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Mortgage Bankers Association of Georgia P.O. Box 801 v Macon, GA 31202-0801 Phone #: (478) 743-8612 v Fax #: (478) 743-8278 Web site:

2013-2014 MBAG BOARD OF GOVERNORS Greg Shumate JD Crowe Steve Copeland Toby Foster Kelvin Bolden Frank Lee

President First Vice President Second Vice President Secretary/Treasurer Executive Broker Liaison Immediate Past President

Rick Darlington Jason Hultgren Fowler Williams Tony Boothe

State at-Large State at Large State at Large AMBA President (2013-2014)

Phone #



(770) 279-0222, ext. 225

-------(770) 947-3205 (877) 519-4944 (706) 821-6032

DIRECTORS AT-LARGE (678) 226-2240 (678) 575-6955 (770) 392-1611 (404) 553-2626

DISTRICT I Scott Burchett (2014) David Freas (2013) Paul Schouest (2014)

(770) 354-1396

-------(770) 435-8840

DISTRICT II Bobby Taylor (2014) Walter Moody (2015) Steven Alexander (2015)

(478) 953-4490 (478) 746-2063 (404) 264-7947

DISTRICT III Lisa Lively (2014) Marlene Buhler (2014)

(912) 355-9902 (912) 201-7370

ASSOCIATE MEMBER GOVERNORS Ashley Crosslin (2014) Richard Shafritz (2014) Patti Griffith (2014) Nikki Gilbert (2014)

(972) 801-5772 (404) 255-8183 (229) 938-7425 (678) 298-2100

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STAFF Loretta Salzano Richard Raymer Mo Thrash

Governmental Affairs Governmental Affairs Legislative Liaison

(770) 248-2885 (678) 281-6499 (678) 281-6445

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The Atlanta Chapter of Mortgage Bankers Association of Georgia Inc. (MBAG), Atlanta Mortgage Bankers Association Inc. (AMBA), is proud to foster the American Dream of homeownership by donating money to organizations who support its fellow Atlantans. AMBA recently donated $1,000 to Meals on Wheels, an Atlanta area non-profit whose mission is to support senior independence through meals, shelter, education and community. AMBA also donated $2,500 to Operation Homefront, an organization which assists military veterans obtain the relief, recovery and recognition they so rightfully deserve. The mission of each organization assists individuals to either retain their current home or provide financial assistance and training so they may obtain housing and achieve the American dream of homeownership.

AMBA Donates Money to Meals on Wheels Atlanta and Operation Homefront

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10 Mitigating the Risk of Distributed Denial-ofService Attacks By Jonathan Foxx


28 Lykken on Leadership: Creating a Winning Culture ... Charisma By David Lykken

table o N A T I O N A L

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Five Attributes for Successful Leadership By Phil Hall ......66 The Right Stuff By Tom George ............................................68 Leadership Philosophy Within a Corporate Culture By Phil DeFronzo ....................................................................69 Leadership: The Marketing Visionary By Brent Emler ........70 What Does It Take to be a Successful Visionary in the Mortgage Industry? By Brian Benson ..................................72 Inspirational Leadership By Kerry Elam ..............................73 Take Me to Your Liter By Eric Weinstein ..............................75

48 Legends of Lending: New Penn Financial’s Legendary Status ... Just Good Timing and Luck, or Something More? By David J. Coster

50 NAPMW Celebrates Golden Anniversary in the Emerald City: A Look Back at 50 Years of the NAPMW By Robert Ottone

62 NMP Mortgage Professional of the Month: Vladimir BienAime, President & CEO of Global DMS By David J. Coster

Leadership in the Shadow of Crisis By Laura Lynn Burke ....76 The Five Biggest Hiring Mistakes That You May be Making By Marc Wayshak ....................................................78

FEATURES Consumer Direct Title Insurance By Andrew Liput ................8 The Elite Performer By Andy W. Harris, CRMS ........................8 Are Third-Party-Paid Fees Included in High-Cost Determinations? By Melanie A. Feliciano Esq. ........................16 Time-Wasters: Are You Guilty? By K. Justin Restaino ..........18 A Message From MAA Chairwoman Amy Swaney ........18 NAMB Perspective ..........................................................20 Ramblings of an Old Jewish Mortgage Broker and More! By Eric Weinstein ................................................24 Regulators Target AMCs With Joint Proposed Rule By Vladimir Bien-Aimé ............................................................32 NMP’s Economic Commentary: Historical Perspective on Mortgage Rates By Dave Hershman ................................34

V I S I T Company

Web Site


A Page

AllRegs.............................................................. ..........................................................70 American Financial Resources Inc........................ ..........................................30 & 31 Appraisal Nation, LLC ........................................ ..............................................3 ...................................... ..........................................43 Brokers Compliance Group.................................. ..................................35 ...................................................... ............................................................74 Calyx Software .................................................. ................................................41 Carrington Mortgage Services, LLC ...................... ..............................11 & 86 Continental Home Loans, Inc. ............................ ......................................5 Document Systems, Inc./DocMagic ...................... ........................................................7 Easy Mortgage Apps............................................ ..........................................28 Emerald Creek Capital ........................................ ......................................37 First Guaranty Mortgage Corp. ............................ ..............................................................33 Global DMS........................................................ ......................................................39 .......................................................... ..............................................................77 Lykken On Lending ............................................ ............................................55 MailerLeads, LLC ................................................ ............................Inside Front Cover Matchbox .......................................................... ..................................................76 Maverick Funding Corp....................................... ............................................27 Menlo Park Funding .......................................... ....................................................15 NAPMW ............................................................ ..........................................................49

f contents








Tales From the Closing Table By Andrew Liput ..................36 Having It Your Way With Online Leads By Kelly Booth ..........38 One Million Notaries By William A. Anderson ........................40 Jumbo Headache: The New Era of QM and the Implications for Jumbo Loans By Christopher Chakford & Asim Ali ............................................42 A Few Quick Tips From AllRegs on Vendor Management ..46 The Long & Short: The Business of Short Sales By Pam Marron ....................................................................54 FHA Insider By Jeff Mifsud ..................................................55 GSE Reform: Thinking Outside the Box? (Part III) By Ryan W. Birtel ..................................................................56 Using Credit Bureau Data for Your Marketing ..............58 Life After Refinances: Leaders Need to Step Up By Tom Ward ........................................................................60 Why Your Business Needs Quality Online Reviews By Rene Rodriguez ................................................................64 Bigger Homes, Bigger Sales Problems? By Phil Hall ........80


Taking the Lead: A Beginner’s Guide to Facebook Advertising By Jonathan Blackwell ........................................85

New to Market................................................................12 NMP News Flash: April 2014..........................................14 Heard on the Street ......................................................26 NMP Resource Registry ................................................82 NMP Calendar of Events ................................................87


Web Site


NAWRB ............................................................ ............................................................29 New York Community Bancorp, Inc. .................... ................................................78 NYC Finance Expo .............................................. ..............................................61 Paramount Residential Mortgage Group, Inc. ...... ................................................13, 25 & 81 Path2Buy .......................................................... ........................65 & Inside Back Cover PB Financial Group Corp..................................... ..............................................61 Prime National Credit Repair .............................. ................................................79 Quick Qualifier Software .................................... ................................................47 REMN (Real Estate Mortgage Network) ................ ........................44 & 45 Ridgewood Savings Bank .................................... ..............................................59 Rushmore Loan Management Services LLC............ ....................................................19 Secure Settlements Inc. ...................................... ..........................................47 Simple Nexus .................................................... ..................................................65 Stearns.............................................................. ..................................................17 & 86 TagQuest .......................................................... ........................................................23 Texas Mortgage Roundup.................................... ........................................79 The Bond Exchange............................................ ..........................................57 Titan List & Mailing Services, Inc. ........................ ..........................................................9 United Northern Mortgage Bankers, Ltd. ............ ........................................1 & 88 United Wholesale Mortgage ................................ ........................................73 & Back Cover

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APRIL 2014 Volume 6 • Number 4


Am I a boss or am I a leader?

1220 Wantagh Avenue • Wantagh, NY 11793-2202 Phone: (516) 409-5555 • Fax: (516) 409-4600 Web site:

This month, we take a closer look at the topic of “Leadership.” Although your position as a manager or supervisor gives you the authority to accomplish certain tasks and objectives in your organization, this power does not make you a leader, it simply makes you a boss. Leadership differs in that it makes the followers want to achieve greater goals, rather than simply ordering people around. Therefore, if you are a boss that inspires your team by your position, you are also a leader by influencing team members to do great things. But does the burden of leadership carry with it assumed growth and success for both you and your team members? What makes a person want to follow a leader? People want to be guided by leaders they respect and who have a clear sense of direction. To gain respect, they must be ethical and have a sense of direction achieved by conveying a strong vision of the future. When people are deciding if they respect you as a leader, they do not think about your attributes, rather, they observe what you do so that they can know who you really are. They use this observation to tell if you are an honorable and trusted leader or a self-serving person who misuses authority to appear like a good guy on the outside, but hides their agenda of climbing the corporate ladder. On the other hand, self-serving leaders are not as effective because their employees only obey them, not follow them. They succeed in many areas because they present a good image to their seniors at the expense of their workers. Good leadership is an honorable character trait … one in which you are always selflessly serving your organization. In the eyes of your employees, your leadership is everything you do that impacts the organization’s objectives and their well-being. In 1987, a book titled The Leadership Challenge, authored by James M. Kouzes & Barry Z. Posner, characterized the road to great leadership that is common to successful leaders. This checklist should be the foundation for all leaders to follow as their guide: l Challenge the process: First, find a process that you believe needs to be improved the most. l Inspire a shared vision: Next, share your vision in words that can be understood by your followers. l Enable others to act: Give them the tools and methods to solve the problem. l Model the way: When the process gets tough, get your hands dirty. A boss tells others what to do, while a leader shows that it can be done. l Encourage the heart: Share the glory with your followers’ hearts, while keeping the pains within your own.

STAFF Eric C. Peck Editor-in-Chief (516) 409-5555, ext. 312

Joel M. Berman Publisher - CEO (516) 409-5555, ext. 310

Joey Arendt Art Director (516) 409-5555, ext. 307

Beverly Bolnick National Sales Manager (516) 409-5555, ext. 316

Scott Koondel Operations Manager (516) 409-5555, ext. 324

Robert Peter Ottone Executive Editor (516) 409-5555, ext. 314

David J. Coster Senior Editor

Francine Miller Advertising Coordinator (516) 409-5555, ext. 301

Phil Hall Senior Editor

Brian Coleman Business Development Coordinator (516) 409-5555, ext. 311

ADVERTISING To receive any information regarding advertising rates, deadlines and requirements, please contact National Account Executive Beverly Koondel at (516) 409-5555, ext. 316 or e-mail

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.

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.


publisher’s desk

Statements, articles and opinions in National Mortgage Professional Magazine are the responsibility of the authors alone and do not imply the opinion or endorsement of NMP Media Corp., or the officers or members of National Association of Mortgage Brokers and its State Affiliates (NAMB), National Association of Professional Mortgage Women (NAPMW), National Consumer Reporting Association (NCRA) and/or other state mortgage trade associations. Participation in NAMB, NAPMW, NCRA, and/or other state mortgage trade associations events, activities and/or publications is available on a non-discriminatory basis and does not reflect the endorsement of the product and/or services by NMP Media Corp., NAMB, NAPMW, NCRA, and other state mortgage trade associations. National Mortgage Professional Magazine, NAMB, NAPMW, NCRA, and/or other state mortgage trade associations do not make any misrepresentations or warranties concerning the regulatory and/or compliance aspects of advertisers, products or services and/or the editorial content contained in NMP Media Corp. publications. National Mortgage Professional Magazine and NMP Media Corp. reserve the right to edit, reject and/or postpone the publication of any articles, information or data.

In closing, if you come into work every day and approach your position as a boss and fail to challenge or inspire, then you will achieve what most bosses do—you’ll get the job done. But if you create challenges and inspire your team by showing what can be done and raising the bar with rewards for success, you’ve truly become a leader. At the end of the day, you’ll not only get the job done, but will pave the road for great success for both yourself and your team. Sincerely, Joel M. Berman, Publisher-CEO NMP Media Corp. •

APRIL 2014 n Georgia Mortgage Professional Magazine n

National Mortgage Professional Magazine is published monthly by NMP Media Corp. • Copyright © 2014 NMP Media Corp.


EDITORIAL CONTRIBUTORS Featured Editorial Contributors David J. Coster

David Lykken

Brian Benson

Christopher Chakford

Jeff Mifsud

Pam Marron

Vladimir Bien-Aimé

Phil DeFronzo

K. Justin Restaino

Robert Ottone

Ryan W. Birtel

Kerry Elam

Rene Rodriguez

Amy Swaney

Jonathan Blackwell

Brent Emler

Tom Ward

Kelly Booth

Melanie A. Feliciano Esq.

Marc Wayshak

Laura Lynn Burke

Tom George

Eric Weinstein

Jonathan Foxx

Phil Hall

Andy W. Harris, CRMS

Dave Hershman

Andrew Liput

Editorial Contributors Asim Ali

William A. Anderson


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NAMB The Association of Mortgage Professionals

National Association of Professional Mortgage Women

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

2013-2014 NAPMW National Board of Directors and Administration President Jill Kinsman (206) 344-7827

Vice President (Western Region) Anna Mackovska (323) 331-2222

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

President-Elect Christine Pollard (607) 226-1046

Secretary Cynthia Nutter (360) 449-6408

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

Vice President (Central Region) Kelly Hendricks (314) 398-6840

Treasurer Jeanne Evans, CME (918) 431-0155

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

Vice President (Eastern Region) Kimberly Rozell, CME (607) 229-5008

Parliamentarian Dawn Adams, GML, CMI (607) 329-4622

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

Vice President (Northwestern Region) Ken Perry, CMI, CME (360) 936-3010

Administrator Hulene Works (800) 827-3034

NAMB 2013-2014 Board of Directors OFFICERS

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


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

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

2013-2014 Board of Directors & Staff Maureen Devine President (413) 736-4511

William Bower Resident Screening Committee Liaison (888) 316-4242

Mike Brown Vice President/Treasurer (801) 925-6691, ext. 3777

Judy Ryan Strategic Alliance Committee Chair (410) 747-9551

Daphne Large Ex-Officio (901) 259-5105

Sharon Bieszk Director (262) 542-1700

Nancy Fedich Conference Committee Chair (908) 813-8555, ext. 3010

Mary Campbell Director (701) 239-9977

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

Julie Wink Education Committee Liaison (901) 259-5105

Dean Wangsgard Director (801) 487-8781

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

Tom Conwell Legislative Committee Liaison (800) 445-4922, ext. 1010

Terry Clemans Executive Director (630) 539-1525

Renee Erickson Membership & Elections Chair (866) 932-2715

Jan Gerber Office Manager & Member Services (630) 539-1525


APRIL 2014 n Georgia Mortgage Professional Magazine n

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

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


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Consumer Direct Title Insurance: A Wake Up Call for Title Agents? By Andrew Liput

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A few columns ago, I discussed how the initial negative reaction to vendor management and independent vetting of title agents was short-sighted. That vetting established a form of new credential that agents could use to set themselves apart from the pack. At that time, I commented about how the major underwriters seemed to be growing their direct-managed offices, perhaps to reduce their reliance on contract agents to increase revenue and reduce risk. Vetting, I suggested, helped to level the playing field for small agents by allowing them to market themselves to banks and mortgage lenders as subject to an independent review and oversight from a risk standpoint (separate from the underwriters with whom they have contracts and revenue sharing arrangements). I ended that column saying: “Vetting helps the little guy!” Now, we have word that direct-to-consumer title insurance is developing: Title insurers bypassing agents and selling insurance direct to consumers at a 35 percent average premium discount. This will result in fewer agents and lower commissions as everyone tries to stay competitive. And while it may offer consumers better pricing, there is no guarantee it will offer them betters services, nor does it eliminate vetting and monitoring since lenders will still be held accountable for settlement agent activities. It may, however, leave many small agents looking for a new way to earn a living. Competition can be good, as it breeds innovation, lowers prices and generally leads to better service. Consolidation can be bad, especially if it creates an environment that is volume-driven and revenue-focused, and is not consumer-friendly. Time will tell what consumer-direct title insurance will mean for consumers and the industry. In the meantime, small agents may be able to demonstrate to banks and lenders that they are just as good a risk as large firms in the provision of mortgage settlement services. It’s time to embrace independent vetting; it may just be the advantage you will need to stay competitive in this new era pushing greater consumer choice with respect to title services. Andrew Liput is president and CEO of Secure Settlements Inc., a company he founded after nearly 10 years studying the problem of escrow and closing fraud and the uninsured risks associated with mortgage closing professionals. He may be reached by e-mail at


elite performer Spring Forward By Andy W. Harris, CRMS

It’s that special time of year again when flowers are “Life is too short to spend in blooming, eyes are itching negativity. So I have made a and spring is in the air. The 2014 housing market can certainly use a conscious effort to not be where I don’t want to be.” little sun to get buyers more active and sellers motivated to list and grow inven—Hugh Dillon tory after a slow start to the year. From talking with many colleagues in the industry, February was one of the slowest months many have experienced in recent history. Big regulatory changes in the mortgage sector are now a reality, and we’re in a new era of residential mortgage financing. The expectation by most experts in the housing market is that 2014 will be a slow and steady year of growth for real estate, but not entirely notable. Certainly interest rates and job numbers will play a role in trends this year. I believe we have already seen a large increase in buyer activity and accepted purchase agreements in March and similar trends heading into April. I also believe this trend will continue through the remainder of the year. With the tax season over and the first quarter in rear view, it’s time to “spring forward” into 2014 with determination. Here are a few tips that can assist in having a successful 2014:

Control the six inches between your ears If you have a big head … maybe it’s eight inches. Every day you make a choice to allow positive or negative influences to enter your thoughts. Industry news this year is rarely positive so you must find opportunity behind the message. Compressed margins, higher compliance costs, lower volume, and competition are flooding the mortgage market this year. The Mortgage Bankers Association (MBA) just announced that the average profit reported at $150 per loan is 93 percent lower than one year ago and the lowest on record since they started tracking in 2008. So what does this mean to you? The optimist may think there will be less competition, while the pessimist might believe there will be more competition, but the opportunist is already taking the loan application.

Be prepared and be accessible We’ve recently hit a 19-year low with new mortgage loan applications. With company mergers, layoffs and realities facing the mortgage market, you must be ready and in position to pick up the slack. Do whatever you can to avoid getting mixed up in the recruiting roller coaster, working on reviewing employment offers rather than consumer loan applications. Be organized, branded and ready to hit all aspects of direct and referral marketing toward consumers in your target market. Ensure you have the tools, systems and product to successfully convert and close new loan requests. Ensure all your Web sites and consumer-directed content is upto-date, accurate and working properly.

Vet your expenses As I’ve always said, control your balance sheet in this industry or it will certainly control you. We’re not compensated in a traditional way, but we have traditional billing. Save your money and look ahead. Shave any personal or business expenses that are unnecessary or not producing positive results and only invest time and resources in those activities and areas that directly improve business and quality SPONSORED EDITORIAL

continued on page 65


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Mitigating the Risk of Distributed Denial-of-Service Attacks

By Jonathan Foxx n Tuesday, April 1, 2014, Ellie Mae’s systems were compromised by a Distributed Denial-of-Service (DDoS) attack. Resources known to be affected were all Encompass services, including Encompass Docs Solution, Electronic Document Management (eFolder), Encompass Product and Pricing Service, Encompass Compliance Service and Ellie Mae Network Services.1 Ellie Mae itself proactively published a press release on April 1st, announcing that “Recent outages [that] have made Ellie Mae’s Encompass services unavailable to users.” And further stating that it “has detected unusually high demand for services consistent with an external malicious attack characteristic of a distributed denial of service (DDoS).”2 As reported by Bloomberg at the time, the system failure “prevented some mortgages from closing.” One client complained that “our business is at a standstill.”3 For our own clients, we sought to know how Ellie Mae was challenging this attack and also we monitored its


status page.4 By Wednesday, April 2, Ellie Mae’s focused and deliberative handling of this matter was bringing the overall problem to the stage of being resolved. The completion was met with a statement by Sig Anderman, Ellie Mae’s CEO, with a statement affirming that, “as of 2:15 p.m. PT, we verified that Encompass Home page log-in and load times have returned to normal.”5 As it happens, and quite coincidentally, on April 2 the Federal Financial Institutions Examination Council (FFIEC) issued a statement to notify institutions of “the risks associated with the continued distributed denial of service (DDoS) attacks on public-facing Web sites and the steps institutions are expected to take to address the risks posed by such attacks.”6 I remember meeting a compliance officer of a relatively large bank at his office. He asked me to step around his desk and take a look at his screen. I was astonished to see thousands and thousands of green coded lines scrolling on the screen. I asked him what was going on, and he told me that the bank’s systems were under attack and these were the unending attempts to penetrate their systems. I had never

seen anything like it! Let’s take a brief trip into this area of Internet madness that IT professionals deal with daily. Since 2012, there has been an increasing number of DDoS attacks launched against financial institutions by politically motivated groups, so says FFIEC. However, we also know that DDoS attacks have come from foreign country proxies, mafia-type criminals, and sundry other nefarious individuals and organizations hell bent on disrupting financial institutions. DDoS attacks serve as a diversionary tactic by criminals attempting to commit fraud using stolen customer or bank employee credentials to initiate fraudulent wire or automated clearinghouse transfers. These DDoS attacks have increased in sophistication and intensity, almost to the point that they are commonplace. The attacks cause slow website response times, intermittently prevent customers from accessing institutions’ public websites, and adversely affect back office operations. Thus, many financial institutions are considerably at risk to information security failures and even entire system implosions. Financial institutions of all sizes that experience DDoS attacks may

face a variety of risks, including operational risks and reputation risks. And if the attack is coupled with attempted fraud, a financial institution may also experience fraud losses, as well as liquidity and capital risks. FFIEC suggests that financial institutions should address DDoS readiness as part of ongoing information security and incident response plans. Through FFIEC, such readiness has been proposed by the Board of Governors of the Federal Reserve System (FRS), Federal Deposit Insurance Corporation (FDIC), National Credit Union Administration (NCUA), the Office of the Comptroller of the Currency (OCC), Consumer Financial Protection Bureau (CFPB), and the State Liaison Committee. Many states now mandate adopting an Information Security Plan that contains many elements of readiness, incident response, and certain risk mitigation procedures. There are actions a financial institution’s management would be wise to take to mitigate the risks associated with DDoS attacks, given the company’s size, complexity and risk profile. Any plan to mitigate such risks should include the following elements:7 1. Maintain an ongoing program to

assess information security risk that identifies, prioritizes, and assesses the risk to critical systems, including threats to external websites and online accounts. 2. Monitor Internet traffic to the institution’s Web site to detect attacks. 3. Activate incident response plans and notify service providers, including Internet Service Providers (ISPs), as appropriate, if the institution suspects that a DDoS attack is occurring. Response plans should include appropriate communication strategies with customers concerning the safety of their accounts. 4. Ensure sufficient staffing for the duration of the DDoS attack and consider hiring pre- contracted third-party services, as appropriate, that can assist in managing the Internet-based traffic flow. Identify how the institution’s ISP can assist in responding to and mitigating an attack. 5. Consider sharing information with organizations, such as the Financial Services Information Sharing and Analysis Center8 and law enforcement because attacks can change rapidly and sharing the information can help institutions to identify and mitigate new threats and tactics.

Computer Emergency Readiness Team (US-CERT),16 Understanding Denial-ofService Attacks.17 Jonathan Foxx is president and managing director of Lenders Compliance Group and Brokers Compliance Group, mortgage risk management firms devoted to providing regulatory compliance advice and counsel to the mortgage industry. He may be contacted at (516) 442-3456, by e-mail at, or visit or

Footnotes 1—Update–Encompass Incident Alert (4/3/14): 2—Ellie Mae Reports on System Outages, “Outage Consistent with External Malicious Attack, No 10—Information Security: it-booklets/information-security.aspx. 11—National Cybersecurity and Communications Integration Center (NCCIC): 12—National Institute of Standards and Technology (NIST): 13—Computer Security Incident Handling Guide: 14—Distributed Denial of Service Attacks and Customer Account Fraud: 15—Mitigating Distributed Denial-of-Service RSK2013-01.aspx. 16—United States Computer Emergency Readiness Team (US-CERT): 17—Understanding Denial-of-Service Attacks: /





6. Evaluate any gaps in the institution’s response following attacks and in its ongoing risk assessments, and adjust risk management controls accordingly.




On-Time Closing Promise for FHA loans – 15 Day Clear to Close on qualifying purchase or refinance loans, or your borrower receives a $500 closing cost credit.* Plus, get a prequalification letter and enjoy our early disclosure service. Submit with no AUS. Restrictions apply. FICO minimums to 550 on government programs and expanded FHA guidelines that include manufactured housing and use of non-traditional credit. Expanded Operations Support. Multiple operations centers offering support across all time zones provides outstanding service and fast turn times.

*Carrington will process any qualifying loan from the time a loan file is submitted to underwriting to the time it funds within 15 business days of appraisal receipt or the company will apply a closing cost credit of $500 to the loan once the loan closes. In order to receive the closing cost credit, any delay that causes the loan to close more than 15 days after appraisal receipt must be due to Carrington’s independent processes. If the delay is due to the broker, borrower’s or third party’s action or inaction or any other circumstances outside of Carrington’s control, the closing cost offer will be void. This offer excludes some loan programs, such as VA loans, USDA loans, 203K Loans Short Sales, New Construction loans, loans requiring property repairs, inspection, or re-inspection prior to closing, loans requiring condo approvals and flips. Offer is subject to revision or cancellation at any time. The appraisal received date is recorded in Pipeline Manager for all qualifying loans. Some loans may require additional information and be returned. Exclusions apply; contact your Account Executive for details. © Copyright 2007-2014 Carrington Mortgage Services, LLC headquartered at 1610 E. Saint Andrew Place, Suite B150, Santa Ana, CA 92705. Toll Free (800)561-4567. NMLS ID 2600. Nationwide Mortgage Licensing System (NMLS) Consumer Access Web Site: AZ: Mortgage Banker BK-0910745; 2159 McCulloch Blvd 4, Lake Havasu City, AZ 86403. CA: Licensed by the Department of Business Oversight under the California Residential Mortgage Lending Act, File No. 413 0904. CO: Check the license status of your mortgage loan originator at GA: Georgia Residential Mortgage Licensee 22721. IL: Illinois Residential Mortgage Licensee. MN: This is not an offer to enter into an interest rate lock agreement under Minnesota Law. MO: Residential Mortgage Broker License 09-1746-S. NH: Licensed by the New Hampshire Banking Department. NJ: Licensed by the N.J. Department of Banking and Insurance. NY: Licensed Mortgage Banker—NYS Department of Financial Services. New York Mortgage Banker License B500980/107664. OH: Ohio Mortgage Broker Act Mortgage Banker Exemption MBMB.850208.000 (FHA DE & VA Automatic loans only) OR: Mortgage Lender License ML-4886. PA: Licensed by the Department of Banking. RI: Rhode Island Licensed Lender, Lender License 20112809LL. VA: Licensed by the Virginia State Corporation Commission MC-5382. WA: Consumer Loan License CL-2600. Also licensed in AL, AR, CT, DE, DC, FL, ID, IN, ME, MD, MI, NM, NC, OK, SC, TN, TX, WV and WI. NOTICE: All loans are subject to credit, underwriting, and property approval guidelines. Offered loan products may vary by state. There is no guarantee that all borrowers will qualify. Restrictions may apply. This is not a commitment to lend. Terms, conditions, and programs are subject to change without notice. This information is for mortgage professionals only and is not intended for distribution to consumers. Carrington Mortgage Services is not acting on behalf of or at the direction of HUD/FHA or any office of the federal government. All rights reserved.

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Growing your business with the right partner has never been easier. Get started today with Carrington Mortgage Services.

At Carrington Mortgage Services, we are committed to meeting the financing needs of those who are underserved throughout America. We have loan programs specifically tailored to credit-challenged borrowers, so there’s no need to turn away those borrowers with low FICO scores. We are your government lender of choice with loan programs, service, technology and national support to grow your business today, tomorrow and beyond.


I strongly recommend that the management of a financial institution meet regularly with the chief information officer (CIO) or, in lieu of a CIO, the IT professional who is in charge of maintaining the institution’s systems. Furthermore, every CIO and IT professional should be fully versed in the requirements set forth in FFIEC’s booklets, Information Technology Handbook on Business Continuity Planning9 and Information Security.10 Another resource is the DDoS Quick Guide, dated Jan. 29, 2014, published by the Department of Homeland Security’s National Cybersecurity and Communications Integration Center.11 This Guide provides useful information on attack possibilities and traffic types. It should be shared with an institution’s IT department and the institution’s online banking and Web site service providers, if applicable. Finally, there are the publications such as National Institute of Standards and Technology’s12 “Special Publication 800-61,” the Computer Security Incident Handling Guide,13 which offers specific instructions for IT staff members to help implement incident response plans. Also helpful are the reference materials from the OCC, Distributed Denial of Service Attacks and Customer Account Fraud,14 the NCUA, Mitigating Distributed Denial-ofService Attacks,15 and the “Security Tip (ST04-015)” from the United States

Evidence of Data Breach,” Press Release, April 1, 2014. 3—Bloomberg News, Ellie Mae Technical Breakdown Prevents Mortgages From Closing, Heather Perlberg and Kathleen M. Howley (April 1, 2014): 4—Ellie Mae’s status page (04/03/14): 5—Anderman, Sig, Encompass Incident Update from Ellie Mae, Encompass Incident Update, Ellie Mae, April 1, 2014: 6—Joint Statement, Distributed Denial-of-Service (DDoS) Cyber-Attacks, Risk Mitigation, and Additional Resources, FFIEC, FIL-11-2014: html. 7—Idem. 8—Financial Services Information Sharing and Analysis Center (FS-ISAC): 9—Information Technology Handbook on Business Continuity Planning:

REMN Updates Product Line to Include Fannie Mae’s HomePath Reno

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REMN Wholesale, on the heels of its near record-breaking renovation lending Webinar with National Mortgage Professional Magazine, has just updated its product line to include Fannie Mae HomePath Reno and HomeStyle Reno for investment and rental properties. REMN Wholesale is one of the noted leaders in renovation lending, due in part to their dedicated Renovation Concierge Service, which helps to ensure that everything stays on track for all parties involved during the complicated process. More than 1,300 people registered for REMN Wholesale’s renovation lending Webinar, the second highest registration for any National Mortgage Professional Webinar to date. Led by Carl Markman, director of national sales for REMN Wholesale and featuring Pam Seifert, REMN Wholesale’s director of training, the Webinar explained the intricacies of renovation lending products and how they can be positioned to help turn the outdated properties on the market into dream homes for new buyers. “With lenders continuing to leave the wholesale channel, it’s more important than ever for brokers and bankers to find a wholesale lender they can trust to come through both now and in the long run. What we heard time and time again at our 25th anniversary party during the regional conference in Atlantic City was that it’s not just our product line that sets us apart, it’s also our commitment to customer service,” said Markman. “From same day turn times on new files to continuing to bring on new associates across the country, as well as our extensive capabilities in renovation lending, our customers know we’re here for them regardless of what coast they’re closest to or what products work the best for their market.” The REMN Wholesale team will continue to have a presence at industry events across the country to meet face-toface with colleagues and explain ways that their expanded renovation lending product line can help brokers and bankers grow their business.

A Ginnie Mae issuer with its own servicing portfolio, REMN Wholesale also offers traditional FHA, VA and USDA products, which in conjunction with relaxed FICO requirements and their mini-correspondent program, only enforces the company’s position as one of the top choices for mortgage brokers and bankers.

SSI Introduces Mortgage Settlement Insurance Backed by RFIB and Underwriters at Lloyd’s of London Secure Settlements Inc. (SSI) announced its partnership with RFIB Group Ltd. and certain underwriters at Lloyd’s of London to offer a new product that will insure lenders utilizing SSI’s ClosingGuard service against losses arising at the closing table. Endorsing the effectiveness of SSI’s suite of online risk management products for the vetting of closing agents, the group of insurance professionals is launching the Mortgage Settlement Insurance (MSI) Policy in support of the SSI program. The MSI Policy is designed to protect retail mortgage lenders that utilize SSI’s ClosingGuard closing agent vetting product against losses arising at the closing table from such perils as fraud, theft and documentation error. Coverage extends to warehouse banks and secondary market investors including GSEs, and may be available as well to consumers who are indemnified for losses at the closing table. SSI’s vetting process, developed after several years of consultations in London, Bermuda and New York with insurance industry risk professionals, will be the basis for the MSI Policy. The Lloyd’s syndicates will require a closing agent to have a rating of “low risk” by SSI for the agent to be eligible for coverage. The MSI Policy will be marketed and administered by surplus lines broker Grace Church Intermediaries LLC working in partnership with insurance agents nationwide and the appointed insurance intermediary, Lloyd’s-registered broker RFIB.

“Joining the effective risk mitigation practices of SSI’s closing agent vetting program with the sound underwriting practices of Lloyd’s has created a policy that we envisage providing unparalleled additional protection in an ever-evolving lending environment and giving lenders more certainty as they adapt to new landscapes,” said Jeremy Brasier of RFIB. Unlike other types of coverage or protection, the MSI Policy covers theft of bank funds, borrower funds and seller funds; willful blindness; negligent funds disbursement; failure to follow closing instructions; collateral mistakes; conspiracy; and failure to record. “Based on the effectiveness and success of our ClosingGuard service, the new MSI Policy is able to offer more extensive coverage than other insurance products such as title insurance or closing agent errors and omissions insurance,” SSI CEO and President Andrew Liput said. “This should become something all retail mortgage lenders consider as they evaluate acceptable levels of risk and practice sound lending.” The Federal Bureau of Investigation (FBI) says that lenders filed more than 98,000 suspicious activity reports in 2013 and reported 1,220 indictments of mortgage fraud in 2012. Meanwhile, escrow and closing fraud grew more than 20 percent in the past three years, according to the Financial Crimes Enforcement Network (FinCEN) of the U.S. Department of the Treasury.

United Wholesale Mortgage Launches New Non-QM Jumbo Product United Wholesale Mortgage (UWM) announced that it launched a new program called “Big & Easy Plus,” which is design for non-QM Jumbo loans. “There are a lot of borrowers that currently do not fit into the QM category,” says Mat Ishbia, CEO and president of UWM. “Our Big & Easy Plus program gives UWM clients the flexibility to originate a ‘make sense’ loan for Jumbo bor-

rowers with higher DTIs, helping expand their pipelines.” Program highlights include: A DTI range of 43.01-49.00 percent; loan amounts from $417,001-$1,500,000; 740-plus FICOs; and LTVs as high as 75 percent. UWM’s originators can log into its broker portal, EASE (Easiest Application System Ever), to review the full set of guidelines and parameters. The program can also be accessed by UWM’s recently rolled out mobile application for Apple and Android Devices.

Carrington’s New Offering to Target Underserved Markets Carrington Mortgage Services LLC has announced plans to further sharpen its focus on reaching and serving “underserved” borrowers (typically those in the sub-640 FICO score range)—a sizable market often ignored by today’s lenders. To accelerate and further enhance its ability to give this market the attention it deserves, Carrington has lowered its minimum credit requirement to a FICO score of 550, and expanded its guidelines on a number of FHA, VA and USDA loan programs, extending eligibility to more property types and reducing overlays. In addition to reducing its minimum FICO requirements, Carrington has added to and enhanced a number of its primary product offerings to further complement this strategy and increase its accessibility for the underserved market. “Effectively meeting the needs of clients in the underserved market requires the ability to both originate quality loans and appropriately service them after the fact,” said Carrington Mortgage Services Mortgage Lending Division Executive Vice President Ray Brousseau. “While that combination of capabilities is atypical among most lenders, at Carrington, it’s in our DNA! Both Carrington’s lending platform and specialty servicing business were created to serve this particular market segment. That uniquely positions us as the lender

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EWSFLASH l APRIL 2014 l NMP NEWSFLASH l APRIL 2014 l NMP NEWSFLASH l Loan Profit Dips Nearly $600 Quarterly in Q4

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Independent mortgage banks and mortgage subsidiaries of chartered banks made an average profit of $150 on each loan they originated in the fourth quarter of 2013, down from $743 per loan in the third quarter, the Mortgage Bankers Association (MBA) reported in its Quarterly Mortgage Bankers Performance Report. “Fourth-quarter production profits were at their lowest levels since inception of the Performance Report in 2008, driven by study-high costs in a declining mortgage market,” said Marina Walsh, MBA’s vice president of industry analysis. “One consolation was in mortgage servicing, where financial income improved. However, not all mortgage companies retained mortgage servicing rights or generated margins large enough to offset production losses. It is perhaps not surprising that only 58 percent of participating companies had overall positive pre-tax profits in the quarter.” In basis points, the average production profit (net production income) was nine basis points in the fourth quarter of 2013, compared to 38 basis points in the third quarter. This marks the fifth consecutive quarter that production profits have decreased. Average production volume was $367 million per company in the fourth quarter of 2013, down from $391 million per company in the third quarter. The volume by count per company averaged 1,641 loans in the fourth quarter, down from 1,788 in the third quarter. The purchase share of total originations, by dollar volume, increased to 69 percent in the fourth quarter of 2013, up from 67 percent in the third quarter. For the mortgage industry as whole, MBA estimates the purchase share at 47 percent in the fourth quarter of 2013, down from 49 percent in the third quarter. Secondary marketing income increased to 248 basis points in the

fourth quarter, compared to 244 basis points in the third quarter. Total loan production expenses— commissions, compensation, occupancy, equipment, and other production expenses and corporate allocations— increased to $6,959 per loan in the fourth quarter, up from $6,368 in the third quarter. Fourth quarter 2013 production expenses were the highest recorded in any quarter since the Performance Report was created in the third quarter of 2008. Personnel expenses averaged $4,385 per loan in the fourth quarter, up from $4,130 per loan in the third quarter.

GSEs Execute Three Million-Plus Foreclosure Prevention Actions Since 2008 Fannie Mae and Freddie Mac have completed more than 3.1 million foreclosure prevention actions since the start of conservatorship in 2008. These actions have helped more than 2.5 million borrowers stay in their homes, including nearly 1.6 million who received permanent loan modifications. During 2013, Fannie Mae and Freddie Mac completed nearly 448,000 foreclosure prevention actions, 99,700 of these in the fourth quarter. The majority of these allowed troubled borrowers to save their homes. The results are detailed in the Federal Housing Finance Agency’s fourth quarter 2013 Foreclosure Prevention Report, also known as the Federal Property Manager’s Report. The quarterly report has information on delinquencies in each state and an updated, interactive Borrower Assistance Map for Fannie Mae and Freddie Mac mortgages, with information on delinquencies, foreclosure prevention activities and real estate-owned (REO) properties.

Also noted in the report: l Serious delinquencies dropped seven percent during the quarter t0 the lowest level since the first quarter of 2009, and the seriously delinquent rate fell to 2.4 percent. l Nearly half of all permanent loan modifications in the fourth quarter helped to reduce homeowners’ monthly payments by over 30 percent. l Approximately 31 percent of borrowers who received permanent loan modifications in the fourth quarter had portions of their mortgage balance forborne. l There were more than 20,000 short sales and deeds-in-lieu completed in the fourth quarter, bringing the total to nearly 552,000 since the start of conservatorship. l Completed third-party sales and foreclosure sales continued a downward trend with a 15 percent reduction in the fourth quarter and foreclosure starts were down three percent.

Wells Fargo Named Top Commercial/Multifamily Originator in 2013 According to a set of commercial/multifamily real estate finance league tables prepared by the Mortgage Bankers Association (MBA), Wells Fargo; JP Morgan Chase & Company; Bank of America Merrill Lynch; Eastdil Secured; KeyBank; PNC Real Estate; HFF LP; Meridian Capital Group LLC; CBRE Capital Markets; and Prudential Mortgage Capital Company were the top commercial/multifamily mortgage originators in 2013. The MBA study is the only one of its kind to present a comprehensive set of listings of 117 different com-mercial/multifamily mortgage originators, their 2013 volumes and the different roles they play. The MBA report, Commercial Real

Estate/Multifamily Finance Firms: Annual Origination Volumes, presents origination volumes in more than 140 categories, including by role, by investor group, by property type, by financing structure type, and by the location of the originating office. Nine different companies were at the top of the 11 lists reporting total originations by investor groups: l Wells Fargo topped the list of total origination volumes l JP Morgan Chase & Company and Eastdil Secured were the top originators for commercial mortgagebacked securities (CMBS) l Bank of America Merrill Lynch and PNC Real Estate were the top originators for commercial bank loans l MetLife Real Estate Investors and Prudential Mortgage Capital were the top originators for life insurance companies l Wells Fargo and Walker & Dunlop were the top originators for Fannie Mae l CBRE Capital Markets Inc. and Berkadia were the top originators for Freddie Mac l Red Mortgage Capital LLC and Greystone were the top originators for FHA/Ginnie Mae l TIAA-CREF and JLL were the top originators for pension funds l CBRE Capital Markets and HFF LP were the top originators for credit companies l KeyBank and Eastdil Secured were the top originators for REITS, Mortgage REITS, and Investment Funds l Mesa West Capital LLC and Meridian Capital Group were the top originators for specialty finance l Wells Fargo and HFF LP were the top originators for the “other investors” category By dollar volume, the top five originators for third parties in 2013 were Eastdil Secured; HFF LP; Meridian Capital Group; CBRE Capital Markets; and KeyBank. The top five lenders in 2013 were Wells Fargo, JP Morgan Chase & Company, Bank of America Merrill Lynch, KeyBank and PNC Real Estate.

Plaza Home Mortgage Raises $70,000-Plus for Breast Cancer Research

related financial transactions overseen by a federal financial institution regulatory agency that require appraiser services l Require that appraisals comply with the Uniform Standards of Professional Appraisal Practice l Ensure selection of a competent and independent appraiser l Establish and comply with processes and controls reasonably designed to ensure that appraisals comply with the appraisal independence standards established under the Truthin-Lending Act. The proposed rule would provide participating states 36 months after its effective date to implement the minimum requirements. An AMC that is a

subsidiary of a financial institution and regulated by a federal financial institution regulatory agency is required by section 1124 and the proposed rule to meet the same minimum requirements as other AMCs, although such an AMC is not required to register with a state.

Commercial and Multifamily Bankers Closed $358 Billion-Plus in 2013

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In the Nation! 15

For Branch opportunities call 877.896.8496

Feds to Further Tighten Rules Against AMCs Real Estate Mortgage Network Inc, DBA Menlo Park Funding. 499 Thornall Street 2nd Floor, Edison, NJ 08837. NMLS# 6521

n Georgia Mortgage Professional Magazine n APRIL 2014

Six agencies have issued a proposed rule that would implement minimum requirements for state registration and supervision of appraisal management companies (AMCs). An AMC is an entity that serves as an intermediary between appraisers and lenders and provides appraisal management services. In accordance with section 1124 of Title XI of the Financial Institution Reform, Recovery, and Enforcement Act of 1989, as added by section 1473 of the Dodd-Frank Wall Street Reform and Consumer Protection Act, the minimum requirements in the proposed rule would apply to states that elect to establish an appraiser certifying and

Commercial and multifamily mortga g e b a n k e r s closed $358.5 billion of loans in

Plaza Home Mortgage, Inc. raised $70,345 for Susan G. Komen San Diego during its October month-long campaign to support breast cancer services, support and finding a cure—bringing a twoyear total donation to $169,817. The gift from Plaza Home Mortgage represents the efforts of its associates and customers from 12 regional offices, two divisions and corporate headquarters. “We were so moved and impressed by the outpouring of support for Susan G. Komen among our associates,” said Kevin Parra, CEO and co-founder of Plaza Home Mortgage. “It confirmed to us that our decision to support Susan G. Komen was the right one on so many levels.” For the second year, Plaza Home Mortgage, Inc. pledged to make a donation to Susan G. Komen for every funded mortgage loan originated in the month of October 2013 to recognize Breast Cancer Awareness month. The donation was the result of the extraordinary efforts of Plaza associates and customers nationwide. In addition to the corporate donation, Plaza employees in all 12 regions hosted bake sales, knitted scarves, lifted weights, walked, raced and looked pretty in pink to raise awareness for breast cancer. “Our second annual pledge to Susan G. Komen provided both associates and customers with inspiration to work hard and raise awareness about this important cause,” said James Cutri, EVP of National Production and co-founder of Plaza Home Mortgage. “It was a pleasure to witness this engagement, and we are so appreciative of the effort everyone put forth.”

licensing agency with the authority to register and supervise AMCs. The proposed rule would not compel a state to establish an AMC registration and supervision program, and there is no penalty imposed on a state that does not establish a regulatory structure for AMCs. However, an AMC is barred by section 1124 from providing appraisal management services for federally related transactions in a state that has not established such a regulatory structure. Under the proposed rule, participating states would require that an AMC: l Register in the state and be subject to its supervision l Use only state-certified or licensed appraisers for federally related transactions, such as real estate-

Are Third-Party-Paid Fees Included in High-Cost Determinations? By Melanie A. Feliciano Esq.

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More than a month after the January 2014 implementation date of the Dodd-Frank Act’s rules, many in the industry still have questions about how fees and charges paid by a thirdparty (a third-party is a party other than the lender and the borrower), including the seller, should be treated for the purposes of calculating Section 32 and Qualified Mortgage (QM) total points and fees. In September of 2013, the Consumer Financial Protection Bureau (CFPB) issued a final rule amending, among other things, the Official Staff Interpretation (the “Commentary”) for Section 32. A comment was added for paragraph 1026.32(b)(1) that states, “Under §1026.32(b)(1), points and fees may include charges paid by third parties in addition to charges paid by the consumer. Specifically, charges paid by third parties that fall within the definition of points and fees set forth in §1026.32(b)(1)(i) through (vi) are included in points and fees (emphasis added). In calculating points and fees in connection with a transaction, creditors may rely on written statements from the consumer or third party paying for a charge, including the seller, to determine the sources and purpose of any third-party payment for a charge.” The Commentary then goes on to provide examples of charges that would, or would not, be included in points and fees. Based on the language in the Commentary, then, the answer to the question, “Are seller-paid and other third-party-paid fees included when calculating Section 32 and QM total points and fees?” isn’t a simple “Yes” or “No.” Before deciding whether to include a specific fee or charge paid by a third-party, one must first determine whether or not that fee or charge “falls within the definition of points and fees” found in Section 1026.32(b)(1). The following analysis may help in determining which third-party-paid fees and charges to include or exclude: l Paragraph 1026.32(b)(1)(i) includes in the definition of points and fees “all items included in the finance charge under 1026.4(a) and (b)”, with specific exclusions. Because such charges are not included in the finance charge when paid by a third-party, they should be excluded from the calculation of total points and fees. l 1026.32(b)(1)(ii) through (vi) provide that specific charges that are not part of the finance charge are, nevertheless, included in points and fees. Comment 32(b)(1)-2 states that “charges paid by third parties that fall within the definition of points and fees set forth in 1026.32(b)(1)(i) through (vi) are included in points and fees.” Accordingly, these charges should be included in points and fees when paid by a third-party. Also, please note that the requirement for including fees and charges paid by a third-party or explicitly by the seller in state high cost tests may be different from federal requirements. Melanie A. Feliciano Esq. is DocMagic Inc.’s chief legal officer and currently serves as editor-in-chief of DocMagic’s electronic compliance newsletter, The Compliance Wizard. She received her JD from the Georgetown University Law Center, and is licensed in California and Texas. She may be reached by phone at (800) 649-1362 or e-mail


nmp news flash continued from page 15

2013 according to the Mortgage Bankers Association’s (MBA) 2013 Commercial Real Estate/Multifamily Finance Annual Origination Volume Summation. Commercial bank and savings institutions were the leading investor group for whom loans were originated in 2013, responsible for $100.5 billion of the total. CMBS issuers saw the second highest volume, $79.8 billion, and were followed by life insurance companies and pension funds; Fannie Mae; REITS, mortgage REITS and investment funds; and Freddie Mac. In terms of property types, multifamily properties saw the highest origination volume, $136.9 billion, followed by office buildings, retail properties, hotel/motel, industrial, and healthcare. First liens accounted for 97 percent of the total dollar volume closed. “Improving property markets and a strong appetite among lenders led to a very active year in commercial real estate finance,” said Jamie Woodwell, MBA’s vice president of Commercial Real Estate Research. “Multifamily rental properties drew the most financing, and banks and thrifts were the largest source of commercial real estate lending. Despite the fact there are fewer maturing loans in need of refinancing this year, originations should continue to be buoyed by higher property values, rising property incomes and still low interest rates.” Driven in part by increased coverage, the reported dollar volume of commercial and multifamily mortgages closed in 2013 was 47 percent higher than the volume reported in 2012. Among repeat participants in the survey, the dollar volume of closed loans rose by 22 percent.

DeMarco to Depart the FHFA The Federal Housing Finance Agency (FHFA) today announced that Edward J. DeMarco will depart the agency at the end of April. DeMarco, who served as Acting Director of the Agency from 2009 until January, 2014, submitted a letter confirming his departure date to Federal Housing Finance Agency Director Melvin L. Watt. He has made no announcements about his future plans. “Ed has been an invaluable asset to FHFA and I appreciate his assistance to me during this transitional period,” said Watt. “Throughout his 28 year career as a public servant he has made many important public policy contributions grounded in his strong background in housing finance. I wish him the very best in his future endeavors.” DeMarco joined the Office of Federal Housing Enterprise Oversight

(OFHEO), a predecessor agency to FHFA, in October of 2006 as its Chief Operating Officer and Deputy Director. He was appointed Acting Director of FHFA on August 25, 2009 by President Obama and served in that role until Director Watt was sworn in on January 6, 2014. Previously, DeMarco served in various capacities at the Social Security Administration, U.S. Department of the Treasury and U.S. General Accounting Office.

HUD Requests $46 BillionPlus Budget for 2015 U.S. Housing and Urban Development (HUD) Secretary Shaun Donovan has unveiled HUD’s fiscal year 2015 budget proposal. This year The President’s Budget provides a roadmap for accelerating economic growth, expanding opportunity for all Americans, and ensuring fiscal responsibility. The Budget adheres to the 2015 spending levels agreed to in the Bipartisan Budget Act and shows the choices the President would make at those levels. But it also shows how to build on this progress to realize the nation’s full potential with a fully paid for $56 billion Opportunity, Growth, and Security Initiative, split evenly between defense and nondefense priorities. “This year’s budget presents a unique opportunity for HUD to work within the frame of the Bipartisan Budget agreement while continuing to build ladders of opportunity for all Americans” said Donovan. “This funding will continue to help strengthen and stabilize our nation’s housing market while putting our economy back on the right track and helping those in most need.” HUD’s budget is an essential component of the President’s vision of investing in the things we need to grow our economy, create jobs, increase skills training and improve education – while continuing long term deficit reduction.

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: 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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Time-Wasters: Are You Guilty? By K. Justin Restaino Let us face the facts … time is the currency of life and it is sacred. In sales, you only have so many hours in the day to manage your work and your personal time. Do you make the best of your time or do your bad habits contribute to you accomplishing less than you should in a day? Some days it may feel like workloads are piling up, but the hours are not. The first step to addressing time-wasting is to identify the types of time-wasters. The ASAP’ers Everyone wants to think of themselves as someone that gets things done. For some of us, our own self-worth depends on our vision of being busy. But getting things done ASAP at the sacrifice of another task can be wasteful. For example, have you ever had a customer call with a simple problem—a problem that could be handed off to someone else to take care of? Instead of utilizing resources, we stop what we are doing to help them now. In retrospect, this problem that was somewhat urgent, but trivial, prevents you from making sales calls that would have used your time better in the long run. All too often the “ASAPer” succumbs to the lure of the present task and miss precious opportunities to focus on efforts that will promote growth of business. Each time ASAPer’s grab at any task that comes their way, they compromise their ability to use their time more effectively.

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The Settlers of Status Quo Established sales professionals have habits that put them in a state of comfort. They make good money and don’t feel the need to expend more energy to be more effective because “it works.” While this may work for some, the world is rapidly changing, so the demands for new techniques and habits are changing with it. The “Settlers of Status Quo” are content in their current state of work, which can lead to ineffectiveness. Are you using the same weekly routine to organize your workweek, collecting customer information or determining whom to call on? Contentment with status quo almost always means you’ll never realize your full potential. The I Can Do It Allers It’s a natural tendency for salespeople to work alone. The ability to handle this responsibility is normally a positive trait for a salesperson to have. However, many salespeople insist on doing it all themselves no matter how time-consuming the task may be. The truth is that these tasks can be done better by others in the organization if the salesperson would be willing to solicit the help. Too much time that could otherwise be used on selling is wasted when salespeople insist they can do it all. There are hundreds of time-wasting habits in sales, but these are the most common. No matter which one you identify with more, you can correct them and be on your way to improving your time management efforts throughout the day. K. Justin Restaino is vice president of Titan List & Mailing Services Inc. For more than 14 years, he has led Titan’s Mortgage Division, helping lenders of all capacities grow their businesses utilizing targeted direct mail. With a specialized focus in refinance and purchase markets, Restaino has the insight for proper data and mail application for success. He may be reached by phone at (800) 544-8060, ext. 204 or e-mail


MBA’s Mortgage Action Alliance Build. Ensure. Preserve ... MBA’s 2014 National Advocacy Conference A Message From MAA Chairwoman Amy Swaney n April 9 and 10, the Mortgage Bankers Association (MBA) brought more than 400 industry professionals to Washington, D.C. for their National Advocacy Conference (NAC). Before heading to Capitol Hill to meet with our senators and representatives, NAC attendees spent the first portion of the Conference being briefed on the top issues facing the real estate finance industry. We heard from MBA’s chief lobbyist and policy expert team, FHA Commissioner Carol Galante and Congressman Patrick McHenry of the House Financial Services Committee. These speakers provided with us with a unique insight as to what our industry will be facing in the future, and education on the legislative and regulatory issues we face now. The theme of NAC 2014 was, “Build. Ensure. Preserve.” This theme spoke to our desire to build a sustainable secondary mortgage market, continue ensuring greater access to credit and preserve general stability within the real estate finance industry. After being briefed on these issues, it was time to storm the Hill. Together, we conducted over 225 meetings with members of Congress and their staffs. This was the eighth time I attended the NAC, and every year, I leave the Conference with one resounding thought … while the specific issues that we’re weighing in on change with the year, what doesn’t change is the fact that there will always be something that we, as mortgage industry professionals, need to fight for. If we don’t stand up for our industry, no one will. We are an industry of nearly 300,000, yet only 7,000 of us are speaking up on the issues that affect the way that we do business. If you weren’t able to join us in


Washington, D.C. this April, I encourage you to get involved another way and join the Mortgage Action Alliance (MAA). Joining MAA is the easiest thing you can do to support our industry. We need you to stand up and advocate with us. MAA is the avenue for which every single member of the entire real estate finance industry has the ability and opportunity to actively participate and advocate for the industry that provides for each of us, our families and customers. NAC highlights how important our grassroots efforts are to the bigger advocacy picture. MAA engagement is a key component to MBA’s overall advocacy efforts. At the end of the day, legislators want to hear from their constituents on the issues that matter to them. You are a voter, employer and a constituent. Your voice matters. MBA can do its part in D.C., but Congress needs to hear from you—the mortgage bankers in the hometowns who are their friends, neighbors and constituents. Real estate finance industry professionals who wish to join or learn more about MAA can do so at If you have any questions, please contact MBA’s Assistant Director of Political Affairs Annie Gawkowski by phone at (202) 557-2816 or e-mail Amy Swaney, CMB is governmental relations officer and branch manager with Scottsdale, Ariz.-based Citywide Home Loans. Amy is also chair of the Mortgage Action Alliance (MAA), a voluntary, nonpartisan and free nationwide grassroots lobbying network of real estate finance industry professionals, affiliated with the Mortgage Bankers Association (MBA). Amy may be reached by phone at (480) 822-6262, ext. 2164, e-mail or visit nAlliance.


n Georgia Mortgage Professional Magazine n APRIL 2014

NAMB PERSPECTIVE The President’s Corner: April 2014 t is really an eye-opening experience when you talk with the membership and you can relate firsthand as to what they are going through each and every day in their businesses. It has become very apparent that it is getting harder and harder for brokers to stay in the business of brokering loans. In most cases, if you are a one or two person company, you are going to survive because your costs are really low and you can meet your low threshold of expenses. If you are a company that employs a processor, have four or more originators, and an office space and general overhead to cover, it is tough. At any given month, if an originator or two goes on vacation or the loan volume just slows a bit, you could be very quickly become a company that is struggling. As I am writing this article, we have seen yet another company pull out of the wholesale lending market. The ironic thing is that they are still in the business buying from correspondents and small wholesale mortgage companies. Just like Wells Fargo, Chase, and all of the other major companies that have shut off brokers, they are still buying third-party origination paper from midsized mortgage companies that are doing a great job of buying from brokers. Many a mid-sized mortgage company is doing a great job of buying business to reach their goals. They, in turn, sell them to these companies that no longer buy directly from brokers, but they buy their


APRIL 2014 n Georgia Mortgage Professional Magazine n


paper. Why, because these companies have the ability to buy back a loan if it goes awry for any reason. In common terms, they have bigger pockets and a vested interest. But you still have all of these companies buying from the broker because it is cheaper than having a brick and mortar and retail presence. And each broker is now making the decision to either remain a broker or move to becoming a mini-correspondent or even a true correspondent. Brokers still produce the loans cheaper and better than most creditors. And the other item is that everybody is brokering loans. Banks and credit unions are now in the broker market, and they are increasing their income and do not have the overhead of all of those different departments they need to service and close their own loans. This will continue to increase the brokered loans in the mortgage arena for years to come. As the market continues to evolve through rules mandated by the Consumer Financial Protection Bureau (CFPB), the housing industry is a large force in our economy. It continues to drive a lot of factors that are critical in the housing industry. We are starting to see increases in building permits for homes and new residences all across America. The construction crews are just waiting for the weather to break to start building homes. Here in my home state of Indiana, it seems that people are now in a position to want to move out of the home that they have been in for the past five to seven years and look at moving to a slightly larger

How a Geezer Can Marry a Young Chick By John Councilman, CMC, CRMS You may be wondering what on earth does the title of this story have to do with mortgages? Maybe you think I have lost my mind. You need not worry. This has everything to do with mortgages these days, so I haven’t lost my mind, but I did get your attention, especially if you are an aging fellow or gal. We all need to laugh now and then. AARP is not only giving hotel discounts, they are really working on your benefits. Now, they are helping geezers get a young spouse. Late last year, AARP filed suit in the D.C. Court of Appeals in a case where a home

subject to a Home Equity Conversion Mortgage (HECM) was being foreclosed upon. AARP brought two arguments. First, the not-in-title surviving spouse was being required to pay off the entire indebtedness rather than the 95 percent of fair market value that heirs normally pay. With home values declining, the spouse could pay far more than the home was worth just to stay in the family home. That does seem a little strange, but HUD had changed that by a policy statement in 2008 without public comment. The second part of the argument for relief AARP brought was that the surviving spouse should be able to stay in the house for the rest of her life. In the case of one plaintiff, the house was purchased by the spouse prior to the marriage and

home or one that is in a different school district. I really feel that 2014 and 2015 are going to be really good years for people to buy new homes and refinance. Yes, I said REFINANCE! As I have been saying for over six months, there is still a great refinance market out there if you work to get them. No longer are the phones going to ring off the wall, but if you work your referral network and talk mortgages to all of your friends and family, you can make a good living on those loans. So I say to all of the naysayers … refis are still alive, but it will take a concerted effort to get them. The many options for streamlines and HARP loans are just waiting to be refinanced. I was really thrilled to be on a panel at the Miami NMLS Conference in February. I was on the panel with two reps from the CFPB. We were talking about LO compensation and the three percent rule. It is amazing as to how they think that the originator earns all of their money. They really didn’t have an idea that this was the total compensation and all bills had to be paid from this for the office. I got to meet a lot of regulators and a lot of them are really nice people. I learned a lot just sitting and listening to them talk and reflect on the mortgage business. I am now on the American Association of Residential Mortgage Regulators (AARMR) Industry Panel and I should be able to represent the mortgage broker industry very well. I will update you more on this panel in the next few months. Everyone needs to start making plans to attend the NAMB National Conference in September. We are going to be at the Luxor, and are planning some great activities for all of those who attend. Opportunities for all originators will be getting better in the next two years and

this will be a great time for you to increase you skills and understanding of the mortgage business for years to come. Please mark your calendar for Sept, 1315 for this exciting event. This is going to be a great time. As a matter of fact, if your state has chosen you to be a Delegate for your state at Delegate Council, now is the time to start to make your plans to attend. This is the National meeting where Delegate Council convenes and we have a change in the status of the Board members and install our new NAMB Board. I would like to thank each of you who made the Legislative & Regulatory Conference a success, including all who attended. We only had 14 people not attend who were registered, and with the weather, we still were able to meet, have great conversation, have great speakers and visit with our representatives. And on a completely different note, I would like to give a great big shout out to Frank Garay and Brian Stevens at The National Real Estate Post. It was nice of them to put together a show about NAMB on Capitol Hill and it was very appreciated. Please stay involved with each of your NAMB state affiliates, and I thank all of you who are members of NAMB. We need more members, so if you know someone who is not a member, get them to join today.

was never titled in the spouse’s name. You would think that alone would have negated the surviving spouse’s claims … not so. A closer look at the law that enacted HECMs discloses that not only does the borrower have a right to stay in the house until they die, it appears the same rights accrue to the spouse.

the purchase or ever took title. This is far better than a life-estate. Servicers generally have to advance real estate taxes and insurance when they are not paid. Things could get even more interesting if there was a pre-nuptial giving the house to the kids. Making matters more complicated is the phrase “… events specified in regulations of the Secretary.” Clearly, HUD felt it could issue regulations that solved the problem of younger spouses living in the home for many more years. In Section (h) of the above Section, the Secretary may not make rules retroactive so any corrective fix would not apply to previously endorsed loans. Meanwhile, just recently, HUD tucked its tail between its legs and announced it had rescinded its December 2008 policy. HUD also halted the three foreclosure proceedings against the plaintiffs. Now, more borrowers’ spouses have filed a class action lawsuit with the same claims. It is possible that as many as 25

“The Secretary may not insure a home equity conversion mortgage under this section unless such mortgage provides that the homeowner’s obligation to satisfy the loan obligation is deferred until the homeowner’s death, the sale of the home, or the occurrence of other events specified in regulations of the Secretary. For purposes of this subsection, the term “homeowner” includes the spouse of a homeowner.” 12 USC 1715-z(j). The wording implies Congress didn’t want spouses kicked out of the family home. They are called a “homeowner” even when they never paid a penny into


Donald J. Frommeyer, CRMS NAMB President

NAMB PERSPECTIVE percent of HECMs fall into this scenario. Then, there are all of the previous situations where the spouse had to leave or may have paid the full mortgage balance. Where does all of this end? Perhaps at the Supreme Court, but only if appeals courts disagree. It may be that a HECM will

only be made where both the borrower and spouse are eligible. That would certainly drastically cut the number of HECMs being made. If younger spouses are able to live in the house indefinitely, it would serve to reduce the amount available to the borrower. It appears

NAMB Bylaws Update By Andy W. Harris, CRMS Hello NAMB members! Just a quick and short update that the majority

of the association’s proposed bylaw changes are still pending further discussion and approval. In our recent Delegate Council Meeting, there was a vote to revise and change the proposed verbiage under title definitions we

Leadership in NAMB By Rocke Andrews, CMC, CRMS

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

feel were outdated or no longer applicable. The next course of action is to discuss the proposed NMLS specific membership changes, which will certainly raise more questions and discussion. We hope to conduct conference calls and meetings to increase attendance and participation before live formal voting in the upcoming Delegate Council Meeting(s). Contact me anytime by phone at (877) 496-0431 or e-mail aharris@van- if you have any questions.

always good to keep after them if you are interested in participating. You are not being ignored. The best way to get involved is to show up at the committee meeting at national events and say, “I am here to help the committee.” NAMB national positions are filled by nominations from the membership. Every year, a Call for Nominations goes out and you would be surprised at how few are actually sent. If you are interested, have someone nominate you. The executive office positions are nominated as well, but you must have served as an NAMB director first. For all NAMB positions, it is desirable to hold either the Certified Residential Mortgage Specialist (CRMS) or Certified Mortgage Consultant (CMC) designation. Leaders need to show that they have a commitment to the profession. So what qualities are looked for and needed for these leadership positions? You need to know your profession and

have the desire to better and protect it. The ability to listen to all sides of an issue before making your decision is necessary. The ability to work with others, delegate some jobs, and take on others yourself. Most important is the act of showing up. If you want to be in a position of leadership, you need to lead and showing up to meetings is a requirement. So there is no secret to being a part of NAMB leadership other than wanting to work and keep asking where you can help. If you ask once and do not get a response, keep asking. There is always a need even when there isn’t always time to get back to you.

Andy W. Harris, CRMS is president and owner of Lake Oswego, Ore.-based Vantage Mortgage Group Inc. and 2010-2011 president of the Oregon Association of Mortgage Professionals. He may be reached by phone at (877) 496-0431, e-mail or visit

Rocke Andrews, CMC, CRMS of Lending Arizona LLC in Tucson, Ariz. is vice president of NAMB—The Association of Mortgage Professionals. He may be reached by phone at (520) 886-7283 or email

By Fred Kreger, CMC Ever since the Dodd-Frank Act was introduced, debated and passed, many of us have been decoding the intended and unintended consequences of the new rules. More specifically, we, as an industry, have been dealing with the Qualified Mortgage (QM) and Ability-to-Repay (ATR) Rules. We, as industry advocates, have been playing out how these new rules could and would affect everything from our borrower’s ability to receive a mortgage, to the actual securities themselves being traded in the open market. Everyone is working on

their crystal ball and wondering how this is playing out in front of the media, legislators, regulators, industry stakeholders and the actual mortgage clients themselves. So, why am I pointing out the obvious? Because I know from history that the regulation pendulum will come back down off its apex and we will once again have a “Normal” market at least for a period of time. If the past has taught us anything, it is that the government, both at the state and federal levels, has always had an influence in housing. For the past 100 years, the U.S. government and just about all administrations have supported housing as a social policy objective. Housing finance is continued on page 22

For April 2014 issue of National Mortgage Professional Magazine, visit

n Georgia Mortgage Professional Magazine n APRIL 2014

The Government’s New Mortgage


How do you get into leadership positions with NAMB—The Association of Mortgage Professionals and what qualities are needed? There are many different ways to get into leadership positions at NAMB. Traditionally, the best way to get there is to start at your local NAMB state affiliate’s chapter level. Members join the board or committees at the local chapter level and work their way up to the position of chapter president. Upon reaching this goal, the next step is to become active in the state leadership. Join the statewide board of

directors and help out on various committees. In the past, the state president and president-elect attended NAMB Delegate Council Meetings representing their NAMB state affiliate as their state delegates. There, you would discuss and vote on national concerns, such as dues and attend the Legislative Conference in Washington, D.C. and lobby your elected officials. It is at these meetings that you are encouraged to join a committee and see how the organization works. Committees never have enough help, and are always happy to have more hands on deck. Being a volunteer on a committee takes time away from your regular job. The committee chairs are busy and may not respond to your emails as quickly as you may think. It is

the case only addresses spouses at termination of the HECM. What happens when a borrower remarries after the HECM is taken out? If things remain unchanged, there could be a lot of young women looking for a geezer to marry.


Why Do I Need NAMB? … JOIN TODAY! l NAMB Testifies Before Congress l NAMB Works With the CFPB l NAMB Participates in Multiple Regulatory/CFPB Panels l NAMB Webinars l Full-Time NAMB Lobbyist on Capitol Hill l NAMB Protects Your Business l NAMB Forms Industry Coalitions l NAMB Education

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For detailed information, visit

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

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

the government’s new mortgage continued from page 21

heavily regulated because it is seen as important to the health of individuals and the nation. When the pendulum comes back towards the center, what will we see in the near future? A market, for the most part, that is predictable and mortgages that are once again underwritten in a “Make Sense” fashion. Let us face our industry’s past, when we had loan originators come into our industry to take advantage of money earned, and we as professionals and our clients got hurt. Our clients were persuaded that the home loans that were created by the “Quants” were safe, and then we all found out that the truth was the opposite of what our clients were told. This is why the federal government stepped in and created the Dodd-Frank Act and subsequently, the enactment of the Consumer Financial Protection Bureau (CFPB). We, as industry stakeholders, are navigating the new rules of the land, and it really is not quite different from what investors have created for us over the last three years as it relates to the ability-to-repay. Do we not prove that our clients have sustainable income, verifiable assets and pass anti-fraud reports? This is a resounding YES! We need not be stifled by those particular rules. The QM rule itself will need to be corrected, but in essence, the ATR rule is pretty sound in its thought process. We, as industry professionals that advocate on everyone’s behalf, will make these technical corrections happen in Congress and through the regulators. We always have and always will continue with our industry support. Remember, our representatives were elected to pass laws and govern us as individuals, groups and industries. We need to remind them (legislators) of this as well.

We, as industry professionals, need to also tell them of what we do and how we originate loans for their constituents. This will help shorten our need for so many corrections of new laws and regulations that were placed on us as originators and ultimately our clients that we serve. Now, getting to the title of this article, “The Government’s New Mortgage.” What is left in place for all of us to originate is a sound and safe mortgage that can be portfolio’d or sold in the secondary market. Isn’t this is the goal of today’s mortgages? We do not need to panic because we have financial products to place our clients in for their homes. The market has always found a way to survive regulatory changes and thrive. We as originators need to have the faith and fortitude to move forward and not be stopped in fear. At the end of the day, legislators, regulators, consumer groups, associations and originators really do think that we are advocating on behalf of the client. We just have different opinions on how we protect them. Let us not take our eye off this concept when we talk and tell our story to legislators, the media and to other industry stakeholders. I am happy to be a pathfinder for many of you, and I look forward with optimism to what our industry has to offer in the near future. Fred Kreger, CMC is branch manager at American Family Funding, a Division of American Pacific Mortgage. He is also the immediate past president of the California Association of Mortgage Professionals (CAMP), and currently sits on the Board of Directors and Government Affairs Vice Chairman for NAMB—The Association of Mortgage Professionals. He can be reached by phone at (661) 505-4311 or e-mail

A Message From NAMB Treasurer

Lending Integrity Requirements

l l l l l l l l l

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

By Andy W. Harris, CRMS We have continued to improve our financial position within NAMB and the organization of financial data. Our events continue to reflect a strong profit and monthly financial statements continue to be in the black, while spending is carefully tracked to confirm the benefits to the association and membership. The outlook is very positive financially with NAMB on slow growth and comfortable reserves, and we will continue to keep the associa-

tion’s financial records organized and accountable data. We look forward to the continued growth in membership by adding value and more successful events in the future assisting with our bottom line. Andy W. Harris, CRMS is president and owner of Lake Oswego, Ore.-based Vantage Mortgage Group Inc. and 2010-2011 president of the Oregon Association of Mortgage Professionals. He may be reached by phone at (877) 496-0431, e-mail or visit


n Georgia Mortgage Professional Magazine n APRIL 2014

s g a b l n Rm i of an Old Jewish Mortgage Broker and More! By Eric Weinstein uly 2014 will be my “Bar Mitzvah Anniversary” of an article I wrote in The Mortgage Press called “This Is My Story and I Am Sticking to It.” In the Jewish tradition, the age of 13 is where a Jewish male child (Bat Mitzvah, in the case of a female) is said to have become all grown up and an official member of the congregation. It is fitting because in this piece, I admit to myself that I have finally grown up. The original July 2001 article, commonly known as the “Where’s Betsy” story, was a huge success when it was published. Carteret Mortgage Corporation was just starting to be well known, and I basically explained how it happened and why. Back then, it was unheard of for a mortgage company to allow their loan officers to work from home, much less, pay them an override on employees they hired. Being the first, I had my share of regulators trying to put me out of business because, as they would say, “It’s just not done.” Now, federal banks are doing it. If you are a loan officer working out of your house, taking care of your kids as you make a lot of money, you can thank me. At the time the article was written in 2001, we were the 18th largest mortgage broker in the country. In 2003, we were the largest. If you want a copy of the original article or were in elementary school when it was originally published, just e-mail me at I recently turned 55. I have been feeling kind of tired lately. I noticed a lot of advertising on TV for something called “Low T.” That sounded just like me. I figured I would check it out. So, I went to the doctor who took a blood test, but he said that wasn’t it. With a straight face he tells me, “You are old, overweight, smoke, have diabetes and don’t exercise. What do you expect?” At that point, I gave up being young and embraced being old.


All that us old people have left are just memories … Back when I first started in the mortgage industry in 1991, there were something called pagers. The cellphone was not yet invented. If you had an emergency in the office, they would put in their phone number then * (which translated into a dash on the pager) and then 911. If I was just a question it would be *411. Without cellphones, I put my office, fax, car phone, pager and home number on my cards. It got

whose native language was not English. Exasperated, I finally said, “No you don’t understand, the government wants 3.5 percent equity in the deal.” He said loudly, “No … I don’t want the government to own any part of my house.” Aside from the language barrier, I love helping people from third world countries buying their first home. In many countries, like Peru for example, there is no FHA, Fannie Mae or Freddie Mac. If you want a home, it is 50 percent down, or purchase it in cash. Only RICH people can buy real estate. Coming from a country like that, for a normal person to buy a house one day is just a far off miracle.

Once I took a loan application for a young lady in her home. She met me at the door in a bikini. She said she was sunbathing in the back and forgot all about the appointment. I asked if she wanted me to come back or wait for her to get dressed. She said, “That’s okay.” We did the entire application with her in a bikini. When I got home, my wife asked how the application went. “The usual,” I replied. That is where I got the uncouth line, “Scantily clad women get HIGH interest at our company.” Once, I got a call from someone who wanted to meet me at a beauty salon. As I drove there, I soon realized that this was in a very scary part of town.

When I walked in, I noticed all the “hairdressers” were wearing lingerie and sexy outfits. Everyone wanted to do a loan. Unfortunate, all their downpayments and earnings were in cash. This was the exception that disproved my uncouth line. When I first started my company, I had to hire some clerical help. I found this one lady who was perfect for the job. But her last name was the same as a bully who tormented me to no end when I was in school. I asked her if there was any relation. “That’s my husband,” she said with a long face. I am sure she figured that was it, but I hired continued on page 46


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a bit crowded. Thank goodness there were no NMLS numbers back then. I was just starting out and my home number was my main business line. With four small kids, the rule to them was “NEVER pick up the home phone.” It might be a real estate agent calling for daddy. One day when I was in the bathroom, my 11-year-old daughter thought she would help. I heard the phone ring, she picked it up, there was a pause and then I hear her say, “No, I am sorry, my father is in the bathroom taking a poo-poo right now.” I raced out of the bathroom with toilet paper trailing, but not in time. I never did find out who called. After that episode, as she got older, I told her that if she had to answer the phone, to at least get a return phone number. One day, she came up to me proud and told me someone had called for me. She didn’t get a name, but she took a number. On the paper was the message “234 Cottage.” I never did find out who that was or what it meant either. When I first got into the mortgage industry, I read several books on how to sell. I think my favorite was Zig Ziglar’s Secrets of Closing the Sale. One thing he teaches when selling is to just say your spiel and then shut up. The next person who talks loses. Very true. I remember one of my first applications just starting out was for a drill salesman who worked at Mobil. We were at the kitchen table with his wife. I gave my spiel and then just shut up. And then, he didn’t speak. And I didn’t speak. We must have sat their two minutes saying nothing. Finally, his wife spoke up and said, “Will somebody please say something.” I said, “Zig Ziglar?” and he said “Secrets of Closing the Sale?” And then we both laughed. I never did get that deal. One of my most embarrassing memories in the mortgage industry was a Peruvian couple buying their first home. I took the loan application at their small apartment kitchen table. I had a very upset stomach that day. I politely excused myself, calmly walked to their bathroom, and had a horrible case of diarrhea. When I was done, I went to the mirror, arranged myself and coolly walked out of the bathroom like nothing had happen. Just then, I spied their 16-year-old daughter. She must have been in her bedroom. Unsuspectingly, she walks into the bathroom, goes in, and then immediately walks out. To her credit, she never said anything and just went back into her bedroom. The great thing about this job is that you meet all sorts of people. From CEOs of major companies, to immigrants right off the boat, I have seen them all. One elderly “high-class lady” complained to her referring real estate agent that I did not wear a tie to the application (and that remains the ONLY time anyone ever complained about that). Another time, I was trying to explain about the 3.5 percent downpayment required on an FHA loan to someone

heard street ON THE

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

StreetLinks Partners With InHouse Connexions for Automated Appraisal Reviews

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StreetLinks Lender Solutions has announced a partnership with InHouse Connexions, which will make automated appraisal review technologies, StreetLinks QX and ValueComp, available to lenders operating within the Connexions platform. The integration between the StreetLinks and Connexions platforms will give eligible lenders the ability to order a StreetLinks QX or ValueComp report for any appraisal order placed through Connexions. “It’s always exciting to partner with organizations that share the same commitment to quality,” said Kelly Taylor, SVP of StreetLinks. “After completing over 1,000,000 StreetLinks QX reviews internally, we’ve seen a 40 percent reduction in collateral underwriting times. We’re pleased to be able to extend these efficiencies to InHouse clients.” StreetLinks QX is a comprehensive collateral review solution that combines sophisticated automated review utilities with a highly focused manual underwriting process. Recently named one of the 100 most innovative technology solutions in the mortgage industry, StreetLinks QX accelerates the appraisal review process and increases clarity, quality and accuracy in appraisal reports. ValueComp is an industry-leading automated review model and comparable validation tool specifically engineered to technologically replicate a local review appraiser’s execution. ValueComp analyzes each appraisal against StreetLinks, Equifax, MLS and public data sources to validate the comparables used to derive the original value and recommend the most appropriate comps for the subject property.

DocMagic Expresses Concern Over Platform Reliability DocMagic Inc. has announced that more of its customers are expressing concern with the reliability of their mission critical technology systems and asking for more information about system uptime from their vendors. DocMagic has maintained these stats for its own company for many years and publishes its status, including uptime, processing time and bandwidth, in real-time, on its Web site. “We’ve always shared our uptime record with our customers because it’s just so important,” said Dominic Iannitti, CEO of DocMagic. “With uptime typically between 99.99 and 99.999 percent, our clients never have to worry about having access to the documents and compliance tools they need to close their loans. This type of uptime is not only possible it’s critical to the fundamentals of mortgage lending. Companies that take customer service seriously do a good job of achieving the 99.99 percent + uptime metric” Iannitti pointed out that guaranteeing reliability involves investment in infrastructure, superior staff training, constant monitoring and an unwavering commitment to the task. But he adds than any lender who has suffered through a service interruption knows exactly how important it is. At DocMagic, uptime means that all company services are functional and available to its customers. It’s not just a measure of when the servers are turned on. To test this, DocMagic developed a proprietary system that sends complete transaction requests of all types through the system continuously 24 hours a day, seven days a week. As these requests flow through the system, company techni-

cians monitor over 1000 data points that impact service delivery and quality. Any potential problems are identified and addressed before they can escalate and pose a risk to the entire system. Measuring uptime with any method that does not include the actual delivery of the company’s service, results in a meaningless metric that will not contribute to high service availability standards. Customers should require service providers to provide uptime information. “Reliability is one of the most important qualities in a service provider,” Iannitti said. “DocMagic is fully transparent when it comes to service delivery uptime. Achieving the high level of uptime that we do is a major accomplishment, of which our entire organization is very proud. It means we are absolutely the best at what we do and we prove it to our clients every day.”

Global DMS and CoreLogic Form Appraisal Compliance Partnership

Aime, president and CEO of Global DMS. “Our integration with the CoreLogic ChannelMaster ELS enables loans to move through the appraisal process unencumbered by manual touch points between systems.” eTrac Enterprise allows ChannelMaster ELS users to more efficiently manage multiple Appraisal Management Companies (AMCs) or an in-house appraisal panel depending on their internal processes and preferences. This ability to manage a diverse set of vendors and augment coverage with the eTrac Network provides users with enhanced flexibility in the appraisal process. This best-of-breed solution allows lenders to easily order appraisals and then assign, track, and deliver loans to the GSEs via the Uniform Collateral Data Portal (UCDP), helping them avoid costly buy backs. eTrac is specifically engineered to help lenders maintain their appraisal compliance with state and federal laws, the Consumer Financial Protection Bureau (CFPB) and the Dodd-Frank Act.

Industry Compliance Vendors Unite to Form Global DMS has announced that its Compliance Collaborative eTrac Enterprise platform has been integrated with the CoreLogic ChannelMaster Enterprise Lending Solution (ELS). The integration allows ChannelMaster users to compliantly order and process appraisals, attain real-time status updates, establish transparency and control, and return completed appraisal files directly from the ChannelMaster platform. By automating previously manual processes, this integration can help lenders increase their efficiencies while decreasing their costs. “It’s important for mortgage lenders to make their processes as seamless as possible to prevent users from having to jump to another application in order to complete tasks,” says Vladimir Bien-

Jonathan Foxx, president and managing director of Lenders Compliance Group Inc. (LCG), has announced the formation of a new consultancy firm, Compliance Collaborative Inc. (CCI). The firm is the first of its kind, combining top mortgage industry compliance vendors, professionals and compliance support providers across the U.S. With the combined expertise and reach of member organizations, the firm will provide cost-effective compliance services to any enterprise involved in residential mortgage loan origination and servicing and will offer its services on a retained basis or as part continued on page 32


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Creating a Winning Culture: Charisma By David Lykken e quietly approaches the lectern as the crowd of thousands looks on to hear the business mogul pass on his advice to the next generation.



He is wearing a robe to match the others with whom he shares a stage, but they are used to seeing him in blue jeans. He begins to speak. “Thank you,” he says as the applause quiets down. He then smiles and says, “I’m honored to be with you today for your commencement from one of the

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finest universities in the world.” More applause ensues. “Truth be told,” he continues, “I never graduated college … and this is the closest I’ve ever gotten to a college graduation.” A few people from the audience laugh at the irony and the speaker continues. “Today,” he says, “I want to tell you three stories from my life. That’s it. No big deal. Just three stories.” Thus begins the now famous 2005 Stanford University commencement address delivered by the late Steve Jobs. In each of his presentations, Jobs knew how to draw people in. He connected with people in a magical way. And, despite his well-known temperamental managerial style, he knew how to get people to follow him and listen to what he had to say. Steve Jobs was engaging. Steve Jobs was electrifying. Steve Jobs had charisma. This might sound fairly obvious, but I’m going to say it anyway: To become a great leader, you’ve first got to actually get people to follow you. After you’ve attracted people to your cause, then you will also need other traits like “character” if you actually want to keep them. But, as for developing that initial attraction, there is one trait great leaders must have that outshines all the rest: Charisma. You cannot attract people to you if you aren’t “attractive.” Now, what do I mean by attractive? Of course, I’m not talking about being physically attractive. You don’t have to be the stereotypical “tall, dark and handsome” to have charisma. I’m talking about being relationally attractive. Charisma is all about having a magnetic energy that draws people in and makes them want to hear what you have to say. It’s about connecting with people on an emotional level in such a way that they are compelled to like you.

For the past several months, I have been focusing on what causes some organizations to succeed and others to fail. Through years of observing and working with hundreds of companies, I’ve determined that it almost always boils down to organizational culture. Winning cultures embody values that prime them for success. And the leaders of those organizations hold certain characteristics that make that success inevitable. Lately, I have focused on character, conviction and confidence. All of these traits are vital for keeping the right people in your organization and maintaining the appropriate atmosphere for success. But before you can “keep and maintain,” you’ve got to attract and build. That is, you’ve got to attract the right people to begin with and build a culture around the values those people share. Nothing can help a leader build a team quite like a healthy dose of charisma. “That’s all fine and good,” you may be saying, “But what if I’m not a charismatic person?” After all, isn’t charisma something you’re born with? Isn’t it one of those personality traits that you either have or don’t have? Well, I’m sure some people are more naturally charismatic than others. But as much as it’s a “trait” that you are born with, I also think it’s a “skill” you can develop. If that’s the case, how can you become a more charismatic leader? Well, I’m sure there are dozens of books out there to teach you how to become more empathetic, energetic, and emotionally intelligent. Find all the advice you can, because there’s a lot of good stuff out there. But I’m going to give you five tips that you might not find filling those pages. Here are five counterintuitive ways to become a more charismatic leader.

David Lykken is president of mortgage strategies and managing partner with Mortgage Banking Solutions. He has more than 35 years of industry experience and has garnered a national reputation, and 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) 977-9900, ext. 10, or e-mail or


n Georgia Mortgage Professional Magazine n APRIL 2014

when you’re out walking your dog. Listen to people tell their stories and respond with some stories from your own life. As you do this more and more, you will see yourself becoming increasingly more magnetic. You’ll become more fluent and articulate when you talk to people, and you’ll intuitively grasp how to better draw them into conversations. The more comfortable you are having conversations with people, the more receptive they will be to you. One final piece of advice I have for you if you are looking to boost your charisma has to do with recruiting. When you are building your team, hire first and foremost for passion. You know the old adage: “hire for attitude; train for skill.” I think that’s true. It’s a lot easier to train a skill than it is to change an attitude. Hire people who approach their work with a passion, and that passion will rub off on you. So, when you’re hiring people, give more weight to the question, “why do you want to work for us?” than you do to the question, “why are you the best person for the job?” Because the people who most want to work for you, regardless of their skill levels, probably are the best people for the job. Those are the people who will be willing to learn and grow with you. When you have people working with you who are passionate about what they do, that excitement will transfer to you—making you more charismatic. Then, your charisma will reflect back to your team—creating an endless cycle of passionate engagement. And that’s how you become unstoppable. Charisma isn’t about hype. It’s not just being a dynamic speaker. If you watch how Steve Jobs presented, he actually did so in a quiet way. And yet people still latched onto every word. You don’t have to be loud and boisterous. You don’t even have to be an extrovert. That’s not how I see charisma. Charisma is about connecting with people on an emotional level. It’s about identifying with people in such a way that they gravitate toward you. It’s about being likable. And, as a leader, that skill is absolutely crucial for building the team you need to create a winning culture.

First, stay physically healthy. I’m not a doctor, but I think there is some basic, well-established medical advice that I would be comfortable giving. Drink more water and less soda. Exercise as often as you can. Get more sleep. Try to only eat salts, sugars, and fats in moderation. Few people would disagree with these best practices. And yet, what happens when you wake up in the morning to go for a jog? You hit snooze. And what happens when you get home late from work? You grab fast food or order a pizza. It’s quick, it’s convenient, and it satisfies a craving. So, what does being healthy have to do with being more charismatic? Well, more and more research is showing a substantial mind-body connection. If you treat your body badly, it shows up in your mood. You can become grumpy, groggy, anti-social, and just not very fun to be around. Take care of yourself, on the other hand, and you have more energy to interact with people—more passion with which to inspire them. Another thing you can do to improve your charisma is make the decision to shun cynicism. When you consuming content—whether it’s on TV, in a book, or on the Internet— avoid the negative. Go on a media diet, if you must. You’ll find that the world keeps spinning, even if you stop watching the news for a bit. Also, avoid conversations with negative people. There is always going to be someone wanting to tell you how horrible things are and how hopeless your situation is. Ignore them. They are charisma-killers. They suck your passion and leave you hollow. Cynicism is a charisma thief—don’t let it into your house. A third thing you might want to try is probably something you haven’t heard before in a professional context: consume more stories. By “stories,” I mean reading fiction, watching movies, and even listening to narrative-based songs. How can this help your charisma? Simple. Being charismatic is all about relating better to other people. There is no better way to get a clarity on how people think and feel than to experience stories about them. The more you are in tune with what it means to be human, the more people will be attracted to you. Give it a shot. Read memoirs about how people have overcome obstacles in their lives and professions. Watch movies that have complex characters and intricate social interactions. Listen to people tell you stories about their lives. You’ll be surprised by how much it feeds your charisma. On that note, another thing you’ll want to do in order to become more charismatic is have more conversations. Talk to everyone. Start conversations with people while you’re waiting in line at the coffee shop, when you’re flying on a plane, and


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CALL US T TODAY ODAY FOR DETAILS DETAILS AND STA STA Lend er N MLS 2 8 2 6 . A FR Wh o l e s a l e , a div d iv ision of Ame rica n Fina ncia l R Re e source s, I nc. is a nation natio nw wide ide who les a ale le r es identia identiall m or o r tga tgage ge i s a G N M A i s s u e r, r, F N M A s e l l e r / s e r v i c e r, r, F H A M o r t g a g e e , U S D A N a t i o n a l L e n d e r a n d V A A u t o m a t i c L e n d e r. r. T h i s i n f o r m a t i o n i s

professionals. This is not an adv ve e r t i s e m e n t e x t e n d e d t o t h e c o n s u m e rr,, a s d e f i n e d b y S e c t i o n 2 2 6 . 2 o f R Re egulation Z. - Equal Hous sii n lo cated a att 9 Sy S y l va van W Way, a y, P Par a r s i p p a ny, n y, N NJJ 0 7 0 5 4 . 0 3 2 8 1 4 A AB B


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Regulators Target AMCs With Joint Proposed Rule By Vladimir Bien-Aimé A new regulation is slated to be implemented on appraisal management companies (AMCs) would be subject if, in a given year, it oversees an appraiser panel of more than 15 state-certified or statelicensed appraisers in a state, or 25 or more state-certified or statelicensed appraisers in two or more states. The 2010 Dodd-Frank Act required bank regulators to establish minimum standards for state-led regulation of AMCs hired by lenders to manage the appraisal process. As a result, most states have already passed or proposed model legislation regarding AMC registration and regulation. On March 24, 2014, six federal agencies issued a joint Proposed Rule regarding AMCs as required by Section 1473 of the DoddFrank Act. Those six federal agencies include: 1. Consumer Financial Protection Bureau (CFPB) 2. Office of the Comptroller of the Currency (OCC) 3. Board of Governors of the Federal Reserve System 4. Federal Deposit Insurance Corporation (FDIC) 5. Federal Housing Finance Agency (FHFA) 6. National Credit Union Administration (NCUA)

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Under the Proposed Rule states would need to require that an AMC: l Register with or obtain a license from the state and be subject to regulatory supervision l Contract with or employ only state-certified or licensed appraisers for federallyrelated transactions l Require that appraisals comply with the Uniform Standards of Professional Appraisal Practice (USPAP) l Establish policies and procedures to ensure compliance with the appraisal independence standards established under the Truth-in-Lending Act (TILA) l l l l

Additionally, the state regulator for the AMCs would need to have the power to: Approve or deny AMC registration applications Examine AMC books and records Verify that AMC appraisers hold valid state certifications or licenses Conduct investigations, discipline AMCs for non-compliance with related laws, and report violations to the Appraisal Subcommittee (ASC).

The potential consequences of this legislation are significant. States already impose fees for AMC registration, and with additional requirements, the cost to AMCs could rise considerably. Some states charge as high as $5,000 annually for AMC registration, plus bonding fees. The annual expense for national AMCs could escalate to hundreds of thousands of dollars. Furthermore, the ASC retains the ability to impose additional registration fees at a later date. Many smaller AMCs will struggle with this barrier to entry, reducing competition and forcing the consumer to pay more for appraisal reports. Moreover, the Proposed Rule does not require states to adopt a regulatory structure for AMC registration and supervision, and it should. There is no penalty imposed on a state that doesn’t establish a regulatory structure for AMCs. Consequently, if a state doesn’t adopt it, the AMC is barred by Section 1124 from providing services for federally-related transactions in that state. This Proposed Rule could literally close the doors of many AMCs nationally over the next 36 months. Additionally, an AMC that is a subsidiary of a financial institution and regulated by a federal financial institution regulatory agency is not required to register with a state. The intent is clearly designed to reduce redundancy, but ultimately, creates an unfair competitive advantage for lender-owned AMCs, resulting in higher cost for consumers. I strongly encourage you to voice your opinion on this matter. To comment, log on to and search for “Docket ID OCC-2014-0002.” More information can be found online at: Vladimir Bien-Aimé is president and chief executive officer of Global DMS. Since cofounding Global DMS in 1999, Bien-Aime’ has grown the company to capture a leading share of the appraisal management segment, with a client base of over 20,000 unique users and a 100 percent retention rate among lender clients. He may be reached by phone at (877) 866-2747 or visit


heard on the street continued from page 26

of packaged services plans. “CCI was formed because of a need in the mortgage industry to provide all firms in the lending and servicing space with affordable, yet independent, compliance services that avoid the appearance of a lack of arm’s length separation between oversight and operations functions that is all too common in the industry currently,” said Foxx, founder of CCI. “Through its strategic alliances, CCI will deliver comprehensive counsel and guidance that will meet the exacting expectations of regulators.” CCI will operate from its offices in Long Beach, N.Y.

HomeBridge Expands Pennsylvania Presence HomeBridge Financial Services Inc. continues to grow its presence in Pennsylvania with a new office and team of associates in Lancaster City, Penn. Centrally located, HomeBridge’s new Lancaster branch is the firm’s sixth office in the state, joining its existing Allentown, Chambersburg, Harrisburg, Leighton and York branches. In business for 25 years, HomeBridge currently has more than 70 offices across the country, each one dedicated to making the home mortgage process easier for home buyers, home owners and housing industry professionals. HomeBridge has thrived during the last 25 years through its diverse line of mortgage solutions, in addition to its unwavering commitment to quality and customer service in helping people secure the right mortgage to fit their individual needs. In addition, HomeBridge is a leader in renovation lending, which makes it an ideal fit for helping Lancaster area home buyers, especially first time buyers, turn the existing properties on the market locally into the homes of their dreams. “HomeBridge and Lancaster are a perfect fit. HomeBridge has all of the resources and mortgage options that someone would expect from a national bank, but combined with the small town dedication to customer service you want to experience when making what is most likely the largest financial transaction of your life,” commented Steven Siegel, HomeBridge’s manager for the Central Pennsylvania region. “In addition, HomeBridge is a multi-state lender, so we’re able to help people with their mortgage needs regardless of if they’re buying locally or looking to move outside of Pennsylvania.”

addition of three regional sales executives and nearly 30 account executives from the wholesale division of Green Tree Servicing LLC, a lender based in Fort Washington, Pa. Green Tree recently closed their wholesale mortgage division, which provided an opportunity for New Penn to hire these individuals. With the addition of the new team members, New Penn’s wholesale division now counts close to 70 sales executives across the country. “We saw an opportunity to bolster our wholesale sales team and went after it,” said Brian Simon of New Penn Financial. “These individuals will nicely complement our existing team and enable us to significantly expand our market share while offering our products to more customers across the country.” The three regional sales executives oversee large territories across the United States. Wells Constantine will cover Northern California and the Northwest; Zeenat Zonte, Southern California and the Southwest; and Tony Petronio, the Northeast and Midwest. The 28 additional account executives are based across the country. Licensed in 47 states, New Penn has forged a national industry presence built on competitive rates, exceptional customer service, and healthy lending practices. Since its founding in 2008, New Penn has funded over $14 billion in loans and provided mortgages for borrowers on more than 60,000 loans.

360 Mortgage to Implement ReverseVision’s RV Exchange

ReverseVision Inc. has announced that 360 Mortgage Group LLC has joined the growing ranks of reverse mortgage lenders and will be using ReverseVision’s reverse loan origination system, RV Exchange. A reverse lending operation had been in the plans for 360 Mortgage Group for some time, and their timeline accelerated when the firm was able to hire Mike Suits—an expert with these loan programs. With its launch this month, 360 Mortgage Group will be originating reverse mortgages via retail, wholesale and correspondent channels. “We are a traditional mortgage company that leverages technology as its competitive edge,” said Mark Greco, president and founder of 360 Mortgage Group. “We are eager to apply our traditional know-how in the reverse space and we are confident that the ReverseVision end-to-end platform will New Penn Bolsters Its support our success.” Wholesale Sales Force RV Exchange was designed from the New Penn F i n a n c i a l ground up to manage reverse mortgage LLC has an- origination from the first point of connounced it has nearly doubled the size of its wholesale sales force with the continued on page 54













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HUD-9208 (8--83 83 3) (HB4115.1)


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M A G A Z I N E ’ S

economic commentary

HISTORICAL PERSPECTIVE ON MORTGAGE RATES By Dave Hershman ates on home loans have risen during the past year. Yet, every time this trend is reported in the media, we also hear that rates are historically low. So, what does “historically low” actually mean? Does it mean that we are a little under the norm, or way under for the historic average? The chart below covers rates on 30-year mortgages over the past 4045 years. You can see that rates have actually averaged slightly over eight percent over that time period. The high was over 18 percent and the low was in the “mid-threes” during 2013. In 2014, rates have averaged in the “mid-fours” and have only been at that level one other time within the past 40-plus years. If you look at the past decade, even during tough economic times and in the middle of the financial crisis, rates averaged above five percent. For the average prospective homeowner, these extraordinarily low rates can be promising, but still leaves us to answer the following questions: How affordable is homeownership today as compared to renting, and how does owning today compare to owning in the past? In early 2014, Trulia reported in their Rent vs. Buy Report that ownership of homes costs less than renting in

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all 100 large U.S. metros. And according to Trulia, a 30-year fixed rate of 4.5 percent, buying is 38 percent cheaper than renting nationally. Almost 40 percent cheaper to own? That is a very significant statistic. Secondly, how do the numbers compare if we continue to go back in time? According to the National Association of Realtors (NAR), in 1990, the average home price was a little less than half what it is today and rates were slightly over eight percent, which is near the historical average. So let’s say you get a $300,000 home loan today at 4.5 percent versus a $150,000 loan in

1990 at eight percent. What would the difference in payments be? The $150,000 loan would be approximately $1,100 and the $300,000 loan would be approximately $1,520. That is an increase of approximately 38 percent in 25 years. The U.S. Census Bureau reports average rents rose close to 60 percent during the same time period. Basically, mortgage payments should have more than doubled in the past 25 years. Instead, they increased 38 percent. Keep in mind, when comparing a mortgage payment to rent, rent is not tax deductible and the majority of a mortgage payment (interest and

taxes) are deductible. Plus part of the mortgage payment goes to pay down the principal of the loan which is a forced payment plan, while the entire rent payment goes to the landlord. Consider this … if you took out a 30-year loan in 1990, the loan would be almost paid off today. Finally, a mortgage payment will rise more slowly than rent in the future because the entire rent payment is subject to inflation while only small portion of the mortgage payment (tax and insurance) is subject to inflation. The cost of a mortgage may be reduced by 40 percent or more when taxes and principal reduction are taken into consideration and the discount rises to over 50 percent over time due to inflation. The conclusion? Today or 40 years ago, homeownership has been a bargain when compared to renting. And today’s “historically low” interest rates makes homeownership even more of a bargain for prospective homeowners. Dave Hershman is a top author in the mortgage industry with seven books published. He is also the founder of the OriginationPro Marketing System, and currently the director of branch support for McLean Mortgage. He may be reached by e-mail at or visit


n Georgia Mortgage Professional Magazine n APRIL 2014

TALES FROM THE CLOSING TABLE By Andrew Liput The mortgage closing transaction is the single largest financial transaction in the lives of most consumers, and it is also the riskiest stage of the mortgage process for lenders. While the vast majority of lawyers and notaries and title agents are experienced, ethical and diligent professionals, for a few the role of closing agent is too tempting a lure for selfish criminal intent. This monthly column addresses the good, the bad and the ugly …

Top industry news … Goodbye Fannie and Freddie? Rep. Maxine Waters, the ranking Democrat on the House Financial Services Committee introduced another proposal for housing finance reform on March 27. The proposed Housing Opportunities Move the Economy (HOME) Forward Act, calls for the wind-down of Fannie Mae and Freddie Mac within five years, replacing Fannie and Freddie with a cooperative of lenders that would be the sole issuer of mortgage-backed securities (MBS) guaranteed by the government—thus creating an entity akin to a mortgage “utility.” Waters’ proposal also calls for the establishment of a Mortgage Insurance Fund that would provide a federal guarantee on eligible mortgages and would establish yet another new regulator, the National Mortgage Finance Administration (NMFA), to oversee the Federal Home Loan Banks and the new cooperative.

You can’t make this stuff up! l A Florida bank executive was sentenced to three years in prison for fraudulently obtaining more than $2 million worth of mortgages on two properties in North Carolina. He did so by utilizing straw purchasers to purchase the properties, and by lying about the income and assets of these straw purchasers on loan applications. Both of these properties ultimately went into foreclosure, resulting in a loss of more than $1 million to the lenders. Trust me, he told them, I read all of Carlton Sheets’ books. l An Oklahoma real estate agent was charged with inducing lenders to fund mortgages based on inflated real estate prices and misrepresenting the distribution of excessive loan proceeds to him as commissions and bonuses. So that’s why the RE commission was listed at 20 percent on the HUD! l A North Carolina attorney was sentenced to 18 months in prison for orchestrating a mortgage fraud scheme that cost lenders nearly $3 million. The lawyer falsified HUD-1 statements to misrepresent the amount of money the borrower brought to closing, the payment of closing funds to secondary, prior lien holders, and the amount of money actually paid to her for legal fees. Those law school student loans can be a real pain to pay off! l Another attorney, this one out of Missouri, was arrested on an indictment charging him with falsifying documents to obtain a line of credit on a home which did not belong to him, as well as aggravated identity theft. According to the indictment, the lawyer submitted a false loan application in order to obtain a $100,000 line of credit. The individual home owner was unaware of the application. He needed the money for St. Louis Cardinals season tickets (it’s not cheap folks).

Regulatory updates … The Consumer Financial Protection Bureau (CFPB) ordered a Connecticut mortgage lender to pay $83,000 as a penalty for illegally splitting real estate settlement fees. This after the company “self-reported” the violation in a surprising mea culpa. “These types of illegal payments can harm consumers by driving up the costs of mortgage settlements,” said CFPB Director Richard Cordray in a released statement. “The Bureau will use its enforcement authority to ensure that these types of practices are halted. continued on page 65



WITH ONLINE LEADS By Kelly Booth hen I came across Fannie Mae’s recent study that revealed a significant increase in the number of online mortgage shoppers, I almost immediately thought of fast food. Not because I was hungry—but because what’s happening in the mortgage industry today is akin to what happened in the fast food industry in the 1970s and 1980s. Believe it or not, there was a time when most fast-food restaurants didn’t have drive-thru lanes. In fact, the first McDonald’s to have a drive-thru option was in Sierra Vista, Ariz. in 1975. It was created only because the restaurant was next to a large military base, and the base personnel were not allowed to leave their cars while wearing fatigues. Today, well over half of McDonald’s revenues come from its drive-thru lanes. Indeed, most consumers actually prefer this service option, which is why a fast food restaurant without a drive-thru has become an anomaly. Right now, we’re experiencing a similar transition taking place with mortgage borrowers. Fannie Mae’s study, “Technology Use in Mortgage Shopping,”1 found that nearly half of all people shopping for a mortgage today are getting their quotes online. In other words, roughly 50 percent of your potential client base are connected with a lender without ever leaving their house or picking up a phone—just as most fast food customers no longer leave their car when ordering their burgers and fries. The good news is that it’s a lot easier and much more profitable to target online borrowers than ever: you can have it your way, as in the old Burger King commercials. Thanks to advancements in online marketing and lead generation tools, lenders are able to identify and engage the online shopper in multiple ways including Search Engine Marketing (SEM), online


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advertising, corporate blogs, and social media platforms such as Facebook and Twitter. And advanced profiling capabilities allow lenders to get more targeted in their online marketing efforts, producing higher quality Internet leads that contain more information about potential borrowers than ever. Lenders can take all that rich profile data and match the needs of the borrower with their particular product niche or expertise. This adds up to higher quality leads and a better borrower experience. That said, successfully converting the online prospect to a closed loan on your books requires a certain set of tools and skills that you’ll need to develop in order to win. If you want to

attract, nurture and convert the online borrower, here’s what you must do:

Act fast Time is of critical importance to the online borrower. And it should be to you, too. In other words, lenders shouldn’t waste time getting in touch with prospects, online or not. Of course, acting fast on a hot lead is Sales 101. But not many lenders understand exactly how fast. Taking a day or longer won’t cut it. Even an hour may be too long. If you have an online lead generation strategy, keep in mind that most online prospects seek competition. In fact, prospects on average reach out to at least three or more online sources for informa-

tion and quotes, according to a recent survey by Zogby Analytics and Velocify titled “Online Buyer 2 Expectations.” So if you are selling to online borrowers, you should be prepared to respond to their inquiries in minutes. Ever notice the timers that many fast food drive-thru windows have? That’s because they know customers care about time. The “need for speed” also applies to how quickly you are able to grasp what a borrower wants and how they prefer to work with you. Savvy consumers expect that once they express their interest in a mortgage, lenders will pounce. Not only will they be timing you, they will be paying particular attention to whether you respond the way they prefer, such as by e-mail or phone, and whether the person that reaches out to them understands what they need and has the experience and skills to deliver.

Be patient Yes, you need to be both fast and patient. Even though speed is important to the online borrower, you cannot automatically assume that every prospect is ready to act. Buying a home is still a major financial and lifechanging decision, and online borrowers are no different than any other borrower in this regard. While you may be working with your borrower solely through phone and e-mail, and responding to their questions as quickly as possible, online borrowers shouldn’t be rushed. Patience is an especially valuable tool considering all the extra hoops lenders are required to jump through these days, such as checking and rechecking a borrower’s assets, income and credit. Many times, a prospect won’t qualify, or may put the decision on hold. But just because someone does not qualify today doesn’t mean they won’t in the future, or that a borrower who decides the timing is not right won’t return. They’ll appreciate someone who can work with them and stay in touch with them until they are ready to pull the trigger. Yes, it’s a lot of

work, but if you are patient and persistent, you have a customer for life.

Be smart

Adapt to Generation Y I might add that a growing number of mortgage customers are younger Americans who have grown up with the Internet and are not shy about online

Again, tackling online borrowers correctly will take planning and work. But if you’re truly “hungry” to capture a growing segment of mortgage consumers—and if you’re fast, patient and smart about it—there’s still plenty of room at the table. Kelly Booth is the director of the mort-

gage unit at Velocify, bringing more than 25 years of experience in sales, marketing, management, strategic planning and product design in the financial software industry. She possesses a solid understanding of the mortgage and banking industries, the overall mortgage lifecycle and the technologies that support the loan process. She may be reached by e-mail at

Footnotes 1—Fannie Mae, Fannie Mae National Housing Sure, “Topic Analysis: Technology Use in Mortgage Shopping,” 2014. 2—Zogby Analytics/Velocify, “Online Buyer Expectations: A Study of Personal and Business Buyer Experiences and Where Sellers Fall Short,” 2013.


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According to Fannie Mae’s study, higher income borrowers—those who earn more than $50,000 a year—tend to shop for a mortgage online twice as often as lower-income borrowers, and they are likely to base their decision on how hard a lender competes for their business. You can compete on price, but you need also to compete on service and how easy you make the process for your borrower. If someone is comfortable with finding a lender online, I would venture to say that they are comfortable doing business there, too, such as online banking and even using electronic signatures. I understand that the mortgage process is still not entirely paperless, but my recommendation would be to make the mortgage process as paperless as possible for your online customers.

doing what you do best: Providing excellent advice and selling quality loan experiences. Keep in mind to that a fast-food restaurant like McDonald’s wouldn’t be able to sell a single burger through the drive-thru without a technology platform in place to ensure fast and accurate service. You’ll need it, too.

transactions—in fact, quite the opposite. They may actually question your credibility if you ask them to sign anyMake online leads thing in person or in ink. Again, this is where an investment in technology can a priority The steady growth in online borrowers really pay off. While online lead quality does not mean you should immedi- has improved dramatically in recent ately drop all other lead generation years, it’s still a numbers game, and not strategies and bury your head in your every borrower you contact is going to computer screen. It does mean that if convert. On the other hand, the only you want online leads to work, you proven way you can increase your need a plan to incorporate this lead response rate, and thereby maximize generation strategy into your current your lead conversion ratio, is through business in a way that works. technology. For example, some lenders with You may also find other benefits, retail operations are adding addi- too—such as the ability to automatitional staff and placing them in cally sort high priority leads. By takcharge of managing and responding ing all the extraneous tasks off the to online leads. These folks typically table, your work is stripped down to act as a “first contact” for the online borrower. They’ll conduct an initial screening interview before passing the borrower on to the actual sales person, hopefully one who is best suited to help the customer and close the loan. To truly do this right, you’ll need tools for managing and distributing online leads, such as a technology platform that enables your staff to identify certain types of borrowers by their particular need and motivation level. It should also allow you to identify which loan officers, based on their skill set, performance, or other key attributes are best equipped to turn those leads into borrowers. Very large lenders are using these tools now to supplement their retail operations with online leads. But thanks to the increasing availability of lead management and sales automation technology, including cloud dialers, many smaller lenders are using them, too. In fact, the smaller shops often do much better at converting online leads because they are simply faster and more nimble by nature.

One Million Notaries: Why They Matter to the Mo By William A. Anderson hen it comes to taking out a mortgage, most consumers are focused on interest rates, closing costs and pulling together all the records needed to get the loan approved. They probably don’t give much thought to the person who will be notarizing their documents come closing time. Even for many mortgage brokers, loan officers, underwriters, and others who work in the mortgage finance industry, notarizations can seem like small details amid the myriad other tasks that must be completed to originate a single loan. But because no loan in America is closed without notarization, the mortgage industry and its various servicers and subcontractors rely heavily on notaries to lend trust and integrity to its deal flow. Consider that there are 4.4 million Notaries in the U.S. That’s one Notary for every 71 residents (see Infographic). More than one-third of the 4.4 million notaries work in various financial and lending industries, according to online surveys conducted by the National Notary Association. A closer look at the numbers suggests that nearly 25 percent of notaries work in or are connected to the mortgage lending and servicing industries or in peripheral industries, such as title and escrow. The total numbers fluctuate with market ups and downs, but one million notaries is a significant labor force segment that underscores the value notaries bring to the origination and servicing of mortgage loans. While their job titles differ within their companies and organizations, notaries serve two primary functions: ensuring that the borrowers signing loan closing documents are who they claim to be and protecting consumers and businesses against fraud. In a world where people doing business often never see each other face to face, the notary offers assurance that a document is authentic, that its signature is genuine, and that its signer acted willingly and intended the terms of the document to be in full force and effect. These assurances are fundamental to the integrity of the mortgage industry. But who are these million Notaries?


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Notaries in the mortgage industry The overwhelming majority of U.S. Notaries—approximately 88 percent— hold regular jobs and become notaries at the request of their employers. They work for law firms, banks, insurance companies, car dealerships, government agen-

cies, healthcare companies and more. Frequently, the only documents they notarize are directly related to their jobs. That holds true for notary employees in the mortgage industry. You’ll find notaries working for just about every type of company involved in the mortgage ecosystem—from lenders to servicers to title and escrow companies to settlement services firms to investment firms in the secondary mortgage market. Approximately 12 percent of U.S. notaries are self-employed, and most of those work as mobile notaries. They travel to customers to notarize and provide signing services related to documents in the closing package, and often most of their business comes from working as signing agents in the mortgage industry. In short, notaries are everywhere in the mortgage industry, and with good reason. Consider all the points in the life of a mortgage where a notarization is needed.

It starts with the loan closing. The borrower meets with a representative of the lender who also happens to be a notary. All the documents related to the loan are signed and several are notarized. Once the loan is closed, more often than not it’s sold on the secondary mortgage market, and documents related to the transfer of ownership are notarized. A notary also will need to be on hand whenever the servicing rights are transferred. If foreclosure proceedings are commenced, documents in both judicial and non-judicial foreclosure states must be notarized. And finally, when the loan is paid, another notarization will be necessary for the satisfaction of mortgage or reconveyance deed filed with the relevant county recorder’s office.

The face of lenders Most of these touch points take place behind the scenes. But the public does

get to see what happens at the loan closing. In fact, some in the industry describe the process of signing the loan documents as a ceremony. Investing the loan signing with the aura of ceremony underscores the importance of the transaction, particularly given the fact that it often is among the biggest financial decisions most people make. And the person conducting the ceremony is a notary. In the past decade, it has become commonplace for borrowers to submit a loan application and supporting documents online, and use email, text messages and phone calls to work with their loan officer or mortgage broker. Consequently, borrowers seldom meet face to face with their lender. The first human face they often see is the notary at the signing table, and, in the eyes of the borrower, that face represents the lender and everyone else involved in the origination process. Lenders have been paying more

ortgage Finance Industry

The duties of a notary

l The signer must appear in person before the notary at the time of the notarization. This is necessary in

Taken together, these elements of notarization protect the interests of all parties to a transaction. By providing a layer of trustworthiness to mortgage transactions, notaries provide value to lenders and others. In the current regulatory environment, financial institutions and the thirdparty vendors they hire are required to protect consumers, and they can be hit with steep penalties for any lapses. Because there is so much documentation involved with a single mortgage, it’s all the more important to make sure that it is handled properly. Given the involvement of notaries in the lifecycle of a single mortgage, by performing their duties correctly every time—and keeping a proper record of it—they help ensure the integrity of the loan and any transaction involving it. Many people in the industry, however, don’t fully understand the role of a notary and often expect them to do things that they cannot legally do. It can be a particularly difficult situation if the request is coming from the notary’s supervisor or a regular client. Among other things, Notaries cannot: l Skip any of the elements of the notarization, including personal appearance and proper identification. This undermines the whole purpose of the notarial act. l Backdate the notarial certificate. The notarial certificate verifies that a notarization took place on a particular date. By backdating, the notary commits false certification, a crime in most jurisdictions. l Determine the notarial act. Determining whether an acknowledgment or jurat is needed is a legal decision that is against the law unless the Notary also is a licensed attorney. l Offer advice or explanations about the loan documents. This generally falls outside the Notary’s expertise and could constitute the unauthorized practice of law. continued on page 79

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By definition, a “Notary Public” is a stateappointed official who serves as an impartial witness to the signing of important documents. In that role, notaries are considered “ministerial” officials, meaning that they are expected to perform their duties according to the procedures laid down by their state’s laws and regulations without exercising significant personal discretion. Most people think of a notarization as a ubiquitous act, as in, “I need to get this notarized.” But there are different types of notarial acts, and each has a specific purpose. The two most common types are acknowledgments and jurats. In taking a signer’s acknowledgment, a notary verifies the authenticity of the signature on a document. In performing a jurat, a notary verifies that an individual has sworn or affirmed the truth of a particular statement. Both notarial acts are authorized by law in all U.S. jurisdictions. There are essential elements common to each notarial act:

order to complete other essential elements. l The notary must positively identify the signer. The whole point of a notarial act is to verify that a specific individual signed a document or asserted the truth of a statement. l The notary must determine the signature is the signer’s free and voluntary act. Certain jurisdictions require the notary to ascertain the awareness or competence of the signer. l The notary should keep a clear and complete record of every notarial act.

attention to the signing ceremony involving notary signing agents and borrowers at the closing table. In part, this has been driven by regulations from the Consumer Financial Protection Bureau and other government agencies. It also is driven by the desire to improve the overall customer service experience. A special committee called the Signing Professionals Workgroup (SPW), comprised of executives from major lenders and title companies, came together in late 2012 to review the role of notaries. With representatives of the National Notary Association serving as advisors, the SPW met throughout much of 2013 to develop best practice standards for the independent Notaries who take on loan signing assignments. In October 2013, the SPW published the Certified Signing Specialist Standards that include a Code of Conduct; a standardized script to use as a guide at loan signings; annual background screenings; an annual exam; and a recommended minimum level of Notary errors and omissions insurance. Notaries who meet the SPW Standards will earn the Certified Signing Specialist designation. Since late 2013, the SPW has been developing procedures for implementing the certification program. The point of the SPW Standards is to provide lenders and title companies with broadly acceptable best practices that can provide a consistent closing experience for all of the parties involved in the mortgage transaction.

Jumbo Headache: The New Era of QM and the Implications for Jumbo Loans BY t’s no secret that regulation and the costs associated with it have increased dramatically for the mortgage industry, which affects all mortgage professionals in the origination and servicing channels. And one particular area where these new regulatory implications hit home the hardest is jumbo loans. Jumbos are defined as higher-priced mortgage loans that exceed the maximum amount eligible for government guarantee, typically under $417,000, though it can go as high as $625,500. The game changer for jumbos comes in the form of the Consumer Financial Protection Bureau’s (CFPB) ability-torepay (ATR)/qualified mortgage (QM) rule, which went into effect on Jan. 10 of this year. The rule was crafted to guard against the riskier lending practices that contributed to the financial crisis by incentivizing lenders with a safe harbor. When a loan meets the “qualified mortgage” definition, it is deemed to be in compliance with the new ATR standard and the lender can avoid legal liability for the ability-to-repay representation of the borrower. Yet despite the best intentions of the regulators, the QM rule unfairly burdens and restricts certain areas of the mortgage market, chief among them jumbos. The ATR/QM rule contains two key provisions that will make it much more difficult for jumbo loans to gain QM status: The total monthly debt-to-income (DTI) cap at 43 percent and the restriction on interest-only (IO) loans. Under the Rule, jumbo non-conforming loans will be in breach of the QM standard if the borrower’s DTI exceeds 43 percent of monthly income. This will impact the willingness and ability of lenders to make these loans as it affects risk retention. Based on Federal Housing Finance Agency (FHFA) data from 1997-2009, more than 23 percent of all loans purchased by government-sponsored enterprises (GSEs) Fannie Mae and Freddie Mac had DTIs greater than 43 percent. However, the effect on jumbo loans is more pronounced. These non-conforming loans will not be eligible for a Fannie or Freddie guarantee, while loans that exceed the 43 percent limit, but are otherwise eligible for government backing will be QM-eligible under the rule. According to the CFPB, about 15 percent of jumbo loans were over the 43 percent threshold last year.


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“… despite the best intentions of the regulators, the QM rule unfairly burdens and restricts certain areas of the mortgage market, chief among them jumbos.” —Christopher Chakford, Managing Director, NewOak Capital

The result of the rule is that jumbo loans with low documentation will not qualify for the safe harbor. With lenders required to verify that a borrower’s DTI does not exceed the 43 percent threshold (based on standards outlined in Appendix Q of the QM rule), a deep dive through a borrower’s financial statements is now required to establish monthly pre-tax income. A lender must examine the borrower’s past employment record, verify employment for the most recent two years and obtain confirmation of current employment. The lender must determine if income is “reasonably expected” to continue for at least the first three years of the loan. The borrower will need to provide proof of assets and income through such means as tax returns, bank statements and pay stubs while also providing documentation on all major debt, such as mortgage payments and automobile loans. While the increased documentation requirement will hurt access to loans across the mortgage spectrum, selfemployed jumbo borrowers look to be affected disproportionally by the Appendix Q standards for non-conforming loans. Any loan that cannot meet the DTI calculation requirements of Appendix Q will not qualify for QM status, regardless of whether the DTI is within or beyond the 43 percent threshold. In addition to personal and business tax returns for the previous two years, self-employed consumers will be required to produce a balance sheet and profit-and-loss statement for their business. For the self-employed, the adding back of capital losses and operating-loss carryovers to their income will result in a loan being deemed nonQM. In addition, the requirement for income stability under Appendix Q will result in much greater scrutiny for self-

employed borrowers when there is a declining income trend present. If a borrower has been self-employed for less than two years, the new rules make it extremely unlikely that they will find a lender regardless of previous success or assets. Under the ATR guidelines, loans that do not require borrowers to pay principal during an initial period will not qualify for QM status. The ineligibility of an interest-only feature will impact the jumbo market as IO loans have been popular. According to CoreLogic, around 14 percent of jumbo loans through the first three quarters of 2013 had interest-only features. In many high-cost areas of the country, the IO option allows families to live where they choose due to the lower monthly payment feature. The financial flexibility afforded by the lower monthly payment, combined with the appeal of tax deductibility, have made the interestonly feature attractive to many borrowers in the jumbo market. Under the Dodd-Frank Act (DFA), the ATR rule is one of several risk-management provisions aimed at the mortgage finance sector. Other regulations, such as the risk-retention, qualified residential mortgage (QRM) and rules related to capital requirements for mortgagebacked securities held by banks under Basel III, also will impact the industry. While mortgage finance-related regulations targeted market excesses, the aggregate effect this raft of new regulations will have on the mortgage finance market in terms of credit availability and compliance cost places an unnecessary burden on market participants. Due to the increased legal liabilities, ambiguities of the rule and increased costs overall, many small institutions are already considering getting out of

“Under the ATR guidelines, loans that do not require borrowers to pay principal during an initial period will not qualify for QM status.” —Asim Ali, Advisory Group Director, NewOak Capital

the mortgage lending and origination business. With this in mind, the CFPB is making an effort to counteract some of the unintended consequences of the ATR/QM rule through a public campaign that signals perhaps a softer approach. One example is where the CFPB has taken steps to ensure credit unions continue their mortgage lending programs by providing exemptions from some of the rules for credit unions servicing fewer than 5,000 loans. Both investors and regulators want to return to a healthy housing finance and securitization environment. The new standards are intended to build investor trust over time and encourage the flow of private capital into the mortgage and housing markets. However, some of the smaller, less-capitalized lenders are considering getting out of the mortgage business because they don’t want to make mortgages that are not deemed QM. It is clear that the regulatory costs have increased dramatically for the mortgage industry. If the implementation of the new rules is not handled properly, the regulations will become counterproductive. This will erode general availability of mortgage loans and undermine growth prospects and the interests of the very consumers it means to protect. The hope here is that, over time, regulators and private lenders will work together to resolve all ambiguities and pitfalls, fine-tuning the legislation to facilitate QM and non-QM financing. The mortgage finance industry has found itself in the eye of the regulatory hurricane spinning out of the DFA, which includes the creation of the CFPB. The inconsistent treatment of jumbo loans is just another example of legitimate consumer and mortgage market needs being subordinated to overly restrictive regulatory provisions. Chris Chakford is managing director of NewOak Capital, focusing on business development and investment strategy for the company’s Asset Management Division. He may be reached by phone at (212) 209-0785 or e-mail Asim Ali is a director within the Advisory Group at NewOak Capital, overseeing research on structured finance, capital markets, municipal finance and cross-national financial regulations. He may be reached by phone at (212) 209-0862 or e-mail

know. We provide a simple format, with real life examples that most loan officers no doubt have already experienced.”

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of choice for this population of borrowers, and the mortgage brokers and real estate agents who work with them. Our message is clear: You can count on Carrington to serve the underserved and get the tough loans done right.” Effective April 1, Carrington will eliminate conventional and jumbo loans from its wholesale product line and limit its acceptance of wholesale submissions with FICO scores above 680. However, Carrington will continue to serve veterans with VA loans across the credit spectrum. The company feels strongly that this move is necessary for appropriately allocating its resources to provide optimum support to borrowers in the underserved market.

transaction. The title work provided on a transaction is probably the most overlooked portion of a mortgage transaction. The “not my job” attitude prevails. But while that may be true, perhaps no other element can affect your deal like a title issue can. And typically the issue is brought to light late in the transaction, further complicating things. Indeed Abstract is offering free, live or Webinar-based training to loan officers. “By no means is this detailed, title training,” said Amoroso. “Rather, it is a sales approach to what you really need to

Quandis Adds Additional Functionality to KMC Information Systems App Quandis Inc. has announced that it has added new functionality to its existing bankruptcy search interface with KMC Information Systems LC’s (KMCIS) CaseAware application. CaseAware is a case management system (CMS) for default servicing law firms to efficiently manage, process and communicate with other parties in order to complete foreclose related tasks and transac-

tions. Quandis developed an automated search service of PACER (Public Access to Court Electronic Records), the United States Courts bankruptcy locater system, which locates borrower bankruptcy information across the country. The enhanced solution eliminates the need to add staff, saves huge amounts time, lowers costs, reduces errors, boosts employee productivity and returns court documents in a standardized, organized fashion to ensure data integrity. Information is obtained from PACER and returned back into CaseAware in realtime to determine if a borrower has sought protection under federal bankruptcy laws, thus enabling organizations continued on page 47

GSF Unveils New Credit Care Program

Indeed Abstract has announced that it is now offering title training to loan officers. The point of the training is to educate loan officers to understand the basics of the title procedures, and more importantly, to identify a potential issue early on in the transaction. “Early detection, and understanding how to deal with the issue, saves deals and instills confidence in the eyes of your borrowers” said Joe Amoroso, managing director of Indeed Abstract. The common theme amongst the most successful loan officers is that they understand all aspects of the mortgage

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Indeed Abstract to Offer Title Training to LOs


GSF Mortgage has unveiled its GSF Credit Care program. GSF Credit Care offers a free credit report, 90 days of free credit monitoring and $1 million in identity theft insurance; no credit card required. In a time where more people are more aware of how low credit scores can affect their every day lives and with credit fraud being more prominent, GSF Mortgage is proud to step in and offer our customers a way to take control. We are dedicated to helping our customers assess and understand their credit score in a unique easy to read format. Taking control of credit information is a valuable step when our customers are securing their financial future. “We are very excited to offer this service to our customers. Understanding your credit score and verifying the accuracy of accounts reflected on your report is a very important step in the mortgage process. It is not a secret that higher credit scores translates to lower interest rates and more borrowing power. We want to help develop that power for our customers and put them in the best possible position for their transaction,” said GSF President Chad Jampedro.

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A Few Quick Tips From AllRegs on Vendor Management Vendors pose a risk for banks and non-banks alike … and the Consumer Financial Protection Bureau (CFPB) is monitoring those risks. “Consumers are at a real disadvantage because they do not get to choose the service providers they deal with—the financial institution does,” said CFPB Director Richard Cordray in a release from the CFPB. “Consumers must not be hurt by unfair, deceptive or abusive practices of service providers. Banks and non-banks must manage these relationships carefully and can be held accountable if they break the law.” The CFPB has specified that “supervised entities” are responsible for ensuring that their vendors and service providers are in compliance of federal financial laws. Here are few items you should know about vendor management compliance. 1. There is a difference between a vendor and a service provider A vendor is a person or organization that vends or sells a product. A service provider sells a service, like consulting or staffing. In the mortgage arena, vendors do not come in contact with consumers or client files. The “vendors” who usually cause the extra compliance risk are in fact “service providers.” These companies offer services that bring them into contact with consumers, consumer data, loan files, and decision-making processes which are regulated by the government. You are liable for your service providers when they are in contact with your consumers or loan files.

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2. Be diligent about ensuring vendor/service provider compliance, or you put your own organization at risk When you hire a vendor or service provider, they may seem like they are responsible and compliance-ready. You may feel confident to trust that they are compliant since they are a reputable company and actually doing the work that requires compliance. Do not follow this route. The law holds you liable for their actions. Make sure you have policies and procedures in place to monitor their activities to ensure compliance of the law. More importantly, make sure you have a Compliance Management System in place for all aspects of CFPB compliance. 3. Get your senior management and board of directors involved CFPB guidance clearly conveys the expectation that the board of directors and management will “develop a plan of action for oversight of serviceprovider (vendor) relationships.” Your vendor management policy requires their final approval. To take it a step further, your staff vendor management training should also reflect the internal policies of your business. So, how do you manage vendor compliance? The AllRegs Compliance Management System gives you the tools you need to ensure that your entire organization is compliant with the CFPB through technology and professional services. Our system gives you access to courses like Examining Vendor Management to train your staff. You can also work with the AllRegs Professional Services Group on a customized Vendor Management policy. To learn more, visit us at or contact your dedicated account executive at (800) 848-4904.


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her anyway. She was just the best qualified person for the job. That’s all that counts. When I started Carteret Mortgage, I was working from my home. As we hired people, we licensed their house and they worked from home just like me. We were doing $1 billion in loans and we were one of Countrywide’s biggest customers. One day, a big senior vice president came for an unexpected visit. As usual, I open the door in my bathrobe. He apologizes for it being so early and asks if I want to meet him at my office. “No, this is the office,” I tell him, and we conduct the interview in the living room. Twenty years later, I just recently spoke to him on the phone. He said he was so impressed at the time, he gave us great marks. With our low overhead, he said, he knew we were poised for greatness. He said he loved the part where we had to sit on the porch steps because my wife would not let us smoke in the house. After a while, Carteret just got too big for the house and my wife kicked us out. I guess after doing $1 billion in loans annually, the rule is you have to move into an office. I would have five people scurrying around the house filing, doing faxes, answering calls, etc. My kids were all in school, so my wife would sit and watch soap operas until they got home. She said the final straw was when everyone was so busy and she just sat on the couch like the Queen of Egypt. It made her feel horrible. When I first moved into the office, I had five middle aged women on staff whose job function was “Do whatever Eric tells you to do.” The first order of business, the women decided with themselves was to have a dress code. They asked me if that was okay. I said, “Yes, as long as it does not apply to me.” The next day, I come in wearing a torn t-shirt. Robin, pulls me aside and says, “I know the dress code does not apply to you, but at least put on a pair of pants!” When I hired my first few loan officers, my way of keeping track of them was by their initials. John Pappas was JP. Peggy Sullivan was PS, etc. As the company grew, I had a problem. We hired Paul Skeens, but PS was already taken. What do we do, not hire him? So I came up with a system, if PS was taken, take the second letter of their first name and put it between his initials. So Paul became PAS. This way, we would always know that the first and last letters of the employee initials corresponded to their actual initials. When we hired another person with the initials PS, the third letter of his first name would be substituted. The new “Paul” would be PUS. Then, the fourth and so on. When those were used up, we took the second letter of their last

name. After those were used up, we took the second and third letters of the first name, and so it went. Who would have thought the company would grow so much. I have a good friend who is a dentist and loves Jimmy Buffet. One day at a concert, he and his wife start talking to another Parrothead couple. It turns out he is a loan officer at the mortgage company I own. My friend doesn’t tell him he knows me. Soon, the loan officer’s inebriated wife starts going on about the place where her husband works. “The owner is so naïve and dumb, I am going to apply for a job there and I will own that guy when I am done.” The next week I got her resume. “Sorry, we just filled that vacancy, thank you for applying.” I used to think I could read a person’s character just by meeting them or talking to them. Turns out you can’t. People can put on a good face, people can change. How well can you really know anyone? You think you do, but you don’t. It turns out one of my top managers hired a state manager who hired a lady in North Carolina. We got a borrower complaint about her for religious discrimination! I could not imagine that in this day and age. The customer said she told her that “The only way you are going to get this loan is if you come with me to church and pray.” I felt for sure the client must have misunderstood. I called the loan officer to get the full story. This, after all, was a serious complaint and grounds for termination. So I called her and asked to what happened. She explained she didn’t mean it like that, the borrower was confused, but she had to go because there was a monkey on her back and Satan was at the door. I just looked at the phone. We ended up firing her and doing that loan for free. For anyone thinking of owning a big company, here is a lesson I learned. As we got bigger, I got tired of doing all of the accounting, and figured I could afford to hire some high-powered CPA to work for me. Who better to hire than my CPA’s auditor who came to review the books every year? She knew the systems, was highly intelligent, very competent, a hard worker, and unfortunately, very beautiful. We, of course, because good friends who joked around and people just ASSUMED we were having an affair (just for the record, we never did … I was happily married at the time). One day, we were out for a smoke break and she was telling me how her legs were bothering her. As we talked, she squatted down to exercise them. Just then, my wife drives up. I never heard the end of that one from my wife. As my company expanded, naturally we had to hire some top end managers. continued on page 61

new to market continued from page 43

to compliantly initiate foreclosure proceedings. Quandis can automatically search and obtain full Dockets for bankruptcies on a regional court level, returning all pending cases into CaseAware. “Quandis has a long-stranding integration and partnership with KMCIS and their CaseAware product,” said Laura Hadley, VP of product management at Quandis. “We recently rolled out additional functionality to our PACER search service on a standalone basis, but our integration with CaseAware provides users with a significant uptick in efficiencies gained.” KMCIS’ CaseAware Suite consists of CaseAware Manage and CaseAware Integrate. CaseAware Manage is a complete CMS that includes a dynamic workflow engine, built-in fee and cost forecasting, and integrated document generation, storage and retrieval. CaseAware Integrate provides automated, two-way transmission of data between a law firm’s CMS and accounting system to major default services industry middleware platforms such as LenStar, LPS Desktop, VendorScape, iClear and NewInvoice, among many others.

ValuTrac Announces Integration With Ellie Mae’s Encompass

Your turn National Mortgage Professional Magazine invites you to submit any information promoting new “niche” loan programs, new products or any other announcement related to the introduction of a new program, to the attention of: New to Market column Phone #: (516) 409-5555 E-mail: Note: Submissions sent via e-mail are preferred. The deadline for submissions is the 1st of the month prior to the target issue.


n Georgia Mortgage Professional Magazine n APRIL 2014

Black Knight Financial Services has announced that two of its solutions will help lenders and their service providers comply with the significant changes required by the Consumer Financial Protection Bureau’s (CFPB) new Integrated Mortgage Disclosure Rule. Under the new rule, which will go into effect Aug. 1, 2015, lenders will be required to provide home buyers seeking a mortgage with a loan estimate form within three days after application and a closing disclosure form three business days before closing on the loan. The new forms feature an updated format and include additional disclosure requirements from the Dodd-Frank Act. “The CFPB’s new Integrated Mortgage Disclosure Rule will require a massive change in the way lenders generate loan origination documents and will impact every provider involved with the origination process,” said Dan Sogorka, president of Black Knight’s RealEC Technologies division. “These significant changes mean lenders need to start looking now at the impact of this rule to their organizations and begin planning immediately to meet the upcoming deadline.” Black Knight’s Closing Insight creates a data-driven environment that allows lenders to electronically collaborate with their service providers within one solution. Closing Insight’s collaborative closing services will facilitate the reconciliation of fees for final closing disclosures using a workflowdriven approval process to support data consistency and integrity. This process will also allow lenders to generate and review disclosure documents and refine fees, while helping ensure timelines are met. Additional functionality that will be added to Closing Insight includes the collection and aggregation of fee quotes, delivery of disclosures, and pre- and post-closing data consistency and integrity checks. Closing Insight will be delivered through the RealEC Loan Quality Gateway, an open technology platform that provides integration, data management, decisioning and workflow management through a 24/7 data exchange connected to more than 15,000 of the mortgage industry’s service and solution providers.

ValuTrac Software has announced an integration with Ellie Mae, where it will integrate directly with Ellie Mae’s Encompass mortgage management solution to seamlessly facilitate the appraisal portion of the loan process. The integration will increase efficiency and remove risk for Encompass users by automating complicated appraisal steps. “Ellie Mae’s Encompass software is a natural fit with ValuTrac’s appraisal management platform of products. This combination demonstrates how integrating our appraisal management software with leading enterprise mortgage technology providers, such as Ellie Mae, can help build a holistic platform that streamlines the lending value chain and mitigate risk,” said Clint Cornett, CEO of ValuTrac. “ValuTrac is committed to being the leader in providing appraisal management companies, banks, credit unions, and mortgage lenders appraisal management solutions to improve accounting processes, appraiser vendor management, and regulatory guidance for all of our clients.” “Seamless integrations across the lending ecosystem are creating significant efficiencies as well as a higher standard for the mortgage process. ValuTrac’s appraisal management software is a welcome addition to the Ellie Mae Network,” said Joe Tyrrell, SVP. “This integration continues our commitment to providing access to quality products that help minimize origination cost while maximizing retail, wholesale and correspondent performance.”

Black Knight Announces New Solutions to Aid in CFPB Compliance

legendsoflending BY DAVID J. COSTER

New Penn Financial’s Legendary Status: Just Good Timing an


APRIL 2014 n Georgia Mortgage Professional Magazine n


ew Penn Financial and company Chief Executive Officer Jerry Schiano are the focus of this month’s NMP’s Legend of Lending. New Penn Financial was founded in the midst of the mortgage crisis in 2008. Schiano had just completed a two-year noncompete period following the sale of his previous top 15 non-agency-oriented mortgage firm, Wilmington Finance. It is certainly accurate to say that his timing was fortunate, as his new venture emerged to the forefront while others were crashing around him. Yet, such a statement on its own would obfuscate the truth of the hard work and ingenuity that has been essential to both firms’ success. As you read selected excerpts from my recent interview with Mr. Schiano, you will hear the voice of experience coming through loud and clear. Building one successful firm in this industry is a major accomplishment, let alone doing it twice. While Schiano’s previous success was impressive, his stewardship of New Penn from 2008 through today is more impressive from my vantage point, as it has required an uncommon ability to grow steadily, while the industry was taking on a new shape. What emerges below is a blueprint for what the largest, most successful mortgage originators of the future will look like: Multi-faceted with diverse revenue sources and well capitalized. In a nutshell, much more like the most successful businesses across the financial services spectrum. I recently had the chance to speak with Jerry to reflect on his career and how New Penn Financial, now a top 20 lender in its own right, is positioning itself for the emerging and evershifting mortgage industry.

Tell us about how New Penn was established. Jerry Schiano: I started New Penn in May of 2008. Previously, I had started a mortgage company in 1999 and ended up selling that company to American General, which was an AIG company. We grew that company to a couple of thousand employees and from $0 in originations to about $15 billion annually. You had to sit out of the industry for a couple of years. How did that impact you? Schiano: I had a chance to view the mortgage market from the sideline as it was imploding. That provided an invaluable perspective on what a sustainable mortgage company must look like. It was a great time to learn, if you really wanted to learn. I was trying to figure out why at that point in time companies were being hit by loan buybacks. Some of them were directly related to the products of the previous era, and they had already gone away, but others were related to the loan manufacturing process. For example, a good reason for buybacks, even today, is undisclosed lia-

bilities. It happens when borrowers have an inquiry on their credit report and mortgage companies don’t successfully follow through to make sure the borrower doesn’t have other debt. We set up New Penn based upon those types of lessons. We put a policy in place where we focus on the credit inquiries and we make borrowers sign a form that says, “I am aware of this credit inquiry and I’m not taking out this debt.” We also have our loan officers speak with borrowers about credit use during the origination process. Our focus is on education, but also on risk management. We have instituted the practice of having a recorded call between our loan officer and borrowers in situations where inquiries show up on their credit report. That’s just one small example, but we tried to understand what the problems were in the market and have developed manufacturing processes in response that would ensure that we didn’t fall into the same traps. You have to figure out a way to offer good quality and good manufacturing, but still do it in a way that’s customer friendly.

Your timing was fortunate, wouldn’t you say? Schiano: I would love to say I was really smart about the timing of it, but it was also simply good luck. The truth is also that our years of effort to build a successful non-agency platform just happened to be rewarded at an opportune time. New Penn is a multi-dimensional lender, is that a fair description of your model? Schiano: New Penn is a multi-origination channel business model. We have a TPO Division where we get business from brokers. We also have mini-correspondent and traditional correspondent lending on select products as part of that business channel. We have a traditional distributed Retail Division with “people on the street” working with real estate agents and builders. And we have a Call Center Division that focuses on purchases and refinances. There are times where some distribution channels are hotter than others, but we think our balance works really well. In addition to that, we’re a multirevenue stream company. Our goal was

“Leading mortgage companies will have to figure out a way to use technology to deliver a compliant, high-quality loan at a much lower cost than the marketplace does today.” —Jerry Schiano, New Penn Financial, Chief Executive Officer

nd Luck, or Something More? to become self-sufficient. Part of that is our ability to deal with Ginnie, Freddie and Fannie directly. We are also able, through our parent company, Shellpoint Partners, to create non-agency or jumbo products and to securitize them. We acquired a servicer not too long ago, so we now service our own loans and other company’s loans as well. We think a balanced company can create revenue from origination and also the servicing book that we have been building up over time. Such a structure is vital because we are in such a cyclical business.

What’s the key ingredient in New Penn’s emergence as a major force in the industry? Schiano: We care about doing the right thing for our customers at New Penn, and are willing to work really hard to make sure we do it. We have integrity with what we do, and we think that’s important. The larger a company gets, the easier it is for what matters to get lost. Customers and employees become numbers. It’s just another “origination unit.” But at the end of all those “origination units,” and the end of all those reports, there’s a customer or employee. If you treat that customer or employee right, they’re willing to say nice things about you and tell people about you. For us, it’s the customer experience that’s most important. Always been and always will be. David J. Coster is senior editor of National Mortgage Professional Magazine. He may be reached by phone at (919) 559-2171 or e-mail


n Georgia Mortgage Professional Magazine n APRIL 2014

What opportunities to you see in the mortgage industry in the near term? Schiano: There are a couple of things. The market right now is in a resetting stage. Volume in the market is down. Capacity is still too great. So, we think for companies that are well capitalized, which we are, it creates opportunities to selectively add origination from compa-

What will the winners in the emerging mortgage market have in common? Schiano: Leading mortgage companies will have to figure out a way to use technology to deliver a compliant, highquality loan at a much lower cost than the marketplace does today. That’s really where the operational focus of cranking it up a notch has to be. In addition, we try to align ourselves as much as we can at the beginning of the mortgage process rather than towards the end. What I mean by that is, as a company, we’re striving to align ourselves with the mortgage lead. So, getting as close to builders, real estate agents and consumers as we can to introduce ourselves along the way, rather than just when there’s a deal.

What will separate one lender from another in the smaller, more complex mortgage market that is emerging? Schiano: It starts with the customer (which, for us, depends on the business channel). You have to create a positive experience for your customer and their customers. We have to make sure that we implement all of our best manufacturing and risk management practices and still have people say, “I want to deal with them.” In the same way, I judge us by these measures, “Are we a company I’d want to deal with? Are our rates good enough? Are our practices good enough? Do we make it as easy as we can?” It’s a cumbersome business. First, we have to create a positive experience for the customer. Then we have to create quality loans that are compliant—and we have to do it at a reasonable cost to manufacture. Those are the things that we focus on: Customer experience, quality, compliance, costs.

nies that maybe don’t have access to the same products or the same capital.

APRIL 2014 n Georgia Mortgage Professional Magazine n


NAPMW Celebrates Golden Anniversary in the Emerald City A look back at 50 years of the NAPMW BY ROBERT OTTONE


his year marks the 50th anniversary of the National Association of Professional Mortgage Women (NAPMW). Established in 1964, NAPMW was founded by nine women with around 161 years of total mortgage experience among them. The first association meeting was held in Seattle, Wash., with the aim of further establishing and promoting women in the field of mortgage banking.

While the original association was predominantly centered around the Seattle area,

other parts of the country began expressing interest in joining the then-called Seattle Association of Professional Mortgage Women. Eligibility requirements were fairly simple. If you’re connected to the mortgage industry, either currently or previously, there’s an opportunity for you to join the NAPMW. “I was one of the nine women who got together in February 1964 for a dinner meeting,” said Georgene Peterson Lee, founding member and first president of the NAPMW. “Out of that meeting, the seed for starting an organization to help improve and get recognition for women working in the mortgage lending field developed. I was the first president and was instrumental in setting up the framework of the organization and developing the bylaws for the organization. In October of 1965, we held a ‘bosses’ night to explain to our employers what we were attempting to do.” From there, the NAPMW established an association-wide code of ethics as follows: Members shall recognize the magnitude of the responsibility in accepting this field as a career, and shall engage themselves individually and collectively to further the purposes of the Association and bind themselves to the provisions of this Code. In fulfilling the obligations of our profession we ... Q Shall adhere to the Articles of Incorporation, Bylaws and Standing Rules and accept the responsibility of membership in this Association with integrity and dignity. Q Shall accord just and equitable treatment to all members of the profession in the exercise of their professional rights and responsibilities. Q Shall not misrepresent an institution or organization with which we are affiliated and shall take adequate precautions to distinguish between personal, institutional and organizational views. Q Shall be guided in all our activities by the highest ideals for which the National Association of Professional Mortgage Women stands, and be aware of our commitment to ourselves, the profession and the community. The association’s code of ethics may have been tweaked and refined over the


years to have morphed into what it is today, but the aims of the association have always been guided by the following mantra: Q To promote and foster educational opportunities for its members. Q To work for equal recognition and opportunities for women. Q To bring its members together for the exchange of experiences, ideas and interests in all phases of mortgage banking on the local, region, and national levels. Q To encourage women to choose the mortgage banking profession as a career. “NAPMW’s purpose has always been to promote and foster educational opportunities for its members and to bring its members together for the exchange of experiences, ideas, and interests in all phases of mortgage banking on all levels,” said Jill Kinsman of U.S. Bank, current NAPMW national president. “Education and networking continue to bring our members together

—Georgene Peterson Lee, Founding Member and First President of NAPMW

for these reasons, particularly at a time in our careers when there have been so many changes in our industry.” Women have long been considered underrepresented in the mortgage industry. There are con-

stant pushes for women to take a more active role in various companies across the nation. NAPMW’s goals aren’t to be taken lightly, and those in leadership positions with the association take their duties seriously. “We have transitioned from a fully managed association to a self-managed association over the past seven years, while still trying to maintain our ‘Premier Provider of Mortgage Education’ status. Our membership has declined drastically with the downturn in the industry, but we are a stronger association because of it,” said Laurie Abshier, past national president. “Our membership is also ‘aging.’ We seem to either have difficulty reaching the Gen-X’ers or they don’t get the importance of education. This is something we continue to work on.” “NAPMW works to promote equal recognition and opportunities for women as well

n Georgia Mortgage Professional Magazine n APRIL 2014

“I was one of the nine women who got together in February 1964 for a dinner meeting.”

Q To maintain the high standards of the profession.

as men in our industry today. When NAPMW originated in 1964, those opportunities were not as readily available to women, and I feel that NAPMW made an impact on women’s lives because it gave them the knowledge and the confidence to succeed in pursuing a career in the mortgage lending industry,” said Kinsman. “While today’s market allows for more equal opportunities for women, it is still vitally important to continue to provide both men and women with the tools and skills they need through education and networking to succeed in their careers.” Education and mentoring are some of the cornerstones of the NAPMW. Maintaining educational systems not only for women, but for anyone with a thirst to learn and remain on top of the multiple regulatory shifts facing the mortgage industry today has only added to the value of the NAPMW and its mission since its inception back in 1964. “Mentoring is

“Serving as a leader of NAPMW has been a great source of joy to me, dedicating my time to something I truly am invested in and believe in” —Jill Kinsman, NAPMW National President 52

a large part, and we have always encouraged our members to get involved



association on all levels,” said Sue Barnett, past national


moving away from general knowledge of the business

of NAPMW. “They

which puts them at a disadvantage of seasoned loan

begin by starting

originators that learned most of what they know over

on the local lev-

a long period of time through osmosis and through

els and move up.

learning from their own mistakes. It is so hard to hear

This experience

a new loan officer say ‘You are so lucky’ … no … not

and the training

lucky.’ I pounded the pavement for years to make

that NAPMW offers carries over into their personal and business lives.”

myself ‘lucky enough’ to work off my referral base.” There is strength in membership for the NAPMW.

Keeping education at the forefront in the promotion

While there has been a downtick in actual member-

of professionalism, NAPMW also partners with cur-

ship numbers in the years since the economic crisis

rent NMLS providers to assist their members in get-

began, there is a surging level of pride and excite-

ting the continuing education both online and in live

ment within the organization.

classroom settings that they need to continue in their

“The most profound impact the NAPMW has had

chosen professions. For those looking to make a

on the industry is its support of its members and the

change, NAPMW also offers a career center that

communities they serve during the chaotic times we

allows members to potentially seek employment

all went through from 2007-2011,” said Ken Perry,

opportunities within businesses and with recruiters

president and CEO of The Knowledge Coop and

associated with the NAPMW. Members receive

NAPMW VP of the Northwestern Region. “NAPMW

access to members-only online content, discounts at

continues to meet and provide support, education,

national events, and more.

and encouragement to the in-dustry at a time when

The NAPMW also fosters its leadership program, established to help provide insight for future mortgage industry leaders and those seeking a career in the profession. “We have made great strides in furthering the development of our ‘Choose to Lead’ program under Candace Smith, CME, CMI, past national president, and Jeanne Evans, CME this year,” said President Kinsman. “We have had an entire new section added to our Web site devoted to leadership and training. We have presented and sponsored some terrific Webinars, and have added a resource library and forum to connect and have your questions answered. We want to encourage and provide our members with the skills and confidence they need as they take on leadership roles within NAPMW going forward.” “It makes us better loan originators and better leaders,” said Abshier of the association’s leadership initiatives. “Unfortunately in today’s immediate environment where everything is seemingly available at the click of a mouse, individuals in our industry are

“We have transitioned from a fully managed association to a self-managed association over the past seven years, while still trying to maintain our ‘Premier Provider of Mortgage Education’ status.” —Laurie Abshier, NAPMW Past National President

each person was going




allowing members to re-build a n d g r o w their businesses.” Many



individuals interviewed for this feature highlighted the importance of the organization, while also praising how intensely loyal those who


the storm have been. “For the members



“The more you invest and participate within NAPMW, the more it will allow you to grow within areas such as leadership and being educated in industry topics.”





facets of mortgage finance education,” said President


“Funding may be used for university or comm u n i t y c o l l e g e coursework, as well as other educational coursework that may be available,

—Kim Rozell, NAPMW Central NY President, National VP of the Eastern Region

but must be in the area of finance, mortgage banking or its related fields.”

Kinsman re-flects on her time as president of the NAPMW and w h e t h e r o r n o t the dip in membership has prov-en a stumbling block or not. “Serving as a leader of NAPMW has been a great source of joy to me, dedicating my time to something I truly am invested in and believe in,” said President Kinsman. “That being said, some of the issues we have all struggled with in our industry for the past several years has affected NAPMW as well. Due to

“NAPMW continues to meet and provide support, education, and encouragement to the industry at a time when each person was going through difficult times allowing members to rebuild and grow their businesses.” —Ken Perry, NAPMW VP of the Northwestern Region



regulatory changes, many of our jobs look very dif-

have invested time

ferently than they did a few years ago. Many people

and energy into

have left the industry or changed to new positions.

NAPMW, the im-

While continuing to stay educated is important in

pact has been a

order to know how those changes affect us, many

more profession-

of our employers are not as supportive as they were



at one time. Membership and marketing our associ-

employee and ex-

ation are the two areas that have been a challenge

posure for those

because of this. We are working toward marketing

companies,” said

NAPMW through social media and other avenues



and hope to continue building our membership by

CFCU Community

providing a value to our members that is vitally





Central NY Presi-

The NAPMW is an association with a history of val-

dent and National

ues, confidence and education. It is firmly grounded in

Vice President of

the notion of advancing women in the mortgage

the Eastern Re-

industry, while also promoting education for all, male

gion. “The saying,

or female. The NAPMW ‘s values are incredibly impor-

‘You only get out

tant to the industry, as a whole and for the continued


progression of the mortgage professional in today’s


what you put into

regulatory-laden environment.

it’ comes to mind here. The more you invest and par-

“Those values are quality education, great net-

ticipate within NAPMW, the more it will allow you to

working opportunities, long-lasting relationships and

grow within areas such as leadership and being edu-

growing your personal and professional skills,” said

cated in industry topics.”

President Kinsman.

There has also been an exciting stimulation of

As the NAPMW returns to its roots of Seattle, May

ideas and concepts created by those in the associa-

15-17, enjoying its “Golden Celebration in The Emerald

tion, at all levels.

City,” one must note that the association over the

“One thing about NAPMW is its loyal core of mem-

past 50 years has adhered to its original goals and

bers, who have devoted countless hours to keeping

pledges of promoting and fostering the mortgage

NAPMW alive. They should be applauded,” said

profession. Fifty years later, the association is still


going strong in today’s mortgage marketplace, one

The NAPMW also has a foundation-arm called the

riddled with regulation at every turn in a tumultuous

APMW Foundation. The Foundation is a corporation,

economic and U.S. housing market. However, the

with a principal office in Washington. Not directly part

NAPMW remains true to its roots and mortgage pro-

of NAPMW, APMW Foundation is able to give grants

fessionals nationwide can attest to the power and

and scholarships to NAPMW members, and since its

benefits of membership in the organization.

inception, the Foundation has awarded more than 80 scholarships totaling more than $75,000. “The APMW Foundation was formed in March of

Robert Ottone is executive editor with National Mortgage






1992 with the purpose of providing scholarships to

reached by phone at (516) 409-5555, ext. 314 or by

mortgage finance students, thereby providing finan-

e-mail at


The Long & Short: The Business of Short Sales

Surge of Past Short Sellers Spotlights New Problems for Sellers With Deficiencies By Pam Marron Many are aware of the foreclosure code placed on past short seller credit. As past short sellers surge back into the housing market, new problems come to light. Short sellers who paid on a deficiency after the short sale closed are getting denied by both Fannie Mae and Freddie Mac for a conventional mortgage for three reasons: 1. The short sale credit is coded as a foreclosure, the same problem that almost all short sales are experiencing. 2. The date the deficiency is paid off pulls forward as the date the short sale “Foreclosure” occurred. Two years must lapse before a past short seller is eligible for a conventional mortgage, and this is causing a denial when the paid off date is within two years. 3. Paid off deficiencies often appear as a “charge-off” or M-9, and lenders are not downgrading credit code, stating they are coding correctly.

APRIL 2014 n Georgia Mortgage Professional Magazine n


As the economy shows improvement, many past short sellers with two years or more behind them since their short sale are surging back into the housing marketplace. Many are aware of the erroneous foreclosure code that is commonly visible for the first time in Fannie Mae and Freddie Mac automated underwriting systems (AUS) and are preparing prior to a home purchase, checking to see if the code problem exists on their credit. A good number of past short sellers had deficiencies, or additional funds, required to absolve the short sale debt. Some had deficiencies because they were government employees who cannot go delinquent in order to keep their job. Others insisted on continuing to pay to keep credit intact through a short sale, and many more appear to be in jobs where higher pay is likely, even though these folks suffered an acceptable hardship to get the short sale approved. Even though the deficiency is paid, or the payment is included in the new debt-to-income (DTI) calculations, more credit problems have appeared that result in a new conventional mortgage denial for these past short sellers. We are already having problems with the Fannie Mae solution that was supposed to allow a “fix” when the erroneous foreclosure code is applied to short sales. This only works when Fannie Mae sees a conflict in the credit report narrative, and gives the “go ahead” to the lender to try the fix. This fix only happens occasionally. And Freddie Mac, where an approval cannot be seen for a conventional mortgage prior to four years after a short sale, is now showing the same problem. Getting this problem fixed now is imperative, and here is the reason why. There are 2.2 million past short sellers, and 6.5 million, or 13.3 percent of all U.S. residential mortgage holders that still have negative equity at the end of 2013, per CoreLogic.1 That is 8.7 million U.S. consumers that are, or may have a problem coming back into the housing market. If you examine the credit of most past short sellers, you will see pretty good credit prior to and after the short sale. This doesn’t mean these folks “scammed the system” as articles about strategic defaulters profess. Lenders only need to look at the excessive back end DTI of past short sellers and underwater homeowners who are trying to exit their home where ratios are so high, a new mortgage is not possible. And, they will see a credit pattern of homeowners who have done all they can to continue making payments, even at the peril of other debt. THE PROOF IS NOT HARD TO GET. A great majority of past short sellers have and continue to hang on until they can no longer. The “root” of the problem is that lenders continue to this day to require negcontinued on page 79

heard on the street continued from page 32

tact between a LO and a customer. Its automated workflow allows loans to seamlessly flow from origination, through underwriting and closing, to the lender’s secondary or servicing group, reducing errors and streamlining operations. RV Exchange was developed to eliminate the risks of double data entry, and its business rules can block progress on the loan until it is ready to move to the next step. Lenders experience higher profits and reduced risks with the ReverseVision’s RLOS platform.

Clear Capital Partners With Freddie Mac for UCDP Appraisal Data Validation

ClearCapital has been selected by Freddie Mac to power its collateral review of appraisals submitted through the Uniform Collateral Data Portal (UCDP) and to provide the company with indepth feedback regarding the quality and accuracy of the appraisals. Clear Capital will integrate a customized version of its valuation review product, ClearQC with the UCDP. Clear Capital is customizing its ClearQC workflow and business intelligence to align with Freddie Mac business requirements. “We have been refining ClearQC for our own internal quality assurance for over a decade,” said Kevin Marshall, president of Clear Capital. “It’s been a part of Clear Capital’s foundation, and we have seen it perform on millions of valuations. By providing a customizable version of ClearQC in the UCDP, we are working with Freddie Mac to provide a consistent approach to appraisal review and transparency on appraisal requirements.” Clear Capital’s retail version of ClearQC offers customizable rule sets with detailed narrative and data points on each rule run. This gives ClearQC customers the ability to evaluate appraisal data and receive pre-funding feedback. Actionable, informative and specific messages help customers make timely and appropriate funding decisions based on high quality appraisal evaluations, scored and validated against a vast repository of third-party data.

Six Leading Mortgage Insurers Launch New Trade Association Six of the leading active U.S. mortgage insurance companies announced the launch of a new trade association, U.S. Mortgage Insurers (USMI). Arch MI, Essent, Genworth, MGIC, National MI and Radian are the founding members of USMI. The new organization replaces Mortgage Insurance Companies of America (MICA), which wound up operations in early 2014.

Rohit Gupta, president and CEO of Genworth Mortgage Insurance, will serve as co-chair of USMI and believes USMI will serve an important role in Washington. “USMI will put a renewed focus on the benefits of mortgage insurance (MI) to help ensure access to housing finance for borrowers while protecting taxpayers,” said Gupta. “As policymakers focus on the need to create a strong, stable housing finance system, USMI companies are strongly positioned to serve the housing finance market and are actively engaged in efforts to ensure that MI remains a reliable foundation for the future housing finance system.” USMI is led by a board of directors from the six member companies, including Teresa Bryce Bazemore, president of Radian Guaranty; David Gansber, president and CEO of Arch MI, Rohit Gupta, president and CEO of Genworth Mortgage Insurance; Adolfo Marzol, executive vice president of Essent; Patrick Mathis, executive vice president, chief risk officer of National MI; and Patrick Sinks, president and COO of MGIC.

Stewart Adds Mortgage QC Specialists Wetzel Trott and Partners With DataQuick

Stewart has announced that Wetzel Trott Inc., headquartered in Farmington Hills, Mich., has joined the Stewart family of companies. The transaction strengthens Stewart’s quality control (QC) audit and due diligence offerings for the mortgage origination and servicing space. Wetzel Trott has specialized in QC reviews for residential lenders since 1985, with hundreds of customers throughout the United States. Wetzel Trott performs origination and servicing QC reviews on conventional and government loans in accordance with the requirements of Fannie Mae, Freddie Mac, U.S. Department of Housing & Urban Development (HUD), the Veterans Administration (VA), the Federal Home Loan Banks (FHLB), and private investors. The entire Wetzel Trott team joins Stewart and builds upon the existing loan review and due diligence product offerings strengthening the origination QC and servicing QC that Stewart offers for mortgage lenders, servicers and the capital markets. “We are pleased to be joining the Stewart family,” said Jan Wetzel, founder and CEO of Wetzel Trott. “Our dedication and focus on compliance and due diligence mirrors that of Stewart’s, and we have found a great home to continue to grow this service for the mortgage market.” Stewart has also announced that it continued on page 60

FHA’s Bailout on the Backs of Buyers Begins to Fail: The Administration Takes Action By Jeff Mifsud


These changes will allow lenders to confidently target the FTHB market which likely has a vast number of borrowers with credit profiles that will require manual underwriting. FTHBs will now have a greater opportunity to qualify for FHA loans but they first have to become aware of the opportunity. The lenders that implement the marketing campaigns to attract FTHBs will win. I encourage all MLOs that want to develop

These changes are not enough! When FHA was formed by the Roosevelt Administration in 1934, it was the loan of choice for the hard-working Americans that had a dream of owning their own home … and FHA filled this role beautifully until the recent leadership began making changes that kept making FHA more and more like a conventional product; the increase in MIP being only the most recent example. With the expected surplus in the Mutual Mortgage Insurance Fund, FHA needs to lis-

ten to what the market is saying and lower the MIP to restore FHA as the clear loan of choice for FTHBs. The FHA loan has always been the ray of hope for millions of potential home buyers, and it’s time for the real FHA to stand up and fulfill the original mission of helping the hard-working American attain homeownership. Jeff Mifsud is founder of Michigan-based Mortgage Seminars LLC, a former FHA underwriter with 15-plus years of experience originating FHA loans, an FHA expert for and creator of The FHA Originator, a monthly FHA newsletter. Jeff may be reached by phone at (248) 403-8181 or visit


n Georgia Mortgage Professional Magazine n APRIL 2014

An opportunity to write more loans …

more FTHB business to get this information out to your real estate agents before your competition does.

n the June 2013 issue of National Mortgage Professional Magazine, I penned an article entitled “FHA Continues to Bail Itself Out on the Shoulders of New Borrowers.” In this piece, I discussed the fact that FHA’s decision at that time to raise mortgage insurance premiums (MIPs) was effectively forcing new FHA borrowers to bail FHA out from the poor loans of years past. Would FHA have taken the time to do satisfactory market research on the impact of raising insurance premiums—for example, by speaking with MLOs and potential borrowers—they might have come to the conclusion that raising the premiums would decrease FHA volume… and thus, harm the FHA program. Had they not failed to survey potential first-time homebuyers (FTHB), they might also have had some important information that would have influenced a better long term strategy. Historical FHA data indicates that approximately 75-85 percent of FTHBs utilize FHA financing. When the FHA MIP was significantly lower than conventional MIP, it made better financial sense for borrowers to select FHA as the loan of choice. However, we now see clearly the choice consumers are making— and it’s clear that FHA is losing business to conventional MI loan programs. In addition, the amount of FTHBs has decreased. According to a recent data from the National Association of Realtors (NAR), FTHBs accounted for only 26 percent of the January 2014 sales numbers, down from the historical 38-40 percent. It would thus appear that the decrease in FTHBs, coupled with the higher MIP, has significantly decreased new FHA insurance endorsements. This has forced FHA to make some changes, making it easier for lenders to approve loans. Thankfully, a step in the right direction … In a move to stimulate FHA originations, FHA has made a bold and well needed move to bring more clarity to manually underwritten FHA loans that have higher ratios. These FHA changes essentially end the years of unsureness that plagued lenders when underwriting loans that exceeded ratios. Now lenders have clear guides on how to approve the classic make-

sense FHA loans with ratios that exceed 31/43. Mortgagee Letter 14-02 announced these revised manual underwriting requirements for forward mortgages. Here are the highlights of these changes which are effective April 21, 2014: 1. One- and two-unit properties must have cash reserves of one month PITI. Three and four units must have three months of reserves. (Previously only two months PITI were required for borrowers with insufficient credit.) 2. Maximum ratios for borrowers with scores below 580, or above 580 with NO compensating factors, may not exceed 31/43 (33/45 for Energy Efficient Homes), regardless of compensating factors. Nonowner occupant income cannot be included if scores are below 580, but can be included for non-traditional credit borrowers. Previously no maximum ratio limits were established and it was left up to the underwriter to decide. 3. Maximum ratios for borrowers with scores at or above 580 can go up to 37/47 if the Borrowers meet ONE of the following compensating factors or up to 40/50 if TWO of the following compensating factors are met: A. Three months cash reserves for one and two units; six months for three and four units; B. New payment cannot exceed the lesser of $100 or five percent of current housing expense; must have 12month payment history with no 30day late payments; C. Verified and documented significant additional income that is not considered effective income; D. Meet residual (net-disposable) income requirements as outlined on p. 14 of the mortgagee letter.

APRIL 2014 n Georgia Mortgage Professional Magazine n

GSE Reform: Thinking O


utside the Box? (Part III) By Ryan W. Birtel

2012 Reform Efforts

instruments should remain an area for continued private sector innovation and encouraged the Federal Reserve and other financial regulators to continue studying how these tools might be incorporated into their capital frameworks. Unfortunately, FSOC may have missed an opportunity to benefit from Freddie Mac’s feasibility study as the overall concerns of such strategies reflected upon in FSOC’s report had been addressed. Incidentally, the report was presented by the same senior Federal Reserve economist that had highlighted to the Brookings Institute in 2011 the inadequacies of private MBS and private mortgage insurance in managing systemic risk. This economist’s earlier recognition that private markets do not innovate tools that manage systemic risk, when considered along with the inability of Congress to get any private investment support for NMAs until decades after their creation, is perhaps contrary to the FSOC’s official findings, in that, it will be the government’s responsibility to create and pay for the tools it needs. By October, several news articles had been written describing the GSE’s attempts to meet the deadlines for risk sharing through the use of PMI and by issuing “Risk Sharing Bonds”, otherwise known as non-guaranteed MBS. The articles highlighted the continued demand to privatize risk in a fashion that Congress and the Administration deemed causes of the financial crisis a year and a half earlier and which fail to address the actual obsolescence of those GSEs.

That month, the FHFA publicly released its updated projections of potential draws required by Fannie Mae and Freddie Mac on the line-of-credit Treasury extended them after they collapsed. The FHFA interpreted these projections as a sensitivity analysis of the economic future of the GSEs as a function of housing prices. Though the likelihood of the presented scenarios was hinted at through reliance on a statistical rating agency’s assessments of housing path probabilities, FHFA made a point to distance this ‘what if’ scenario analysis away from what might actually be expected. Though it forecasted housing prices in an inconsistent fashion than the Federal Reserve had earlier in the year, its non-accountable stance on the projection passed that risk to Treasury just as effectively. HUD followed-up the next month with its annual report to Congress on the financial status of FHA’s mutual mortgage insurance fund. It projected FHA’s current capital reserves would be insufficient to absorb future losses due to downward changes in housing price appreciation forecasts used by the independent actuaries that performed the analysis. While it may be common wisdom that the use of independent analysts can help promote transparency, when the analysis being performed is one related to forecasting the future, it is better to make sure that those with the authority retain accountability. Otherwise, those with authority are not only outsourcing a primary duty, they are increasing continued on page 58

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

n Georgia Mortgage Professional Magazine n APRIL 2014

We have them! Do you?


In February 2012, the Federal Housing Finance Agency (FHFA) released publicly its “Strategic Plan for Enterprise Conservatorship” in which was established the primary goals of building a new infrastructure for the secondary mortgage market, using the government-sponsored enterprises (GSEs), such that the new standards for mortgage securitization could be emulated by Congress and private market participants in the future. While making note that only Congress could modify the charters of Fannie Mae and Freddie Mac, it was hoped that by slowly ‘sharing’ mortgage credit risk with the private markets FHFA could both contract the GSE’s operations and avoid shocking a sensitive economic recovery. FHFA was acknowledging the need for reform yet their efforts were constrained by their current legal mandate to address only the immediate short-term deficiencies, thus putting the impetus on Congress to affect a long-term strategy. Until it does so, Congress runs the risk of allowing the GSEs and private markets to continue the pass-through of systemic risks to the Treasury, suggesting that the Treasury must be prepared to manage that risk appropriately. On March 13, the Federal Reserve released its 2012 methodology and results for stress testing large, complex bank holding companies’ capital sufficiency. Though the analysis was explicitly impacted by a singular large housing price stress, the Federal Reserve caveated that the stress was not a forecast, rather a hypothetical scenario to test capital resilience. By avoiding the substantiation of such an integral stress factor, these tests, while perhaps increasing transparency, do not make the Federal Reserve accountable to Treasury for deciding what capital reserves are necessary. That would not be consistent with the duties placed on the Federal Reserve in the 1930s. The Federal Reserve’s dynamic capital supervision is a necessary step to improve the government’s ability to monitor systemic risk, but it does not in itself offer any advancement in how to respond to those risks. Two weeks later, the FHFA released its 2012 Conservatorship Scorecard which road-mapped the implementation of the strategic plan released a month earlier. Integral to this roadmap was the initiation and execution of new risk sharing transactions by the end of 2012 and through 2013, beyond the charter-required private mortgage

insurance. FHFA was suggesting, correctly, that private mortgage insurance was inadequate in helping them achieve their goals yet still mandated by Congress. The following month, FHFA researchers released a working paper entitled “Countercyclical Capital Regime” which was studied how countercyclical capital requirements would have affected Fannie Mae if implemented during the 2002-2010 period. The paper identified housing price indices as the simplest and most direct measure of risk in the mortgage market. On May 14, I presented to senior executives at Fannie Mae the essential elements of the contingent capital risk sharing process studied by Freddie Mac and suggested they may find greater value in sharing catastrophic financial risk via that process versus relying on the relatively complex and costly MBS platform. Though dismayed, they had not been made aware of this option a year earlier they confirmed its potential viability and suggested further study was warranted. Two years following the enactment of the Dodd-Frank Act (DFA), on July 18, FSOC released their report to Congress on the suitability of mandating contingent capital for non-bank financial companies. While the report provided an academically thorough review of the concept of contingent capital it made no attempt to perform an actual ‘business’ feasibility analysis (requiring estimated benefits and costs of specific and related structures) which is what was in fact mandated by the DFA. The FSOC concluded that contingent capital

Using Credit Bureau Data for Your Marketing

APRIL 2014 n Georgia Mortgage Professional Magazine n


What is pre-screened credit data? Pre-screened credit data comes from the three major credit bureaus, Equifax, Experian and TransUnion. It is the data that is used for direct marketing, telemarketing, direct mail, past client monitoring for mortgage credit inquiries, and mortgage trigger leads. Using pre-screened credit data allows you to pre-select and qualify consumers for your offer before you solicit them ensuring only qualified prospects are receiving your offer. Credit data increases response quality and close ratios saving you time and money. Every company that uses credit data must be set up with each respective bureau so there is a paper trail showing who is using the data and for what purpose the data is being used. The most important thing to keep in mind when using credit data is that you have to follow the guidelines outlined in the Fair Credit Reporting Act (FCRA) set forth by the Federal Trade Commission (FTC) and enforced by the Consumer Financial Protection Bureau CFPB. You can find the FCRA guidelines at On their main page in the top right corner you will see a search bar. If you type “FCRA” in the search bar, it will bring up the FCRA guidelines, so you can read, interpret, and stay in compliance with them. The Consumer Financial Protection Bureau (CFPB) is the new watchdog in the industry. Their purpose is to protect consumers from predatory lending and any marketing that may lead to predatory lending. Not only are they overseeing the marketing that you do and the loans that you write, they are also trying to track industry relationships you have that may involve RESPA. They can even regulate the amount of money a lender charges a borrower. Even with these changes credit data is a viable option for you to use with your marketing. Strict guidelines and oversight means less competition. Those who are using pre-screened data and trigger leads are seeing higher response rates and lower acquisition costs than ever! TagQuest Inc. Client Spotlight … Jason H., Maryland Mortgage Lender Each month, we like to talk with our clients and find out how their campaigns are going. Here’s what we heard from one of our mortgage professionals, Jason H., based in Maryland. Mortgage Insights (monitoring past clients for credit inquiries) l Past clients being monitored: 2,500 l Match rate in March: 1.8 percent l Past clients that had their credit pulled by someone else: 45 l Applications taken: 18 l Closed loans: Six (with 12 more in the pipeline … all applications are moving forward) Highlights of the campaign that worked well for Jason H.: “As a last line of defense to protect our past clients, knowing when they’ve had their credit pulled for a mortgage is the best time to call” Highlights that could appeal to other loan officers or offices: “An inexpensive addition to our follow up and the ROI from it is higher than any other follow up system or marketing campaign.” Medford, Ore.-based TagQuest is a full-service marketing firm created specifically for the ever-changing business world. TagQuest assists companies with their direct marketing, advertising and branding needs, and knows what it takes to generate quality customers and, most importantly, how to retain those customers for years to come. TagQuest brings forth a unique opportunity to utilize our experience and expertise in varying consumer sales and marketing environments. For more information, call (866) 376-5540 or visit VIEW OUR MOST RECENT WEBINAR ON YOUTUBE Online readers please click on the link below, readers of the print edition, please copy the link and paste it into your browser.


gse reform continued from page 57

financial instability by relying on entipensation for at least three years? ties with no “skin in the game.” This is not++Mandatory consistent with Arbitration DFA’s philosophy and and it passes the complex task of recFinanced Single-Premium Insurance onciling and responding to such risk to Do your policies and procedures Treasury. address provisions that: ++Prohibit contracts or agreements 2013requiring Reform Efforts from consumers to submit On Jan. 17, Fannie and Freddie disputes concerning aMae residential mortMac approved the newly created gage loan or home equity line of credit National Insurance to arbitration Mortgage and prohibit applying or Corporation as an eligible private mortinterpreting such contracts or agreegage insurer as federal it was statutory unburdened by ments to waive causes legacy losses that all of the PMI busiof action? nesses that preceded it then had premidue to ++Prohibit financing of any their concentrated speculation on ums or fees for credit insurance or debt housing prices. cancellation or suspension in connecfollowing day, credit as mandated by tionThe with a consumer transaction DFA, six federal regulatory agencies secured by a dwelling?20 issued the final rule establishing new property appraisal requirements for 2. Do your policies contain all the higher-priced mortgage loans. The rule relevant disclosures required by the placed total responsibility for developnew rules? ing++Do federal standards for yousuitability use model disclosure property valuation in the hands of the forms and language contained in the Appraisal guidance? Standards Board of the regulatory Appraisal Foundation, which is exactly ++If not, are your disclosures clearly where it was before the financial crisis. written in a way that consumers are Total to reliance on an entity without likely understand? authority or accountability is not only ++Are the disclosures presented in a inconsistent with DFA’s treatment of way that is likely to call the consumer’s the statistical rating agencies, it leaves attention to the nature and significance a the significant andin the non-transparent of information notice? source of housing price volatility within ++Have disclosures been reviewed the financial system. by compliance and audit? On Jan. 30, at the meeting of the Federal Marketbeen Committee 3. HaveOpen the policies reviewed (FOMC) it was deemed necessary tofuncconby the board (or similar oversight tinue the programmatic purchasing tions) and senior management of as $40 billion of GSE-guaranteed and appropriate, the complianceMBS officer, $45 management billion of longer-term risk firm, or legal Treasury counsel? securities, per month, to “foster a ++Were any concerns identified at stronger economic recovery in context this level? of ++If price yes, stability.” The been FOMC’s reliance have they resolved? on MBS, a tool that confounds systemic and4. borrower specific risks,your mayactual be a Do the policies reflect necessary means to influence shortpractices? term pricyyou stability, but it does not, in ++Do have testing planned to and of itself, set the right precedent for confirm this? how the government should approach long-term riskdo management 5. Whatsystemic processes you have in in housing finance. place to ensure that policies are kept Incidentally, the FOMC refercurrent and account for allmade changes in ence to the option-implied price of the regulatory environment? insurance long-term downside ++Who against is responsible for maintainrisk of the S&P 500 stock index. This ing content? acknowledgement of the need to gauge private capitalthe market sentiment 6. Describe steps you will takefor to future systemic financial risk is key to ensure that new product development understanding Treasury rules might creconsiders newhow regulatory and ate more stable housing price forecasts. associated risks. While derivatives, being finan++Isoption the compliance function reprecial tools heavily laden with countersented in the new product development party risk, are not appropriate for getprocess? ting accurate pricing of systemic risks, a financial tool designed without coun7. Do your policies and procedures terparty risk which combines both vary materially regionally, by delivery Treasury securities and housing price method, or by legal entity? indices bevary: (and let the Federal ++If would practices Reserve ‘kill two birds stone’ ++Is testing done forwith eachone segment? as ++Are well). Creating a marketplace for all policies individually such a tool was in fact the proposal that approved? Freddie Mac made are to inFHFA ++What controls placeand to Treasury in early 2011. ensure that regulatory updates are

On Feb.for 25,in all thepolicies? Bipartisan Policy accounted Center (BPC) formally presented their recommendation that the tools U.S. replace 8. Have automated been Fannie Mae and Freddie Mac with a sinupdated to reflect your new policies gle government-owned corporation that and procedures? will++Have provide they government guarantees on been tested to confirm MBS against catastrophic losses. The accuracy? authors recognized what should be a natural up you andupdated down cycle 9. Have your of riskhousing assessprices and suggest the tendency of ment to reflect thethat regulatory changes? many ‘actors’ theand market to con++Do yourwithin policies procedures vince that prices only go up definethemselves a process for ongoing updates to should be addressed in the future the risk assessment to account for housreguing finance system through some form latory changes? of countercyclical capital buffering. Central to creating thatfrom buffer is their “Confidence comes discipline recommendation thatKiyosaki21 a significant and training.”—Robert amount of private capital be in a firstlossTraining position ahead of the government, where the new Guarantor would Training is aPublic critical component of determine the minimum, yet dynamic, self-assessment and, indeed, it is a pivamount required to cushion otal partof of buffer a compliance management the government a drop in system. Policies from statements arehousing guide values no less extremethe than what was posts, but, inevitably, employees of experienced during the recent crisis, the i.e. a financial institution must know “30 to requirements 35 percent.” Taken atto face many related thevalue, comthese might suggest committhe crepany’sopinions regulatory compliance ation of Consider a public investment trust which ments. this list a de minimis is fully diversified against collateral set of questions! value risk such it promotes 1. Have you that determined whatliquiditrainty creating a speculative ingwhile needsnot to also be developed? investment opportunity for the 2. Have you determined whoprivate needs markets. training? Notwithstanding the criticism that3.such trustconsidered would be providing liqHavea you the following uidity where is not needed, i.e. redunquestions in it developing training: dant, this isinformation not the structure ++What will be actually covered being suggested by the BPC. in the new training? The report propose limiting ++What willdid thenot format be for trainLTVs to the 50-60 percent required ing? (Instructor-led, online, et cetera.)to shield a lender losses related a ++How will from training vary basedtoon BPC-level job duties?systemic housing price shock and++How related do fixed (always completincurred youcosts document when foreclosing and liquidating ed training? homes). Instead, it isconsequences suggested thatfor a ++What are the housing price shock of that magnitude employees not completing training by “would correspond to aggregate credit the assigned deadline? losses of four five percent prime ++Have thetochanges to theontraining loans.” is a integrated lot of assumption programThere been fully into your embedded in the transition a 35 full training program andfrom ongoing percent drop in housing prices to a five schedule? percent Firstroll ofout all,thethat loss 4. Howloss. will you changes approximation was based on rough estito your training program? mates of what GSEs be better quality ++When willthe training completed? loans had experienced throughout ++Do training timelines allow the for crisis. Those wouldtoprobably have enough timelosses for staff fully underlooked different had Treasury stand rule requirements prior to not the bailed-out the GSEs with $180 billion, so effective dates? any++Have loss expectations pegged that figyou done any to testing of ure is necessarily of what is needed training program shy changes? to avoid a government bail-out during a 5. Who is responsible for developing mortgage market stress such as the U.S. course content? just++Did experienced. Secondly, the you purchase content BPC’s from assertion “prudent underwriting is an outsidethat vendor? the++How single most to mitigate is effective senior way management risk in theinsystem” whileand alsoapproving failing to involved developing include LTV amongst the “traditional course content? factors” thatdid a lender should consider ++How you determine that reinforces the Administration’s official course content is adequate? stance that borrower creditfor riskidentifytook a ++What is the process larger role in the crisis than the overall ing the need for additional changes? leverage housing prices.what A Public 6. Havetoyou determined trainGuarantor divorces housing operaprices ing will bethat needed to address from mortgage credit in such a way can only be defined as a pro-cyclical entity,

just as the GSEs have always been, ergo its creation would not address any issues of obsolescence. Treasury would only continue to wear the type of systemic risk it did prior to the financial crisis. On Feb. 28th, at a meeting with a new team of senior capital market and housing finance policy analysts at Treasury, I presented evidence of their continued acceptance of, and sensitivity to, systemic housing market risk. Initial reactions suggested belief that, given popular academic forecasts for upward trending housing prices, systemically important financial institutions were adequately capitalized against future housing price shocks. As such, there was little concern for additional near-term Treasury bailouts. However, upon further discussion it was realized that reliance on housing price forecasts from entities without skin in the game is inconsistent with DFA’s declaration of financial stability through accountability and that Treasury’s responsibility goes beyond supporting only short-term recovery efforts. It was advised that for longterm stable economic expansion Treasury should be studying and advocating for the creation of a capital market for housing prices. A week later, after relaying to Freddie Mac the discussion points covered with Treasury, they conveyed to me that they were focusing on a creditlinked note (CLN) strategy, as opposed to the contingent capital strategy at the

heart of our prior joint study, for the purpose of satisfying their risk sharing quota placed upon them by FHFA. The prioritization was, or is, based on perceived “increased hedge effectiveness and reduced basis risk� which would seem to be at odds with both the results of our earlier study on the matter and FHFA’s own suggestion the previous year that housing price indices were the simplest and most direct measure of risk in the mortgage market (the contingent capital strategy relied on housing price indices as the triggering mechanism). CLN on the other hand, in this context, are a type of residential mortgage-backed security (RMBS) where an institutional counterparty, like Freddie Mac, ‘promises’ to pay bond investors monies related to the performance of mortgage loans, where the loans themselves are not actual collateral to be held for the benefit of the bond investor. CLN were discussed briefly within the BPC report as a source of private credit enhancement and, though never used by the GSEs in the past, were used extensively by the private capital markets, especially banks, prior to the financial crisis. As they embed a level of counterparty risk on top of what RMBS already possess, the suitability of such a risk sharing process must be carefully analyzed as to avoid to their contributing certain risks to the overall financial system as detailed in the FCIC report. The following June, a draft of the Housing Finance Reform & Taxpayer

Protection Act is released. This GSE reform bill is centered on the creation of a Federal Mortgage Insurance Corporation (FMIC) which will, as recommended by the BPC, replace the GSEs with a single U.S. owned corporation that will provide government guaranteed catastrophic mortgage insurance. That same month, Credit Suisse Group AG downgraded a large reinsurance company called Validus Holdings Ltd. Credit Suisse based its decision on the fact that Validus’ insurance company clientele were moving toward the use of contingent capital instruments as a more effective way to manage their weather-related catastrophic property risks. This re-raises the question of the appropriateness of creating an insurance company, such as the FMIC, which is meant to handle catastrophic systemic risk while only being capitalized to handle diversifiable risks, when the private insurance markets themselves have recognized the inadequacy of that business model for such a task. It also suggests Congress and the Administration should revisit and refine the idea of contingent capital as a basis to privatize systemic risks. In July, Freddie Mac released the offering documents for its new risk sharing bond, a CLN called Structured Agency Credit Risk (STACR) securities. These documents describe how only hypothetical loan losses are to be shared with STACR bond investors, not actual losses, by establishing pre-set loss amounts for any

loan that defaults based solely on the overall level of defaults within the reference portfolio, regardless of how, for example, housing prices fluctuate in the future. Though Freddie Mac has met the strict interpretation of FHFA’s quotas for risk sharing it has also, by divorcing housing prices from mortgage risk, impeded regulators from gaining private market substantiation of their hypothetical forecasts of a critical measure of systemic risk. Another feature of this structure is that it will give Freddie Mac an actual profit on every loan that defaults which does not experience a loss as severe as was pre-set, when, for example, housing prices are stable or increasing. This creates an odd incentive given, as written in the STACR offering circular, “Freddie Mac does not re-underwrite the mortgage loans it acquires from its sellers, which may adversely affect the performance of the reference obligation.� Without retaining any accountability for the loans it is insuring or securitizing there can only be greater performance instability in those loans, per DFA, which suggests that Freddie Mac is currently engineered to speculate on the price appreciation resulting from the Administration’s steps to affect a short-term economic recovery. That’s the type of pro-cyclical feedback loop that may not be consistent with the Pecora Committee’s suggestion for the continued on page 86


Markets may be volatile, but there’s one thing you can always count on, the total commitment of our Mor tgage Team. Loyalty, continuity of ser vice and our dedication to protecting the integrity of our relationships are just a few of the things that set us apar t. Ridgewood understands the needs of its communities              

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Life After Refinances: Leaders Need to Step Up By Tom Ward

APRIL 2014 n Georgia Mortgage Professional Magazine n


As a leader of your organization, the next 12-24 months are going to be challenging … or maybe a better way of saying it is this time will be “different.” If you are managing a team, a branch, a region, or are the CEO of your company, you need to consider making some in-flight corrections ASAP. Let’s flash back to the last 10 years. There are three types of producers in most companies. The top producers in any organization will thrive during a refinance market and are resourceful enough to transition into the market after the refinances dry up. Sure, they will be doing fewer loans, but ultimately, they will be just fine. The bottom of your organization will really struggle after the shift to a purchase market and some will even leave the business because that low-hanging refi fruit is gone. It’s easy to take a client from seven percent to six percent, and then to five percent and even to four percent. It’s like taking orders. The lead acquisition strategy for some was answering the phone with, “Hi … this is Tom. Can I help you?” Saving a customer $200 a month with a 24-month break-even was simple. When times change, a salesperson’s weaknesses are exposed. Like Warren Buffet says, “Only when the tide goes out do you discover who's been swimming naked.” The last group is the most important and that’s the middle. This is the one that will make or break an organization. These are the folks who were doing refinances, but knew the day would come that they would need to transition to a business model that focuses on purchases. That’s where the leadership skills of a manager get challenged. During “Refimania,” managers typically had this group on auto pilot. Sure, they played an important part in the process, facilitating lock extensions with secondary, expediting the underwriting of files, getting the file to closing, but now, things have changed. This group needs purchase leads, and sometimes, we find that the manager might be a little rusty on teaching how to make sales calls to real estate agents getting those leads. Let’s face it, in a shrinking of the market, you need to go get market share and that means taking someone else’s loans. In order to do that, you need to be really good and have some strong unique selling propositions, but that’s a story for another day. This group is looking for guidance, but not just soft, scratch the surface type of stuff. They need to know who to call on, exactly what to say, and how to differentiate themselves from all of the other loan officers who come through the door. They are starving for leadership and want someone to guide them through these tough times. They need someone they can trust and someone who knows what they are doing. When a branch manager uses old-school training tactics like “just go out and call on some real estate agents, drop off your rate sheets, etc.,” it doesn’t take long for the energy to get sapped, leading to a loss of appetite, and ultimately, production. If you require them to fill out a call report, they just fill in some names to make sure they filled your quota, knowing you won’t verify them anyway. Here is the other thing to point out. If you don’t give them the leadership they seek, they will search elsewhere and eventually leave your organization. If no one is showing them how to go and get the purchase business, then your business suffers and their future becomes an uncertainty. The secret to getting through these next 12 to 24 months is to move the middle. For more information on how we can help, visit Tom Ward is founder of the Path2Buy Homeownership Coaching Program ( He may be reached by phone at (847) 340-4295 or e-mail


heard on the street continued from page 54

has entered into a definitive agreement with DataQuick Lending Solutions to acquire its collateral valuation, settlement services and the title and closing business operations. The transaction represents a significant expansion of Stewart’s mortgage services offerings and centralized title operations, in addition to expanding Stewart Title’s retail office footprint. This transaction expands Stewart’s title operations by adding two additional processing centers in the U.S., a suite of complementary branch operations, a team of talented title and closing operations staff, and a platform upon which Stewart can continue to grow centralized title services. This transaction also broadens Stewart’s bundle of mortgage services offerings to include a robust suite of collateral valuation products including appraisal, broker price opinion, and hybrid valuation products. These valuation products will complement Stewart’s existing product lines in support of home equity and first mortgage lending as well as, default and capital markets activities. In addition to adding significant business lines and capabilities to Stewart, the DataQuick Lending Solutions’ team of industry experts is joining the Stewart family.

RealtyTrac Expands Business With New Licensing Domain

Absolute Mortgage Continues Pacific Northwest Expansion

Absolute Mortgage has announced the opening of its newest location in Edmonds, Wash. Continuing their planned expansion, this marks the third neighborhood location for Absolute Mortgage in Snohomish County, Wash. in 2014. Absolute is known for its strong leadership and integrity, and follows the four core values of Teamwork, Empowerment, Positivity and Excellence, while offering a wide variety of home loan options. “Our team members have lived in Edmonds for over a decade and we cannot express our excitement over opening a branch of Absolute Mortgage in our very own community.” said Katy Reischling, who is the recently appointed leader of the Edmonds branch. She continued to say, “As one of the owners of Embellished in Edmonds, we know that the business community is extremely supportive of businesses and residents of Edmonds. We look forward to introducing ourselves and Absolute Mortgage and participating in many of the local events. See you around!” This marks the fourth branch in Snohomish County, Wash. opened by branch operator Jasen Nuetzmann.

Platinum Data Solutions Approved To Carry RealtyTrac has announced it has entered Freddie Mac’s Home the tax, deed and mortgage data Value Suite licensing business, making it the first new entrant in the business in more than a decade. For years, RealtyTrac has been licensing its proprietary foreclosure database of more than 20 million current and historical foreclosure records and local & environmental data available through Homefacts. Now, it launches a nationwide property-level dataset for tax, deed and mortgage records for U.S. parcels nationwide. “For nearly 20 years, RealtyTrac has been a market leader in B2B and B2C applications for comprehensive real estate data, and we are excited to expand our data footprint and continue our mission of bringing more data to more people,” said Jamie Moyle, CEO at RealtyTrac. “We are expanding the horizons in every direction when it comes to leveraging real estate data for personal, business and policy decision-making.” RealtyTrac also hired 28-year industry veteran Brian Mushaney to head up its rapidly growing file licensing division. Brian was previously with Lender Processing Services for 11 years as senior vice president of Sales within the Data Solution group and most recently was the senior executive with X1 Analytics.

Freddie Mac has approved Platinum Data Solutions as one of nine authorized distributors of Freddie Mac’s Home Value Suite to mortgage lenders, servicers and other third parties, Platinum Data officials announced. Freddie Mac’s Home Value Suite includes Home Value Explorer (HVE), an automated valuation model (AVM), and Home Value Calibrator (Calibrator), a quality control tool that analyzes the relationship between key loan information, borrower information and collateral valuation data. “We’ve been in discussions with Freddie Mac about our AVM calibration and testing program, and I believe our dedication to accuracy and suitability is a key reason they selected us a distributor,” said Phil Huff, CEO of Platinum Data. Platinum Data is one of the largest independent resellers of automated valuation models (AVMs) in the country and a provider of collateral evaluation and quality technologies for the mortgage industry. As an authorized distributor, Platinum Data can now sell HVE to not only lenders, servicers and other direct users, but also third-party continued on page 64

ramblings of an old jewish broker continued from page 46

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| | KEYNOTE SPEAKER MICHAEL STOLER President, New York Real Estate TV, LLC Managing Director, Madison Realty Capital



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n Georgia Mortgage Professional Magazine n APRIL 2014

After that, he DID start hiring top loan officers and made a hellva lot more money. After Carteret closed, he opened up his own shop, and I ended up working for him and still do. At Carteret, we would say, “The tent is big enough for all different types of models.” At the other end of the extreme were the two guys who ran our Lending Tree Division. They would buy leads from Lending Tree, give them to new junior, low paid loan officers and have them dialing for dollars. Of all the branches, this one got the most complaints. I would visit their operation and tell them they had the lowest percentage of repeat business. In effect, by paying so low, they got unskilled labor and had to reinvent every lead again by buying it rather than developing a following. By saving money, they were actually losing money. Eventually, they quit, started their own mortgage company and were out of business within a year. In 2003, I bought a farm in the Shenandoah Valley as a second home. My next door neighbor was James Carville and his wife, Mary Matalin. He ran the Bill Clinton Presidential campaign and she was the Press Secretary for Vice President Dick Chaney. His kids would come over and play in our pool. He would jog on my bottom land because the ground was firmer and better for his back. Once, my family and I saw his jeep stuck in the mud. We tried to use my tractor to get it out. Then my tractor got stuck and we needed a neighbor’s tractor to tow all of us out. We got all muddy and had a great time. He told my daughter, “You are a good American citizen.” Even in real life, he talks in sound bites. It was that year that Carteret Mortgage Corporation became the largest mortgage broker in the country. Thompson Financial sponsored a black tie event in our honor. They told us there would be a special celebrity guest. “Come on Britney Spears,” I thought. When I get there, the “Special Celebrity” turned out to be James Carville. They had no idea we knew each other. We talked all night about the neighbor kid ramming his fence at “The Farm.” People just looked at us and said, “I guess it’s true, all rich people know each other.” The next night, I was invited to a private dinner with Sig Anderman, the founder of Ellie Mae and Dan Jacobs, the CEO of First Metropolitan Mortgage, third biggest mortgage broker at that time. Among other things, we started talking about our mutual Jewish heritage. I said, “Wow, this Jewish Conspiracy thing is really working out.” We laughed because there is no Jewish Conspiracy thing. Except for every third Thursday of the month when every Jewish person in the country comes to my house and we “just talk.”

It was a pretty eclectic group. I am Jewish. My chief compliance officer, Al, was the former Commissioner of Banking for the District of Columbia and an African-American. Michele, my chief financial officer, was a CPA and an attractive woman. Matt was a highly intelligent IT guy who used to work for a defense contractor. When we were getting real big, actually the second largest mortgage broker in the country at the time, I had someone from our top rival come interview for a job. I will not say the name of the company, but they were the number one mortgage broker by volume, were out of Texas and were later sued for discrimination by the federal government. After I showed him around, he was amazed. He said his current boss would never have a Jewish person and a woman who was black in top management running his company. Of course, I have censored out what he really called us. “Sorry, we just filled that vacancy, thank you for applying.” In 2001, I was awarded the Freddie Mac Service Award. They paid for my trip to Hawaii, hotel stay and a one in 10 chance to win a Chrysler PT Cruiser as they drew our names out of a hat. As financially well as Freddie Mac did that year, the flight was economy class and the hotel was a three-star hotel. I gave my ticket and hotel to my top producing branch manager as a reward. I bought a first-class ticket, stayed at a five-star hotel and later bought myself a PT Cruiser because I lost. The best part of the trip was talking to Paul Skeens, the branch manager. Most of my other branches had several loan officers and the manager got an override on their business. Paul was different. He did all of the loans and had his staff help him. They called him “The Head.” Basically, he was on the phone all day with his headset, making deals. Once arranged, he would have a junior loan officer take the application and the ladies in the office would set up the loan, process and close it. He could literally have no actual body and just be a head in a jar like Futurama and still make a good living. I gave him, what came to be known as, “The Good Enough” speech. As great as his model was, it was limited. After all, there are only so many hours in a day, so many weeks in the year. At some point, he would reach the maximum earnings he could make, as big as that was. “But,” he replied, “I have a certain level of excellence my customers expect of my operation. No one will ever be as good as me.” “That is true, “I said, “If you train someone to be another ‘Head’ and they train someone to be another ‘Head,’ they will never be as good as the original ‘Head.’ BUT, you will make a hellva lot more money. And that might just be GOOD ENOUGH.”


Vladimir Bien-Aime

President & Chief Executive Officer of Global DMS


APRIL 2014 n Georgia Mortgage Professional Magazine n


ational Mortgage Professional Magazine recently had the chance to speak with president and chief executive officer of Global DMS, Vladimir Bien-Aime. Vlad, as he is known to his friends and those who work with him, has built Global DMS into one of the leading appraisal management technology firms in the mortgage industry. Global DMS provides appraisal valuation management solutions to numerous lenders, appraisal management companies (AMCs) and other entities involved in the valuation process. I wanted to find out from Vlad how he came to bring his talents and entrepreneurship for developing innovative technology in the mortgage industry, and what his views are on the current state and future prospects for the mortgage space. Vlad is a proven leader who continually drives the adoption of best practices while maintaining the highest standards in all things related to the residential appraisal process. He has built a software firm that enables mortgage professionals to operate more effectively and meet today’s ongoing challenge to ensure compliance, and to do so with far greater efficiency than ever before.


NMP: Vlad, congratulations on being

named National Mortgage Professional Magazine’s Mortgage Profes-sional of the Month for April. Vladimir Bien-Aime: Thank you … I appreciate the honor. Did you choose a career in the mortgage industry specifically, or did it just sort of happen to be the path your career took? Bien-Aime: My background is technology-based, which has always been a passion and strong suit of mine. I was a computer science major in college back when that major was just gaining momentum pre the hi-tech boom of the mid- to late-90s. Post-school, every job I’ve had has been related to technology. In my second job out of school, I had an opportunity to work for a company that was in the mortgage industry, developing forms for appraisers to use. That’s what got me into the industry back in 1995. I was a young man back then. I left that company because I wanted to grow and ended up pursuing a solid career in general consulting. But ultimately, I was drawn back because the clients I used to work with would call me up and ask for advice on how they could do things a better way. It has led me along this path where I have sought to deliver that “better way,” where clients can be more mobile, and

where they could cut down on office space. When questioned, my answer has basically been Web-based technology for appraisal management. Early on, that concept was a completely different idea, and I had a boss at the time say, “How do we do what we do better?” I replied, “Let’s do it on the Web.” Ultimately, I left to pursue this idea on my own, and we were able to turn it into a great business. It has and continues to be a great ride for me. You were a pioneer among those providing appraisal compliance services online. Now with the entire appraisal process under such close scrutiny and appraiser independence required by regulation, would you say that your firm has had to significantly evolve over the last several years? Bien-Aime: Well, it’s kind of funny you say that because when we started out, we were already exercising best business practices. So for us, it wasn’t really a new thing and all of our clients believed in being independent from a security perspective. Many of our initial clients were lenders who got involved with subprime lending. They were leery of it because they were generally more conservative companies, so their ability to determine the real value of the homes was imperative.

Every client we had initially had their own appraiser panel. They placed an order from a portal and then had internal staff to manage and place requests and communicate with the actual appraiser. All of that was included in our product, so we were pitching creative solutions when it was wildly unpopular during that particular time period. It was something that we always believed in, and I think the rest of the world eventually came around to our way of thinking. Do you think you were ahead of the curve in creating separation between appraisers and lenders? Do you believe that if the new requirements had been in place earlier, the housing crisis could have been eliminated or significantly reduced? Bien-Aime: It’s an interesting thing. When you have these individuals who really want to push the limits of what is realistic … now you have this visual barrier. Obviously, certain individuals will do what you allow them to do, but this regulation has been in place for a very long time. It’s not new. People say, “Oh, all of a sudden we have to do this,” but this was something that was always required. It’s not new. It’s just being properly enforced. So to answer your question more specifically, Yes, the rule

OF THE MONTH was always there, and our software enabled enforcement of it, but all too many organizations got caught up in pushing the envelope. There is no one thing that could have prevented the mortgage crisis or significantly reduced its debacle. It was a culmination of different things.

What are the key challenges and opportunities you see in the new mortgage industry? Bien-Aime: There is no doubt that you’re going to see a lot of things continue to revolve around compliance. If you look at the very nature of the Dodd Frank Act and the mandates of the Consumer Financial Protection Bureau (CFPB), it’s going to be pretty important to actually maintain compliance over the long-term. I think they are looking more and more to the vendor sphere for assistance in that regard. A great deal has happened in the last several years that has required us to bring extra help

How will Global DMS remain at the top of its field? Bien-Aime: We at Global DMS like to be innovators. We are always investing in the future. We’ve already spent millions of dollars on our next-generation technology. We like to be ahead of the game in everything we do. For example, when you look at Web forms, we’re still the only company that really has a full Web-based appraisal system that includes form technology. We launched that back in 2007. I think that innovation and staying ahead of the curve is one of our strongest characteristics. We reinvest and most companies forget to do that. I also think we have done a great job investing in people. A lot of companies don’t realize that people are part of their capital. One of the most important things we do is look for talented people at all times. I believe that having great people makes a great company. David J. Coster is senior editor of National Mortgage Professional Magazine. He may be reached by phone at (919) 559-2171 or e-mail


n Georgia Mortgage Professional Magazine n APRIL 2014

What is your approach to leadership? Bien-Aime: My motto is to lead by example. You see, there are many people who see certain things, but then don’t actually act on it. People have a hard time getting behind leaders like that, so I endeavor to practice what I preach I think if you do this, people will believe in you and will follow you as a result.

Speaking of lenders, what are they going to have to do to survive in the future? Bien-Aime: With all of this regulation, they’re simply going to have to be more efficient and effective, get better at what they already do. When the likes of Wells Fargo and mega-lenders are laying off hundreds at a clip, it’s a sign that you’re going to have less people employed internally. You’re going to have to do more with less. Technology automation and tight integration are key to succeeding.

What separates one appraisal management company (AMC) from another? Bien-Aime: There’re probably many good factors. I would say first and foremost is the integrity of the actual AMC’s owners. I think that’s a top aspect. You have heard of so many AMCs go out of business. There are companies that not only took money from the lenders who never got their appraisals, but left them on the hook for millions of dollars. I think that’s a pretty significant outcome which has ramifications throughout the entire industry. As a result of that, we actually launched a site to help lenders find more quality in AMCs. However, the AMC model serves a valuable purpose and there are many well-established AMCs of high quality. Lenders just need to perform their due diligence before engaging with them. I fully support the AMC model. It has proven to work well. Technology obviously also plays a big role. Global DMS pioneered Web-based appraisal technology that was helping the appraisal space many years before the mortgage industry became a daily headline post the crash. I think companies that pay for better quality products actually see better results. For example, when you see things like the model where AMCs do the cost plus, where they take a flat fee for their service, then, as a result, are not squeezing the appraisers to make more margin. I think that type of integrity goes a long way, and ultimately, delivers a better product to the lender.

from a legal perspective to ensure that our clients are in compliance. It’s something that’s expected of us. Our technology will revolve around that. Compliance isn’t going away; it’s here to stay. Mobile technology is going to be a big factor, as this type of technology enables people to work the way people actually work. Twenty years ago, if you said that everybody was going to be using Webbased software, people would have said you were crazy. In the next 20 years, everything will be going the way of mobile devices, and I think people who move towards that innovation are going to be a lot better off in the future. The last way to survive in this new mortgage industry will be via trusted, long-term partnerships. I think if you look at consolidation in the industry, the companies that have staying power are the ones that work together for success. We at Global DMS firmly believe in that. We’ve made a number of different strategic partnership moves in the last couple of years to align ourselves with great companies to make sure that lenders gain the most from automation and experience the best service. Those types of solid relationships are going to be key.


Two simple tips to maximize reviews

APRIL 2014 n Georgia Mortgage Professional Magazine n

You most likely close business on the phone, in person, with pen and paper, behind a desk, and even in coffee shops. If you do, you should be collecting online reviews! 1. Fit it to your sales process: Search Engine Land cites Customer Lobby CEO Ted Paff saying, “Comment card reviews solicited at the time of service can see completion rates of 80 to 90 percent.” It makes sense. The point of sale is the height of customer euphoria. Take advantage of these feelings by verbally asking for a review. The true professionals carry their iPads with them at all times, just waiting for those moments to arise. Include it on the back of every document you give to the client. Staple it to their paperwork. 2. Proactively share your reviews BEFORE they search for you: As much as we all want people to find us when they need us, it just doesn’t always happen that way. Be proactive in how you share your positive reviews. Make them available to read on your Web site, in your physical lobby while they wait for you, and attached as a link to your e-mail signature. This way, you direct them to what you want them to see versus them having to seek you out. And who knows what they’ll find then besides your competitors. For more tips on maximizing your online reviews, please visit Rene Rodriguez is founder and chief executive officer of, a powerful and easy-to-use online loan officer review management system. Loan officers can collect, manage and promote their reviews in order to build trust, secure more referral relationships and close more deals. Rene is also CEO of Volentum, an enterprise education and consulting company. He has been named to National Mortgage Professional Magazine’s “40 Under 40 Most Influential Mortgage Professionals” for five consecutive years. He is a renowned behavioral and organizational change expert, leadership coach, world class sales trainer & dynamic keynote speaker who has shared the stage with Tony Robins, Lou Holtz, Ben Stein, Roy Firestone and Jeffery Gitomer.


Guild Mortgage Expands Into Georgia

Mortgage Professionals to Watch

As part of its planned expansion in the Southeastern U.S., Guild Mortgage Company announced the opening of the company’s first branch in the state of Georgia, located in Savannah. Brenda Harden, who has more than 30 years of experience in the mortgage industry, will lead the Savannah branch as branch manager. Prior to joining Guild, she worked with Brand Mortgage. Guild Mortgage, founded in 1960 in San Diego, has more than 200 branch and satellite offices in 20 states and generated loan volume of $7 billion in 2013 and servicing volume of $13 billion. “After interviewing with nine other companies, I chose Guild because they’ve been in the mortgage business for more than 50 years and service most of their loans,” said Harden. “Guild offers programs that other lenders don’t and has particular expertise in helping first-time homebuyers. They studied the Savannah region and are optimistic about the economy and the housing market, so I knew we would be able to reach more buyers and get them into homes. Guild is also a pioneer in using technology to make the home buying process faster, smoother and more efficient.”

l First Guaranty Mortgage Corportion (FGMC) has announced that David Streeter has joined the company as national marketing manager. Patty DeVita has also joined FGMC as Northeast regional sales manager, TPO.

Guaranteed Rate to Expand in the MidAtlantic Region

Guaranteed Rate has announced plans for a major expansion of its operations in the Mid-Atlantic region and the addition of a new head of regional sales and operations for Washington, D.C., Maryland, Virginia and North Carolina. Pat Casey, who increased mortgage loan volume from $85 million to $3.6 billion during his 25-year tenure at SunTrust and Crestar Mortgage, has joined Guaranteed Rate as its new regional manager, responsible for mortgage lending in the Mid-Atlantic corridor. He’ll also be responsible for recruiting top area loan officers, branch managers, and underwriters, as Guaranteed Rate plans to open a number of new locations in the region over the next year. The company’s newest Washington D.C.-area locations will be announced and open later this spring. “Pat’s philosophy matches that of Guaranteed Rate perfectly,” said Tom Gamache, Guaranteed Rate’s national director of retail production. “He believes in making mortgages simple



and more transparent with low fees. His experience and long track record of success in the Washington, D.C. market makes him the ideal person to lead our new growth strategy in the region.”

l DocuTech Corp. announced that its Chief Operating Officer Scott K. Stucky has expanded his role within the company and has been named chief strategy officer.


The results of the Local Consumer Review Survey (2013) are in, and as we predicted, the trend is continuing. Online reviews are here to stay and are gaining power. Just how important are online reviews to consumers? Survey says: EXTREMELY! Let’s take a look at some of the most interesting results from the survey to learn why consumers are relying on online reviews more, and why it’s critical that your business has an expansive arsenal of positive reviews. If your business relies on customers who value quality over price, this first bit of data should make you happy. Seventy-three percent of consumers reported that positive customer reviews make them more likely to use a local business (up from 58 percent in 2012) compared to just 24 percent who make their selection based on other factors like location and price (down from 28 percent). Even more encouraging for businesses, 79 percent of consumers trust online reviews just as much as personal recommendations—provided they look authentic, of course. A Bazaarvoice Survey published survey results of its own, citing that 51 percent of people actually found user-generated content (an online review) more important than the opinions of their friends and family. That’s great news, because it means you have more control over how your business is represented. If you choose to take an active role in generating online reviews, that is. The survey’s findings also revealed that 85 percent of consumers regularly or occasionally use online reviews to determine which local business to use. That means almost everyone is searching you out when they want to do business with you.

resellers. Another distinction of being an authorized distributor is that Platinum Data is now able to provide Calibrator, which was not previously available through the company.

l United Guaranty Corporation has named Tom Parrent chief risk officer (CRO).


By Rene Rodriguez

continued from page 60

l Kimberly Swyka has joined Mortgage Network Inc., d/b/a MNET Mortgage Corporation as a loan originator in the company’s Elkton, Md. branch office.


Why Your Business Needs Quality Online Reviews

heard on the street

l Secure Settlements Inc. (SSI) has announced that the Honorable Kenneth Donohue, former Department of Housing and Urban Development (HUD) Inspector General continued on page 79

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One of the best and worst things Carteret gave me was the money. My wife and I could finally afford that divorce we were saving for. Seriously, I do blame the money for tearing us apart. It just gave us too many options. When we were poor, we had to work together to pay the bills, now we didnâ&#x20AC;&#x2122;t. Separating was one of the worst things in my life. I call it the â&#x20AC;&#x153;John Belushi Syndrome.â&#x20AC;? Google him or just substitute any of the young rich celebrities who get famous or make money really fast and then their life just spirals down or they overdose on heroin. People prop you up, start telling you are great and you start believing it. Pride is one of the seven deadly sins for a reason. On the other hand, being really, really rich is that bad. After the divorce, somehow a 46-year-old, overweight Jewish guy became attractive. One night, I went out for sushi and sat alone at the bar. After the meal, I paid with my American Express Black Card. You may not know what that is, but every 25-30 year old knows. That is the card Madonna or Jennifer Lopez uses. It has an unlimited credit limit, costs $12,000 a year to hold and comes with your own concierge. There are only about 1,000 total in the world. So when I paid

for my meal, this 25-year-old girl starts talking to me. We dated for a while and whenever people asked how we met, I tell them the truth, â&#x20AC;&#x153;I donâ&#x20AC;&#x2122;t know. I was just reaching for my wallet and there she was!â&#x20AC;? Carteret went out of business in 2008, and I retired. Then I got bored to death. Now I am back to where I was in 1991, 23 years ago, doing loans. I really do love it. It was a wild ride. Some of them magic, some of them tragic, but I had a good life all the way. One thing I have learned from all this is: A day without laughter is a day wasted. Eric Weinstein worked in banking, on the commercial real estate side until 1991, when he fell in love with residential lending. In 1995, he started a small mortgage company in his basement called Carteret Mortgage Corporation, which in 2003, grew to one of the largest mortgage broker companies in the United States. These days, Eric is semi-retired, doing mortgages by referral only. As he likes to put it, â&#x20AC;&#x153;He is either saving people money per month or helping them buy a new home. What a great job!â&#x20AC;? He may be reached by phone at (703) 505-8692 or e-mail

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the elite performer continued from page 8

Andy W. Harris, CRMS is president and owner of Lake Oswego, Ore.-based Vantage Mortgage Group Inc. and 2010-2011 president of the Oregon Association of Mortgage Professionals. He may be reached by phone at (877) 496-0431, e-mail or visit

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  ! !    !  We will, however, also continue to take into account the self-reporting and cooperation of companies in determining how to resolve such matters.â&#x20AC;?

On the lighter side â&#x20AC;Ś A bank auditor dies in poverty and so his friends decide to raise funds for his funeral. A colleague walks into a local mortgage lenderâ&#x20AC;&#x2122;s offices and asks if the owners would care to donate $100 for the fund. â&#x20AC;&#x153;Whatâ&#x20AC;&#x2122;s it for?â&#x20AC;? they ask, and the man tells him. So the president calls his accounting department and

within minutes hands over a check for $1,000 saying, â&#x20AC;&#x153;Here â&#x20AC;Ś go and bury 10 of them.â&#x20AC;? Andrew Liput has been a corporate, real estate and banking attorney for more than 25 years. He is the founder, chief executive officer and president of Secure Settlements Inc., the first data intelligence and risk analytics firm to offer specialized vendor management services addressing settlement agent risk to mortgage lenders and banks nationwide. He can be reached by e-mail at

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n Georgia Mortgage Professional Magazine n APRIL 2014

Remember each morning that you make the choice to either slide out of bed or spring out of bed. Market share opportunities are there for those with a spring in their step that

emerge from change by quickly adapting to what others are unable or unwilling to.

of life. You will find that it is much easier to control and produce positive thoughts when you are more financially stable. You can think much clearer and make more educated decisions rather than compulsive ones.

“A primary attribute of leadership is being visible. Those that view the ‘C-Suite’ as an ivory tower are in need of a better vantage point.”

Five Attributes for Successful Leadership By Phil Hall

APRIL 2014 n Georgia Mortgage Professional Magazine n


Peter Drucker once commented, “Leadership is defined by results, not attributes.” And while few people will question that impressive results will affirm one’s leadership abilities, there is still a need to define the attributes that can identify a successful leader. This is especially important in the mortgage world, which has faced a battery of problems from external sources as well as more than a little problematic decision making from within. If any industry could use a surplus of leaders, this industry would be a prime choice! According to many well-respected figures within the industry, the key to successful leadership is not difficult to achieve—as long as one works with five crucial tenets that can ensure a foundation of quality leadership.

The ability to lead from the front A primary attribute of leadership is being visible. Those that view the “CSuite” as an ivory tower are in need of a better vantage point. “People can’t be a leader at any company if they are at the 30,000-foot level,” said Mat Ishbia, president of

Troy, Mich.-based United Wholesale Mortgage and president/CEO of United Shore Financial Services. “You have to be down in the weeds.” Rick Roque, principal with Washington, D.C.-based Menlo Company, observed that successful leaders are the ones that bring out the best in others by showing the best of themselves. “Good leaders are not reactionary,” Roque said. “The are always looking to correct a situation that went wrong. They are not yelling or screaming at you, and they are not cursing you. A good leader recognizes humanity in the people around them. If you demean someone or swear at them, that’s not leadership. It might be management, but it’s not leadership.” Indeed, a leader who cannot get others to follow their path is doing something very wrong. “Successful leaders are able to get people to believe in them,” said Andrew Peters, chief executive officer of Frederick, Md.based First Guaranty Mortgage Corporation (FGMC). “You can have knowledge, vision and strategy, but if you do not have the ability to get people to buy into you and believe in you, you’re already lost.” “In leadership, we look for people

who can rally others around them,” said Scott K. Stucky, chief strategy officer at Idaho Falls, Idaho-based DocuTech. “We want someone that is serving as a leader to their team, not having the team serve them.”

The ability to set an example Leadership is a triumph of deeds over words. Eddy Perez, president of Atlantabased Equity Loans LLC, believes that a leader has to set the pattern of performance that will define how a company operates. “The best way to be a leader, first and foremost, is to lead by example,” said Perez, adding that a hard-working leader is one that sets the standard of behavior. “Something can be said about a person that works eight hours a day versus someone who works 10 to 12 hours a day.” Stan Middleman, CEO of Freedom Mortgage Corporation in Mount Laurel, N.J., agrees. “Good leaders can be followed by the way they act,” explained Middleman. “When you’re asking people to behave a certain way, you too should behave that certain way.” But Middleman warns that there is a difference between leadership and follow-the-leader. “Great leaders work hard to make others successful,” he said. Ishbia states that successful leaders are the first to accept responsibility if things don’t go according to plan. “We have a saying in our company: ‘We’re thumb pointers, not finger pointers,’” said Ishbia. Roque believes that a successful leader does not give the impression of being indispensable. “You cannot have a cult of personality,” said Roque. “You need someone who can inspire those around them. If that person can go on vacation for two weeks and the will flow without them, then you have a successful leader.”

The ability to create cultural stability Roque also notes that the growing level of mergers and acquisitions within the mortgage world creates new challenges when different corporate cultures are

blended into a new entity. “When consolidating companies and folding them together, the question of leadership in managing is paramount,” said Roque, adding that putting the wrong people in the top job can become an obvious error too quickly. “Executives usually have their own teams. In taking on new leadership, a tremendous amount of energy absorbed. But we’ve seen more money lost in six to nine months after acquisitions than probably in any other time.” Furthermore, Roque warns that having a leader whose style and focus is at odds with the company as a whole will usually lead to problems. “There will be friction in having a rogue executive fighting the grain,” he said. “Unless there is a mutual appreciation for differences, it will not fit.” Stuckey concurs, citing an example within his company when a wellregarded industry expert was recruited for a leadership role. “You can bring in someone with a stellar reputation, but you have to be sure they fit in with your corporate culture,” said Stuckey. “One fine gentleman was here one-and-a-half years, but he just didn’t fit within our culture. It was a frustrating situation all around, for him and us. In this case, we didn’t get it right, which was unfortunate.”

The ability to see the bigger picture In the mortgage world, leadership is not just about the ebb and flow within a company. For Christy Hoskins, vice president of business development at Brentwood, Tenn.-based Churchill Mortgage, one’s leadership abilities can be judged by how they interact with the world beyond the office. “When I look at leaders, I know it says a lot about someone’s character if they are invested in their community and care about their community,” said Hoskins. “When it comes to building trusting relationship, if you care about your community and the people you are serving, it says a lot about how trustworthy you are and the willingness you have to get things done–and done right. Look at what someone does outside the company, because it tells you a lot about they can do inside the company.”

Andy Harris, owner and president of Lake Oswego, Ore.-based Vantage Mortgage Group Inc., believes that mortgage professionals can show even greater leadership through their involvement in industry trade groups. “There is a lack of leadership in the industry–and not necessarily in certain companies,” said Harris, who serves as treasurer of NAMB–The Association of Mortgage Professionals and was the 2010-2011 president of the Oregon Association of Mortgage Professionals. “A lot of people are paying attention to what’s right in front of them, but they are not involved in the industry as a whole. If you are not being a leader in the industry, it can be a challenge to lead people to work at your company.” Harris adds that a failure for mortgage professionals to advocate on behalf of their wider industry could

have serious consequences. “We will wind up relying on others to make decisions for us,” said Harris. “That can be a dangerous place to be.”

The ability to encourage new leaders Ultimately, mortgage industry leadership is not static–successful companies are always on the lookout for new leaders to fill managerial and executive roles. “We’re always recruiting,” said Perez. “If you’re not recruiting, you’re dying. You always have to be looking for opportunities and looking for growth.” “Our business has grown tremendously over last five to six years, and we’ve brought in a lot of people from outside of our organization,” said Stuckey. “This is a small industry–we knew them or knew of them before we brought them on.” Middleman also favors external

recruitment, albeit with a significant caveat. “I don’t like to bring in people who are going to leave,” noted Middleman. “I want to get people that I can invest in. We have seen people advance in their career and grow in the context of the business. I don’t want a flash in the pan. I want to have cumulative success. People anxious to grow quickly and rise fast are not the type of people I want.” There is also the question of internal promotions to leadership positions. Stuckey acknowledges that his current position is the result of promotions over the course of seven years at DocuTech, while FGMC’s Peters notes that his company’s chief information officer worked his way up through the ranks over the past 15 years. Of course, not every person within a company is the right candidate for a leadership role. For Middleman, identifying

potential leaders within the corporate ranks requires patience and careful study. “You need to look for honesty, integrity, skill-set and intellect,” said Middleman. “There should also be a certain level of humility–people who learn selfless behavior encourage people to follow them.” For Roque, a high level of employee retention offers evidence that excellent work is properly rewarded. “Are you keeping your employees?” asked Roque. “It is amazing how leaders tend to lie to themselves as to why people leave. A good leader will have a very humble approach–that person will look at himself or herself and say, ‘I need to make these changes.’” Phil Hall is senior editor of National Mortgage Professional Magazine. He may be reached by e-mail at 67

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“The presence of strong, effective leaders across all levels of a firm is critical to its survival.”

The Right Stuff: The Traits of Prosperous Mortgage Industry Leaders By Tom George

APRIL 2014 n Georgia Mortgage Professional Magazine n


There is little doubt that good leadership is necessary for any business to be successful. Publications such as Forbes Magazine and Bloomberg BusinessWeek release numerous articles each year detailing the importance of leadership, and an entire section of the bookstore is dedicated to this very subject. However, in light of all the changes taking place in the mortgage industry, firms need something more than good leaders. The presence of strong, effective leaders across all levels of a firm is critical to its survival. So, if good is not good enough for mortgage industry leadership, what exactly do firms need? The books and magazines value individuals who exhibit the highest level of professionalism and integrity, while others point to an ability to make a strong first impression. In practical application, mortgage industry leaders must possess five primary traits: adaptability, good judgment, financial responsibility, perseverance and interpersonal skills.

Adaptability Leaders in the mortgage industry must be adaptable to any changes that may come their way. This adaptability helps them recognize when it’s necessary to change course, as well as when new opportunities are on the horizon. Adaptability has become an especially important attribute for mortgage industry leaders since the adoption of the Dodd-Frank Act. Often, few details have been provided about the guidelines associated with DoddFrank until it’s nearly time for the regulation to go into effect. This has not provided mortgage bankers with much time to create and implement the internal measures necessary for

compliance with the new regulation. Rather than let this challenge become a burden, adaptable leaders have found a way to work around the uncertainty and make adjustments, as necessary. Leaders who demonstrate adaptability are also in a better position to identify and act on new opportunities. For instance, while many mortgage bankers see the Consumer Financial Protection Bureau’s (CFPB) qualified mortgage (QM) rule as a hindrance, adaptable leaders see it as an opportunity. Instead of limiting themselves to the new ability-to-repay (ATR) criteria, enterprising lenders are creating new loan products for a group of homebuyers who were previously underserved. By doing so, these companies are gaining a substantial competitive advantage.

Good judgment One of the most important lessons the mortgage industry has learned during the financial crisis is that leaders with good judgment are essential to the firm’s long-term viability. Few can argue that companies such as Lehman Brothers, Countrywide Financial and Washington Mutual may still be around if not for the poor judgment of its leaders. Alternately, companies with leaders who made conservative decisions based on the data made it through the mortgage meltdown intact, and are still conducting business today. It’s important to understand that there is a difference between leaders with conservative judgment and those who are completely risk-averse. Leaders cannot be afraid to take a chance. After all, pursuing a new opportunity involves some element of risk. Leaders who can judge the difference between recklessness and tak-

ing calculated risks based on data and intuition prove themselves to be invaluable assets to their companies.

Financial responsibility In the mortgage banking industry, it should go without saying that a strong leader exercises financial responsibility. However, 60 percent of mortgage lenders across the nation were forced to close their doors in response to the financial crisis. Alternatively, companies with leaders who never wavered in their commitment to put cost controls in place, practiced common sense underwriting guidelines, appropriately managed risk and maintained quality controls managed to prevail. Some mortgage industry leaders, such as the partners at Primary Residential Mortgage Inc. (PRMI), made a commitment to always operate as a company that is completely debt-free. As a result, the firm enjoys a higher level of financial stability that most of its peers, and is in a stronger competitive position regardless of the fiscal or regulatory environment.

Perseverance When learning to ride a bike, children are taught that when they fall off, the best thing to do is get right back on and try again. This ability to persevere in the face of failure or adversity remains true throughout life. Even with solid data and good judgment, even the best leaders will inevitably make mistakes. This is evidenced by the story of Sir Alexander Fleming, the scientist who created penicillin. Fleming spent his life searching for a drug that could cure all kinds of diseases, but continually failed to find success despite his preliminary research. After throwing away yet another failed experiment, Fleming noticed that one of the contaminated Petri dishes contained a mold that was dissolving all the bacteria around it. Through his perseverance, Fleming found the drug he was looking for, and the world gained one of its the most powerful antibiotics. The ability to accept responsibility, learn a lesson from the mistake, and

act on that lesson to move forward in a positive manner is what separates ordinary leaders from the great ones. Leaders who understand that change usually presents opportunity if they are only willing to embrace it will persevere personally, as well as inspire their employees to do the same.

Interpersonal skills Great leaders know that they cannot be successful on their own. They rely on their interpersonal skills to earn the respect of employees and the loyalty of customers. When leaders are only concerned with profit and place little value on human interaction, the attitude will be negatively reflected throughout the company. On the other hand, employees who feel cared for will pay it forward by improving productivity and making customers feel valued. Developing interpersonal skills sometimes requires leaders to roll up their sleeves, stand side by side with employees, dig in and get their hands dirty. After all, how can leaders relate to employees if they don’t understand what employees experience on a daily basis? This ability to relate to the multitude of demands that employees deal with on a daily basis is why mortgage bankers who worked their way up to the ranks, from loan originator to vice president, have become some of the industry’s most effective executives. There are a number of good leaders in the mortgage industry, but individuals who demonstrate the qualities previously described will always rise to the top of their organizations. Ultimately, successful leaders will use these traits to strengthen their firms by defining a long-term path to success, identifying new opportunities and inspiring others to strive for excellence. Tom George is chief operations officer and executive vice president of Primary Residential Mortgage Inc. (PRMI). He may be reached by e-mail at

“Perhaps the most important quality a leader can have is empathy; when you understand and share another person’s experiences and emotions you relate to them on a level that does not place the importance on either one of you.”

Leadership Philosophy Within a Corporate Culture

“Whatever you are, be a good one.” —Abraham Lincoln Providing people the opportunity to speak up and contribute is priceless. I think the most successful businesses are those that encourage collaboration and ingenuity; I admire these places and strive to make my company one of them. Tony Hsieh, Zappos CEO, says, “Chase the vision, not the money.” That’s a philosophy worth looking into. I really believe that by creating a fun environment that encourages creativity, where people are consistently striving for innovation, you’ll always be winning. Being a leader is a lot like raising kids, I think. You have to find that perfect balance of knowing what is best and letting them make their own mistakes. If you let people do their jobs and give them the opportunity to make decisions, they will feel relevant and in turn, will continue to add value to the company. Obviously leaders maintain a level of authority but it should always be in a way people look up to. As a leader, you want to be the one people go to for trusted answers and good advice. You should be the one to point them back in the right direction without always dictating exactly where that direction is.

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Founder and CEO of Norcom Mortgage, Phil DeFronzo started the company in the fall of 1989. Under his leadership, the company has grown to become an upstanding and respected regional lender. He may be reached by phone at (860) 899-3785 or email


in their inbox if they got up. When you take the time to get to know who you work with, (and notice I didn’t say who work for you), you put yourself in the position to be a credible leader. The feelings and experiences we share as By Phil DeFronzo humans, at the end of the day, bring us all down to the same level. Titles, positions, “The most dangerous leadership myth is that if you don’t have the experience, you board memberships, all of that mean that leaders are born … that there is a don’t know what you’re talking about and I nothing when you commit to getting to genetic factor to leadership.” strongly disagree with that. Sometimes the know and understand each other. —Warren Bennis freshest perspectives come from somebody In today’s corporate world, we are all that has been working for two months in “Earn your leadership every day.” searching for the next great idea, the next an industry they have never been in before. —Michael Jordan plan that is going to take us one step fur- They aren’t jaded by opinions or politics, To that end, you need to immerse yourther. We set up cultures within our com- which makes them incredibly valuable. self in what’s going on within the walls of panies that inspire creativity and free-flow- Leaders should not be limited by age; the your company. How can one ever expect to pick a leader out of a crowd if you don’t ing thought for at any moment, somebody right temperament is all it takes. could offer a solution, a game-changer or The literal definition of a leader is “A know how they work day to day? To find the ultimate curveball. And some of us person who has commanding authority leaders, you have to be observant; be out look to the leaders of the group to do or influence.” There’s nothing about years of your seat and walking around. Spend exactly that; lead. However, when you of experience in there. I have some man- some time with the receptionists, with the trust the same people for answers over agers that are in their 20s and some that support team, with the people hired in and over, you’ll get the same solutions. are in their 60s-all who have the qualities entry-level positions. Assign projects you When you believe in every solitary employ- necessary to lead a group, and all who need help with and remain involved in ee however, only then do you open up the revealed themselves as having these qual- the process to see who will stand out. I want to see who is going to go the full potential of your company. ities at different times. They’ve surprised To that end, I agree with Warren Bennis; me by coming up with their own solu- extra mile on something big or small; who that leaders are not born, but made. As tions. I consider it a luxury when they tell is going to stay late, to put together a forhumans, we do not enter into this world me what to do and not vice versa. mal presentation that’s not required, to knowing enough about life and opportuni- Perhaps the most important quality a find a speaking engagement to participate ty to know how to lead. Human interac- leader can have is empathy; when you in without being asked. When you involve tion, being tested in real-life situations, understand and share another person’s yourself in all levels within your business, measuring success and learning from fail- experiences and emotions you relate to you get to see the leaders emerge and the ure: That is what turns somebody into a them on a level that does not place the most exciting part is being totally surprised by who they are. Now you can teach them leader. True innovators reveal themselves importance on either one of you. what you know and at the same time be as they put into action the lessons they learn from other leaders along the way. “Become the kind of leader that people mindful to watch them take things to the As the owner of a company, I myself would follow voluntarily; even if you had next level on their own. have applied all lessons learned from my no title or position.” mentors into how I choose to lead my —Brian Tracy staff. By taking advice and adding my In my experience as a chief executive offiown spin, I have successfully, (at least I cer, I have come across a variety of perthink so), built a culture where the oppor- sonalities and human qualities that have tunity to stand out as a leader is present- helped me identify promise within my N A T I O N A L M O R T G A ed to every person we employ regardless company. I think the biggest challenge of of their age, position, years in the busi- being a leader is not letting it go to your ness, or level of experience. head or using it to an unfair advantage, which is why empathy is the most impor“Never tell people how to do things. Tell tant personality trait of a leader. them what to do and they will surprise I have seen people in the position of you with their ingenuity.” authority who don’t even know the —General George Patton names of those that work under them. Or Some of the best ideas I have heard come bosses and managers who never walk from the youngest members of our team. I around the building, but stay solely in think in general, people tend to assume their offices, scared of missing something

“A visionary leader engenders a culture of success by personally practicing and preaching the principles of his marketing belief system.”

Leadership: The Marketing Visionary By Brent Emler Today’s mortgage leaders are faced with a sobering reality in 2014. The current average profit per loan is $150. This average is down from $2,256 in the fourth quarter of 2012. These are staggering statistics! Industry experts cite increased compliance costs and increased competition as the driving forces behind this dramatic decrease in profitability. If the down-trend in profitability continues, those mortgage

companies who have a clear vision for navigating the formidable challenges ahead will be the ones who thrive. A major component to your business and one that addresses both compliance and competition is your marketing strategy. Consider the following: l It costs six to seven times more to acquire a new customer than to


APRIL 2014 n Georgia Mortgage Professional Magazine n

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retain an existing customer.—Bain & Company l A two percent increase in customer retention has the same effect as decreasing costs by 10 percent.— Leading on the Edge of Chaos, Emmet Murphy & Mark Murphy l The probability of selling to an existing customer is 60 to 70 percent. The probability of selling to a new prospect is five to 20 percent.— Marketing Metrics A complex challenge faced by leadership in the mortgage industry today is identifying the most effective marketing techniques. Marketing concept, combined with the use of formulas for determining CLV (Customer Lifetime Value) and CAC (Customer Acquisition Cost) can take a generalized concept such as “relationship marketing” and provide data that clearly points to those customers who result in the greatest return, thus making it possible to spend your marketing budget in the most targeted, effective way. What’s your marketing vision? You’ve probably heard the popular Marcus Lemonis mantra, “People, Process and Product,” as the three fundamental basics to success. A fully engaged visionary has the ability to break down these three vital areas in a holistic way and will not be afraid to make a strategic investment in any area. When margins shrink and profits tank, the conventional wisdom is to cut costs. A visionary leader has a wellrounded, educated understanding of the objective and balances both creative thinking and the ability to strategize through the available factual data. He won’t throw the baby out with the bathwater. He will do his due diligence through to a clear path— proof of concept, and will put his marketing dollars where he is confident there will be a return. Mortgage companies often have great people in place, a great product to promote, but due to the overwhelming nature of managing numerous loan officer databases, pictures, contact

information, disclaimer text, NMLS numbers, e-mail vendors, print vendors, gift vendors, designers and writers have not fully exploited their existing database in their marketing efforts. A company with 50 loan officers likely has 15,000 referral and repeat customers that could become its greatest asset. Yes, it will take some work to have a well-designed marketing solution to stay in regular contact with those clients but if just three percent of those clients do a loan or refer someone, that’s almost 500 more loans in a year. How much time and money would you invest to get 500 more loans on the books this year? By now, it’s obvious that customer retention is a good thing, but what is a customer’s real worth? An important component to the marriage of vision and fact is monetarily quantifying the value of your clients. How should a marketing budget be split between retaining established customers and marketing to new customers? Discovering this answer in terms of dollars and cents goes a long way towards developing a pointed marketing strategy. The good news is that it is possible to use a relatively simple mathematical formula to assess the potential value of a client over their typical lifespan. It’s called Customer Lifetime Value (CLV). CLV is a forecast of the net profit attributed to the future relationship with a customer. CLV might also be defined as the monetary value of each customer relationship as based on the present value of projected future cash flow from that relationship. CLV is an important concept in that it encourages marketers to shift their focus from immediate profits to the long-term health of their customer relationships. There are numerous ways to calculate the CLV and we‘ll show you a simple way to do it in just a minute. However, no matter how you arrive at the total, producing a solid dollar figure gives you a tangible place from which to design client retention strategies and promotional campaigns. Of course, the following example does not determine

profit, but it does give a better sense of the overall client value. For example: The average sales price in your area is $200,000 and your loan officers generally earn 100bps. If your loan officer closes a new transaction and that customer refers him just one new client per year, he will earn about $16,000 from that one customer over a five year period. That’s just one customer referring one new client per year. Use the same logic spread over 100 past clients; that’s $1.6 million in commission over the next five years.

given CAC strategy will no longer be beneficial, since the financial rate of return that generally accompanies new customers is surpassed by the cost of acquiring those customers in the first place. Consider how much time your loan officers spend looking to acquire new customers through relationships with real estate agents. They’ve probably spent hours chasing an agent who promised to send them referrals, only to be presented with two or three or more “leads” for potential clients who really are more in need of a bankruptcy lawyer or credit counselor. We’re not at all suggesting a loan officer doesn’t have to work through these scenarios to gain the trust of their referral partners. Referral partners, such as real estate agents and financial planners, are a tremendous source of business when you find the right ones. What we are suggesting is that, as a leader, you promote the idea that your loan officers treat their client databases as one great big referral partner. The logic is really so simple … Say you have one loan officer with a database of 300 past clients, friends and family. If just 10 percent of them refer him one client this year, that’s 30 additional loans. Does your loan officer have any real estate agent partners that will send him 30 referrals this year? If you do, we’re betting you spend a whole lot of

time and energy promoting your loan officer’s relationship with him. The leaders who have invested in a proven relationship marketing system and have committed to providing the infrastructure and tools necessary to execute, have a significant advantage. This advantage can be seen not only from a sales and marketing standpoint, but also from a recruiting perspective. The up and coming, motivated originators are more likely to make a move to your company if they can see that your vision includes a commitment to making them successful with clearly defined, accessible marketing systems. The mortgage industry is an everevolving challenge. The mercurial nature of the regulatory system and rapidly progressive technology demand creative and nimble leadership. These aspects of the current mortgage lending climate have greater impact on our marketing strategies than ever before. Leaders who face these challenges with the ability to quickly adapt and without losing sight of their ultimate goal are inspiring to all of us. We see these visionaries rising to the top and we salute them! Brent Emler is director of sales and marketing at, a customizable marketing software provider exclusive to the mortgage industry. He may be reached by e-mail at


If you think these numbers are extraordinary, you’re right. Not because database marketing results are mixed, but because too often originators don’t invest in their most valuable asset; the contacts in their database. A visionary leader not only understands the long term impact of these kinds of numbers on his business, he has the unique ability to inspire his entire team to adopt his vision. A visionary leader engenders a culture of success by personally practicing and preaching the principles of his marketing belief system. Furthermore, he facilitates his employee’s success by investing in adequate database management and relationship marketing systems. CLV has an intuitive application as

a marketing concept, because in theory it represents exactly how much each customer is worth in monetary terms, and therefore exactly how much a marketing department should be willing to spend to acquire or retain each customer when it comes to relationship marketing. You’ll likely treat customers with high CLV differently from those with low CLV. You’ll spend more to retain them because they’re obviously worth more. You might discover that some customers have a low or even negative CLV. So, why spend a lot of money trying to retain them? In addition to using the CLV formula, using the Customer Acquisition Cost (CAC) formula can be of tremendous value. CAC is the cost associated with convincing a new customer to buy a product or service. This cost is incurred by a business attempting to convince a potential customer. It includes all costs involved—research, marketing, etc. This is an important business metric as it plays a huge role in calculating the value of the customer to the company as well as the resulting return on the investment in a customer. CAC refers to the resources that your business must allocate (financial or otherwise) in order to acquire new customers. CAC will typically increase as business matures, but it is also typical to see a diminishing return on CAC as a business grows in size. At some point, a

n Georgia Mortgage Professional Magazine n APRIL 2014

“Great leaders ensure their businesses have an understanding of how each provider’s pricing has performed historically relative to others in the same local market.”

What Does It Take to be a Successful Visionary in the Mortgage Industry? By Brian Benson

APRIL 2014 n Georgia Mortgage Professional Magazine n


“What makes a great leader in the mortgage industry?” This question came up during a dinner I shared recently with one of my industry peers. While leadership is often more art than science (notwithstanding our initial response from the old 1970s Milton the Monster cartoon intro: “Six drops of the essence of terror; five drops of sinister sauce …”) during the course of the hour, we agreed that in addition to core leadership traits, there were five additional characteristics that were increasingly critical for leading in today’s demanding mortgage arena: Command of the regulatory compliance arenas; decision-making based on reliable analytics; a never-ending passion for efficiency; leadership in leveraging new technologies; and finally, the balance, maturity, know-how and stamina to weather any market condition that may arise.

Command of the regulatory compliance arena In an ever-evolving industry, it is a neverending battle to stay compliant. It requires patience in some areas and action in others. While it is complex to navigate the vast number of regulations that govern the financial industry, it is vital that leaders continue to pursue and hone this skill. Successful industry leaders will tap into the most up-to-date technology to help understand and dissect how regulations apply to their businesses. Imagine a race car traveling at 120 miles per hour. When the driver is making a pit-stop to change the tires, they must remain fixed on the track, but must also rely on a whole team of experts to determine what adjustments need to be made to get back in the race. As that relates to the mortgage industry, a leader will always keep “The Big Picture” in mind, but must also rely on vendors as well as technology to maintain readiness and efficiency even while keeping his or her business consumer-friendly.

Decision-making backed by reliable analytics Managing with a “gut feeling” is important, but the reality of today’s marketplace is that change happens quickly and advantages are measured in increasingly minor units. Content must be accompanied by context. Knowing where and how to compete is critical; intelligently managing partnerships is crucial, and failing to recognize industry trends and not being able to react quickly can be a death sentence to the unsophisticated business. The challenge, then, becomes assembling the information that can help support strong and solid decision-making. Reliable partners who are transparent and can provide breadth, depth and historical perspective, as well as ones who can give you the information vital to your continued success. For example, lenders often allow their loan officers the flexibility of choosing which third-party providers they work with to close a loan. But are they making the best choices? How do those providers perform relative to others in their space? Knowing how their pricing and service levels compare to other available vendors can be critical in managing those third-party networks. Great leaders ensure their businesses have an understanding of how each provider’s pricing has performed historically relative to others in the same local market. This can significantly improve the speed, cost, performance and efficiency with which that lender can perform the closing, with the net result happier regulators and higher consumer satisfaction.

solutions that can and will enhance their business efficiency. The worst thing they can do is freeze while in the process of improving company processes. All too often, people are afraid to engage in projects fearing the unknown or the inevitable challenges along the way. Instead, a leader will ask the tough and thought-provoking questions: “Why is this done that way?,” “How can we do this better now given the current circumstances?” and “What will be the true benefit?” … all while continuing to look for further change opportunities to help the company as a whole. True leaders must constantly evaluate and re-evaluate processes to determine the most effective methods to improve workflow and productivity—even if that means “breaking” the status quo.

Leads the company to emerging technologies

Using technology to improve internal efficiencies and workflow should be a goal for most companies. Tech-savvy leaders will consider the effect technology can have on meeting compliance requirements, improving internal workflows and better serving customers. More importantly, these individuals will be proactive in their quest instead of reactive based on the latest crisis. This is a key difference from the average person who does not understand the effect market changes will have on a business and the ongoing benefits technology can provide in preparing for those changes. Realizing the difference between developing your own technology, which can be a lengthy process, and partnering with a trusted technology provider is another distinction of a tech-savvy leader. It is one thing to understand how technology can aid in faster workflows and monitoring compliance status, but it is yet another to truly comprehend the far reaching benefits that will be achieved. Leaders with longterm vision will use technology to its fullest and will consistently look for all possible A never-ending quest areas where it can be deployed to improve for efficiency All too often, companies operate under processes and create value to clients. less than optimal conditions because they are concerned about the potential impacts Fortitude for any cycle of change. Leaders cannot simply sit and The current financial market is still in a watch as technology advances. They need state of limbo. Given the uncertainty that to be at the forefront of implementing recent regulatory changes will have on

overall business, as well as changes in the surviving companies, many analysts were projecting 2014 to have a more rocky start than it has had. Leaders must remain true to their foundational values and do what they believe is correct. Stand by strong principles regardless of the market climate; be it riding high on large loan volume or low with small volume. Many people get too caught up in what is happening in the current market to have the foresight to see the next turn in business. It is important to be able to respond to different market conditions while maintaining consistent business practices. True leaders are prepared to make important decisions based on the state of the current market and tend to do so sooner rather than later. Leaders emerge when the market shifts, and they understand that managing businesses through these different and often difficult changes include making investments when the market is slow in order to best prepare for the next up cycle.

Are you on the path to become a successful leader? Successful leaders emerge from situations where they are required to assess situations and develop a plan of action that is best for everyone involved. Understanding the industry is only one aspect of being a successful leader. Understanding and using technology, comprehending the role of compliance, focusing on efficiency, being consistent during any type of market condition and using data wisely are paramount to being an effective leader. Strong and effective leaders ensure that all of the tools available are used to make wise business decisions that will lead a company to success. Having a strong, efficient individual at the helm will result in satisfied customers, loyal employees and efficient workflow processes through which any company can weather all the market shifts. Brian Benson is CEO of ClosingCorp, a provider of residential real estate closing cost data and technologies for mortgage lenders, real estate professionals and consumers. He is responsible for overseeing the company’s daily operations and long-term strategic direction. He may be reached by phone at (858) 551-1500.

“Leaders inspire and lift others up to their highest potential by looking at them as an individual and the gifts they have.”

Inspirational Leadership By Kerry Elam

Lead by example

Goal-setting Merriam-Webster defines a goal as “Something that you are trying to do or achieve.” We all have our own stories about successes and failures with setting goals and the water cooler talk is how annoying Human Resources is about the process for goals and reviews. How many times have you felt as though your manager was just checking the box to talk to you regarding your goals and do your review? In many cases, this is a last minute dreaded task. This happens even when it is tied to raises and bonus funding. A fresh way to view goals is in relation to leadership to cultivate inspiration. To inspire the best from your team, messages must come from the top down. Come up with a plan that will align firm and personal goals to ensure you are focusing on

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As a leader, it is critical to lead by example. For instance, if you expect overtime for important deadlines, your team is much more inclined to do their best if you stay and also work the overtime to ensure a successful outcome. You will contribute to the success versus demotivating them and giving them reasons to blame you for their extra hours. And when your team pulls through, reward them as best you can either through recognition, time off or monetary compensation. A simple message to the entire firm regarding your appreciation can be a powerful tool that costs you nothing, yet makes your team feel amazing. Another lead by example scenario is to not feed into office politics or gossip. Focus on the positive aspects of people and issues that arise. If you hear your team talking negatively about someone or something, bring up a point that is positive about that person or event. Each challenging person or situation allows us an opportunity to grow. Show your team that you can “rise above” and maintain both a level of professionalism and gratitude. Your positive mojo benefits everyone.

1. Accountability: The first step is to ensure we are taking accountability in our role at work. Blaming the politics, culture or boss is not productive. If you are unhappy, it is your responsibility to figure out why and to work with your manager to make the changes necessary. Be proactive, seek out mentoring, ask questions, and give meaningful feedback. Manage your work, meet deadlines and celebrate success. Strive to expand your role and add value by bringing new opportunities to the table and staying in touch with your network.

There are numerous schools of thought regarding whether you can groom a leader or if certain people have the predisposition to be better leaders than others. The same question arises regarding our personalities. Wikipedia states, “The study of personality has a broad and varied history in psychology with an abundance of theoretical traditions. The major theories include dispositional (trait) perspective, psychodynamic, humanistic, biological, behaviorist, evolutionary and social learning perspective. However, many researchers and psychologists do not explicitly identify themselves with a certain perspective and instead take an eclectic approach.” Personal experience leads to a similar conclusion that we are both born with innate ways of being and our environment also plays a part in how we see the world, treat others and our leadership styles. Being able to lead effectively takes awareness, commitment to the growth of people and wisdom. Daniel Goleman, author of Focus and Emotional Intelligence” said, “One aspect of wisdom is having a very wide horizon which doesn’t center on ourselves,” or even on our group or organization. He said generativity is a true sign of wisdom. Generativity means giving back without needing anything in return, Dr. Goleman said. The form of giving back could be creative, social, personal or financial, and “The wisest people do that in a way that doesn’t see their lifetime as limiting when this might happen,” he said. Leaders inspire and lift others up to their highest potential by looking at them as an individual and the gifts they have. We all want to be successful, and sometimes just having someone believe in us and allow us to shine is all we need to excel. In this article, we will explore some fresh perspectives on inspirational leadership.

your areas of expertise and interest. Thomas Jefferson’s view stated, “Nothing can stop the man with the right mental attitude from achieving his goal; nothing on earth can help the man with the wrong mental attitude.” The idea is to actually spend time with your team on creating meaningful and achievable goals that are catered to the areas in which each person excels and is most interested. This is a simple approach, yet a reminder is important to bring us back to the present and take goal setting seriously and with a positive attitude. Three key words are the focus on a goalsetting strategy to create inspiration:

inspirational leadership continued from page 73

2. Acumen: The second step is to determine what you want to focus on and learn more about in relation to your area of expertise. Make all efforts to become the expert to ensure you are adding value and being the go-to person in your specialty. Determine what you can do to become more known, such as conducting an internal training, mentoring others, writing articles, or speaking at conferences.

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3. Aspire: Take time to have a heart to heart with yourself to determine what you want out of your career and personal life. Focus on the aspects that excite you professionally and personally and link your goals to areas you most enjoy. It is important to look at your personal life as

well to ensure you have an outlet for all the things you gain pleasure from As Malcom Forbes said, “I think the foremost quality—there’s no success without it—is really loving what you do. If you love it, you do it well, and there’s no success if you don’t do well what you’re working at.” For example, maybe you love giving back to the community and your firm needs someone to lead the next community service event. Sign up for it to help to balance your work and personal interests. So, how do you get started with the creative process of setting inspirational goals? Ask yourself the questions below to get started in creating a fresh, new goal plan.

l What inspires you? l Who inspires you professionally? l What is your favorite thing about work? l What excites you personally at work? l In what ways could the passions you pursue on a personal level benefit your firm? l What do you want to be doing in five years? l What skills do you want to improve upon? l What type of project do you want to be on next? l What would you like to help on internally? l What would you like to learn more about internally? l What would you like to help your firm accomplish next year? l What is your favorite thing about working at your firm? l What do you do to ensure balance

in your life? l Do you give yourself time to do the things you love most? Successful leadership stems from empowering your team to be the best they can be, leading by example and creating a safe environment for flourishing careers. When you and your team have a good day, everyone is happier, more productive and inspired. Everyone benefits in the end. Kerry W. Elam is managing director of operations and human resources with Actualize Consulting. She oversees the finance, marketing and recruiting functions of the firm, and is also responsible for facilitating knowledge management, training and social activities for the employees of the firm. She may be reached by phone at (703) 868-1506, email or visit

“Being a successful leader doesn’t make you smarter, prettier or a better person, no matter what your sycophant employees will tell you.”

Take Me to Your Liter By Eric Weinstein I love that cartoon where an alien walks into a 7-11 and says, “Take me to your liter.” Okay, that has nothing to do with being a leader, but it’s funny. When I first started my mortgage broker business, all I wanted was to work from my house and be left alone. I had never been much of a “leader” in any of my past jobs. I had supervisors that I hated and who were morons. I just wanted no bosses. Never did I ever plan to run a huge organization and have to be a leader. I was forced into it as the company grew.


As the owner of the mortgage company, I was constantly confronted with “King Solomon” decisions I had to make. Always, it seemed, the administration people and the loan officers were fighting over something. I explained that they were two sides of the same coin. One could not function without the other. Imagine your kidney and your liver got into a fight. Whose side do you take? I think it was best summed up by a Japanese-American interned during World War II. They asked him which side did he wanted to win. He said, “When your mother and father fight, which side do you take? Neither, you just want them to stop fighting.”

Don’t do what I say As the owner of the company, I was constantly on the lookout for a “leader” to promote as manager. You cannot promote a manager to leader. You can only promote a leader to manager. As the company grew, I used to hold “Bowling Parties” as a way to get everyone together and develop an esprit d’corps. But as we expanded, the employees in the other states felt left out. One loan officer took it upon himself to organize a bowling party of his own in West Virginia. When I called him, he was afraid he was getting fired for overstepping his bounds. Instead, he was promoted. I told him, “I am not looking for people who do what I say, but people who do it before I say.” That is a leader.

Be happy Pride less Being a successful leader doesn’t make you smarter, prettier or a better person, no matter what your sycophant employees will tell you. You are doing a job on the ship, no less valuable than the lowest deckhand or receptionist in your office. You just do different jobs and are paid differently. Have no doubt; you can both be replaced if someone better comes along. For managers that look down on their employees or maltreat them, I say, pride is one of the seven deadly sins for a reason.

Forget about being a leader And being a leader is not all fun and games. It was one of the hardest jobs I could ever imagine. Imagine having to cut off a limb to save your body. It is easy to hire someone, give them wages to support their family, boost their selfesteem and raise them to a new level of

Be careful what you wish for, being a leader is not all that great sometimes. I am way happier just being a loan officer, doing my own thing and not having the burden of 2,000 people on my shoulders. The pay was good, but the stress was horrible. The idea is not to be the richest man in the cemetery, but to enjoy your life. Now, I am enjoying mine. Eric Weinstein worked in banking, on the commercial real estate side until 1991, when he fell in love with residential lending. In 1995, he started a small mortgage company in his basement called Carteret Mortgage Corporation, which in 2003, grew to one of the largest mortgage broker companies in the United States. These days, Eric is semi-retired, doing mortgages by referral only. As he likes to put it, “He is either saving people money per month or helping them buy a new home. What a great job!” He may be reached by phone at (703) 5058692 or e-mail


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Not a jerk The best form of government is not a democracy … it is a benevolent dictatorship. The top person is a leader with everyone’s best interest in his heart. Someone who can resolve disputes fairly, someone you can trust, someone with the same values as you, someone smarter than you. Someone who will take charge when there is a need and stand back when there isn’t. When the guy at the top is a jerk, everyone down the line will tend to be, also. You want that “not jerk” guy to run things.

King Solomon

prosperity. Now, think of the reverse when you have to let them go. Especially, since they were loyal, hardworking good friends during the good times. A leader has to make the hard decisions. More than anything, I think that is why my company failed during the tough times. I did not have the heart to make the cuts I should have when the economy tanked.

Did you ever think about how a king becomes a king? I mean, first starting out, not inheriting the crown. I always imagined it started in a small village. Everyone did their own jobs; no one was really in charge. But then, some smart person realizes, things would be better if they organized. He convinces the group to work together for an irrigation system, to train for self-defense, that things would go smoother if people were honest with each other and there should be a penalty if they weren’t. Basically, it is the person who thinks ahead of everyone else. People follow him, not due to charisma, but because he is right most of the time. He is wiser.

Trust Envision a ship on the ocean. You have the people steering, the people who take care of the sails, the person cooking the meals. But you have to have one person who is constantly looking at the horizon steering the ship clear of foul weather and dangerous reefs ahead. The crew listens to him because he sees the big picture. They trust him with their lives. It is kind of like who you choose to be the banker when you play Monopoly. A leader must be someone you can trust.

A father I think the thing that prepared me the most for leadership was being a father. Every employee became one of my children. I worried about their well-being, them getting ahead and what made them happy. If you take care of your people, they will take care of you. As they get ahead, your organization gets ahead. The more they make, the more you make.

“Great leaders lead, while managers manage … there is a distinct difference.”

Leadership in the Shadow of Crisis By Laura Lynn Burke Leading after a crisis is often times more difficult than leading through a crisis. In the midst of crisis, everyone pulls together and rallies the troops to make it through unscathed. Leadership after crisis is utopic, as it is scrutinized under the microscope. In hindsight, fingers are easily pointed, and “should haves” are abundant. We are all well aware of the 2008

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financial meltdown and mortgage crisis that affected our nation and a plethora of lenders. Many companies closed their doors, the mortgage brokers business never to be the same again. As time heals all wounds, the gaping gashes of the mortgage crisis are healing, still tender to the touch and ever ready to be opened again, hast we lead with ethically strong leaders.

What characteristics make a strong leader? I could list a bunch of adjectives we are familiar with from our days of ethics and business leadership courses: Accountability, achiever, character, ability to command, conviction, determination, education, experience, ethical, foresight, loyal, resolve, thinker, trustworthy, and the list goes on. But what truly determines a leader is that others will “choose” to follow them. It is not a mandated rule, or strong-armed management decree, it is a pulling of their insides that guides them and directs them to follow a leader. It is a quality unknown to those who are not true leaders, that people will merely choose to follow a leader, to believe in a leader, from the trenches of war; with General Patton to Mother Teresa; a Roman Catholic Religious Sister and missionary, others chose to follow. Great leaders lead, while managers manage … there is a distinct difference. Now is the time to display your leadership, whether you are running a billion dollar enterprise or running your own business of originating loans, you will want to be a leader. Leave the past and move forward, not forgetting the past but learning from past mistakes, not making the same ones again, make new ones as we move forward. Did you know all leaders blunder and make mistakes, but it is how they react and relate to their mistakes. Do they take ownership of their error, and do they make it right to the best of their abilities? There is the Pareto Principle, known as the 80/20 rule, which states that, for many events, roughly 80 percent of the effects come from 20 percent of the causes. For example, 20 percent of a group of people will succeed, while 80 percent will not because 20 percent will do what it takes to make it work, while the other 80 percent will either not try or simply give up. John Maxwell noted in his Leadership 101 seminar, “If you are leading a company, knowing

these statistics are relevant; one should spend 80 percent of your time, and company budget, focusing on the 20 percent who will produce and will become leaders.” Just like in art, we have masterpieces and master works. A master work is art painted by the same artist who created a masterpiece, similar in quality, but not a masterpiece. All leaders may not be creating masterpieces all of the time, however, they may be doing master work, which is what all companies strive for—from the top CEO all the way through to the workers. A key worker, who is a leader in his/her own right, can lead a group of workers to produce the most high quality work. An inspiring leader who is a manger/supervisor can help coach and bring about more leadership in the workers. It goes up the line all the way to the top CEO, as the CEO’s core philosophies are exuded via the company. The company makes statements of leadership quality throughout its culture and economic scale. What is your company saying about your leadership? Is it giving the right signals? Examine the leaders at your helm to see if they are leaders who inspire others. One must leave the past and move forward, is your leader demonstrating the qualities to expand, and rekindle the fires that burned within mortgage banking of year’s past? It is time to stoke those fires, send up the smoke signals and recapture lost market share by having the competitive advantage of leadership. Not all leaders are born knowing they are to be a great leaders. It is true that some have inherent leadership qualities, while others obtain theirs along the road of experience and education. I have devised a theory of leadership, as many of us have taken the personality test to determine our category, Type A Personality, Type B Personality, the Over-Achiever, or the Complacent One. What if we had a litmus test to

score our employees or future politicians as to their leadership qualities, traits and abilities? Just what is it that makes the introvert become the key leader in a crisis? Who should we trust to guide our ship back from treacherous waters, the navy seal who never gives up, or your company’s CEO, COO or CIO? Or either one, as they are both equal leaders? Whose qualities do we rely on? A team of uniquely talented individuals are who should be the leaders of this decade and beyond. Those who are like-minded in spirit, share ideas and agree to disagree. It is going to be the emergence of leading teams led by great leaders who inspire and communicate effectively that will take companies from being just ordinary to extraordinary status.

As the mortgage industry rebounds, leading from the hip is no longer an appropriate strategy for leadership. The in-sync, thoughtenhanced, and thought-induced leader is needed. Where do we find one? From what depths must we search for one? Should they be young or old? Male or female? AfricanAmerican, Caucasian or Asian? Welleducated or filled with the hands-on experience of working in the trenches? The answer is yes, yes, and yes to all of the above. What does a naval seal leader have in common with a religious leader? What does a religious leader have in common with the chief executive officer of Microsoft? Leaders lead, that is what they do best, they don’t manage, they don’t sell, they lead. Leaders innovate, reflect, instill

values and are constant students of their environment. One must lead a company into prosperity. A leader knows what their strengths and weaknesses are. They also know their team’s strengths and weaknesses, as well as the strengths or weaknesses of their company. They are great communicators. A leader’s qualities are diverse in culture, age, size, sex, occupation, education and accomplishments. Leaders are extraordinary people who make ordinary events extraordinary. It is time for all leaders to emerge, stand tall, regroup and bring the mortgage industry back to the glory days of the past … a time when lenders confidently lent money to average people to obtain the American dream of homeowner-

ship. It will be these leaders that the industry will follow and adapt as prominent and key individuals to the rising up from the ashes, and give birth to the mortgage industry as we once knew it. It is time for our leaders to look past the dark years of 2008-2011, past the failures and shortcomings of Fannie Mae and Freddie Mac, and it is time to put aside blame, and move forward towards more prosperous times. Awaken all leaders and move forward! Laura Lynn Burke has 20-plus years of experience in the mortgage arena, having been in the trenches as a loan officer, originating more than $35 million as CEO of her own mortgage company. She may be reached by e-mail at 77

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â&#x20AC;&#x153;Always be on the hunt for A-players, and when you find one, hire them.â&#x20AC;?

The Five Biggest Hiring Mistakes That You May be Making By Marc Wayshak Tom is the president of a $90 million software company with just under 40 salespeople. The company makes a great product, but has consistently struggled with mis-hires and great turnover throughout the years. Ever since Tom built the company from the ground up, he and his management team have relied

on a very casual and entrepreneurial approach to hiring new employees. Early on in the companyâ&#x20AC;&#x2122;s development, this laissez-faire hiring process was a source of pride, but now, Tom is beginning to see that it is holding the company back from rising to the next level. Do you relate to this story at all? If you

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are like most business owners and managers at small- to mid-sized companies, then you likely have dealt with some of these issues as well. Here are the five biggest hiring mistakes that Tom is making (and that you may be making as well): 1. Hiring only when in dire need Tom only hires when he absolutely needs someone new for his team. Once he finds that new hire, he shuts down the entire hiring process, only to reboot it again when he needs it the next time. This means that Tom will often not find the best candidates for particular roles because he is always in a rush to fill a vacancy. Instead, Tom should keep the hiring process going throughout the entire year. Always be on the hunt for A-players, and when you find one, hire them. 2. Not asking his existing team first Whenever Tom decides to hire a new candidate, he places ads on common job search sites, like Monster, Craigslist and LinkedIn. However, he never thinks to ask his existing team for referrals. Oftentimes, your existing A-players know other A-players from previous jobs and their personal life. All that Tom has to do is ask and reward. Moving forward, Tom should offer a hefty bonus to any employee that introduces the company to a new hire who lasts for over six months. Compared to how much you pay a recruiting firm, rewarding an existing employee with a $3,000 bonus for finding a great hire is actually cost-effective. 3. Not using a formal hiring process Due to his entrepreneurial nature, Tom has always hired candidates based on some relatively informal interviews, meetings with the team and his gut instinct. However, while human evolution has led to a very accurate gut instinct when danger is present, it has not done the same in hiring situations. Tom needs a more formal hiring process that starts with identifying which candidate traits are â&#x20AC;&#x2DC;must-havesâ&#x20AC;&#x2122; versus â&#x20AC;&#x2DC;wants.â&#x20AC;&#x2122; Then he should conduct brief phone screening interviews, online assessments and faceto-face interviews using pre-selected questions before scheduling a final interview with other team members.

4. Allowing interviewers to do most of the talking When Tom and his management team conduct interviews, they fall into one of the most common traps: They do most of the talking! Rather than focusing all of their attention on a candidateâ&#x20AC;&#x2122;s qualifications, attitude, style, behavior and fit, they spend most of the time talking about their organization and the prospective position. Instead, Tom and his team should have a prepared list of questions that they can consistently ask each candidate. This may feel less interesting to the interviewer, but consistently asking the same questions will allow for an applesto-apples comparison of candidates. It will also ensure that the candidate, not the interviewer, is doing the talking. 5. Not properly on-boarding Once Tom does find that perfect candidate, makes the offer and ultimately hires his newest A-player, he has no consistent on-boarding process for the new candidate. Whereas Fortune 1000 companies have the resources to formally on-board new candidates, many smallto mid-sized companies donâ&#x20AC;&#x2122;t have a process that goes beyond arranging for a new hire to shadow one of the existing employees. Tom and his team need to spend some time formalizing the onboarding process for new hires. What type of training, mentoring, technical support and emotional support will the new hire receive? Without clear answers to these questions, many hires will get a sour taste in their mouths for their new organization. By addressing all five of these very common hiring mistakes, Tom (and you!) can finally develop that team of rock star employees necessary to take the organization to the next level. Marc Wayshak is the author of two books on sales and leadership, Game Plan Selling and Breaking All Barriers, as well as a regular contributor for Entrepreneur Magazine and the Huffington Post Business section. He may be reached by phone at (617) 203-2171, e-mail or visit www.

one million notaries continued from page 41

While notaries often go about their duties with little fanfare or notice, they support the entire mortgage ecosystem. Without them, how much business could be done? How willing would a North Carolina bank be to loan money to a borrower in Oregon? The notarization is more than a hoop to jump through; itâ&#x20AC;&#x2122;s more than another piece of red tape. By understanding the purpose and duties of notaries, other mortgage industry professionals can enable them to do their

jobs properly, contribute to everyoneâ&#x20AC;&#x2122;s success and provide a good customer experience. William A. Anderson is vice president of Legislative Affairs for the National Notary Association (NNA). In his role with the NNA, Anderson identifies, analyzes and follows the scores of bills affecting the notarial profession which are considered each year by the nationâ&#x20AC;&#x2122;s state legislatures and Congress. He may be reached by phone at (800) 876-6827.

the long and short continued from page 54

ative equity homeowners to go delinquent on their mortgage first, before any help for a short sale is given. Once this delinquency exceeds 120 days, the homeownerâ&#x20AC;&#x2122;s credit is coded as a foreclosure. Usually the homeowner is unaware of this until they apply for a conventional mortgage two years later and a new mortgage denial through the Fannie Mae and Freddie Mac automated systems shows the foreclosure. If the housing market wants to see some honest gains in the market, we need to tackle this erroneous short sale code problem now and get a specific short sale credit code, just like the

codes for a bankruptcy, foreclosure and collections. Lenders, credit reporting agencies, both Fannie Mae and Freddie Mac, and most importantly, 8.7 million consumers are pleading for this. Pam Marron is senior loan officer with Bankers Mortgage of Pasco County. She may be reached by phone at (727) 375-8986 or email

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n Georgia Mortgage Professional Magazine n APRIL 2014


under Presidents George W. Bush and ry compliance for Long Beach, N.Y.Barack Obama, has joined SSIâ&#x20AC;&#x2122;s based Lenders Compliance Group Industry Leader Advisory Board. Inc. l Andrew Scripter has joined W.J. l Primary Residential Mortgage Inc. Bradley as Denver area branch sales (PRMI) has announced that Craig manager. Holbrook has been appointed director of marketing at the firmâ&#x20AC;&#x2122;s corporate headquarters in Salt Lake City, Utah. l GSF Mortgage has announced the addition of Jennis â&#x20AC;&#x153;Kayâ&#x20AC;? Harvill to Conroe, Texas as GSFâ&#x20AC;&#x2122;s newest branch manager. GSF has also added Brian Hofmann as a loan originator to the l WFG National Title Insurance firmâ&#x20AC;&#x2122;s Appleton, Wis. branch. In addiCompany appointed David Scarritt tion, GSF Mortgage has announced Ed VP and state sales manager for the Pollack to its team as branch managFlorida region. er in Orlando, Fla. and Dennis Tarnowski as a loan originator, working in GSFâ&#x20AC;&#x2122;s Brookfield, Wis. location. l NYCB Mortgage has welcomed three veteran talents to its growing roster of executives, including Dan Armstrong as wholesale mortgage AE for Massachusetts; Paul Bergstrom as AE for wholesale mortgage l 360 Mortgage Group LLC has Minnesota; and Vanessa Hand as expanded its correspondent sales wholesale mortgage AE for Alabama team by hiring Andy Gottman as the and Central to East Tennessee. new sales manager in the companyâ&#x20AC;&#x2122;s l HomeBridge Financial Services Inc. Correspondent Lending Division. has continued its growth in Central l Brennan T. Holland has been named director of legal and regulatocontinued on page 81

Bigger Homes, Bigger Sales Problems? 2009


Average home price



Average home size

2,362 square feet

2,679 square feet

Homes with at least four bedrooms



New two-story single-family house construction



1.28 million


Number of new home sales Data: U.S. Census Bureau

APRIL 2014 n Georgia Mortgage Professional Magazine n


By Phil Hall Homeownership is often referred to as the American Dream, but it appears that today’s dreams are somewhat grander than ever before. According to data from the U.S. Census Bureau, the average size of an American home has grown from 2,362-square feet in 2009 to 2,679-square feet in 2013. This new trend to XXL-sized residences includes more bedrooms. In 2009, the number of new homes with at least four bedrooms took up 34 percent of the market, while last year it captured a 48 percent market share. Furthermore, the percentage of homes with at least three full bathrooms was 35 percent last year, up from 23 percent in 2010, while the percentage of homes with garage space for three or more vehicles rose from 16 percent in 2010 to 22 percent in 2013. And anyone looking for a single-level new home may have to hunt harder. The U.S. Census Bureau also found that the percentage of new two-story single-

family homes climbed from 51 percent in 2009 to 60 percent in 2013. Of course, bigger homes come with bigger price tags: the average sales price for new homes was $248,000 in 2009 and $318,000 in 2013. However, this new wave of larger residences is not being met with a “Field of Dreams”-worthy scenario of people coming just because something was built. During the period from 2009 to 2013, the number of new home sales fell from 1.28 million to 306,000. “It requires a high credit score and a nice income to qualify for a mortgage,” said Rose Quint, assistant vice president for survey research for the National Association of Home Builders (NAHB) in a presentation during the recent International Builders’ Show in Las Vegas. “There are not as many people who have the income that can qualify for a new home.” Brian C. Coester, CEO of Rockville, Md.based Coester Valuation Management Services, questions whether home builders have been accurately reading the needs of the housing market when shifting to the construction of larger homes. “There is not necessarily a demand

for this,” Coester observed. “The builders get more margin selling higher priced homes. But that situation is designed by the builders. If they set to build cheap affordable housing, they can do it and the houses would sell instantly. They’re building bigger and more expensive housing, but that is not necessarily what people want.” Gina Jacobs, president of Woodbury, Conn.-based Gina Jacobs Real Estate & Property Management, questions whether builders were a little too optimistic in believing that larger and more expensive houses could easily sell during a period of economic fragility. “It is always typically harder to sell larger, higher priced homes,” Jacobs said. “I don’t see families move up into larger homes. I think people in this economy are trying to keep things modest. These larger homes are targeting a very small part of the market.” Yet Rick Sharga, executive vice president of Irvine, Calif.-based, notes that while this might be a small market segment, it nonetheless has rather deep pockets. “It appears to be that the only real

lending activity in the non-Qualified Mortgage world is in jumbo loans that are issued to borrowers with extremely high credit worthiness,” Sharga said. “I am only seeing these types of properties being built when there is some legitimate market demand, with qualified borrowers that are able to get loans.” Sharga added that an absence of jumbo loans could force the builders step in and fill the origination void. “If financing is not available, we could wind up with white-label product offered through the builders,” he said. But Jacobs stated that the industry should not lose sleep worrying about this sector. “The rich will always be able to purchase a home,” said Jacobs. “I see a problem that is more widespread—trying to get people mortgages in all priced homes. Guidelines have tightened so much that most people have been squeezed out.” Phil Hall is senior editor of National Mortgage Professional Magazine. He may be reached by e-mail at

heard on the street continued from page 79







l l



Heard on the Street/Mortgage Professionals to Watch column Phone #: (516) 409-5555 E-mail: Note: Submissions sent via e-mail are preferred. The deadline for submissions is the 1st of the month prior to the target issue.


n Georgia Mortgage Professional Magazine n APRIL 2014


announced that it has hired Robert Cooper as its director of strategic partners. Reverse Mortgage Funding has also announced the hiring of Richard Thorpe as its sales channel leader focused on distributed retail. l Supreme Lending has opened a new branch in Philadelphia, Penn., to be led by Branch Manager Robert Cenci, who has over 18 years of experience as a mortgage loan originator and sales leader. l Caliber Home Loans Inc. has announced that Karen Bausman has

Your turn National Mortgage Professional Magazine invites its readers to submit any information, events, passages, promotions, personal or professional occurrences that seem appropriate and/or other pertinent data to the attention of:


Florida with the addition of five mortgage loan originators in its Orlando office: Angie Willis, Christine Robison, Julia Bell, Rosa Stokes and Suzie Muench. Mortgage Network Inc. has named Brian Moloney branch manager of the company’s new Quincy, Mass. office. Mortgage Master has announced that it is expanding its Midwest production infrastructure and brand by opening a new retail branch office in Northbrook, Ill. to be led by Jorden Brok and Brett Lotsoff as co-branch managers. Guaranteed Rate announced that Jim Earl and Linda Maxwell, leaders of a top loan origination team in Connecticut, have been named area managers as part of Guaranteed’s planned expansion in the state. ReverseVision has announced that Jeffrey S. Taylor, master CMB, has joined its board of directors. ReverseVision has also announced that Gregg Holsapple has joined the firm as product strategist. Nationstar Mortgage Holdings Inc. has announced two new leadership appointments, including David Hisey, Nationstar’s current CFO, who will be assuming the newly created position of chief strategy and external affairs officer; and Robert Stiles who will expand his responsibilities and assume the chief financial officer role at Nationstar. Stiles is the current chief financial officer of Solutionstar, a wholly-owned subsidiary of Nationstar. Generation Mortgage Company continues the growth of its sales team with the promotion of Shirlene Nordé to the position of wholesale account executive and the addition of Pacific Regional Manager Sue Winters to the company’s retail sales division. RealtyTrac has announced that veteran marketing and communications executive Darcy Patch has joined the company as vice president of marketing and operations of the RealtyTrac Network. Stonegate Mortgage Corporation has hired Kelly Henry as SVP of credit administration. VRM Mortgage Services announced that Brandon Kirkham has been named SVP of operations support. Zillow Inc. announced that Curt Beardsley has joined the company as vice president of industry development, responsible for building and strengthening Zillow’s relationships with multiple listing services (MLSs) and other industry partners. loanDepot LLC has announced that David Norris will join the company in the newly created position of president and chief operating officer. Reverse Mortgage Funding LLC

joined the company as managing sales director of Correspondent Lending Eastern Region. l American Financial Network (AFN) of Chino Hills, Calif., has appointed Hoyt Souza as regional production manager, Wholesale Lending Division, of the Northwest Region, including Northern California, Nevada, Oregon and Washington. l Churchill Mortgage has announced that industry experts Pamela Kennedy, Nancy McMahan and Jeanna Tidwell have been promoted to key leadership positions to support its business development efforts across the nation. l Greg Marek has joined Capsilon as chief marketing officer.




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taking the lead A Beginner’s Guide to Facebook Advertising

By Jonathan Blackwell


3. Set your target audience As intimated in the opening paragraph, this is the biggest money and time-waster out there. Why then do marketers fail to define an audience? This is Marketing 101. Advertising to the entire state of Florida, including

4. Create winning landing pages Yes, PAGES plural. If you want to be successful with paid marketing you have to A/B test. Period. There are multiple software platforms that allow you to automatically split test your landing pages—everything from the copy to the logo to the banners

and buttons. Two of my favorites are and There are also WordPress plugins that can help too. Put simply, if you are not split testing, you are throwing away money. Sometimes, even for experienced marketers, it can be difficult to understand the rhyme or the reason why certain landing page copy and/or imagery converts better than other version, but all you need to know is that it does. Because you tested it. Create multiple landing pages and test them … okay?

5. Track, analyze and lift conversions If you skip this step, you might as well stay out of the pay-per-click game. At the very least, hire someone to handle it for you, because you are going to struggle. Ad copy, landing page copy, audience targeting, time of day, you name it—you must track, test and tweak. Track, test and tweak. Track, test and tweak … it’s the only way to spend your advertising dollars wisely and get the most from your campaigns. Will these five basic advertising steps instantly make you a titan of your industry? Of course not, but they will get you headed down the right path. The path to taking the lead. Jonathan Blackwell is chief engagement officer for Jonathan may be reached by phone at (404) 551-3845 or email


n Georgia Mortgage Professional Magazine n APRIL 2014

1. Create your Fan Page Don’t have a Facebook Fan Page? Why the hell not? It’s free, it’s easy and it’s another avenue to share content and engage and influence consumers. In the context of this column, there’s an even better reason to set up a Fan Page … MONEY. Facebook does not want you sending traffic away from their walled garden. They prefer to keep you distracted inside Facebook. They make it obvious how MUCH they

2. Determine your offer Well? Why are you advertising? My guess is you need leads. But what kind of leads? What is your niche? Are you a VA expert? USDA? Or, like me, renovation loan focused? Regardless, you will find riches in the niches and that is what you need to tackle. Borrowers don’t generally click on Facebook ads looking for a great rate. There are plenty of sites where banks compete and everyone loses. Don’t waste your time or resources to compete with that. You –and your ad should solve a problem or provide a resource that they (your target audience) cannot get from Lending Tree or Zillow. They want expertise. To determine your offer, ask and answer this question: What expertise do I have to provide them?

the teenagers, will not make for a winning campaign. Facebook offers some of the best demographic targeting ANYWHERE. It is a treasure trove of information … useful information. I think the best way to illustrate it is through example. My most successful campaign was for HARP 2.0. The ad copy was a house, floating partially underwater, with the word “LIFELINE at the top. Simple enough, the ad copy didn’t make this ad, the targeting did. Knowing that certain subsets of the community, pillars if you will, were less likely to short sale or “hand over the keys” to their home because pillars of the community have lots of eyes watching them. I specifically targeted PTA and Chamber of Commerce members in Florida. I set the campaign up about a month prior to the HARP 2.0 launch. By opening day, I had 65 complete applications. This was my stairway to Heaven or so I thought. As luck and career choice have it, the mortgage business enacted its revenge: My employer decided to pull back from HARP 2.0 one day after it launched. Thus is life in our industry.

et me start with a confession: I have made a lot of mistakes with paid advertising. My goal is for you to avoid those same mistakes and, hopefully, save yourself a lot of money in the process. If only I had a basic set of principles to work from when I started advertising on Facebook over four years and $20,000-plus ago. My initial campaigns sucked. They were bad. Most of your campaigns may be bad as well. I’ve seen them on Facebook. And that reveals a big part of the problem. The fact that I, a licensed loan officer, am seeing campaigns meant for loan-seeking consumers should give you a strong hint at how you may be throwing away money as you read this. You can improve, and get more from your time and advertising budgets–if you follow a few simple steps.

want you to remain consumed by Facebook by significantly discounting ads that keep you inside it. The big takeaway is clear: You’ll spend less on ads if you have a landing page ON Facebook, as opposed to linking away from Facebook to a landing page on your own Web site. More on the “landing page” later.

gse reform


continued from page 59






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APRIL 2014 n Georgia Mortgage Professional Magazine n


proper use of investment trusts. More to this point, the following November, a second STACR transaction was issued in which a bond insurance company participated by providing Freddie Mac contractual protection on the performance of bonds that were not otherwise sold to investors. In essence, the insurance company purchased the bonds, yet would not pay the full amount upfront. The company, Arch Reinsurance Ltd., was required only to provide capital equivalent to 9.5 percent of the value of the bonds it insured, such capital being held in trust by a thirdparty. While it may be argued that Arch Re, a subsidiary of the larger Arch Capital Group Ltd. insurance company, is a more reliable counterparty due to its reliance on a stronger diversified parent, one has only to consider the events of AIG’s failure and Arch Capital’s subsequent acquisition of two failed private mortgage insurance companies in January of this year to begin wondering how long diversified will be ‘diversified.’ While STACR is innovative in the sense that it may help gauge the capital market’s view of borrower credit risk under one particular economic scenario, it by itself restricts the flow of information regarding the broader market’s view on the likelihood of that scenario occurring, ergo regulators have less information concerning housing prices than they had by examining normal private MBS. The information becomes even less clear when complex insurance and reinsurance risks are layered in. The contingent capital study performed by Freddie Mac showed them a way to improve the management of housing price risk by giving the capital markets a product through which they could express their outlook on those prices free of the credit and counterparty risks that confounded attempts to do so with the existing tools.

The road ahead Regardless of the motivations behind them there exists a common thread within the public and private financial markets to facilitate a degree of speculation that can, and will, go too far. In those temporary moments of clarity following the financial crisis that results from going too far, the common threads become exposed. In 1929, it was the manipulation of private market financial tools to concentrate corporate risks such that a stable market could be inflated and then skimmed by a small number of private investors. The government followed up by creating its own financial tool that would diversify borrower risk while concentrating housing price risk such that a depressed market could be re-inflated and then skimmed by everyone. If only they had remembered, or had the discipline, to identify stability while not forgetting what had caused the instability to begin with then perhaps the 2008 crisis would

have been avoided. Nevertheless, it happened. This time, it was the manipulation of both public and private financial tools to concentrate credit, counterparty and collateral risks such that an already leveraged market could be inflated even further. The GSEs, while having some very specific issues unique to them, are probably more a reflection of the inadequacies and super-adequacies of the government’s attempts to achieve its overall goal of stable economic expansion. Yet, the size and scope of the GSEs are such that they have a real impact on the U.S. economy which means reforming them is both a must and an opportunity to sew the seed for broader change in how the government participates within the financial markets. If financial crisis are defined by drops in asset prices and the government’s goal is, as stated within DFA, to promote systemic financial stability then their task of reducing the likelihood and severity of future crisis can only be achieved by improving the ability to both monitor and respond to changes in those prices. When addressing the nature of financial stability at the annual gathering of the American Economic Association in January, Ben Bernanke observed in his last public speech as Chairman of the Federal Reserve that “the immediate trigger of the crisis, as you know, was a sharp decline in house prices” and that “the tools used to fight the panic, though adopted to the modern context, were analogous to those that would have been used a century ago.” If only 2014 Bernanke could reach out to 2008 Bernanke, the latter of which had noted in his opening address to the Jan. 9 FOMC conference call that “I don’t think that we can claim that we have done anything in the way of taking out insurance against what I think are some potentially significant downside risks.” Change comes from changing and those within the government can be most effective when they advocate for the necessary reforms while they still have the authority to affect that reform. That’s the job. Reliance on obsolete tools is a legacy that needs to change. With respect to the GSEs, as long as every act by Congress, the Administration and the independent regulators makes a clear improvement to both transparency and accountability around housing prices they will be affecting long-term reform no matter how simple or complex those acts are. Ryan W. Birtel is founder and managing director of Eolith Advisory Ltd., an independent consulting firm that provides economic and financial advisory services related to the real estate and structured finance markets. He may be reached by phone at (646) 707-1502 or e-mail

calendar of events N A T I O N A L



MAY 2014

Friday-Sunday, May 16-18

JULY 2014

Sunday-Wednesday, May 4-7

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

Monday-Wednesday, July 7-9

MBA’s Commercial/Multifamily Servicing & Technology Conference 2014 Marriott New Orleans 555 Canal Street New Orleans, La. For more information, call (800) 793-6222 or visit

Sunday-Wednesday, May 4-7 MBA’s Legal Issues and Regulatory Compliance Conference 2014 San Diego Marriott Marquis & Marina 333 West Harbor Drive San Diego, Calif. For more information, call (800) 793-6222 or visit

Sunday-Wednesday, May 18-21 MBA’s National Secondary Market Conference & Expo 2014 New York Marriott Marquis 1535 Broadway New York, N.Y. For more information, call (800) 793-6222 or visit

Monday-Thursday, May 5-8

Wednesday, May 7


JUNE 2014 MISMO’s 2014 Spring Summit Dallas/Addison Marriott Quorum by the Galleria 14901 Dallas Parkway Addison, Texas For more information, call (202) 557-2715 or visit

Wednesday-Thursday, June 4-5 2014 Mastermind Summit The Palms Hotel 4321 West Flamingo Road Las Vegas, Nev. For more information, visit

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

Thursday, August 28 Hawaii Association of Mortgage Brokers (HAMB) 2014 Annual Conference & Trade Show Japanese Cultural Center of Hawaii 2454 Beretania Street Honolulu, Hawaii For more information, call (808) 783-4442 or visit

Friday, June 13 Thursday-Saturday, May 15-17 50th Annual NAPMW National Education Conference Seattle Airport Marriott 3201 S. 176th Street Seattle, Wash. For more information, call (800) 827-3034 or visit

The Great Northwest Mortgage Expo Spirit Mountain Casino 27100 Salmon River Highway Grand Ronde, Ore. For more information, call (503) 567-9326 or visit

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


Thursday-Saturday, September 4-6 Florida Association of Mortgage Professionals 2014 Convention & Trade Show Rosen’s Shingle Creek 9939 Universal Boulevard Orlando, Fla. For more information, call (850) 942-6411 or visit


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


Sunday-Wednesday, October 19-22 MBA’s 101st Annual Convention & Expo Mandalay Bay Hotel & Casino 3950 South Las Vegas Boulevard Las Vegas For more information, call (800) 793-6222 or visit MARCH 2015

Sunday-Thursday, March 8-12 32nd Annual Regional Conference of MBAs Trump Taj Mahal Casino Resort 1000 Boardwalk Atlantic City, N.J. For more information, call (732) 596-1619 or visit

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2014 Florida Association of Mortgage Professionals (FAMP) Central Florida Chapter Trade Show Hilton Orlando/Altamonte Springs 350 Northlake Boulevard Altamonte Springs, Fla. For more information, call (407) 399-6120 or e-mail

Wednesday, July 16 “Let’s Make A Deal” Tri-State Wholesale Lending Fair Trump Taj Mahal Casino Resort 1000 Boardwalk Atlantic City, N.J. For more information, call (732) 596-1619 or visit

Thursday-Friday, August 7-8 Monday-Friday, June 2-6

NAMB National 2014 Luxor Resort and Casino 3900 Las Vegas Blvd South Las Vegas For more information, call (860) 922-3441, e-mail or visit

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

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

Saturday-Monday, September 13-15

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Georgia Mortgage Professional Magazine April 2014  
Georgia Mortgage Professional Magazine April 2014