servicers were LNR Partners Inc., CWCapital LLC

& CWCapital Asset Management, Centerline and PNC Real Estate. The MBA survey also collected servicing volumes for loans on commercial/multifamily properties located outside the U.S. Hatfield Philips International ranks as the largest master and primary servicer of nonU.S. commercial/multifamily mortgages, followed by Deutsche Bank and GEMSA. For more information, visit

State Foreclosure Prevention Working Group reports negative trends A group of state attorneys general and banking regulators predict a devastating acceleration of foreclosures unless policy makers step up efforts to assist homeowners. The State Foreclosure Prevention Working Group has issued a report that cited disturbing trends, including a rising tide of delinquent mortgages outpacing servicer outreach and loss-mitigation efforts. The report also offered recommendations for action. “Despite significant state and federal efforts to assist homeowners, more foreclosures are predicted for this year than occurred in 2009,” said Attorney

General Rob McKenna. “Programs to help prevent foreclosure are jammed up, while 60 percent of delinquent borrowers aren’t getting any help. Servicers must do more.” Findings of the Working Group Report include: O Six of 10 seriously delinquent borrowers are not even involved in loss mitigation efforts. The federal Home Affordable Modification Program (HAMP) has helped slow down the foreclosure crisis, but current efforts have been insufficient to get ahead of the problem. O Both loss mitigation and foreclosure efforts appear to be backlogged. The average time to complete a loan modification for some servicers is more than six months. Many homeowners with trial modifications are not yet qualified to transition to a permanent loan modification. O Most modifications result in payment reductions, but principal reductions remain rare. Given the correlation between negative equity and likelihood of default, the failure to write down principal in connection with loan modifications is a glaring flaw in current efforts. O Prime loans are increasingly driving the rising delinquency rates. The foreclosure problem is broad-based and not isolated to poorly-written or exotic loan products. continued on page 14

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Abacus partners with Chip Cummings for SAFE Act training

Abacus Mortgage Training has announced a partnership with international speaker and acclaimed national mortgage trainer Chip Cummings to offer a new, fun twist to the required 20-hour Nationwide Mortgage Licensing System’s (NMLS) Secure and Fair Enforcement for Mortgage Licensing Act (SAFE Act) training that must be taken by most loan originators throughout the country. “Chip has an entertaining yet highly productive approach to training that not only yields results, but allows participants to walk away with fresh ideas and strategies for success,” said Paul Donohue, founder of Abacus Mortgage Training. “For these mortgage professionals, it’s not just training ... it’s an event!” “With the new SAFE Act requirements, this is really a chance for me to bring quality information and first-class origination strategies to thousands of mortgage originators in a fun new way,” said Chip Cummings, CMC, a number one best-selling author and 27year veteran of the mortgage industry. “Paul and his team have put together an incredible two-day program designed to really elevate the level of professionalism within our industry, and I’m pleased to be able to take it across the country.” Chip is the president and chief executive officer of Northwind International Corporation, a mortgage training and consulting firm, and an industry veteran with more than $1 billion in volume under his belt. He has written seven books including three number one bestsellers, and has appeared on numerous TV shows such as FOX & Friends, Neil Cavuto Show, NBC, FOX Morning News, MSNBC and dozens of radio shows. Chip is past president of the Michigan Association of Mortgage Professionals (MAMP), and has received numerous industry awards. As an international speaker, he trains thousands of mortgage and business professionals every year. While there are other NMLSapproved SAFE Act training programs

available, few provide the level of expertise and experience that Donohue and Cummings can bring to the table. With nearly 50 years of mortgage experience between them, both are past presidents of state mortgage trade associations and have been active and visible on the national mortgage education scene for years. Abacus’ training program, “Mortgage Origination Mastery” was the first-class approved for the NMLS, which was organized under the national SAFE Act, and is available in a live or a live broadcast training format. Cummings, who is known for his high-energy delivery and creative strategies, promises to bring some surprises to each city he visits. Initially over the first few months, he is scheduled to appear in California, Oregon, Nebraska, Missouri and Kansas. Paul Donohue founded Abacus Mortgage Training in 2007, and has authored over a half dozen courses certified for continuing education. He is the past president of the North Carolina Association of Mortgage Professionals (NCAMP), and has received numerous industry awards. Paul is a regularly featured columnist in several industry magazines and newspapers, and has trained over 16,000 loan originators. For more information, visit or

NetMore America engages Comergence Compliance Monitoring to enhance TPO approval NetMore America Inc., an expanding next-generation mortgage banker, announced that it has contracted Comergence Compliance Monitoring, a third-party originator (TPO) due diligence solution provider to the mortgage industry, to manage all reviews and continuous profile monitoring of all TPOs working with NetMore. Comergence, based in Orange, Calif., provides mortgage lenders a comprehensive alternative to an in-house TPO approval desk, through an end-to-end service solution, that provides due diligence, management and compliance surveillance. Through a standardized process, Comergence delivers mortgage

PriceMyLoan has announced a collaboration with Google to provide loan pricing technology for their AdWords Comparison Ads feature, which helps users looking for rate quotes on to more quickly and easily connect with mortgage lenders that meet their specific criteria. “We’re excited to assist Google with our mortgage pricing capabilities,” said Gigi Campbell, national sales director for PriceMyLoan. “It’s gratifying to know that Google considers our loan pricing technology to be on par with continued on page 19

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A l l R e g s , a n information provider for the mortgage industry, and Denver-based Motivity Solutions Inc., creators of the Movation Business Management Platform, have announced a collaboration to bring sophisticated business intelligence tools to the mortgage marketplace. Specifically, the companies are implementing intelligence around mortgage lender product and guideline information. “We are very excited to develop solutions with a company as innovative as Motivity,” said Dan Thoms, senior vice president for AllRegs. “Motivity’s platform, Movation, is a perfect match for

PriceMyLoan works with Google on AdWords Comparison Ads affering


AllRegs and Motivity collaborate on mortgage marketplace tools

AllRegs’ underwriting guideline content, and we expect to merge the two together in the near future.” The AllRegs Information Service, known as AllRegs Online, is used by virtually all of the top 100 lenders and throughout numerous governmental agencies. The Eagan, Minn.based company provides mortgage professionals with subscription-based access to single and multifamily underwriting and insuring guidelines, federal compliance laws and regulations, state compliance laws and regulations with plain-language analyses, contract publishing services and training resources through AllRegs Academy. In addition, AllRegs offers its LoanLibrary solution, an eligibility search engine and loan product information management service, featuring more than 2,000 unique products representing 73-plus correspondent and wholesale investors. Movation is a business management platform that focuses on the whole of a mortgage-based operation, allowing adopters to maximize efficiencies and opportunities throughout their organization. By applying Movation to their existing technology, companies will experience real-time access to their combined data in the form of key performance indicators, scorecards, dashboards and on-demand reporting. Movation also fills the gaps in existing technology with its leading edge imaging, business rules, activity queues, and enterprise relationship management. “Partnering with an industry leading content provider to create products that are innovative and relevant is exciting for Motivity Solutions,” said Gabe Minton, chief strategy officer for Motivity Solutions. “The ability to combine our award-winning business intelligence tools with the industry’s preeminent content library will create tremendous value for mortgage companies and continues to drive our mission to take the industry to the next level.” For more information, visit or O

lenders information on mortgage brokers, including a robust background check of any TPO applying to do business with a mortgage lender. The multifaceted check includes a 50-state license status and derogatory review, industry sanctions reviews, Social Security Number verification for authorized principals, Patriot Act compliance, civil and criminal convictions, business credit, address verification, bankruptcies, liens, and judgments search among many others. “NetMore is committed to working with the highest quality mortgage brokers in the industry in a ‘friction free’ manner,” said Lisa Schreiber, chief strategy officer of NetMore. “We believe Comergence’s centralized platform will not only mitigate risk and lower our costs associated with the TPO approval process, but also accelerate the opportunity for NetMore to begin working with quality production partners.” The Comergence online platform is available 24 hour a day, 365 days a year, and aggregates and appends publicly available data with its own proprietary data which offers mortgage lenders a richer view of any TPO. All data is verified by the company’s analysts and made available in a comprehensive report, which includes all documents related to the application. Any TPO that has been previously vetted by Comergence for one mortgage lender can quickly be approved by a new lender as the profile is current and readily available. “We are very excited about partnering with NetMore, a company that clearly understands the power of the right relationships to drive business,” said James Deane, executive vice president of Comergence. “Our innovative solution offers all parties in a mortgage relationship the foundation to trust one another by providing an independent, consistent and comprehensive due diligence review and addresses the key issues of transparency in the mortgage process.” For more information, visit or


news flash

continued from page 11

Recommendations of the Working Group Report include: O Servicers should suspend foreclosure proceedings on any loan involved in the loss-mitigation process. In some cases, homeowners have lost their homes while being told they are being considered for a loan modification. O Loss mitigation programs must be improved to prioritize principal reduction in areas of significant home price declines. Loan modification programs that rely on monthly

payment reductions alone will have limited success in creating sustainable homeownership in states where a large percentage of mortgage loans are significantly “underwater” (e.g., loan balance is greater than the home’s market value.) O Servicers should pay particular attention to reforming paymentoption ARM loans. If unaddressed, the payment shock on these loans, coupled with the high proportion that are significantly “underwater,” will push a significant portion of

payment-option ARM loans into foreclosure. O The HAMP program must increase transparency and reduce paperwork in order to reach its potential. While the U.S. Treasury Department has made positive steps in reducing paperwork burdens, we believe more streamlining is necessary to reduce burdens on both servicers and homeowners. O States should consider expanding homeowner counseling programs or implementing temporary foreclosure mediation programs or other such measures. Given the numbers of homeowners facing foreclosure or likely to face foreclosure in the

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next 12 to 24 months, it is likely that many will fall through the cracks of even the best-implemented system for working out mortgage loans. O Both servicers and the U.S. Treasury should provide better options to keep unemployed homeowners in their homes. Unemployment and loss of income are key catalysts to a mortgage default. While unemployment insurance partially fills a short-term gap in income from job loss, unemployed homeowners face significant hurdles in keeping their homes. The State Foreclosure Prevention Working Group consists of 12 state attorneys general (Arizona, California, Colorado, Florida, Illinois, Iowa, Massachusetts, Nevada, North Carolina, Ohio, Texas and Washington), bank regulators for New York, North Carolina, and Maryland, and the Conference of State Bank Supervisors. The group was founded in 2007 and has issued three prior reports. For more information, visit

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:

MARCH 2010 O



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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of risk is a major risk. Who is to say that the market does not move by 100 basis points in one hour while you are in the loan application? Before this time, you could always say at the end of the application, “Now, I will check rates.” Now, at the end of the application, you cannot say that. You have to honor the quote of the GFE you have compiled. How much would the loss be on a $300,000 loan? A 100-basis point loss would be $3,000. Can you afford that risk on every loan? Apparently, HUD thinks you can. So unless HUD comes back to its senses, it is incumbent upon every loan officer to stay on top of the markets. You better know what the markets are doing when you fill in the form and if the markets are moving while you are in a loan application, you better know that as well. I asked Eric Holloman, our secondary expert and chief executive officer of RateLink, what they do in order to keep production and revenue of loan offi- their clients informed. RateLink has been cers. So, we will focus on one little- around for almost two decades, and therenoted, but very important, part of fore, they were doing such before the this form. This is Line 1 of the first Internet was an option. Here is Eric’s reply: page of the form: “Before the Internet and cell phones, we 1. The interest rate for this GFE is avail- used pagers to let our clients know that able through________. After this time, changes were occurring. Believe it or not, the interest rate, some of your loan orig- some of our clients from that period are ination charges, and the monthly pay- still using that technology. Now, when ment shown below, can change until you the markets are moving, loan officers are lock your interest rate. more likely to ask us to alert them that a change is coming via text messaging on This may not seem like a very impor- their cell phone. But it is not enough to tant part of the form, but let us exam- alert them that the markets are moving. ine two very important points: We must also give them word of what

The Good Faith Estimate and Rate Risk There is no doubt that one of the biggest changes a typical loan officer is dealing with today is implementing the new and revised Good Faith Estimate (GFE). That is saying a lot because there are so many changes that are being implemented in this challenging environment. These examples include the Federal Housing Administration (FHA) tightening up their policy significantly to include a minimum credit score of 580 for those who are using a 3.5 percent downpayment, lower seller contributions to three percent, higher upfront premiums and an audit system that is going to make every lender scared of running afoul of FHA guidelines. It also includes a National Licensing and Registration System that will result in fingerprinting, credit reports and testing for loan officers across the nation. There is certainly a lot on the plate for every loan officer this year.

“The regulation does not prescribe the amount of time the interest rate must be available in the first box in the ‘Important Dates Section’ on the initial GFE. That is why you can put a date and a time in the box. It cannot be zero, and must be an actual date and time.” —David L. Friend Esq., office of RESPA and interstate land sales, U.S. Department of Housing & Urban Development (HUD)

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O MARCH 2010

Therefore, “N/A” is not appropriate and “zero” is not appropriate. It must be an actual date and time. Theoretically, since the date could not be expired when the applicant receives the form (or it is sent out if mailed), even two hours

Dave Hershman is a leading author for the mortgage industry with eight books and several hundred articles to his credit. He is also head of OriginationPro Mortgage School and a top industry speaker. Dave’s Certified Mortgage Advisor Program can be found at If you would like to stay ahead of what is happening in the markets, visit for a free trial or e-mail

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The “new” GFE brings several changes. For one, it is a standardized form like the HUD-1 (and there is a new HUD-1 as well). In the past, the form has taken many formats, varying from lender to lender and software platform to software platform. It is also expanded to three pages and includes a “lump sum” for all lender charges. For brokers, it will make the use of a yield spread premium (YSP) transparent by showing the applicant how the YSP gets credited to their closing costs, which includes the broker’s charges. We could spend four pages talking about the new GFE. However, this is a column on the secondary markets and how these markets affect the

In other words, the loan officer is going to have to take the risk on a floating loan every time a GFE is issued. How much risk? It may be hours (or even a day or more) for the form to be delivered to an applicant. Here is the good news. HUD will let us not only put a date in the form—but also a time. The following is a direct quote from HUD’s Real Estate Settlement Procedures Act (RESPA) office …

In other words, looking on the computer is not enough. You must have a system that will keep you up-to-date from moment to moment. For example, one that will send a text message to your phone as soon as the markets move a certain amount. If ever there was a time for this system to be implemented, the new GFE seems to have made it mandatory. Eric has consented to allow our readers a 30-day trial of such a system, just go to in order to try it and feel free to e-mail me at to let me know what you think of the system, and more importantly, how are you limiting rate risk with the new GFE. If you have another tool or method of limiting risk, we need to get this information out to as many readers as quickly as possible. Many lenders are not even aware that “N/A” is not an option. O

“So unless HUD comes back to its senses, it is incumbent upon every loan officer to stay on top of the markets. You better know what the markets are doing when you fill in the form and if the markets are moving while you are in a loan application, you better know that as well.”

1. Most applicants will be “floating” when the GFE is made out. 2. The U.S. Department of Housing & Urban Development (HUD) has made it clear that the loan officer can only put “N/A” in the blank when there is no lock available for the program. If there is a lock available, a date must be placed in the blank.

economic releases are due the next morning. Many loan officers take loan applications at night and they need to know what may move the markets in the morning.”

©2010 Inlanta Mortgage


For more information on the National Association of Mortgage Brokers, visit

Fighting the fight for the broker nation A Message From NAMB President Jim Pair, CMC

MARCH 2010 O



Many of you have asked if the National Association of Mortgage Brokers (NAMB) has changed its position regarding the Home Valuation Code of Conduct (HVCC). The answer is a resounding “No!” We still believe that the HVCC is harmful to the consumer, to the mortgage broker, to the independent appraiser and to the economy. NAMB was the first to recognize the harm that HVCC would cause to the consumer and the industry when the agreement was initially announced. NAMB, on its own, filed a lawsuit against Director James B. Lockhart and the Federal Housing Finance Agency (FHFA) to stop the HVCC. The suit was filed Feb. 23, 2009


before HVCC was implemented. Later, the suit was withdrawn when NAMB learned that since Freddie Mac and Fannie Mae were in conservatorship, the suit could not be adjudicated in a court of law. As NAMB members, you have supported the efforts of your association to change the HVCC. You contributed to the Legal Defense Fund to bring the lawsuit against the FHFA. You signed petitions against the HVCC and provided information on how HVCC was harming the consumer, the industry and the economy. Through the efforts of NAMB and the National Association of Realtors (NAR), HR 3044 was introduced which called for an 18-month moratorium on HVCC. To date, more than 200 representatives have signed on as co-sponsors of the bill thanks to your efforts. NAMB’s efforts to stop HVCC did not end there. On Oct. 15, 2009, NAMB sent a letter to Congress requesting that they support an amendment to HR 3126 that would sunset HVCC within 90 days of enactment of the bill. The amendment was accepted and attached to the bill and passed by the full House. NAMB is currently working to have the same amendment attached to the Senate bill that will be passed in the Senate Banking Committee. However, the mechanism to implement the sunset provision is the creation of a Consumer Financial Protection Agency (CFPA) which is in question of surviving the legislative debate. NAMB has one big concern even if our efforts to sunset the HVCC are successful or the HVCC expires Nov.1, 2010. HVCC has become so ingrained with most wholesale lenders that it will continue to be the predominant system for ordering appraisals. It will take many months before the smaller wholesale lenders using a different system will cause a substantial change in the way appraisals are ordered. NAMB believes the random appraisal system will ensure the following: O The consumer is not charged additional fees since the appraisal is portable. O Appraisers are paid a fair value for their professional services. O Investors in mortgage broker-originated products have confidence that there was pressure applied to reach a certain valuation. O The mortgage broker will be allowed to order the appraisal in their name.

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NAMB is working with Olde City Lending Solutions to have the governmentsponsored enterprises (GSEs) and the Federal Housing Administration (FHA) approve a random appraisal system. We hope this template for appraisal ordering takes root and is adopted by other parties. Additionally, the net profits from this venture will go toward funding NAMB’s legislative efforts in Washington, D.C., another portion will go towards building a better communication system with our membership and non-members, and the remaining portion will go toward reducing the amount of dues that members pay to NAMB. Many trade associations have for-profit ventures, and NAMB is on its way to creating its own. Again, NAMB has not abandoned its original position regarding the HVCC. We are committed to having it overturned and completely removed from the appraisal ordering system. That will take time and the random appraisal ordering system is a stopgap until that happens. NAMB is creating a “mortgage broker-centric” appraisal ordering system that saves consumers time and money. HVCC is like having a drug in your system and we all know that it takes time for a drug to be completely flushed out. In the meantime, the random appraisal system will give the consumer protection against increased costs that the HVCC does not do. Jim Pair, CMC is with Mortgage Associates Corpus Christi and is president of the National Association of Mortgage Brokers. He may be reached by e-mail at

Scenes From the 2010 NAMB Legislative & Regulatory Conference February 21-24 at the Hyatt Regency Capitol Hill in Washington, D.C. NAMB Secretary Ginny Ferguson takes part in the Q&A portion of the “Regulations on Originator Compensation in 2010” session

Ken Markison, AVP and regulatory counsel for the Mortgage Bankers Association (MBA); Jennifer Smith, assistant chief counsel for economic regulation and banking, Office of Advocacy for the Small Business Administration (SBA); and Paul Mondor, senior attorney, division of consumer & community affairs for the Federal Reserve Board, take part in the “Regulations on Originator Compensation in 2010” session

NAMB President-Elect William Howe moderates the Delegate Council Meeting in Washington, D.C.

NAMB Board members take part in the Delegate Council Meeting

FHA Commissioner David H. Stevens (center) pauses for a photo with NAMB Director Walt Scott (left) and NAMB Vice President Mike D’Alonzo (right)

NAMB Past Presidents Neill Fendly and James L. Nabors smile for a photo in D.C.

Denise Leonard (right, at podium) with NAMB Director John Councilman (left, seated) during the “FHA Changes in 2010” session

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NAMB Treasurer Donald Frommeyer addresses the crowd during the 2010 Legislative & Regulatory Conference in D.C.


NAMB Chief Executive Officer Roy DeLoach introduces speakers during the NAMB Delegate Council Meeting O

Many thanks to NAMB’s Jon Otto, assistant director of government affairs, and his staff for coordinating a very successful 2010 NAMB Legislative & Regulatory Conference


Scenes From the 2010 NAMB Legislative & Regulatory Conference February 21-24 at the Hyatt Regency Capitol Hill in Washington, D.C. Donald Fader from North Carolina with NAMB Past President and current Government Affairs Committee Chair Harry Dinham from Texas

MARCH 2010 O



Ron Smith, president-elect, and Kimberly Ward, statewide president, proudly represent the Texas Association of Mortgage Professionals during the NAMB Delegate Council Meeting


FHA Commissioner David H. Stevens delivers his keynote presentation during the 2010 Legislative & Regulatory Conference

FHA Commissioner David H. Stevens is welcomed to the NAMB Legislative & Regulatory Conference by Deb Killian and Donald Derespinis from Charter Oak Lending in Connecticut

President Nichole Browning and Past President Chuck Anderson proudly represented the Idaho Association of Mortgage Brokers

Califiornia Rep. Gary Miller discusses the latest housing issues on Capitol Hill during the 2010 NAMB Legislative & Regulatory Conference

Ivy Jackson, director of the Office of RESPA and Interstate Land Sales for HUD; Phil Schulman, partner with K&L Gates LLP; and Matt Dolan, director of the Federal Policy Group take part in the “RESPA in 2010� session

NAMB Directors Walt Scott and Donald Starks take part in the Delegate Council Meeting in Washington, D.C.

NAMB VP of Government Affairs Mike Anderson discusses the importance of the Political Action Committee

NAMB Secretary Ginny Ferguson with Rep. Gary Miller (R-CA)

heard on the street

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their high standards. We’re really looking forward to the new business opportunities that AdWords Comparison Ads can generate for our clients.” When users perform searches on mortgage-related terms like “mortgage rates,” Comparison Ads will give users the option to enter their specific mortgage loan parameters, such as loan amount, loan-to-value and credit scores. Users are then presented with a list of advertisers who match the specified requirements, and their offerings can be compared across a variety of attributes to help them find the ones that suit them best. If the user requests a connection, Google notifies the lender and provides an anonymous phone number through which that user can be contacted. PriceMyLoan will supply loan pricing data for this new mortgage pricing feature. Lenders using PriceMyLoan are eligible to have their companies appear in the AdWords Comparison Ads tool with the most current rates and pricing that they offer. For more information, visit

Leads360 assists Google on new Comparison Ads function

Leads360 offers Web-based lead management software to improve sales organizations and increase profitability. The software is flexible enough to accommodate the unique workflow and needs of any sales organization in any industry—and is specifically designed to address the needs of the mortgage industry. Leads360 has been working with mortgage businesses to increase profitability and scale efficiently since 2004. Currently, 2,800 mortgage companies use Leads360’s software to receive, distribute, contact, follow-up with, and convert more leads

into funded loans. Further, the company’s software platform is integrated with more than 1,200 Internet lead sources including LendingTree, Quinstreet, Zillow and Lowermybills. For more information, visit

Bank of America becomes first servicer to sign contract for Home Affordable Second-Lien Modification Program

Bank of America announced that it has become the first mortgage servicer to sign an agreement formally committing

to participation in the pending secondlien component of the federal government’s Home Affordable Modification Program (HAMP). The formal action follows a verbal commitment to the program made by Bank of America’s Chief Executive Officer Brian Moynihan during a meeting with Treasury Secretary Timothy Geithner. Bank of America has systems in place to begin implementing the Second Lien Modification Program (2MP) with the release of final program policies and guidelines by federal regulatory agencies. 2MP will require modifications that reduce the monthly payments on qualifying home equity loans continued on page 21

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Leads360 has announced that it is working with Google to help power its AdWords Comparison Ads feature. Since its first offering as a beta in October, Google Comparison Ads has enabled users of Google’s search engine to quickly and easily find comparative mortgage quotes from participating lenders. Leads360 will be used by mortgage originators to manage inquiries that are generated from Google Comparison Ads. Leads360 worked closely with Google during the development stages of the new Comparison Ads. Leads360 has integrated their lead management software with Google to provide mortgage lenders with an online lead management service that streamlines the process, enables timely follow-up and greater sales results. “We have watched and assisted Google with the development of their feature for some time and have been extremely impressed,” said Dan Morefield, chief executive officer of Leads360. “The volume and quality of leads that Google is able to generate is likely to attract significant new lead buyers into the market. In addition, consumers are provided with a more reliable and speedy method for obtaining comparative mortgage quotes than has previously been available. We are very pleased to be a Google collaborator and are excited to see the results our customers are able to achieve with this new category of leads.”


MARCH 2010 O



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heard on the street

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tion offered by Ellie Mae within the next 12 months.” For more information, visit or

Wells Fargo approves Loan-Score’s AUS interface with FHA TOTAL Scorecard

Loan Score Decisioning Systems, an enterprise-class pricing and automated

Scorecard using one of the following eligible AUSs: Freddie Mac’s Loan Prospector (LP), Fannie Mae’s Desktop Underwriter (DU), Loan-Score or” In 2009, Loan-Score completed a direct system-to-system interface between its AUS and the Federal Housing Administration’s TOTAL Scorecard platform for lenders to receive eligibility results on FHA loans. Loan-Score offers connectivity to Scorecard by: Utilizing Loan-Score’s comprehensive PPE, AUS and customer-facing Web portals; using Web services to transparently connect to Loan-Score’s AUS; and using the continued on page 22

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and lines of credit under certain conditions, including completion of a HAMP modification on the first mortgage on the property. “For many homeowners facing severe financial difficulty, decreasing the payment on the first mortgage without a reduction in the payment on the second lien may not produce an affordable combined mortgage payment,” said Barbara Desoer, president of Bank of America Home Loans. “We continue to work with elected officials and policymakers on sound approaches to helping struggling homeowners keep their homes in these difficult economic times. Signing this contract ahead of the release of the final program guidelines is a continued demonstration of Bank of America’s strong overall commitment to homeownership retention and to the Making Home Affordable program as the centerpiece of these efforts.” As one the nation’s largest mortgage servicers with nearly 14 million loans, including approximately three million second liens, Bank of America will modify eligible second liens regardless of whether the first lien is serviced by Bank of America or another participating servicer. “2MP will become a valuable addition to Bank of America’s broad toolkit of potential solutions for customers facing financial difficulty and will increase our ability to help even more homeowners,” said Desoer. Using non-government programs, Bank of America modified more than 57,000 second liens to assist financially strapped homeowners over the last two years. For more information, visit

underwriting solution provider, has announced that Wells Fargo is officially accepting Federal Housing Administration (FHA) loans that have been determined as eligible through Loan-Score’s automated underwriting system (AUS), which interfaces with FHA TOTAL Scorecard. In a statement issued by Wells Fargo on January 11, 2010 in its lender newsflash bulletin, Wells stated: “Wells Fargo Funding is pleased to announce that effective immediately, sellers approved to deliver FHA loans, when FHA eligibility results have been obtained using Loan-Score’s integration with FHA TOTAL Mortgage Scorecard. All FHA loans eligible for AUS submission must be submitted to FHA’s TOTAL Mortgage

Service 1st joins the Ellie Mae Network

Presidents First is a multi-state, full-service home mortgage Banker dedicated to offering quality mortgage solutions with an unwavering commitment to service. Having years of experience in the mortgage industry, we understand what’s important. Presidents First is dedicated to providing our customers with intelligent, innovative mortgage products at aggressive rates and unparalleled service levels. Utilizing hands-on common sense underwriting, expeditious closing strategies and personalized account servicing, Presidents First is focused on helping our customers to grow their business. Offering affordable lending solutions for borrowers that deserve quality loan programs and stability - it’s clear to see why Presidents First is America’s Leading Wholesale Lender.™

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O MARCH 2010

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Service 1st Valuation and Settlement Services Inc. has signed on with the Ellie Mae Network. As a result of the Service 1st integration, Service 1st will be available as an independent appraiser on the Ellie Mae Network and available to all users of Encompass360. Service 1st is a national appraisal management company (AMC) committed to developing the highest level of customer service in the appraisal management industry. “Service 1st is committed to achieving superior customer service by delivering fast, reliable, efficient and service oriented appraisal management and by joining the Ellie Mae Network, it only strengthens our abilities,” said Mark Oliver, chief executive officer of Service 1st Valuation and Settlement Services Inc. “As Service 1st grows, we look forward to expanding our offering by utilizing the custom technology integra-


heard on the street

continued from page 21 Web portal as a standalone solution. For more information, visit

Mortgage finance and investment vets launch RMBS loan level data company, BlackBox Logic LLC By Tommy A. Duncan, CMT

MARCH 2010 O



What can loan officers learn from the 2009 Year-End Review for Quality Control?


For starters, loan officers can learn to be responsible for the items in the loan process that reflect directly to loan officer’s work. The Application 1003 initial and final is a good place to start. When comparing non-supervised mortgagees (non-bank lenders) and supervised mortgagees (bank lenders), the initial Application 1003 ranks number one in problems with non-bank lenders at 11.14 percent in 2008 and 14.48 percent in 2009, a 3.34 percent jump. Bank lenders showed a 13.42 percent reading in 2008 and a 23.89 percent reading in 2009, a jump of 10.47 percent. Across the board, loan officers have performed poorly in meeting the standards on completing the initial 1003. However, bank lenders had a significant increase from 2008 to 2009 as compared to non-bank lenders. I must congratulate both loan officers who originate for non-bank entities and bank lenders for their good work in reducing errors on the initial Truth-inLending (TIL) and Good Faith Estimate (GFE). The initial TIL and GFE placed eighth for non-bank lenders and seventh for bank lenders. The non-bank lenders won that race in ranking; however, they went from 12.06 percent in 2008 to 7.19 percent in 2009, with a 4.87 percent improvement. The bank lenders went from 10.28 percent in 2008 to 6.91 percent, a 3.37 percent decrease. Bank lenders won the ranking as per the lease amount of problems by less than one percent, but non-bank lenders showed the greatest improvement on issues with the TIL and GFE for 2009. Non-bank lenders did better than bank lenders on the final 1003 Application. Non-banks placed sixth, with a 7.75 percent reading in 2008 and 9.19 percent in 2009 with an increase of problems by 1.44 percent, and bank lenders placed third with 13.16 percent in 2008 and 12.43 percent in 2009, a 0.73 percent improvement. Even though bank lenders improved their percentages in problems, their percentages with problems were higher than non-bank lenders. When comparing the same documents from non-supervised loan correspondents (brokers) to supervised loan correspondents (bank brokers), the number are just as surprising. Both the broker and bank broker had the initial 1003 Application rank as the number one problem area. Brokers went from 11.77 percent in 2008, to 18.91 percent in 2009, a 7.14 percent increase in problems. But the bank broker went from 15.13 percent in 2008 to 23.5 percent in 2009, an 8.37 percent increase. The bank broker maintains the highest problems with the initial 1003 Application. Both the broker and bank broker initial TIL and GFEs ranked sixth, and the percentiles remained somewhat consistent. However, brokers made slight improvements by 1.35 percent and bank brokers showed a slight increase in problems by 0.26 percent. Even though the brokers made improvements, they had a slightly higher percentile than the bank brokers. Brokers ranked seventh on the final 1003 Application, coming in at 10.98 percent in 2008 and 7.35 percent in 2009, an improvement by 3.36 percent, where bank brokers final 1003 Application ranked second for having highest quality control problems. Bank brokers went from 11.84 percent in 2008 to 14.29 percent in 2009 with a 2.45 percent increase in problems. As the numbers speak, there is room for improvement, as loan officers and management need to take steps in improving the quality of the loan process. This can be done by requiring excellence in what one does and in training. Quality Mortgage Services offers full mortgage compliance solutions and releases The 2009 Year-End Review. You may obtain a copy of this report by visiting

Tommy A. Duncan, CMT is executive vice president of Quality Mortgage Services LLC. For answers to your QC and FHA questions, please contact Tommy at (615) 591-2528 or e-mail You may also visit Quality Mortgage Services LLC on the Web at

Sponsored by

A team of mortgage finance and investment management veterans have announced the formal launch of a new company, BlackBox Logic LLC, providing a database of loan level collateral underlying non-agency residential mortgagebacked securities (MBS) for investors, broker/dealers and researchers. BlackBox Logic also announced the availability of its loan level data aggregation service, called BBx Data, which covers the jumbo A, sub-prime and Alt-A mortgage markets. It includes more than 7,200 residential MBS, 21 million loans and nearly 600 million remittance records, dating back to 1999. Headquartered in Denver, BlackBox Logic has offices in New York and Bethesda, Md. The company is majority-owned by Braddock Holdings Company, the private equity affiliate of Denver-based Braddock Financial Corporation. Braddock is a Security & Exchange Commission (SEC)-registered investment advisor. The BlackBox Logic management team has more than 50 years of experience in designing, building and managing information technology systems for the securitized mortgage market. The team is led by Larry Barnett, chief executive officer; Wyck Brown, director of marketing and new business development; Bill Pugh, chief technology officer; Marty Schwartz, lead data modeler; and Dmitri Raskes, director of e-commerce solutions. “BlackBox Logic’s BBx Data offers the highest-quality payment data available on non-agency residential mortgagebacked securities,” said Barnett. “We use proprietary data cleansing logic to clean and verify each origination and payment record. The result is more complete, more accurate data, to meet even the most demanding user’s needs.” For more information, visit

Cobalt Mortgage acquires Coulombe and Evered LLC Cobalt Mortgage has acquired the mortgage brokerage firm, Coulombe and Evered LLC . With this acquisition, Cobalt Mortgage

becomes the third largest retail mortgage lender in King County, Wash., behind Wells Fargo and Bank of America. “Coulombe and Evered has been a high quality mortgage company in the Seattle area for over a decade and has established a solid reputation for great service and integrity in lending,” said Keith Tibbles, president of Cobalt Mortgage. “This acquisition is part of Cobalt’s strategic plan to expand its market presence in Washington state. At a time when many mortgage lenders have decreased their loan availability, Cobalt has sustained and grown its customer base. It’s this business strategy that has led Cobalt to become the state’s largest independent lender. The mortgage industry now has more opportunity for well-run, well-capitalized companies than anytime in the past 10 years. Most of the national companies are simply not focused on providing great service to their customers and communities, which is our focus everyday.” “We are ecstatic to be joining the Cobalt family,” said Brad Evered, principal of Coulombe and Evered. “Cobalt has fantastic operations, support structure and cutting edge technology that will greatly improve our efficiencies and service to our clients.” For more information, visit

OpenClose collaborates with Google on new Comparison Ads

OpenClose Mortgage Software, developers of Web-based, end-to-end mortgage loan origination software, is working with Google to provide loan rate and fee data feeds for Google’s AdWords Comparison Ads for mortgages. The new advertising feature will change the way borrowers search for loan product and pricing information and how mortgage lenders currently generate quality leads via the Internet. Users searching for “mortgage” on may see Comparison Ads that prompt them to select the type of loan to compare various rates. OpenClose will be providing lender data through its loan product and pricing engine, DecisionAssist. They can choose directly from the offers listed or further refine their search by providing additional information like income, home value or other parameters. They can also call the lender directly or request a quote. By using the direct feed from OpenClose, borrowers receive accurate, up-to-date rates empowering them to make informed decisions. continued on page 24

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O MARCH 2010

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heard on the street

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MARCH 2010 O



“Today, Internet users turn to Google for any and all questions they have from early stage investigation to final decision making—mortgages included,” said Jason Regalbuto, chief executive officer of OpenClose. “AdWords Comparison Ads show targeted offers in less than a second with no long forms to fill out. There are no teaser rates or bait and switch offers, just standardized information presented to users, making it easy for them to sort and compare offers on a side-by-side basis. Lenders are only able to contact the user via an anonymized (non-traceable) phone number if the user explicitly requests more information about an advertiser’s offer. Google is setting the standard for how borrowers will interact with mortgage lenders moving forward.” Lenders interested in being included in Comparison Ads can work with OpenClose or one of a few loan pricing engine developers also providing data. OpenClose sets itself apart from other technology by offering a loan origination system in addition to a product and pricing engine. That way, lenders who receive interest from an online borrower can immediately funnel that lead directly into its mortgage software. Borrowers, in turn, benefit from the accurate transfer of data and elimination of repetitious questions and requests. For more information, visit


sent to borrowers as required by the Real Estate Settlement and Procedures Act (RESPA). Wolters Kluwer can also print and mail paper disclosures to Fifth Third’s borrowers when needed through the company’s mail fulfillment center. “As mortgage lenders continue to comply with updated regulatory processes, we’ve found Wolters Kluwer Financial Services’ SDX service beneficial both for our customers and for Fifth Third Mortgage Company,” said Cindy Manser, senior vice president and national operations and fulfillment manager for Fifth Third Mortgage Company. “The SDX service is another product that is bringing the Mortgage Company into the digital age.” “Wolters Kluwer Financial Services is very excited to help Fifth Third Mortgage Company become even more competitive in today’s challenging lending marketplace with our SDX service,” said Jason Marx, vice president and general manager, mortgage for Wolters Kluwer Financial Services. For more information, visit or

Mortgage Professionals to Watch O Tommy Duncan, CMT, executive vice president of Quality Mortgage Services LLC, has announced the hiring of Sherrie Reed to head up the company’s new mortgage servicing division, QMS Servicing.

Fifth Third Mortgage enhances borrower experience using Wolters Kluwer Financial Services’ SDX Product

Sherrie Reed

Fifth Third Mortgage Company, a subsidiary of Fifth Third Bank, announced that it is using Wolters Kluwer Financial Services’ Secure Document Exchange (SDX) service to securely and electronically deliver home loan application disclosures and appraisals to borrowers. The SDX service makes it more convenient for Fifth Third Mortgage Company customers to receive disclosures and appraisals. It does so by delivering these documents to them in minutes electronically versus the days it would take by mail. Borrowers also have the option of securely eConsenting and returning disclosures to Fifth Third Mortgage Company through SDX. Additionally, the SDX service helps Fifth Third Mortgage comply with sending disclosures to borrowers within 72 hours after application. As a result, Fifth Third is better equipped to document that required disclosures were

O Resource Title has promoted Andrew Rennell to the position of chief operating officer.

Andrew Rennell

O Douglas Moritz has been appointed by the Mortgage Bankers Association (MBA) as associate vice president of multifamily. O Bank of America Home Loans has named Matt Vernon short sale and real estate-owned (REO) executive of the company. O George Phelps, executive managing continued on page 28

Credit Plus to offer single price credit report

AllRegs and FICO introduce new FICO National Certification

continued on page 29



O MARCH 2010

AllRegs, a publisher of guidelines for the mortgage industry, and FICO, a provider of analytics and decision management technology, have introduced a new FICO National Certification program: the Certified FICO Professional (FICO Pro). This program is designed to recognize individuals who have a strong understanding of FICO scores and how the FICO score impacts both the lender and the consumer.



LendingTree has announced the launch of its first-ever iPhone App, the Mortgage RateFinder, now available at the Apple Store. This free application allows a user to get up-to-theminute loan offers without any personal information being shared. Mortgage Ratefinder App is extremely user friendly. You simply enter information about the loan you would like. The App then performs a quick search of participating lenders and instantly provides users with customized loan offers. Users can choose to receive up to 30 different offers. Once an offer is found, the user clicks to be contacted by that lender and move forward with the loan request. “Whether refinancing or purchasing a home, today’s consumer demands greater speed and accessibility to competitive mortgage offers and we are very excited to now provide instant access to offers on your iPhone,� said Doug Lebda, founder and chief executive officer of LendingTree. “LendingTree was the first company to deliver transparency and efficiency to the mortgage process by forcing banks to compete for your business and we hope to build upon our success with our expansion into the smartphone market.� LendingTree is committed to protecting the privacy of all its customers. Mortgage RateFinder users’ personal information is not shared in order to receive customized loan offers. Only once the consumer requests to be contacted by a lender is their information transmitted to that specific lender. For more information, O

Credit Plus Inc. has announced that it will offer a single-price credit report, the price of which will be based upon a lender’s business model. The new pricing option will assist lenders and mortgage brokers in achieving compliance with regulatory changes, effective Jan. 1, 2010, that were made to the Real Estate Settlement Procedures Act (RESPA) by the U.S. Department of Housing & Urban Development (HUD). The new rules require lenders and brokers to provide customers with a standard Good Faith Estimate (GFE) that clearly discloses all loan terms and closing costs. Closing agents are then required to provide borrowers with the new HUD-1 Settlement Statement that clearly compares consumers’ final costs with the originally quoted costs. The final price for several services, including the credit report, must be within 10 percent of the quoted price or lenders may face penalties beginning May 1, 2010. “Offering the option of a single-price credit report provides much-needed flexibility in today’s mortgage environment,� said Greg Holmes, national director of sales and marketing at Credit Plus Inc. “We believe the single pricing structure will facilitate compliance with the new HUD regulations, particularly the GFE.� The Credit Plus single-price credit report will include: Supplements that lenders can customize; potential score improvement alerts; unlimited secondary use fees; and unlimited Fannie Mae and Freddie Mac reissue fees. The new standard GFE requires that lenders and mortgage brokers clearly disclose the loan term and type, interest rate, whether there is a pre-payment penalty and/or balloon payment, and itemized closing costs. The new standard HUD-1 Settlement Statement enables a borrower to compare an itemized list of all fees from the GFE with actual closing costs. Lenders and brokers who do not wish to purchase single-price credit reports will continue to have the ability to purchase credit reports within Credit Plus’ traditional price structure. Credit Plus offers scoring tools, Tax Return Verifications, flood reports and other services in addition to credit reports. For more information, visit

LendingTree releases new iPhone app


MARCH 2010 O



Bruce Lawner, Senior Vice President of Wholesale, Presidents First Mortgage Bankers


Each month, National Mortgage Professional Magazine will focus on one of the industry’s top players in our “Mortgage Professional of the Month” feature. Our readers are encouraged to contact us by e-mail at for consideration in being featured in a future “Mortgage Professional of the Month” column. This month, we had a chance to chat with Bruce Lawner, senior vice president of the wholesale division for Melville, N.Y.-based Presidents First Mortgage Bankers. Presidents First opened its doors in March of 2008. Bruce works on a daily basis with quality mortgage brokers to expand the wholesale division. Under Bruce’s leadership, Presidents First has experienced steady growth over the past two years. Bruce draws upon his 20-plus-year career in the mortgage and housing finance industry to lead Presidents First Mortgage Bankers. He began his career with a Mineola, N.Y.-based mortgage broker in 1986 as a loan officer, taking applications and specializing in condominium and co-op conversions. In 1989, he began his long journey into the mortgage banking

world and joined Arbor National Mortgage in Westbury, N.Y. as a senior loan officer. Earning great achievements such as the company’s President’s Club for high volume of originations and closings with his tenure there. He remained with Arbor until the company was sold to Bank of America in 1993, when he then moved to a mortgage banker in Melville, N.Y. in his first of many management roles as sales manager, responsible for all recruiting and the training of sales staff for the company. Bruce helped grow the company by working with all members of the operations staff on improving turn-time and increasing quality customer service. It was there that he began learning all facets of the mortgage banking industry. In 1995, Bruce became vice president of operations for a Westbury, N.Y.-based mortgage banker, obtaining his Direct Endorsement (DE) from the U.S. Department of Housing & Urban Development (HUD), overseeing all members of the operational staff, including processors, closers, funders and secondary marketing representatives. In 1996, he furthered his career as a sales manager for Roslyn Heights, N.Y.based PMCC Mortgage Corporation, a publicly-traded company. Bruce managed the company’s retail sales production team and was instrumental in increasing originations to over $1 billion. He was later promoted to executive vice president of sales. In 1999, Bruce became vice president of sales for Sterling National Mortgage in Great Neck, N.Y., managing the company’s retail sales department and specializing in the growth of FHA and Alt-A originations. In 2002, Bruce was recruited by president and chief executive officer, Frederick Assini, to join Franklin First Financial Ltd. in Melville, N.Y. as vice president of branch banking. He super-

vised 25 of the company’s branches, overseeing more than 500 employees in the retail division. At that time, there was only one last challenge in his career that had to be met, so in 2006, he partnered up as coowner and chief operating officer of Garden City, N.Y.-based Mortgage Source LLC, a Federal Housing Administration (FHA) direct lender. In 2008, Bruce returned to Franklin First Financial d/b/a Presidents First Mortgage Bankers as senior vice president of the wholesale division. Presidents First is a multi-state, fullservice mortgage banker that prides itself on its dedication to providing its customers with mortgage products at aggressive rates and industry-best service levels. How did you first get involved in the mortgage business? After graduating from SUNY College at Old Westbury in 1986 with a bachelor’s degree in business administration, I started working in the family business, an import/export brokerage based out of John F. Kennedy Airport. After about a year-and-a-half of doing that, I realized that working for the family might not be the best future for me. One of my friends at that time had a mortgage broker company. He told me how he was taking a lot of mortgage apps, and asked if I was interested in helping out on the weekends, taking applications on-site at condominium conversion projects, and offered to pay me to do so. Seeing how easy it was and the fact that I was making money on the weekend, I started to inquire more and more about the mortgage business and decided to leave the family business in 1988 and enter into the world of mortgage and housing finance. Do you feel that when you first started in the mortgage industry, you

were working on deals that might not make sense? Yes and no. In the late1980s and early 1990s, I specialized in co-op and condo conversions, and there were bushels of them. Some of the lenders back then, such as Citi Corp., Columbia Federal Savings Bank, Dime and some of the others, had these phenomenal products for people already living in a condo or co-op complex. They were offering 100 percent financing with no money down. So, it was fairly easy if someone had good credit and employment to get them these mortgages. Banks didn’t even qualify their borrowers because there were many noincome check programs available. Even though I had my own apprehensions that the applicants qualified, they were ultimately the final decision-maker.

“Right now, it is more challenging than ever to stay in this business. Some people love challenges in their life and some people thrive on pressure, while others may simply fold.”

Were there any points in your career where you didn’t have the luxury of having a captured audience like you did with the co-op conversion market? Absolutely. When that particular product and market dried up, we had to develop other areas to specialize in or other niches to market to. And that’s what we did. There were many new investors coming into the market, and they all wanted to gain market share; hence the birth of Alt-A, stated-income, no doc, etc. The LTVs kept rising higher and higher. to a point of 105 percent. That made the originator’s job a “no brainer.”

“I like to say that Presidents First Mortgage Bankers is still here to stay and we are thriving, and confident that this current phase of the industry will be a thing of the past.”

O MARCH 2010

This shows the borrower they are dealing with a more ethical and knowledgeable individual. The borrower can feel comfortable in dealing with a broker, as opposed to somebody who works for federally-chartered banks who may not have the answers to the questions a borrower may have. Reps in federally-chartered banks haven’t been asked to brush up on any SAFE Act or RESPA requirements because they are exempt from it. In this industry, I have seen it all. I have been a broker and a banker, I’ve spent time on the retail side, and now, in wholesale, so I’ve experienced all the channels of loan origination. Some of the products that these investors came out with, looking back in retrospect as we were all in the midst of enjoying the financial rewards from these products, you have to think about who actually came up with these guidelines and just how did the industry let itself go? There were no governing factors involved that looked at these products to realize what the repercussions would be down the line. Whoever came up with these guidelines did not have the foresight to really think these things through clearly enough. That is why we have all of these federal regulations coming forth these days, so that something as catastrophic as the recent mortgage and housing crisis does not repeat itself. Mortgage brokers are just an extension of the banks. It is ultimately the lender who has to do their due diligence and perform quality control checks on that file … brokers do not approve these loans. Whether it was an 80/20, 100 percent, stated-income deal for a W-2 employee as they felt a janitor could make $150,000 and approved that loan; it was the doing of the major lending institutions, not that of the broker. Things like that will likely never happen again in this marketplace.


What does Presidents First Mortgage Bankers do for the mortgage broker? What do you offer the mortgage broker that the big banks cannot? I think that part of not being one of the big boys, we offer great personal customer service, in addition to our great turn-times. We personally know these brokers who deal with us locally. Especially at this stage in the mortgage market, with RESPA, regulatory changes and so forth, we work with brokers through the red tape and the challenges they are facing, along with other obstacles. We have the ability to make phone calls that are more personable than the big banks on working through these issues facing the brokers. Sometimes, the reps at the big banks are difficult to even get on the phone. Even if you do get them on the line, they are not going to necessarily have all the answers for you. That sort of personable service will continue to help us, and that personal attention that Presidents First gives to them shows that we have our finger on the pulse of the industry as far as turntimes are concerned to compete in this marketplace. We pride ourselves on our turn-times, and pride ourselves on our aggressive rates and quality product offerings. A lot of the bigger banks have closed shop in their wholesale divisions. There is a significant amount of volume going to the big banks that are left, and they are facing a backlog based on all of this volume. Part of our corporate strategy is that we’ve already received approval for is becoming a Fannie Mae Seller/Servicer, something that we are looking forward to working with this year. We are also actively trying to make the right types of loans in this challenging economy, and when the time is right, apply for our Ginnie Mae Seller/Servicing License as well. This way, we are not at the mercy of the big boys left who are buying the loans. We are holding our own and are optimistic that, in the next few months, we will be in a position to continue in this marketplace and continue to grow our company.

What can mortgage brokers do to get a leg up on the competition from the big banks? Mortgage brokers, unfortunately, have to work within the confines of the guidelines of the HVCC. That is something on the conventional end we have been following very closely. I don’t think the brokers have suffered much from turn-time issues, they have been okay. Brokers may use things like the SAFE Act [Secure and Fair Enforcement for Mortgage Licensing Act] and things like licensing requirements to their advantage when telling a borrower that, because of the SAFE Act and licensing requirements, they had to learn more about compliance and their business. O

You do business in one of the East business. Some people love chalCoast’s capitals of the mortgage mar- lenges in their life and some people ket, on Long Island and in Melville, thrive on pressure, while others simN.Y. to be exact. Are there others in ply fold. I like to think I am up for the this area who may have influenced challenge of surviving in today’s mortyou and have provided guidance gage marketplace. These last few throughout the years? years were unquestionably the biggest My parents were a big influence on me. challenge in my mortgage career. I They were very hard-working individu- like to say that Presidents First als who worked crazy hours, and I idol- Mortgage Bankers is still here and we ized them for that. In fact, I believe that are surviving, paying our bills and work ethic is hereditary and was passed hoping that this current phase of the down to me. They didn’t make a lot of industry will be a thing of the past, money, but were good providers. As hard and the industry will get back on track as they worked, they always found time with the help of politicians and the to make themselves available to me investors. early in my childhood when I was growing up … they came to all of my ball What do you say to mortgage brokers to games. I’ve taken many of these values urge them to stay in business with all of to my work ethic and management the obstacles facing them today? What style. is your advice to the broEarly in my career as a ker community, a comretail loan originator … munity that is facing the first seven to eight issues such as legislative years of my career … I and regulatory pressures, was just originating the Home Valuation Code loans. I worked for some of Conduct (HVCC), very good companies and mounting negative media took pride in my knowlcoverage, etc.? edge of the company’s Whether you are a mortproducts and offerings. gage broker or mortgage In 1989, I started banker, we have many simworking for my first mortilar obstacles lately to overgage banker, American “Mortgage brokers are come. I know we are in the Mortgage Banking, which first year of change to just an extension of later became Arbor guidelines of the Real Estate the banks. It is National Mortgage. The Settlement Procedures Act company’s owner and ultimately the lender (RESPA) and the many other who has to do their chief executive officer, Ivan industry changes that have Kaufman, sold the compadue diligence and come across. I’ve been in ny to Bank of America in this business for a long perform quality 1993 for approximately control checks on that time, and ever since I can $60 million. He is still oper- file … brokers do not remember, there has ating Arbor Commercial always been a mystique approve these loans.” Mortgage to date. He was about mortgage brokers. one of the guys who defiThey’ve been trying to ban nitely influenced me as a young man in mortgage brokers for many years, and this industry. One of the most fascinat- they have yet to be successful. A lot of ing things about Ivan is that he was just brokers are still around who are complia regular guy who did some amazing ant and have a good book of business, things which keeps me motivated to and there are different ways of marketing this date. to that book of business. My current employer, and a man In the old days, I used to pound who I consider a good friend, who has the pavement and get my deals treated me like a brother for some straight from real estate brokers, real eight years, Fred Assini, has been a estate attorneys, certified public major influence and mentor as well. accountants (CPAs), and by word of We have learned a lot from one anoth- mouth. I feel that this is still a very er, compliment each other and always good and viable way of getting busimaintain positive energy in the work ness, as well as being confident with place. His work ethic is second to doing some traditional marketing. none and it shows in the success of You have to be diversified in order to the company. survive in this current state of the marketplace. What keeps you in the industry? There is still this perceived matter I think what keeps me in this business of the bad aura of mortgage brokers is the challenge. Right now, it is more being responsible for the downfall of challenging than ever to stay in this the mortgage business, which I do not

agree with at all. I truly feel that mortgage brokers were not part of any market demise; they just originated and followed the bank’s guidelines, which happened to be very lax at that moment in time. That is part of the reason why there is this mystique … brokers are not empowered to make the loans, they are just the third-party seeking the best deal for the customer. Ultimately, it’s the banks and their lack of quality control procedures, and greed and outdoing each other that led to the mortgage crisis. I think we learned a very valuable lesson during this recent mortgage and housing crisis, and if and when things do ease up, I think the housing finance industry will still be a viable industry to earn a good living in.



heard on the street

continued from page 24

director of Primary Capital, has announced the addition of Jan Wagner and her team from the former Canton Street Mortgage. O Morris|Hardwick|Schneider has named Natalie Hardwick, Cristina Hunt and Jeffrey Sandler as partners.





Natalie Hardwick



Your turn





company’s new senior managing director. Mortgage Services III LLC has announced that Brian Boyles has joined the company as senior vice president of business development. Advanced Funding Solutions Inc., a provider of reverse mortgages, has added Kenneth Connolly as reverse mortgage advisor and Rick Cashman as director of business development. USA Funding Corporation has announced the additions of Mark Rossetto as a mortgage consultant and Darnisha Cleveland-Davenport as a call center representative. Michael J. Langenkamp has joined strategic planner CCG Catalyst as a partner.

Cristina Hunt


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

244 Fifth Avenue Suite P 206 New York, NY 10001-7604 Toll Free: 888-833-5478 Direct Line: 718-502-6563 Fax: 212-710-4326 www.WallStreetList.Com

Phone #: (516) 409-5555 E-mail:

MARCH 2010 O



Jeffrey Sandler


United Northern is Seeking Highly Qualified, Experienced Mortgage Professionals To Grow as We Grow

O Raymond A. Redlingshafer Jr. has joined Clayton Holdings LLC as the

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

• Operations Manager • Production Manager • Senior Underwriter • Virtual Mortgage Loan Officers (VMLOs) • In-House Mortgage Loan Officers (MLOs) • Team Leaders/Sales Managers

Can't Miss Event For Anyone Involved In Credit! Don't miss this HIGH OCTANE training conference covering crucial topics such as Advanced Sales, Marketing, Client Support, Qualifying Prospects, FICO Scoring, Time Management, Compliance...and MORE! Did you know? Majority of businesses that we consult with are out of compliance. Learn How To: • Avoid big mistakes most companies make. • Maximize client satisfaction. • Qualify prospects efficiently.

• Understand scoring cards. • Be profitable and be compliant! • AND MUCH MORE!

Network with other credit professionals at the Welcome Reception on Friday night and the NACSO Banquet lunch on Saturday.

Visit UnitedNorthern.Jobs, email info@UnitedNorthern.Jobs or call (888) 600-8808 ext 1. United Northern Mortgage Bankers, Ltd. Corporate NMLS ID# 7230 New York State Banking Dept. - Licensed Mortgage Banker – License #100724 New Jersey Dept. of Banking and Insurance – Mortgage Lender – License #L0046623 Pennsylvania Dept. of Banking – Mortgage Lender – License #20887 Connecticut Dept. of Banking - Mortgage Lender - License #20372 Massachusetts Div. of Banks and Loan Agencies - Mortgage Lender & Mortgage Broker – License #MC5070 North Carolina Commissioner of Banks – Mortgage Lender – License #L140365 South Carolina State Board of Financial Institutions – Supervised Lender – License #S7,461 Florida Dept. of Financial Institutions - Mortgage Lender - License #ML0700679 Senior Security Home Advantage is a lending area of United Northern Mortgage Bankers, Ltd. Direct FHA Endorsed Lender

Make sure to stay for our bonus business coaching session for a "Question & Detailed Answer Panel." This session will last as long as it takes! Space is limited at the resort Do not delay registration!

new to market


continued from page 25

RES.NET launches Accelerated Management Platform (AMP)

Cogent Road launches Roohmz Mortgage Enterprise to monitor workflow

continued on page 40







ASK ABOUT REGIONAL OPPORTUNITIES Contact Us For An Immediate Response at or call 1-800-562-6715, ext. 150

Thursday, June 24, 2010 Friday, June 25, 2010 AAMB welcomes NAMB to beautiful Phoenix! Come see the new NAMB President and the new NAMB Board installation, while participating in some great networking opportunities. State delegates can also participate in the NAMB Delegate Council Meeting.

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Visit for details.

O MARCH 2010

Cogent Road, a provider of Web-based mortgage technologies that facilitate communication between lenders and borrowers, has announced the launch of Roohmz Mortgage Enterprise, an Internet-based workflow management system that manages the progression of loan applications from origination to closing, enforces compliance and provides a robust communication platform. Roohmz Mortgage Enterprise creates transparency in the loan origination process for both borrowers and lenders by continually monitoring application status, providing real-time updates and ensuring each step is completed in full compliance. Through Roohmz Mortgage Enterprise, each loan file is digitized and rules are applied to its path to closing, guaranteeing that each prerequisite is met before Roohmz moves the loan to the next status. Once the status is attained, Roohmz Mortgage Enterprise automatically delivers the loan file to the next employee in the workflow, and alerts the appropriate stakeholders that the step is complete. Roohmz Mortgage Enterprise also ensures full conformity with Equal Credit Opportunity Act’s (ECOA) Regulation B, Truth-in-Lending Act’s (TILA) Regulation Z and the Real Estate Settlement Procedures Act’s (RESPA) new Good Faith Estimate (GFE) disclosure requirements. The system will automatically warn originators when files are about to fall out of compliance and be withdrawn. Roohmz Mortgage automatically delivers all adverse notices the moment a file is withdrawn or declined, either electronically or via first-class mail, and creates an audit trail for compliance officers. “Roohmz Mortgage Enterprise acts as a train track for the lender’s specific mortgage origination process, ensuring origination happens as expected and within compliance timelines,” said William DiPaolo, chief executive officer of Cogent Road. “The loan application is moved along this predetermined track, with checkpoints completed along the way, without depending on individuals and managers to make it happen. Using this system empowers originators with the knowledge as to why loan workflow is suspended and how it can be corrected, and it also gives them enhanced communication tools to effectively explain any delays to the borrower in a way that they can understand.” Along with intuitive workflow management and assured compliance, Roohmz Mortgage Enterprise offers loan applicants



RES.NET (Real Estate Systems), a whollyowned subsidiary of U.S. Real Estate Services Inc., has announced the launch of its Accelerated Management Platform (AMP). AMP was designed to improve operational efficiencies by managing tasks, storing data, organizing prospects and contacts and provide global oversight of listings and historical data. This platform will also give real estate brokers and agents maximum exposure to industry service professionals within the RES.NET community. RES.NET, a software application company established in 2003, by its parent company, U.S. Real Estate Services, created a real estateowned (REO) management application for asset managers to manage real estate assets and connect with the entire supply chain. “RES.NET recognizes the real estate agent as the core element in any real estate transaction,” said Todd Mobraten, U.S. Real Estate Services chief operating

officer. “Offering a full scale application to the agent was key in continuing to build RES.NET’s community not only for today’s business, but for tomorrow as well.” For more information, visit O

In order to receive this certification, candidates must agree to a code of ethics and successfully complete three one-hour online courses delivered by AllRegs Academy: Exploring FICO Scores, Analyzing the Credit Report, and Communicating Credit Information. Certified FICO Professionals (FICO Pro), based on FICO scores and other credit and lending criteria, will understand how FICO scores are created, the categories and data utilized in the credit report and the impact of FICO scores on consumers. “We are excited to partner with FICO to offer this unique national certification to professionals in the mortgage industry and other credit industries,” said Dan Thoms, senior vice president of AllRegs. “The FICO Pro certification provides a knowledge benchmark for individuals who assess credit risk and how that risk impacts their company and customers.” Registration in the program includes access to all three required courses. FICO Pro certification candidates have 12 months to complete the program from the date of enrollment. “Because extending credit always involves risk, FICO scores play a pivotal role for both lenders and borrowers in most credit decisions,” said Robert Duque-Ribeiro, vice president and general manager of Scores for FICO. “That’s why it is crucial that lenders, mortgage professionals and their service representatives understand how FICO scores do their work of assessing credit risk. The knowledge provided by the new AllRegs curriculum gives financial services professionals the foundation they need to discuss FICO scores confidently and accurately with their borrowers and applicants.” For more information, visit or






At REMN, we understand that mortgage companies perform best when they focus on

MARCH 2010 O



what’s important: their customers. We are


industry veterans and FHA specialists who understand that every application is precious.

It’s about time.

We treat each file with the respect – and urgency – it deserves. Even better, at REMN, same-day approvals are guaranteed.*

Learn more at * Same-day decisions guaranteed if file is received by 11 a.m. EST. Real Estate Mortgage Network, Inc. is located at 499 Thornall Street, Second Floor, Edison, NJ 08837. NMLS #6521. This information is for use by mortgage professionals only and should not be distributed to or used by consumers or third parties. Information is accurate as of date of printing and is subject to change without notice.

Why some Mortgage Professionals fail in Credit Repair while others Make Serious Money Mortgage Professionals make money in credit repair while getting borrowers Mortgage Ready!

You don’t need to be a credit expert to they couldn’t close before due to bad credit! It means more loans and more revenue for my loan start your own Credit Repair business Fortunately, with HTDI Financial’s Credit Services Organization (CSO) program, you will be able to handle ALL aspects of your business except having to do the actual repairs; we do that for you! We will train you on how to handle these customers and you will have the support you need every step of the way. We will make you look like a Fortune 500 company even if you work from home! YOU control how much money you make. In fact, through our CRM, we give you the tools and resources to harvest leads, manage prospects and monitor their progress.

You don’t have to spend tens of thousands of dollars for start-up costs for your own Credit Repair Company Once you are set up in our system, you will get access to software and tools that HTDI has spent over $1 million on research and development. You don’t need to spend an arm and a leg to start building your own credit repair business. Here is a quote from a mortgage company located in upstate New York who spent months of research before choosing HTDI:

As the number of loan programs are shrinking, the bar on credit scores keep rising. This program will allow your borrowers to become “Mortgage Ready” as soon as 45 days. As one of our CSO stated:

“I have many loan officers that are now able to send their clients through the credit repair, raise their scores, and then close the client’s loan that

Get started in a business that is booming and shows no signs of slowing The credit industry, as a whole, is one of the most powerful and profitable industries in existence. With loans, insurance and even employment taken into consideration individuals’ credit picture, the credit industry is getting bigger every day. Inside the credit industry, Credit Services is helping by assisting consumers with getting back on track by removing unverifiable and inaccurate negative items from their credit reports. As a CSO, you can benefit in being in a profitable industry and helping clients with their futures.

“I’ve been in the mortgage business over 22 years. A year ago, as the mortgage crisis worsened, I began trying to find a way to help clients who needed a better credit profile in order to get a mortgage. Fortunately for both me and my clients, I stumbled on HTDI. After a year of experience, I can honestly say the success rate is 100% and client satisfaction is through the roof. All of my clients have seen significant improvements, and some have experienced breathtaking jumps in their credit scores, even on the first round! From Day One you can be sure your “back office” (HTDI) has you covered. They will execute their part of the job seamlessly, with precision, on time, and with total consistency. All you have to do is SELL the service! Just sign people up, collect the money, and send HTDI the paperwork they need to get started. If you simply focus on selling the service, you will make lots of money, the work will get done, and you will never have to worry about unhappy customers. Although I got into it as a part timer, I now realize this is an excellent full time business opportunity. (Frankly, these days it’s probably a better business than the mortgage business!) You could easily make six figures in the first year with a minimal investment of money. How many opportunities like this exist these days? What you must invest is your time – SELL, SELL, SELL & SELL some more! Ultimately, what you are selling is the professionalism of HTDI, which is why this really rocks as a business opportunity.”

20.44% 17.32% 14.21%

Round 1 Round 2 Round 3 Round 4 We average one of the highest fix/deletion rates in the industry for the first 45 days of service. Shown below, in real-time, is the average percentage of fix/deletes per round.

If you are going to get involved in Credit Repair, be VERY CAREFUL First you have “Fair Credit Reporting Act” (FCRA). The FCRA holds credit bureaus and creditors to their reporting methods and has guidelines they must comply with. There are numerous techniques that are used along with similar laws to maximize results for each client. You must know these laws inside out. You can’t forget “Credit Repair Organizations Act.” (CROA). Just like the FCRA, the CROA hold credit repair companies to specific guidelines as well. If you choose HTDI Financial for your backend processing, we will ensure you maintain compliance. Lastly, you have applicable State Laws. Depending on the state you wish to conduct business in, you may have a state Credit Services Organizations act to comply with. As an active member in good standing of the National Association of Credit Services Organizations, you can be sure that we take our job very seriously, making sure you stay compliant and your clients.

FREE demo available

There is only one step you need to take; visit or

O MARCH 2010

call us at 877-877-4834 option 5.


Get those impossible to close deals CLOSED!

46.95% O

“Until last year, I owned a large mortgage company in upstate NY with over 125 employees. We got hit hard during the mortgage industry crash and had to close our doors. I was stuck in a position with thousands of leads and customers that couldn’t get qualified for anything. I decided to start looking for a way to capitalize on my left over resources and help people in the process. I called many other credit repair companies and was very unimpressed. One west coast based company was charging $15,000 and had nothing but negatives written about them on the Internet. Then I found HTDI. They helped me to get started at the beginning of this year and it has been great. I have not only made great money helping people to repair their credit, but I have refinanced 8 of them and helped 6 buy houses that would have never qualified with the new guidelines. The software is very user friendly and all of my clients, affiliates and Brokers have increased business because of it.”

officers. Even better than that, it is very rewarding to be able to help a client regain their credit and be able to get the loan they need.”

Industry Leading Results


A View From the C-Suite Five Keys to Helping First-Time Homebuyers

MARCH 2010 O



By David Lykken


The American Dream of owning a home is never more alive and exciting than for the first-time homebuyer. And, like any “first” in our lives, that first home is often the most memorable home we’ll ever own. It brings back memories of when we were first starting out … back at a time when life seemed simpler, exciting and filled with optimism. Oh, how things have changed! Many today are struggling to make the payment on that bigger house they moved up to and now cannot afford. Some find themselves wishing for those “good old days” of the lower home payments on that first house. More than one person has thought, “If I had only held on to that first house, I would nearly have it paid off by now … I wouldn’t be feeling so stressed out!” The role of the mortgage lender is critical in making the American dream of homeownership a reality, especially for the first-time homebuyer. But many mortgage lenders have forgotten (or never learned how) to embrace the first-time homebuyer. Here are Five Ps that will help you to transition your business to successfully work with first-time homebuyers …

1. Position Get yourself in position to work with

first-time homebuyers. For many lenders today, the bulk of their business has been refinance activity. They have never developed the necessary business relationships to come in contact with first-time homebuyers. Here are some ideas to help you: O Realtors: Excuse the obvious, but for many the “obvious” is easier said than done. This is especially true of lenders who only have experience with refinance transactions. I cannot tell you the number of lenders who have contacted our consulting firm asking us to teach them how to successfully work with Realtors. We have been able to help many of them make the transition, but again, most of them underestimated how much time and effort is required to successfully make the transition. Keep in mind, there have been a number of lenders who have been working with Realtors successfully for years and have well-established relationships that are not easily unseated. But it can be done if you employ the right strategy. O Builders: Just like Realtors, working with builders that build homes targeted for the first-time homebuyers seems to be an obvious strategy. However, it is substantially different than making a

Thursday, June 24, 2010 Friday, June 25, 2010 AAMB welcomes NAMB to beautiful Phoenix! Come see the new NAMB President and the new NAMB Board installation, while participating in some great networking opportunities. State delegates can also participate in the NAMB Delegate Council Meeting.

Phoenix Airport Marriott® Rooms are $99 per night, and will be honored at the same rate if you wish to extend your stay.

Hotel toll-free: 1-800-228-9290

Visit for details.

loan to a consumer who already owns a home. And to complicate matters even more, many well-established builders own their own mortgage company. They do their best to capture as many of their own sales as possible. While on the surface, this would seem like “game over” for any outsider trying to get their foot in the door, it can be done. Again, our consulting firm has successfully been able to help originators transition their businesses to be successful in getting business referrals from builders. Keep in mind; the number one mission for builders is to get their homes sold. In the end, whoever is most successful in accomplishing this objective wins.

considering buying Internet leads, keep in mind that the key to successfully working with Internet leads is speed! The advantage goes to the first loan originator to speak to a consumer after they have hit the “Enter” key on their keyboard. We have clients who have wisely moved their entire office to be on a fast Internet service so that when the consumer hits the “Enter” key, they received the lead a few seconds faster than the competition. Again, he who talks to the consumer first has an overwhelming advantage over the second, third or fourth originator that calls the consumer.

Another important issue you should consider is whether or not you are betO Referrals: Believe it or ter “positioned” to help not, your existing datafirst-time homebuyers as a base is a potential source mortgage broker, as a net for first-time homebuyer “Dealing with some branch of a larger entity or referrals. The key to this first-time homebuyas a mortgage banker. It is strategy is to have wellers is like managing getting increasingly more planned marketing cama guillotine … it is difficult to survive as a paigns to your past cusessential that you mortgage broker. The tomers. It doesn’t necessarily matter how long it keep your head when advantages brokers once enjoyed are diminishing. has been since you last all those about you Many brokers have made contacted them. Of are losing theirs!” the decision to convert and course you will be more become a mortgage banker. successful if you have continued to stay in touch with your This strategy allows them to continue to previous customers. Don’t fret … con- remain autonomous, which gives them the sulting firms can help you get a plan in best advantage of all to best serve first-time place. Just make sure anyone advising homebuyers. you has a proven track record. An unemployed mortgage person turned 2. Products “consultant” (at least until they can find If there was ever an area where the their next job) may be “affordable,” but playing field has been leveled, it would not necessarily have the experience have to be with loan products. In today’s generic world, the products necessary for your situation. offered to first-time homebuyers by O Internet: As many have come to one mortgage originator are about the know, more and more consumers are same as another. So, in a “vanilla world” how do you researching loan programs on the Internet. Therefore, the Internet is an differentiate yourself? In a word, “marexcellent source of first-time homebuy- keting” … it comes down to how well er leads. Consider this, first-time home- you market your loan product versus the buyers are typically younger, and there- next guy. We have clients who we have fore, already very comfortable and pro- helped create some amazingly successful ficient at using the Internet to do their marketing campaigns designed to get the research. In fact, more and more stud- attention of the first-time homebuyer. It ies reveal that an increasing number of can be as simple as giving your products consumers are going to the Internet to unique names. Features and benefits of research loan programs before contact- some programs are more beneficial to ing a mortgage professional. If you are first-timers. Yes, having the right prod-

ucts is important, but how you market those products and your services can make all the difference in the world.

it is essential that you keep your head when all those about you are losing theirs!”

3. Preparation

5. Persistence

You may have heard that the definition of “luck” as “opportunity met with preparation!” Never is this truer than when the opportunity presents itself to work with first-time homebuyers. If you do not understand the unique needs of the firsttime homebuyer, you can forget everything I have written to this point. I don’t care if you have positioned yourself extremely well with all the Realtors and builders in your area, and if you have the best priced products and marketing machine on the planet. If you do not know how to work with first-time homebuyers, you are DOA (dead on arrival)! Here are a couple of things to keep in mind:

Ah yes, another virtue … persistence … that dogged determination required in any endeavor worth pursuing. If you are going to successfully embrace a business model of working with firsttime homebuyers, you have to keep in mind that if it was easy, everyone would be doing it. Persistence is an essential key to building a successful first-time homebuyers’ business model. The reason I recommend this model is that it will provide you with a steady stream of business, regardless of interest rates and market conditions. Beyond that, I can personally attest to the fact that few things in life are as rewarding as helping someone successfully buy their first home … and the more challenging the circumstances surrounding the loan transaction, the more rewarding it is!

Knowledge is King Embracing first-time homebuyers with eEducation

4. Patience

David Lykken is president, mortgage strategies and managing partner with Mortgage Banking Solutions. David has more than 35 years of industry experience and has garnered a national reputation. David has become a frequent guest on FOX Business News with Neil Cavuto, Stuart Varney, Liz Claman and Dave Asman with additional guest appearances on the CBS Evening News, Bloomberg TV and radio. He may be reached by phone at (512) 9779900, ext. 101 or e-mail

O MARCH 2010

To listen to author David Lykken’s online radio show, log on to and type in “Lykken on Lending” in the “Search” box on the righthand side of the page.


If you have heard that “patience is a virtue” in life, well let me tell you that “patience is a necessity” when dealing with first-time homebuyers and their Realtors. They can sorely test your patience, but you must be patient and kind, or you will never make it when dealing with first-timers. That is not to say that you are not in control, but the one you first have to be in control of is your own emotions. It will only be a matter time before your patience will be severely tested. Realize that every opportunity to demonstrate patience is an equal opportunity to market your services. Stress levels are typically at their max with those buying a home for the first time. Your ability to manage circumstances will determine your level of success. I heard it explained this way: “Dealing with some first-time homebuyers is like managing a guillotine …

I would recommend that you make this your professional objective/mission … to facilitate the American dream of homeownership by providing reasonable and affordable financing options for consumers so as to promote sensible long-term homeownership options. And keep in mind what I have been saying … more wealth will be created in the next five years in mortgage lending than all the wealth created in the previous 25 years in our industry. One of the best ways for this to happen is to successfully embrace the first-time homebuyer. I hope you have enjoyed reading the articles written by my business partner, Andy Schell, over the past couple of months. I want to thank National Mortgage Professional Magazine for giving us the opportunity to write to you each month in this column … A View From the C-Suite.

As April 1 nears and buyers race to beat But this was before the current economy the deadline for the first-time home- and the tax credit offer. Now, the branch is buyer tax credit, lenders and Realtors also answering questions about how to have taken out the racing flags to carry qualify for the tax credit and what the guidethem in. Real estate industry statistics lines are. According to Millard, this is just one suggest that approximatemore incentive they can disly 1.8 million people are cuss at these seminars. expected to receive the federal first-time homeEducate yourself buyer tax credit. They also and know your indicate that the rebate target market has currently spurred In any selling situation, it’s approximately 350,000 imperative to identify and home sales. know your target market. With literally millions And right now, who better of potential first-time to target than recent colhomebuyers who qualify lege graduates with secure for the tax credit, mortjobs? gage professionals continWith more than 30,000 “…statistics suggest ue to work hard to sell. students, North Carolina’s that approximately But what is the best way largest university, North 1.8 million people are to “embrace” this group, Carolina State University, expected to receive and with what? The is located in the heart of the federal first-time Raleigh, N.C. Raleigh also answer is education. homebuyer tax cred- has an unemployment it. They also indicate rate much lower than the Hold education seminars for that the rebate has national average with first-time businesses in multiple currently spurred homebuyers industries such as phoapproximately As mortgage profession350,000 home sales.” tonics, biotechnology, IT als, it’s our responsibility and communications, to get information to the and computer and video right people. If possible, hold educa- gaming, all looking for talent. This comtion seminars in your local communi- bination makes for a lot of potentially ties for potential first-time homebuy- great lending opportunities for morters. This provides an excellent forum gage professionals. to educate this group on the benefits According to Jan Sylvester, branch of owning a home, the purchasing manager for Embrace Home Loans’ process, how much they can afford Raleigh, N.C. branch, now more than any and so on. other time, they receive numerous direct For a Peachtree City, Ga. branch of calls from recent graduates looking for Embrace Home Loans, a national lender advice on purchasing their first home. based in Newport, R.I., seminars have Many of these individuals are unsure of been key to originating leads for years— the process and simply need guidance. even before the federal tax credit. “We make certain we’re available to According to branch manager Joy advise this group,” said Sylvester. “This Millard, the branch made a strategic deci- group is new and inexperienced in buysion to target first-time homebuyers many ing a home; therefore, it’s expected years before the tax credit. In doing so, they they’ll have lots of questions and we built relationships with downpayment assis- want to be there to answer them.” tance programs like the Georgia Sylvester continued, “What’s different Department of Community Affairs that about now is that there’s a lot more of enabled them to cultivate a pool of first- them to advise. We’ve experienced a new time homebuyers to target. But where they wave of potential buyers calling, so we’re generated these leads was through semi- not as active in directly marketing.” nars held by the downpayment associations But it’s more than just knowing your throughout Atlanta. Members of the branch target market. It’s also critical to know would join the seminars, and afterwards, what other offers are being available in make themselves available to answer any addition to the tax credit. For instance, the questions and to pre-qualify potential buy- Georgia Homebuyer Tax Credit offers up ers on the spot. to $1,800 in tax credits to Georgia home“We would often leave with 30 or 40 leads after each seminar,” said Millard. continued on page 34 O

I Be prepared to explain your loan products in non-industry terms. I Be prepared to invest the time to answer questions. Having a Frequently Asked Questions (FAQ) sheet can help save time, but there’s no substitute to spending the time talking with them and answering all their questions. See this as a marketing opportunity. I There are more parties that need good communication as to the status of what is going on with the loan once it is in process. Those that have only had to communicate with borrowers in refinance transactions fail to realize how important it is to communicate with the Realtors (the buyers and sellers) and the seller if they are a builder. It is in these simple basics that many fail, which can provide that is your open door.

By Cary Reines


buyers via a credit on their state income tax. This is in addition to the $8,000. “It’s critical that lenders and other mortgage professionals are aware of all opportunities available to homebuyers in their area,” said Millard. “By combining the Georgia and the federal tax credits, this can be a very powerful incentive for potential homebuyers.”

MARCH 2010 O



Educate your sales force


Let’s face it. Lenders aren’t the only ones selling; it’s in large part the Realtors. So do them a favor and keep them current on tax credit updates and other news that could help them encourage potential first-time homebuyers to purchase. Today, we’re in an economic state where now really is the time to buy. Not only has the tax credit provided an incentive, but also interest rates are at an alltime low and home values have plummeted, making this a prime time to own a home. Yes, it’s been rumored that the federal tax credit will be extended again, and some industry experts even believe the tax credit will be available for a very long time until the economy fully recovers. Even if that’s the case, the combination of the tax credit, historically low interest rates and low home values will probably not be available for a very long time, and mortgage professionals need to make certain that potential homebuyers realize this. Let this group know and understand to ensure they’re comfortable with the idea of owning a home. Build relationships with realtors in your community and send emails, newsletters and alerts when news breaks. It’s critical to give this group the tools necessary to sell and to sell well.

Lessons learned … or is it too late? To truly engage potential first-time homebuyers, education is key. For this group, owning a home might be a complete mystery from the lending process all the way down to how much they can

actually afford. This can often be a confusing and cumbersome process that would justify being a permanent resident of an apartment complex. But there are benefits, and these need to be made clear. Additionally, education is critical for mortgage professionals, too. Knowing your target market and their hesitancies of buying a home are important. And obviously knowing everything about the federal tax credit is essential as well as knowing other opportunities available. But according to Millard, it may be too late for some lenders and mortgage professionals to jump on the first-time homebuyer wagon. “We’ve been targeting this market segment for many years,” said Millard. “When others in the industry were turning their noses up at the idea of lending to first-time homebuyers because it wasn’t as profitable, we were. We supported and built relationships with down payment assistance programs because we saw a need to reach firsttime homebuyers. Now, everyone wants to because there is a profit. Unfortunately, we’re hearing from different assistance programs that many mortgage professionals missed the boat by not participating earlier.” But there will always be a demand from first-time homebuyers. And even after April 1, interest rates and home values are likely to still be low for some time; therefore, it would be wise for mortgage professionals to begin building relationships in their local communities now, even after the tax credit is no longer offered, and keep themselves aware of other opportunities available to this market. Cary Reines is executive vice president of Embrace Home Loans, a direct lender for Fannie Mae and Freddie Mac, approved by the Federal Housing Administration (FHA) and the U.S. Department of Veterans Affairs (VA), and an issuer for Ginnie Mae.


Working With First-Time Buyers By Dave Hershman

The market for first-time home buyers enough of a level of trust? People is as hot as it has ever been. With the trust teachers. government offering tax incentives, One characteristic of a teacher is home prices down and interest rates someone who has a great deal of low, homes are more affordable than patience. Expect that questions will be they have affordable in history. Most of asked repeatedly. Expect your clients to the recovery of the real estate market in not always follow through the way you the past year has been would like. All through focused upon the lower these bumps and bruises, end of the market. you will need to exercise Whether you are a real an extraordinary amount estate agent, insurance of patience. You are not agent, tax professional, their parent. You cannot loan officer or other proget angry with them. You fessional, it is hard not to are their teacher. be impacted by this marHelp them prepare. ket. On the contrary, You have heard this a many are stepping up to million times: An ounce focus upon this segment of prevention is worth a of the market. This is not pound of cure. Nowhere a short-term gold rush. is this saying more “How many times Even when the market appropriate than with have transactions normalizes, first-time regard to the home purgone awry because buyers typically comprise chase process. For examclose to one-half of the people went off in the ple, having them spend wrong direction purchase market. time with a loan officer because there was It is not enough to say getting a pre-approval that you are going to not enough of a level will not only give them focus upon this segment of trust? People trust more confidence to purof the market. Those who chase, it will remove a teachers.” are going to service significant amount of renters must understand stress from the process. that these people have special needs. Questions will be answered, issues The home buying experience will be will be resolved and now, the search their most significant financial transac- can occur with a focus on the goal of tion and it is important for the experi- finding the right home instead of two ence to be a positive one instead of a processes that are occurring at once. nightmare. During the process, do not What are these needs? They need assume that the clients understand someone to learn from. That means what you are saying at all times. Do you should not focus upon this mar- not use technical language and jarket unless you are an expert. You gon that may be common to your should anticipate the questions they profession, but foreign to them. For have and be ready for answers. As a example, when you speak about matter of fact, it would be a great rates fluctuating, do not assume that idea to provide them with a sheet of the clients know exactly how that Frequently Asked Questions (FAQs) in affects their payments. They are your area of expertise. There is so even more likely not to know how much information being thrown at rates shifting may affect their paythese people that they are not likely ments after the tax factor is figured to remember what you tell them. into the equation. They might not Don’t limit this information to FAQs. even understand what the mortgage Also include printed information payment is comprised of and other about the process—including dia- areas they will be responsible for, grams and graphs that demonstrate such as home maintenance. the flow. If you are an expert in your indusYou must think of yourself as a try, you must also align yourself with teacher as well as a businessperson. other experts. The first-time buyers When they see you as a teacher will be looking for recommendations. rather than someone trying to sell Going back to the tax issue, they may them something, they are more like- want to speak with a tax professional ly to listen to your advice. How many who may also be able to help them times have transactions gone awry file forms to take advantage of the tax because people went off in the wrong credit if the state and/or federal govdirection because there was not ernment is offering one for which they

qualify. Referrals of other professionals removes more stress from the transaction because once again, they can focus on the purchase instead of shopping for all of the services associated with the transaction. In addition, referring them to other experts also makes it more likely they will experience a smoother transaction. On their own, they are more likely to obtain the wrong information or hook up with service providers who don’t provide the best customer service. Referring experts such as yourself with good service records should be the least you can contribute to the transaction. Of course, these referral relationships should go both ways and these

high level relationships should increase your business in the long run. A strong referral starts you out in a position of trust, which again, is imperative if you are going to lead first-time buyers through a successful and stress-free transaction...? Dave Hershman is a leading author for the mortgage industry with eight books and several hundred articles to his credit. He is also head of OriginationPro Mortgage School and a top industry speaker. Dave’s Certified Mortgage Advisor Program can be found at If you would like to stay ahead of what is happening in the markets, visit for a free trial or e-mail

The Decade of the First-Time Homebuyer By Mike Lesmeister, CRMS

driving those renters who can qualify to homeownership. If indeed, the first-time homebuyer represents the backbone of the housing market for years to come, how will you capitalize on this trend? Here are some simple strategies a mortgage originator can pursue to position themselves as an expert: 1. Familiarize yourself with first-time homebuyer assistance programs in your state and align yourself with lenders that embrace these programs. Many lenders don’t want to invest the time and money understanding and participating in these programs. 2. Introduce yourself to the leaders of the various Community Development Corporations (CDC) in your area. These are the organizations holding the purse strings of the first-time homebuyer and downpayment assistance programs, so they are certainly good people to know. 3. Determine who the real estate agents, builders and developers are that specialize in entry-level housing. If this is where the buyers will be looking, you want them to find you. Perform online searches for agents that work with first-timers and see who is conducting first-time homebuyer seminars in your area. 4. FHA and VA loans are the overwhelming financing choice for these buyers, so become intimately familiar with these programs and the ongoing changes with them. Hosting Realtor and homebuyer seminars that focus on the intricacies of government loans programs will position you as an expert in the field.

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Mike Lesmeister, CRMS, is a licensed mortgage loan originator and managing partner with Home Loan Specialists Inc. based in Houston. He has more than 20 years of financial services experience and is also the founder of Blue Ribbon Agents, a Realtor marketing program for Houston area real estate agents. Mike may be reached by phone at (832) 2861600, or by visiting You can also follow him at or connect with him at


In the ever-changing mortgage markets, the successful mortgage originator has to be nimble. Relying on strategies that worked in the last few years won’t necessary help you survive in a market that is expected to further contract over the next couple of years. Maybe you have more high-end purchase business than you can handle, but if you don’t, seeing yourself as too good for the entry-level buyer may end up costing you more than just a loan or two. O

Wayne Gretzky, the National Hockey Now, many of you will argue that the League Hall of Famer, once told a first-timers who accounted for roughly reporter, “A good hockey player plays 50 percent of all home sales last year where the puck is. A great hockey play- was an anomaly; that this new record er plays where the puck is going to be.” was driven purely by the temporary This philosophy should “fix” of the first-time be no different for a homebuyer tax credit. mortgage loan originator, But before you go back to since we too must adapt your desk and pick up the to the market environphone to buy more refi ment around us. Where and loan modification do you think the puck is leads, let’s take a look at going to be over the some facts. course of the next year (or First, every major con10) and how have you sumer trend in our history positioned yourself to has been driven by our take advantage of it? demographics, most notably, Clearly, much of the the Baby Boomer Generation mortgage market over the which drove the sale and “… the average age past year has been driven of first-time buyers is development of everything by refinancing and firstfrom disposable diapers to 33, we should feel time homebuyer purchasmutual funds. As these es. The refinancing mar- confident that as this Boomers age and move population segment ket has been as dependinto their non-income ages, they will be able as the seasons for earning years, the conthe past couple of sumer effect of Boomerlooking for homes, decades. You could rest related cohorts will begin just as the Baby assured that every few Boomers did, provid- to diminish. Who, if anyyears would bring a rate ing fertile ground for one, will take their place? reduction that would The growth of our populahomeownership drive homeowners to the tion, and the characterisopportunities for a refinancing table as pretics of the consumer, will decade or more.” dictably as geese migratbe driven once again by ing south for the winter. immigration as it was for However, the future economic environ- the early part of the 20th Century. Unlike ment will challenge this cycle and likely many industrialized countries, the U.S. change the dynamics of our business still benefits greatly from immigration. significantly. One thing we will continue While our birth rate is roughly the poputo be able to count on, however, is the lation replacement rate, our population strength of the first-time homebuyer growth rate of one percent is at or above market. the world average, which is significant

for a nation of more than 300 million people. According to the U.S. Census Bureau, fully one-third of our population growth can be attributed to immigration, with Hispanic and Latino Americans representing more than half of that growth. They also had the fastest-growing rate of homeownership of any racial group over the last 10 years. These immigrants will be the homebuyers in the decades to come. Beyond simply the growth of our population, we are also seeing that while our overall population is “graying” due to our aging Baby Boomers, people under age 20 make up more than a quarter of the population. If, as Elliot Eisenberg’s study of First-Time Homebuyers found, the average age of first time buyers is 33, we should feel confident that as this population segment ages, they will be looking for homes, just as the Baby Boomers did, providing fertile ground for homeownership opportunities for a decade or more. Beyond the long-term trends that favor first-timers, there are also tactical reasons to focus at least part of your marketing effort on this client profile because the financial incentives for purchasing a home are considerable. In addition to the first-time homebuyer tax credit, there are also downpayment assistance programs and other first-time homebuyer programs sponsored by state and local governments that can assist buyers in getting into their first home. Far from the seller-funded shell games of the past, these organizations provide valuable resources at a time when virtually every privately-funded concern is tapped out and credit has become tight, to say the least. These programs can provide assistance in amounts of $30,000 or more depending on your area. To be fair, there is certainly bureaucracy associated with downpayment assistance programs, and they are not for everyone, but lenders who hope to penetrate this market should become familiar with what is available in their market. With possible Federal Housing Administration (FHA) changes that include higher downpayments and reduced seller concessions, these programs will take on a great importance. Lastly, as a result of the housing slowdown, home affordability is at its highest level in decades. According to the Center for Economic Policy Research, median home prices averaged 15 times annual rent for decades … until the housing bubble. In some parts of the country, this factor reached 25 times rents and only now are we seeing the averages approach equilibrium again. As we continue to work our way through the glut of housing supply, the monthly debt service on a mortgage will become more economically attractive than comparable rents,


First-Time Homebuyers Need to Realize the Opportunity is Now!

MARCH 2010 O



By Laura Lynn Burke


In the Midwest, first-time homebuyers Realtors and the first-time homebuyers to are spurring on the market, and we find an acceptable property and get an are seeing some “out of the norm” offer accepted. first-time buyers. I am working with a As a Realtor, I am writing multiple lady who has rented a home for 30 offers in hope that at least one of them years, and because of the tax credit, gets accepted. I am working harder for has decided to take the plunge into less of a commission on these properhomeownership and buy her first ties. The lenders should find a way to home. She is excited to be able to make the process a little simpler for choose how she wants to decorate, the first-time homebuyers, especially if have a little vegetable garden and minimal repairs are needed. some flowers of her own. I have spoken to As the time winds numerous other Realtors down to take advantage and they are experiencing of this fabulous credit, similar issues. Melissa Realtors are seeing more Gray of Remax One Team, action. has noted more difficulty Many potential homein dealing with the short buyers are actively pursuing sales. Listings aren’t being homeownership more than entered at what banks are ever before. I have Realtors willing to accept. She has working long hours trying written contracts at full to find them the right price only to find out they home. Some are purchasare countered with a subing two units (duplex). This “Investors are snatch- stantially higher-than-askallows them to spend more ing up these propering price counters. So the than they qualify for with a buyers you showed homes ties so fast making single family home, thus the experience for the to and took the time to becoming a determining write offers for don’t qualfirst-time homebuyfactor if they can find someify for the house you just ers an unfavorable thing in their price range. wrote an offer on. It is In our market, we are one. Sellers can count frustrating to both the on their short sales seeing “the investor” with Realtor and the first-time disposable cash gobbling and foreclosures to be homebuyer, not to menpurchased by these up the lower-end homes tion, the loan officer who that potential first-time has spent the time preinvestors offering buyers are trying to bid qualifying them and offercash.” on. When going up ing a prequalification against the investor, they typically have lender, waiting for contract approval 3.5 percent down working with a only to find out the counter is more than Federal Housing Administration (FHA) they can afford. loan, and often asking for closing cost It is happening in both the suburbs, as assistance. So when going up against a well as in the city. I had another scenario cash offer or an offer with 20 percent on a home in the city. The first-time downpayment, they are not winning the buyer submitted an offer to purchase bid. Banks and sellers are choosing the and she was putting 25 percent down investors first. and was countered at more than $10,000 Gloria Spencer, managing broker of more. When she refused to match the Baker Spencer Realty noted that a major- counteroffer, the Realtor put the listing ity of her first-time homebuyers are pre- back in the MLS as an active listing back approved for a home that is priced right at the original list price, knowing full well for the area, based on other short sales this offer was just declined. and foreclosures. Investors are snatching In speaking to other Realtors, Jennifer up these properties so fast making the Barrett also of the Remax One Team experience for the first-time homebuyers explained to me that this is the way they an unfavorable one. Sellers can count on have to work with the banks on the short their short sales and foreclosures to be sales. She said she has seen this happen purchased by these investors offering time and time again, but the Realtor is cash. It is my understanding that “blanket conditioning the bank for, “What the loans” are becoming a big thing for market will bear, so by sending in the investors making it even harder for the offer and then re-listing it realistically

where it should be the bank maybe more apt to accept the second offer coming in at the same price, because they now know, they have just lost a previous buyer by asking for more.” Jennifer has also stated that she to is seeing many investors trying to lowball the sale of the homes because they are offering cash. She said it is not out of the norm to see a cash offer of $250,000$350,000 come in on a $500,000 listing. The investors are hoping for an aggressive bank or seller willing to accept their cash offer for well below the market rate. Appraisals are starting to come in slightly higher than sales prices. Regardless, it is a great time for the first-time homebuyer to be out there looking to purchase their first home, whether it is a condo, townhouse, cooperative (co-op), single-family home or a twounit this still is the best time. The firsttime buyer’s income tax credit from the IRS may go away. I don’t believe they will extend it again. I am not sure all first-time buyers realize what a fantastic opportunity this is. They can still buy a house with 3.5 percent down, ask for seller-paid closing costs, and receive a non-taxed, no interest, no repayment credit from the IRS for up to $8,000 (certain restrictions apply). That is phenomenal. If they only thought about the time and energy they would have to put forth to save $8,000. In today’s employment climate and stock market fluctuations, savings and profit are down. So taking advantage of this opportunity is an American opportunity not to be brushed off. Let’s review the credits available:

First-time homebuyer credit programs (2008 and 2009) This credit was available from April 9, 2008 through Dec. 31, 2008. This credit was a refundable credit putting hard cash into the hands of the first-time homebuyer. This could also be claimed on your 2008 (as an amended return) or 2009 tax return. This credit must be repaid over a 15-year period. Both programs for 2008 and 2009 are for first-time homebuyers. This credit is only for first-time homebuyers. A firsttime homebuyer is someone who has never owned a home in the past or who has not owned a home in the past three years. Once you have met the first-time homebuyer profile, then the following requirements must also be met: O Home needs to be your primary residence. O Cannot be acquired/purchased from a related person; a related person for this first-time homebuyer tax credit is a spouse, parent, grandparent, children or grandchildren, a






corporation or partnership that is 50 percent-owned by any above relative. Brothers, sisters, aunts, uncles and step relatives are not considered a family member for this credit. Home cannot be acquired as a gift or inheritance. No vacant land. No rental property. Property can be a single family home, multi-family home one- to four-residence, condo, co-op, mobile home, house trailer or boat. Closed on the purchase of qualified principle residence during qualification period and prior to claiming the credit. Meet income limitations, phase out begins at $75,000-$95,000 for single taxpayers or $150,000-$170,000 for married filing jointly. Non-resident aliens are not eligible for this credit. New construction closing date is determined by the later of; either closing date or first date owneroccupied. Proper completion of IRS Form 5405.

For 2008, the maximum credit is $7500, 10 percent of the purchase price with maximum set at $7,500. For example, if you paid $55,000 for a primary residence, then you could get a $5,500 first-time homebuyer tax credit. If you purchased a $150,000 home, you could get the maximum amount of $7,500. Only the 2008 credit must be repaid. It is repaid back to the IRS over a 15-year period, with repayment installments beginning in 2010. The repayment period of 15 years equals $500 per year. This will be an additional tax-owed by the tax payer. Use Form 5405 for this credit. If a single taxpayer should die, then no repayment would be incurred. If married, filing jointly, then the surviving spouse is only responsible to repay their half. If property is transferred due to a divorce, the person transferred to is responsible for making any and all repayments. If the home ceases to be primary residence, then full repayment is due. Full repayment is due the year the home ceased to be the primary home. The full repayment is due the year the home becomes a rental or business use. The qualifying time period for 2008 was between April 9, 2008 and Dec. 31, 2008. Even though this tax credit must be repaid, it is still a great deal. It’s like getting a $7,500 lump sum cash allowance that has to be paid back over 15 years at zero percent interest. You are free to spend the money any way you want, no strings attached, it is yours.

residence on or before April 30, 2010. The transaction for this home must close before June 30, 2010. The taxpayer can still claim 10 percent or $8,000 maximum for married filing jointly, or $4,000 married filing separately, single or head of household. The taxpayer is also allowed to take the credit on either 2009 or 2010. An updated Form 5405 will be used. The tax return cannot be filed electronically as additional documentation is required to be attached. The IRS is requiring a settlement statement, signed HUD be attached to the return. Long-time residents of the same house can now also qualify for a reduced credit of up to $6,500, married filing jointly, or ($3,250 married filing separately) or 10 percent of the purchase price, whichever is less. The long-time resident must have lived in the same house for any five consecutive years during an eight-year period that ends on the date the new home is purchased. The settlement date must be after Nov. 6, 2009 through the April 30, 2010, closing by June 30, 2010.

O If you sell the home to an unrelated person for a gain. O Sell the home to a related party. O Convert the home to a rental or business use. O If the home is disposed of through a foreclosure, repossession or abandonment. O Still own the home, but no longer use as a main home. O Transfer home to ex-spouse due to divorce settlement. O Home was destroyed, condemned or disposed of under condemnation threat.

O Both the first-time homebuyers and long-time residence credit cannot be used for homes that have a purchase price that exceeds $800,000. O The purchaser must be 18 years old, and if married, one must be 18 years old. O A dependent cannot claim either credit.

O Copy of closing HUD-1 Settlement Statement must be signed by (at minimum) the buyers. O Most recent monthly mortgage statement. O Occupancy permit, showing date if new construction. O Cash sale; proof taxpayer paid for it, front and back of cancelled check.


Some common questions related to the first-time homebuyer market


What if one taxpayer owned a home and the other has not? 1. If not married, the tax payer that is eligible may claim the refund. 2. If married, neither tax payer may take the credit.


What about rental agreements with rentto-buy options, to purchase the home? The First-Time Homebuyer Tax Credit does not kick in until the taxpayer actually is transferred to the title; therefore, a rental agreement is not a purchase. No closing takes place.

$7,500 or the $8,000 credit on each separate return. The taxpayer has owned a home in the past three years. Married filing jointly for the FirstTime Homebuyer Tax Credit when one spouse was a prior homeowner. No purchase on rent-to-own agreements. Credit is claimed before the purchase date on IRS Form 5405. Splitting the First-Time Homebuyer Tax Credit and exceeding the maximum allowed. Claiming more than 10 percent of the purchase price.

I hope first-time homebuyers realize what a fabulous offer this is and really take it seriously. Waiting until the summer or until next year is not a smart move, if the credit goes away. The opportunity is now!

As long as the taxpayer’s other property isn’t a primary residence. The taxpayer can own a vacation home or a rental property prior to or during the purchase of their primary residence. The IRS has stated that they are watching the First-Time Homebuyer Credit with caution. They feel it has the potential for a high risk of fraud. Common errors the IRS has seen:

Laura Lynn Burke has been selected from a nationwide search to be featured in Stepping Stones to Success, a highly successful book series. The book features best-selling authors Deepak Chopra (The Power of Purpose), Jack Canfield (Chicken Soup for the Soul), Dr. Denis Waitley (featured in The Secret) and Laura Lynn Burke (Networkolog) who are joined by other well-known authors each offering time-tested strategies for success in frank and intimate interviews. Laura is also the CEO and founder of Footprints International d/b/a The Mortgage Institute, a training and consulting company designed with you in mind. For more information, call (708) 692-6199 or e-mail

O First-Time Homebuyer Tax Credit claimed prior to closing or prior to taking occupancy. O IRS Form 5405 completed incorrectly or incomplete. O Married filing separately taxpayers each incorrectly claim either the

Visit author Laura Lynn Burke’s Web site at where she arms you with the information to “Prepare today for tomorrow’s changes, and you will stay one step ahead of the competition.”

What if the taxpayer owns other property?

A minimum of two of the following items:

If you closed on a primary residence during the correct time frame on 2009, you can claim your credit on either your


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O MARCH 2010

1. Current Driver’s License or other state-issued identification. 2. Recent pay stub (within the last two months showing name and new address). 3. Recent bank statement (within the last two months showing name and new address). 4. Current automobile registration.


If any of the above cause a repayment to be triggered and the taxpayer should die, no repayment is to be made; however, if married, filing jointly and spouse dies, then surviving spouse must repay their half. No repayment is required if you keep the home as your primary home beyond three years from the date of purchase, sell the home to an unrelated person, with no gain, or if the home is transferred to an ex-spouse in a divorce settlement (the repayment requirements are then passed to the exspouse). The new credit, The Worker, Homeownership and Business Assistance Act of 2009 was signed into law Nov. 6, 2009. The new version of the FirstTime Homebuyers Credit was revised with this law. The dates were extended; you must buy or enter into a binding contract to purchase a principle

In the case of an audit the following documentation is required:

2008 tax return you filed in 2009, or your 2009 tax return to be filed in April of 2010. If you didn’t claim it on your 2008 return, but already sent it in, not to worry, the IRS will allow you to do an amended return to get your tax credit refund now versus waiting until April 15, 2010. Seek the advice of a tax professional to determine which way is the best way for you to claim the credit. O

If you closed on a primary home in 2008 and met the qualifications, but didn’t claim the First-Time Homebuyer Tax Credit, there is still time to do so. You would need to file an amended return. The American Recovery and Reinvestment Act of 2009 made the following changes to the First-Time Homebuyers Tax Credit: The maximum amount was increased to $8,000, 10 percent of the purchase price with max set at $8,000 and there is no repayment required. The qualifying dates would be Jan. 1, 2009 through Nov. 30, 2009. They must close on or before Nov. 30, 2009. The credit was raised to 10 percent of the purchase price with a maximum of $8,000. No repayment is required, only a refundable credit. This credit was allowed to be taken on either their 2008 tax returns as an amended return or on their 2009 return, due April 15, 2009. Use From 5405 for this credit. There are some instances that would trigger the 2009 First-Time Homebuyer Tax Credit to be repaid. The repayment would be due with the tax return filed when the event occurs. The following are repayment triggers:



Why Your Attitude Matters A record number of originators continue to exit the mortgage industry. Yet, many originators are experiencing record numbers in their origination volume. What gives? Why are some originators going out of business, while other originators are making record profits? A big part of this difference in success rates is the attitude and perspective of the originators involved. Depending on your attitude and perspective, this is either the best time or the worst time for you to be in the mortgage industry. There is plenty of truth to these words of Henry Ford who once said, “If you think you can, or if you think you can’t, you are right.” In fact, here are two examples that illustrate why your attitude matters, and how you could transform industry chaos into your opportunity to make record profits in 2010.

MARCH 2010 O



#1: Your attitude on negative equity


According to First American Core Logic, approximately 29 percent of all residential properties in the United States are either in or within five percent of a negative equity situation. According to the latest report, which reflected market conditions as of the fourth quarter of 2009, “Negative equity continues to be concentrated in five states: Nevada, which had the highest percentage negative equity with 70 percent of all of its mortgaged properties underwater, followed by Arizona (51 percent), Florida (48 percent), Michigan (39 percent) and California (35 percent).” On the one hand, this seems like very bad news. On the other hand, what about the other 71 percent of homeowners who are not in a negative equity situation? There are even homeowners with equity in the five hardest hit states! In Nevada, 30 percent of all homeowners with a mortgage have more than five percent equity, followed by Arizona (49 percent), Florida (52 percent), Michigan (61 percent) and California (65 percent). In fact, this very same report goes on to state that, “More than 23 million, or 49 percent of all homeowners with a mortgage, have at least 25 per-

cent equity in their home and over 12 million have at least 50 percent equity in their home.” This is consistent with the Federal Reserve Board’s Flow of Funds report that shows that American homeowners have $6.2 trillion of home equity remaining even after the record downturn in housing prices over the last few years. The bottom line here is that you have two choices:

problems. Your mission, should you choose to accept it, is to simply do more business with CPAs and financial advisors, and you will get your share of business from the 23 million homeowners with at least 25 percent equity in their homes. CMPS certification gives you the training, tools, and resources to do just that.

#2: Your attitude on origination opportunities

The Mortgage Bankers Association (MKBA) reported that total origination volume in 2009 was in excess of $2.1 trillion. This represented $1.368 trillion in refinance volume and $740 billion in purchase O Choice #1: Take the volume. The estimated attitude that negatotal origination volume tive equity is a prob- “The choice is yours. this year is expected to lem for you as an The attitude you decline to $1.27 trillion. originator, and use it take about negative This represents $529 bilas an excuse to have equity in your marlion in refinance transaca mediocre year ket will spell the diftions and $745 billion in O Choice #2: Take the ference between sucpurchase transactions. In attitude that negacess and failure.” other words, while purtive equity may be a chase volume is expected problem for your competition, but you are going to to remain stable, refinance volume is take this opportunity to do some expected to decline by a whopping 61 brisk business with just a small percent or $839 trillion! Again, you have two choices here: fraction of the 23 million homeowners who have at least 25 perO Choice #1: Take the attitude that a cent equity in their homes. 61 percent decline in refinance opportunities is an excuse for you to The choice is yours. The attitude you have a mediocre year take about negative equity in your market will spell the difference between O Choice #2: Take the attitude that a 61 percent decline in refinance opportusuccess and failure. nities may be a problem for your comYou might ask, where can I find petition, but you are going to capture the all these homeowners that don’t a bigger piece of the pie when it have a negative equity problem? comes to purchase opportunities in Well, let’s think this through. If I am your marketplace a homeowner who has done a really good job of managing my money and You might ask, how can I capture building wealth over time, where might I be found? Would I use a CPA? more purchase business? Again, let’s What about a financial advisor or think this through together. When people (who have money) are looking to money manager? Bingo! That’s your sales strategy! buy a home, what do they do? Some Find CPAs and financial advisors and people contact their CPAs and financial you will find homeowners that don’t advisors and ask their advice. In fact, 81 have a negative equity problem. I’m percent of investors said they want not saying that all homeowners who advice from their financial advisors on have a CPA or financial advisor don’t more than just investments. Other peohave negative equity problems. What I ple start shopping for a home and conam saying is that all CPAs and financial tact various Realtors in their market for advisors have homeowners that they information. Still, others talk to their know that don’t have negative equity family, friends and co-workers.

All of this points to three strategies that would result in you capturing more purchase business: O Strategy #1: Have a systematic way of reaching CPAs and financial advisors in order to add value to them and their clients who may be in the market to purchase a new home. O Strategy #2: Have a systematic way of adding value to Realtors in your market by solving their problems that they are facing, reaching the buyers in their prospect list, and motivating fence-sitters to take action. O Strategy #3: Have a systematic way of adding value to your own client database and transforming your clients into a referral-generating sales force. Again, Certified Mortgage Planning Specialist (CMPS) certification gives you the training, tools, and resources to implement these three strategies. Let’s face it. Some people get burned out, lose heart, and go personally and financially bankrupt in troubled times. Other people find heroic strength, inspire those around them, and make their personal and financial fortunes.

What kind of person are you? If you are ready to transform unprecedented chaos into unprecedented opportunity and make 2010 your best year ever, it’s time for you to become a Certified Mortgage Planning Specialist! Gibran Nicholas is the founder and chairman of the CMPS Institute, which administers the Certified Mortgage Planning Specialist (CMPS) designation. The CMPS Institute has enrolled more than 5,500 members since its founding in 2005. Gibran is also the chairman of Published Daily, a customizable online magazine, newsletter and marketing service that helps professionals transform their clients and prospects into a referral-generating sales force. He may be reached at (888) 608-9800, ext. 101 or e-mail Visit author Gibran Nicholas’s blog at where he shares his insights on economics, real estate and financial issues, including the current mortgage and credit crises.

(2) The loan applicant’s notification of an intention to proceed with the loan covered by the GFE.

“Intent to Proceed” and the New GFE Disclaimer: The views, opinions and advice expressed in the following piece should not be taken as legal advice and do not reflect the views of National Mortgage Professional Magazine, the National Association of Mortgage Brokers (NAMB), the National Association of Professional Mortgage Women (NAPMW) or the National Credit Reporting Association (NCRA). You should consult your own legal counsel for professional advice.

from the consumer—except for the payment of a credit report fee—in any form whatsoever, such as by a postdated check or an unprocessed credit card impression, or any other kind of payment method which could constitute constructive receipt of payment. Furthermore, and of greater significance, HUD has imposed an additional requirement that affects the collection of fees from a consumer: The loan originator may collect fees beyond the cost of a credit report for origination-related services only after a loan applicant both receives a GFE and indicates an intention to proceed with the loan covered by the GFE. Note the two requirements: (1) The delivery of the GFE to the loan applicant; and

The fourth bullet contains the essential words about the applicant’s intention to proceed with the loan application based on the initial GFE. The verbal form, subtitled “Loan Originator Certification,” is used by loan officers and requires their signed

It is important that a statement on both the applicant(s) Certification and Loan Originator Certification Forms include, but not be limited to, further indicating that the subject form itself is not a loan commitment; the loan originator cannot guaranty acceptance into any loan program, specific loan terms or conditions; and the loan application is subject to credit approval, acceptable property appraisal, title report, and satisfactory completion of conditions stated in commitment or approval letter.

Submit your questions … Do you have a regulatory compliance issue that you’d like to see addressed in the Regulatory Compliance Outlook Column? If so, e-mail your issue or concern to Jonathan Foxx at Jonathan Foxx, former chief compliance officer for two of the country’s top publicly-traded residential mortgage loan originators, is the president and managing director of Lenders Compliance Group, a mortgage risk management firm devoted to providing regulatory compliance advice and counsel to the mortgage industry. He may be contacted at (516) 442-3456 or by e-mail at

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Copyright © 2010 Emigrant Mortgage Company, Incorporated (Emigrant). All rights reserved. Emigrant is a subsidiary of Emigrant Bank, Member FDIC and is an Equal Opportunity Lender. All product names, company names and logotypes are servicemarks or trademarks of Emigrant in the United States and other countries. The information, products and services contained in this advertisement are believed to be correct but may include inaccuracies, typographical errors and/or omissions. Emigrant does not guarantee the accuracy of the data contained herein. This information is intended for mortgage and/or real estate professional use only and should not be distributed or presented to consumers or any other third parties. This is not an offer or guarantee to extend consumer credit. Program guidelines, terms and/or conditions are subject to change by Emigrant without notice. All loans are subject to submission of a complete application, underwriting review and credit and property approval by Emigrant. Not all products and/or programs are available in all states and/or localities and/or for all loan amounts. Certain products / program are offered through third parties. Other restrictions and limitations may apply. New York Licensed Residential Mortgage Lender: Exempt. Emigrant is registered or licensed with the Banking Departments or Divisions in CT, DE, FL, MA, NH, NJ, NY and PA.

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O The initial GFE has been provided within three business days of the application date (business days, excluding Sundays and specified, legal holidays). O The initial GFE was received. O I/We intend to proceed with the loan application based on the initial GFE. O Other than a credit report fee, no fees were charged prior to receiving the GFE.

O The initial GFE was provided to the applicant(s) within three business days of the application date (business days, excluding Sundays and specified, legal holidays). O The applicant(s) received the initial GFE. O The applicant(s) intend to proceed with the loan application based on the initial GFE. O Other than a credit report fee, no fees were charged to the applicant(s) prior to receiving the GFE. O

Since the introduction of the new Good Faith Estimate (GFE), several readers of this column have written to me about their concern regarding the U.S. Department of Housing & Urban Development’s (HUD’s) new requirement for a waiting period to elapse before collecting fees from the consumer, other than the credit report fee. HUD has taken the recently-revised Federal Reserve Board Truth-inLending (TILA) regulations—which limit fees, charged in connection with early disclosures, and defines the timely provision of the disclosures—and incorporates this rule into a way of permitting the borrower to shop for a mortgage loan without paying upfront fees that, in HUD’s view, impede shopping. That TILA rule, simply stated, is that creditors are not permitted to impose a fee on a consumer in connection with the consumer’s application for a mortgage before the consumer has received the TILA disclosure. The Federal Reserve Board makes an exception that allows imposition of a fee that is bona fide and reasonable in amount for obtaining the consumer’s credit history. (73 FR 44522, July 30, 2008) HUD has a public policy goal of creating a “circumstance” where consumers can shop for a mortgage loan without paying significant upfront fees that may impede shopping. Consequently, HUD has, in effect, adopted the Federal Reserve Board’s rule, limiting the charge originators may impose on consumers for delivery of the GFE. Specifically, HUD is limiting the fee for the GFE to the cost of a credit report, and a loan originator is expressly not permitted to charge, as a condition of providing a GFE, any fee for an appraisal, inspection or similar settlement service. To be clear, the loan originator may not accept payment

It is not until both conditions are satisfied that a loan originator may collect fees from a loan applicant for services, other than the cost of obtaining a credit report. Thus, a loan originator must issue a GFE no later than three business days after the loan originator receives an application or information sufficient to complete an application and must be notified of the loan applicant’s intent to proceed before collecting fees, with the exception of the credit report fee. There is a remedy and we have counseled our clients to implement it for their residential mortgage loan applications. Either by written or verbal methods, our clients now use a form, entitled “Intent to Proceed With Mortgage Loan Application.” The written form, subtitled Applicant(s) Certification, contains the following written affirmations, is signed by the loan applicant, and returned with the application package (alternatively, the loan applicant may contact the loan officer to offer verbal affirmations):

attestation, and contains the following verbal affirmations:


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continued from page 29

a personalized, collaborative online workspace called a “Roohm.” The Roohm serves to proactively guide consumers through the mortgage loan application process by showing how the application is progressing and upcoming required steps such as what documents are needed and which need to be signed. Within the Roohm, the applicant can e-sign documents, upload digital documents and collaborate with appropriate mortgage lender employees and thirdparty partners such as title agents, real estate agents, appraisers and notaries. Lenders also have access to their version of the Roohm, where an expanded view provides a snapshot of their application pipeline, current statuses and pending steps. Within a file, the Roohm provides one-click ordering of state specific loan disclosures and closing documents and automatically organizes each one by name for underwriting and investor delivery purposes. “One of the most common consumer complaints about the mortgage process is that they never know what they need to do next, the current status of their loan or if they are on track for completion,” said DiPaolo. “With Roohmz Mortgage Enterprise, the borrower is given a real-time view of their loan status and what steps are required to move it along. This, along with continuous communication with their lender, shortens origination times and increases loyalty with consumers.” Roohmz Mortgage Enterprise is available in a Software as a Service (Saas) model. All software and loan documents are secured in Cogent Road’s SAS 70 compliant data center that undergoes thirdparty security audits each year. The data center is staffed 24/7 and contains biometric scanning, a waterless fire prevention systems, a 100 percent power uptime guaranty and multiple redundancies. For more information, visit

ARES launches Foreclosure Guard tool

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Advanced Real Estate Systems (ARES) has created Foreclosure Guard, a tool for real estate professionals and investors who are working with clients to complete short sales and mortgage loan modifications. “I’ve been working in the default market since 1989 as an investor, real estate broker, consultant, and most recently as a speaker recognized by the National Association of Realtors,” said Phil Tesoriero, co-creator of Foreclosure Guard, “I‘ve taught that the short sale proposal is a necessary and painstaking process. But with Foreclosure Guard I can do higher quality proposals in significantly less time. I am proud to say that with Foreclosure Guard, that process has been reduced down to mere minutes.” Foreclosure Guard allows for a single point-of-entry where the user enters in the necessary details on the default property. It then creates all of the necessary docu-

ments for either a short sale or loan modification proposal. Foreclosure Guard’s high quality documents include many of the most commonly requested bank documents. In addition to that, it produces numerous supporting documents to help defend one’s proposal and move the transaction along to the closing table. Foreclosure Guard is one of the only systems of its type that is compliant with the new U.S. Treasury Guidelines effective April 2010, as well as online short sale platforms used by major lenders. For more information, visit

PriceMyLoan announces interface with FHA TOTAL Mortgage Scorecard

PriceMyLoan (PML) has announced the completion of their interface with the Federal Housing Administration’s (FHA) TOTAL Mortgage Scorecard loan approval platform. Lenders using PriceMyLoan’s automated underwriting and pricing engine now have direct access to FHA eligibility and credit scoring, providing a more efficient and cost-effective method for approving FHA loans. FHA’s Technology Open to Approved Lenders (TOTAL) Mortgage Scorecard is a system developed by the U.S. Department of Housing & Urban Development (HUD) that evaluates borrower credit worthiness for FHA loans. PriceMyLoan’s approval to interface with FHA’s TOTAL Mortgage Scorecard gives lenders a fast and cost-effective way of approving FHA loans. With the interface to FHA’s TOTAL Mortgage Scorecard, PriceMyLoan becomes an all-in-one platform for lenders to originate, underwrite and price FHA loans. All aspects of the approval process—FHA insurance eligibility, investor guideline eligibility and real-time pricing—are handled through a single, Web-based interface. “PriceMyLoan’s ability to interface with HUD for FHA decisions is important both for lenders and borrowers,” said Gigi Campbell, national sales director for PriceMyLoan. “FHA’s decision to allow more vendors like us to interface with TOTAL Mortgage Scorecard makes FHA lending more accessible. Lenders can use our technology to improve the speed and accuracy of their FHA loan decisions, and borrowers benefit from lower costs and faster approvals.” For more information, visit

Nationwide Title Clearing releases ReleaseLINK 2.0

Nationwide Title Clearing (NTC), a document and services provider for the residential mortgage industry, announced that the new version of its ReleaseLINK Web service has been working perfectly for NTC’s lien

release clients since its soft launch on Jan. 4. The company is now making the new Web feature available to all company clients. “This is an important release that adds a lot of functionality to the software and convenience to our customers,” said Jeremy Pomerantz, senior vice president for marketing and sales at NTC. “Our customers now have much more control over their processes and access to better automation. We’re very glad we could enhance our services at no additional cost to our clients.” The newly enhanced Exception Queue feature, which allows NTC lien release clients to view additional types of exception loans mid-process and then allows them to resolve the issue online or flag the loan for various complex curative actions. Clients can also use the new tool to rush an order, place the order on hold or cancel it. “At a time when firms that entered this space to garner other lucrative services are leaving the business, I’m proud that we’re investing in technologies to help our customers be more efficient,” Pomerantz said. “We’ve been in this line of business for almost 20 years. It takes investment and focus on core competencies like this to remain a market leader.” For more information, visit

New GPS for mortgage pricing tool released by Fair Mortgage Collaborative (FMC)

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:

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A new tool, available at, is part of the ongoing campaign by the non-profit Fair Mortgage Collaborative (FMC) to promote “fair and safe mortgages” in the wake of the twin crises in predatory lending and mortgage foreclosures. The new FMC resource, entitled “Fair Mortgage Cost Check” is a tool that will allow homebuyers to determine if mortgage pricing—including interest rates and closing costs—is significantly out of line with the local marketplace. A consumer who has an offer from a mortgage lender can go to the site and use the tool to compare what he or she is being offered with average local rates and quotes. The “Fair Mortgage Cost Check” encourages consumers to go beyond just looking at interest rates to the fees that can be inflated and needlessly cost thousands of extra dollars. “We hope that consumers will use this highly localized information for home mortgage decision making in the same way that they use GPS or MapQuest to plan a trip,” said Howard Banker, executive director of FMC. “Responsible lenders will have nothing to fear from empowering consumers with more and better information. However, this is decidedly bad news for the new generation of predatory lenders who are abusing consumers in the pricing of mortgages, including the interest rate and closing costs. The Fair Mortgage Collaborative was created to help encourage fair and safe mortgage lending practices and also to help restore homebuyer confidence, which had been shredded

by predatory lending abuses and the many horror stories associated with the mortgage foreclosure crisis. We see today’s announcement as a major step in that direction.” The new FMC tool maintains realtime loan pricing with all standard risk-based (agency and government) pricing down to the zip code level. No other tool of this sort provides zip code level specifics and none includes settlement costs, which is an area that is increasingly being exploited by some lenders. FMC’s “Fair Mortgage Cost Check” is not a “prospecting” tool; it respects the privacy of visitors, who are not required to provide personally identifiable information. Further, the FMC resources also completely avoids the bias that is inevitable when a tool of this sort is underwritten or ad-supported on a commercial basis by lenders, who then get clients sent to them. Instead, the “Fair Mortgage Cost Check” resource provides information about FMC-certified lenders to individuals who by using the system to check loan pricing have identified themselves as possibly having excessively high mortgage pricing terms. If they so wish, the homebuyer or homeowner can then contact FMC-certified lending organizations and check for better pricing. However, the Web tool provides no information to any lender or other organization. Launched in June 2009, the Fair Mortgage Collaborative certifies that lenders meeting its rigorous “Fair and Safe” Standards, which ban predatory products and practices. Certified lending organizations—such as BECU (Boeing Employees’ Credit Union), Prime Alliance Solutions, Direct Lending Family, Federation of Appalachian Housing Enterprises, Inc., and Clearinghouse CDFI— now operate from coast to coast. FMC’s current certified lending organizations provides mortgages currently totaling more than a billion dollars per year. That level is expected to double or more in the first year of the program, with further growth anticipated in out years as the demand for mortgages that are certified as being non-predatory takes hold. For more information, visit


Experian Announces New Requirements for Brokers and Net Branch Companies

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Effective April 1, 2010 mortgage brokers and mortgage net branch companies will have new requirements to fulfill before they sign up with a credit reporting agency to access credit reports. All mortgage brokers and net branch companies with access to mortgage credit reports that contain Experian credit data (which is currently all credit reports for mortgage purposes due to the repositories’ own requirements) will need to be re-valuated by their current credit report provider to assure compliance with the new requirements. This is mandatory to continue to receive credit reports. These new rules from Experian are due to the “transitory” nature of the mortgage business and that the recent changes in the industry have raised concerns about the quality of due diligence of some mortgage brokers or net branch operations. The new requirements are intended to mitigate the risks that credit data will end up being used improperly and to make sure that these firms understand the responsibilities associated with credit access. Along with the new requirements, a reminder is also present that misuse can result in the termination of Experian credit data access. The new rules focus on the contracting and physical inspections of all “end users” of the credit reports. The term “end users” is defined in the Fair Credit Reporting Act (FCRA) as the person who accesses, or “uses” the credit report data. In this case, the end user for a mortgage loan is the mortgage originator and the actual mortgage lender that will fund the loan. As in previous policy, all of these firms are in the chain of end users and need proper documentation for disclosure to the consumer. The new rules will specifically address and require independent physical inspections, copies of state issued photo identification cards of certain employees at each different location in which credit reports are accessed and more restricted access to the credit report data. The greatest impact of the new rules

will be on the net branch mortgage companies. These firms will be required to submit separate contracts and independent site inspections and photographs of each different net branch location. These independent site inspections must be conducted by one of the on-site inspection companies that is approved by Experian. There are hard costs associated with these new rules, as well as new contracts for review. The fee for an independent site inspection with photographs average about $75 per location and can exceed $100 per site, pending the location. While this new rule will first impact only mortgage brokers and net branch companies that contract with a new credit reporting agency after April 1, 2010, all mortgage brokers and net branch companies will be subject to the new requirements within a year to continue to have access to credit reports from their current provider. The corporate location for the mortgage broker or net branch company will also need to acknowledge that they are responsible for the access of credit reports from each branch in accordance to the Fair Credit Reporting Act (FCRA) and all other applicable laws and Experian policy. Finally, the corporate office must agree that a violation for non-compliance to the new policy, the FCRA, or any of the other laws by a net branch, is a potential reason for the suspension or termination of credit report access. Watch for further information about these new requirements from the credit reporting agency that you do business with sometime in the near future. Terry W. Clemans is the executive director of the National Credit Reporting Association Inc. (NCRA). He may be reached at (630) 539-1525 or e-mail Visit the National Credit Reporting Association Inc. (NCRA) on the Web at




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Part I: The new pillar of retirement security Part II: Marketing reverse mortgages: It’s all about education Part III: Originating reverse mortgages Part IV: Enhancing freedom: The essence of reverse mortgages Part V: A new frontier in mortgage lending

“When I first began reviewing the contents of this book, I became quite jealous ... Atare Agbamu has set down an impressive amount of information ... And he delivers it in an easy-to-read, simpleto-understand style that will make this book essential reading for all reverse mortgage professionals.” —from the Foreword by Jim Mahoney, Co-Founder and Former Chairman, Financial Freedom Senior Funding Corporation, and former four-term Co-Chair of NRMLA’s Board of Directors

“The stories [Chapter 15: Profiles in Satisfaction] are the best vehicle to increase understanding and acceptance of reverse mortgages among us laypeople. They are very compelling ...” —Therese Cain, Executive Director, Minneapolis/St. Paul Chapter of Little Brothers—Friends of the Elderly

“This book should be required reading for all new loan consultants originating reverse mortgages and is recommended for experienced ones as well. This book provides excellent insight and information on preparing ahead to provide the service our seniors deserve, to ensure a smooth loan process and shorten the time to closing. Most of the problems caused in the processing and closing of reverse mortgages come from inadequate preparation.” —Deanne Opstad, AVP, Senior Underwriter, Generation Mortgage Company


Think Reverse! Table of Contents

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“Atare Agbamu is one of only a handful of people in the reverse mortgage arena who possesses a commanding understanding of the reverse mortgage industry. As an originator, he has hands-on experience educating seniors and their advisors. As author of the “Forward on Reverse” column in The Mortgage Press since 2002, Atare Agbamu communicates nationally with the housing finance community, bringing the unique insights and experience of an ardent reverse mortgage expert into a wider business context. “This book combines Atare’s keen insights and know-how with extensive research to create a first of its kind resource for the reverse mortgage industry. It offers a comprehensive overview of the industry plus detailed information on marketing and originating reverse mortgages. “Present and future reverse mortgage professionals and senior advisors will profit from decades of experience skillfully woven into this book. If you plan to succeed in this industry, this book is the place to start.”

O MARCH 2010


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

Call Dane Basham today 888-544-0034 “If I was in the market to become a branch manager or work as a loan officer, Dane would be on the short list of friends I would contact. His positive attitude is infectious. You cannot have a conversation with Dane and NOT be motivated.” November 28, 2006

MARCH 2010 O



Abacus Mortgage Training and Education .......... ......................................4 & 41 ACC Mortgage .................................................. ....................................12 Calyx Software ................................................ ........................................25 Elliott and Company Appraisers, Inc................... ..............................................34 Emigrant Mortgage Company ............................ ................................39 Entitle Direct Group.......................................... ..................Inside Front Cover First Source Capital Mortgage, Inc. .................... ..........................................16 Franklin First Financial .................................... ............................12 Freedom Mortgage .......................................... ................................Back Cover Frost Mortgage Banking Group .......................... ..............................................20 Gateway Mortgage Group, LLC .......................... ........................................44 Guaranteed Home Mortgage.............................. ....................................19 HTDI Financial ................................................ ........................................31 Inlanta Mortgage.............................................. ................................................15 Mortgage Concepts .......................................... ........................29 Mortgage Now, Inc. .......................................... ........................................23 Mortgage Revolution ........................................ ....................................................40 ..................................43 NAMB.............................................................. ......................................CT1, 29 & 32 NAPMW .......................................................... ..................................................24 Platinum Credit Services, Inc............................. ............5, 7, 9 & 11 Presidents First Mortgage Bankers .................... ......................................21 Quality Mortgage Services ................................ ..................................22 & 37 REMN (Real Estate Mortgage Network)................ ....................................30 Ron Vaimberg International, LTD....................... ................................42 Titan Lists ....................................................................................................................................13 United Northern Mortgage Bankers Ltd. ............ ...... 28 & Inside Back Cover Wall Street List ................................................ ........................................28 Wells Fargo Home Mortgage.............................. ............................................14 Xetus Mortgage Corporation.............................. ....................................................25

MAY 2010 Monday-Thursday, May 3-6 Tennessee Association of Mortgage Professionals 2010 Convention & Trade Show, “Tried, Tested & True” The Hotel Preston 733 Briley Parkway • Nashville For more information, call (615) 302-0001 or visit Thursday-Sunday, May 13-16 National Association of Professional Mortgage Women’s 46th National Education Conference & Annual Meeting Marriott South Austin 4415 South IH-35 Austin, Texas For more information, call (800) 827-3034 or visit Sunday-Wednesday, May 23-26 Mortgage Bankers Association Commercial/Multifamily Servicing and Technology Conference 2010 Sheraton New York Hotel & Towers 811 7th Avenue New York, N.Y. For more information, call (202) 557-2790 or visit Sunday-Wednesday, May 23-26 Mortgage Bankers Association National Secondary Market Conference & Expo 2010 Hilton New York 1335 Avenue of the Americas New York, N.Y. For more information, call (202) 557-2790 or visit JUNE 2010 Thursday-Friday, June 24-25 National Association of Mortgage Brokers 2010 Mid-Year Meeting Phoenix Airport Marriott 1101 North 44th Street • Phoenix, Ariz. For more information, call (703) 342-5900 or visit

AUGUST 2010 Wednesday-Friday, August 18-20 California Association of Mortgage Brokers 2010 Annual Convention & Grand Exposition Hyatt Regency Long Beach 200 South Pine Avenue Long Beach Convention Center 300 East Ocean Boulevard Long Beach, Calif. For more information, call (916) 448-8236 or visit SEPTEMBER 2010 Thursday, September 16 Iowa Association of Mortgage Brokers 2010 Annual Convention White Oak Vineyards 15065 Northeast White Oak Drive Cambridge, Iowa For more information, call (515) 210-4675 or visit OCTOBER 2010 Tuesday-Wednesday, October 19-20 Utah Association of Mortgage Brokers 2010 Annual Expo Location to be determined For more information, call (801) 787-6611 or visit Sunday-Wednesday, October 24-27 Mortgage Bankers Association 97th Annual Convention & Expo Atlanta Georgia Congress Center 285 Andrew Young International Boulevard NW Atlanta For more information, call (800) 793-6222 or visit






Sunday-Wednesday, April 25-28 Mortgage Bankers Association National Technology in Mortgage Banking Conference & Expo Hyatt Regency Chicago 151 East Wackler Drive Chicago For more information, call (800) 793-6222 or visit

JULY 2010 Wednesday-Saturday, July 7-10 Florida Association of Mortgage Professionals 50th Anniversary Annual Convention & Trade Show “From FAMB to FAMP … 50 Golden Years” Rosen Shingle Creek 9939 Universal Boulevard Orlando For more information, call (850) 942-6411 or visit




Andrew Berman, Executive Vice President, The Mortgage Press was a consultant or contractor to Dane at Gateway Mortgage Group LLC

APRIL 2010 Wednesday-Thursday, April 7-8 Maryland Association of Mortgage Brokers 2010 Conference & Exposition “MAMP: A New Game” Baltimore Convention Center 1 West Pratt Street • Baltimore For more information, call (410) 752-6262 or visit


Qualified Candidates with a proven track record will get: • Guaranteed Salary • Full Benefits Package • Bonus based on profitability of branch office. • Assistance with recruiting and training team.




At United Northern, we give you the freedom to originate and succeed with our winning team. About working with United Northern Mortgage Bankers • Ongoing training and consultation with top industry executives • An in-house team to monitor SAFE Act compliance • Access to in-house marketing services

• In-house underwriting

• Pricing support desk to ensure maximum profitability on each • Most loans underwritten in 24 to 48 hours loan, while maintaining a competitive advantage over the street • Multiple valuation tools to research value • Proven leading-edge technology (built on Encompass 360 • In-house valuation desk to help ensure accurate technology) values and responsive turnaround time • Virtual office support • Multiple established warehouse lines • Licensing and regulatory compliance services

Limited room available for established Team Leaders and Licensed Mortgage Originators. Become part of an established 30-year Mortgage Banker with a proven track record and success.

Learn about the great opportunities available by making an appointment with United Northern Mortgage Bankers Executive Vice President Julio de Cardenas by calling 888-600-8808, ext. 1 or by e-mailing

United Northern Mortgage Bankers, Ltd. Corporate NMLS ID# 7230 New York State Banking Dept. - Licensed Mortgage Banker – License #100724 New Jersey Dept. of Banking and Insurance – Mortgage Lender – License #L0046623 Pennsylvania Dept. of Banking – Mortgage Lender – License #20887 Connecticut Dept. of Banking - Mortgage Lender - License #20372 Massachusetts Div. of Banks and Loan Agencies - Mortgage Lender & Mortgage Broker – License #MC5070 North Carolina Commissioner of Banks – Mortgage Lender – License #L140365 South Carolina State Board of Financial Institutions – Supervised Lender – License #S7,461 Florida Dept. of Financial Institutions - Mortgage Lender - License #ML0700679 Senior Security Home Advantage is a lending area of United Northern Mortgage Bankers, Ltd. Direct FHA Endorsed Lender