Georgia Mortgage Professional Magazine December 2014

GA 7

NationalMortgageProfessional.com

n Georgia Mortgage Professional Magazine n DECEMBER 2014

CAPITAL MARKETS

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CORRESPONDENT

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WHOLESALE

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WAREHOUSE LENDING

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RETAIL

THE

CHANGE GE AGENT

OF THE MORTGAGE INDUSTRY. FIRST GUARANTY YOUR SUCCESS

First Guaranty Mortgage Corporation 速 (FGMC), is 100% committed to our Correspondent, Wholesale and Retail origination channels. Together with First Guaranty's Capital Markets and Warehouse Lending Divisions, we provide a full spectrum of lending products and services nationwide.

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800.296.2275

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888.637.0102

First Guaranty Mortgage Corporation速 is an Approved Single Family Issuer for Ginnie Mae; an Approved Fannie Mae MBS Issuer; Approved by HUD; an FHA Approved Lending Institution; Approved for VA; and Approved by USDA.

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First Guaranty Mortgage Corporati p on is an FHA Approved ppp Lending Institution, and is not acting on behalf of or o at the direction of HUD/FHA or the federal government. g First Guaranty Guarantyy Mortgage g g Corporati p on Headquarters q is located at 1900 Gallows Road, Road, Suite 800, 800, Tysons y Corner, VAA 22182 (800) ( ) 296-2275. Company p y NMLS NMLS ID 2917. This information is solely for mortgage g g professi p onals and should not be pproviidedd to t consumers or third parti p ties.. Informati t as off 10/13/14 andd is subj bjjectt to h g wiithout ho houtt notitice. Firstt Guaranty G ty Mortgage M tg g Corporati G l ows Road, R d Sui ( th fol f l oowi t t For dditionall branch b h licensiing informati f tion, pl please visit www.nml w g Al Alabama: by the th Alabama b Banki B king If tion is accurate t change C p tion: 1900 Gal S ite 800, 800 Tysons Ty Corner, C VA 22182 (NMLS ID 2917)) is licensedd in the wiing states.

F addi sconsumeraccess.org. b Licensedd by Dp t 2 AAriizona: d th W Bel B l Road, R d Sui S te 1, Glendale, AZ 85308, N 0907158; Arkansas: Combi C binatition Mortgage BBroker k Servicer, Licensee No. C lifornia: Licensed by by the th Department DDepa t t off Busi B iness Oversi O ight under d the California Residential Mortgage L ding Department, Licensee No. 21332; o Licensed as an Arizona Mortgage g g Banker under the AAriizona DDepar p rtment of Financiial IInstitittuti 8 g g Banker-Broker-Servi Banke k rr-Broker-Ser No. 11884; Cal p rtment g g Lendi Department utitions, 4347 W. Licensee No. AAct,t Licensee NNo. 6037237 d Regul R g lattedd by by the th Col C lorado d Division off Real R l Estate; E t t Connecti C ticut:t Licen D laware: Licensedd by by the th Del D laware State St t Bank B k Commi C issiioner to t engage ( d through th 2014)) Distrit ict off Col C lumbi bia: Licensedd by by the th D.C. D C Department D p t t off Insurance, I surance, 6037237; C Collorado: nsedd bbyy the th Connecti C ticuutt Department D p t t off Banki B king, g Licensee No. N 10162; 1016222; Del engage g g in busi b ness in this State t under d License No. No. 2403 (renewed throuugh gh 2014); Ins ensed Floriida: Floriida M tg g LLender d Licensee NNo. MLD333 M tg g Licensee, No. N 13967; 13967 Idaho: Id h Licensedd by by the th Idaho Id h Department D p t t off Finance, Licensee No. N MBL-5032; R identitial Mortgage M g g Licensee, No. 05484 Indi I diana: Indi I diana Firstt Lien Mortgage M tg g Lendi L ding License under d the th Indi I diana Department D p t t off FiF nanciial SSecuriities andd BBankikingg, Licensee NNo. MLB2917 MLB2917; M Mortgage MLD333; G Georg gia: G Georgi gia RResiidentitial Mortgage MBL 5032 Illinoiis: Illinoiis Resi No. MB.0005484; Georgi I titutitions, Licensee NNo. 11058 0309 KKan K Licens C p y Licensee No. N SL.0000212; SL 0000212 Kentucky: K t ky Licensedd by by the th Kentucky K t ky Department D p t t off Financiial Insti N MC16957; MC16957 Loui L isiana: Resi 1421 Mai M ine: Supervi S p isedd Lender L d Licensee No. No. SLM5962; SLM5962 Maryl M yland: Insti 11058; IIowa: LiL censedd bbyy th the IIowa Division off BBankikingg, Licensee NNo. 2004 2004-0309; sas: Kansas-Li edd Mortgage M tg g Company, I titutitions, n Licensee No. R identitial Mortgage M tg g Lendi L ding Liicensee No. No. 1421; d Kansas: ensed M h tt Massachusetts M h tt Mortgage M tg g Broker/Lender/Servi B k /L d /S icer Regi t Minnesota t Resi ff to t enter t into t an agreement t law. Any t Marylylandd Mortgage M M tg g Lender L d Licensee No. N 1731; 1731 Massachusetts: M tg g Lender L d Licensee No. NNoo. ML 2917; 2917 Michigan: 1st 1 t Mortgage R gistrant, t t LiL censee No. N FR0714; FR0714 Minnesota: R identitial Mortgage M tg g Ori O iginator t License No. No. MN-MO-20399083.

MN-MO-20399083.

MO 20399083 This is nott an offer g t under d Minnesota A y suchh offer ff mayy onlly be b made d pursuant p to q irementst in Minn. Stat. Section on 47.206 ((3)) and (4); ( ) Mississippppi: Licensedd by p t of Banking aand ndd Consumer ennsed byy the Missouri Division of Finance, Licensee No. 14-2178; Montana g g Lender under the Division of Banking & Financial Instititutitions, Licensee No. 8453; Nebraska: Nebraska: t the th requi by the th Mississippppi Department C 2178 Montana: M t a: Licensed Mortgage k Nebraska Mortgage M tg g Banker LiL censee Finance, Licensee No. 2917; Missourii: Licensed M tg g Lendi L ding to k loans securedd by by liens on reall property, W t Warm 702 454 4212 New N Jersey:y Licensedd by J y Department N Mexi M ico: New NNo. 1470 1470; NNevada: d Licensedd by by the th Nevada NNevada d Division off Mortgage t make makel p p ty Licensee No. NNo.1047 G ty Mortgage M tg g Corporati C p tion, n 1489 West W Spri Sp ings g Road, RRoad,S d Suiite 215, 215,HHenderson, 215 d 89014 Phone Ph e No. No. 702-454-4212; NewJ by the theN th DDepartme p t entt off Banki B king andd Insurance, I No. 9700530; 9700530 New N w Mexi M ico 1047, Firstt Guaranty NV 89014, New Jersey Licensee No. tg g LLoa S icer Regi R gistrati ttraatit on, Licensee No. B500800 B50080 (d/b/a C p on);) North N th Carol C M t Mortgage g LLoan Com mpany p y License NNo. 01085 01085; NNew YYork:k Licensed Mortgage g g Banker - N.Y. .S. Bankiking DDepartment p and Exempt pM Mortgage ( p Naame First Guarantyy Mortgage g g Corporati North Carollina: North Caroollina Mortgage o. L-100362; North Dakota: Licensed in North North Company N.Y.S. Loann Servi FGMC In Lieu of True Corporate Name Lender Licensee No. DDakota k t as Firstt Guaranty ty Mortgage M tg g Corporati N MB101924; MB101924 M tg g Broker M tg g Banker B k Exempti MBMB 8550010 hhomaM O g Mortgage M tg g Lendi L ding Licensee GuaraantyMortgageCorporati G C p tion dba db FGMC, FGMC,LiLicensee No. FGMC MB101924;Ohi B k Act A t Mortgage E ption No. N MBMB.850010.000; MBMB.85 50010.000; 000 Oklahoma: h tg g Lender L d Licensee No. N ML002709; ML0002709 02709;O g Oregon enseeN No.ML 2634 Pennsyl PPennnsylylvaniia: Ohio::Ohi Ohio Mortgage Oklahoma Mortgage Oregon: No. ML-2634; D p t t off Banki B ng and Securities, Licensee No. 20768; Rhode IIslland: d Rhode Rh Island Licensedd LLend th Carol C lina: South Carol No. MLS-2917; South Dakota: by the th South S th Dakota D k t Department Dp t Licensed byy the PPen nnsylylvaniia Department R er; South Caarolina Mortgage g g Lender/Servicer Licensee No. Dakotaa: Licensedd by g ation, n Division Pennsyl Lender; of Labor and Regul N ML.05077; ML 05077 Tennessee: T T D p t t off Financiial Insti I titut S ings N 5491155; V t Licensedd by V t Department off BBankikingg, Licenseee No. Tennessee Department Mortgage tg g Licensee NNo. 109451 109451; TTexa by the th Texas T Department De D partment p t t off Savi g andd Mortgage M tg g Lendi L ding; g Utah: Ut h Utah Ut h Mortgage M tg g Enti EEnntitity Licensee No. 5491155 Vermont: by the th Vermont DDepar p rtment t t off utitit ons M Texas:s: Licensedd by g lationn,, Licensee No. the Virggiinia St State gt Washi No. CL-2917; W t Virginia: West Virginia Mortgage Lender Licensee No. ML-20742; Financiial RRegul N 6644; 6644 Virggiinia: Licensedd bbyy th t Corporati C p tioonn Commi C issiion as a Lender L d andd Broker BBroker, k , Licensee No. N MC-436; MC 436 Washi W hington: W hington t Consumer C L Company, C CL 2917 West 0742 Wi W sconsin: Follow us on: Loan Licensee No. Licensedd Wisconsiin M t BBanker, k Licensee NNo. 26835BA Mortgage 26835BA; W Wyomiing: Licensedd bby th the W Wyomiing Division off BBankiking, Licensee NNo. 18 31.

31 1831.

GEORGIA EDITION

MBAG

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

MBAG 2014-2015 Board of Governors JD Crowe Steve Copeland Toby Foster Rick Darlington Kelvin Bolden Greg Shumate Mike Anthony

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

Phone # (770) 279-0222, ext. 225 (404) 639-6592 (770) 947-3205 (678) 226-2240 (877) 519-4944 (770) 822-6608 (770) 989-7374

E-mail jdcrowe@southeastmortgage.us steve.copeland@lionbank.com toby.foster@suntrust.com rdarlington@brandmortgage.com kelvin.bolden@cbcinnovis.com gshumate@brandmortgage.com manthony@accessnational.com

State Directors at-Large Julie Utz Stephen Cannon David Massey

(404) 637-0390 (770) 663-1203 (770) 827-0635

julie.utz@angeloakfunding.com scannon@eheritagebank.com david.massey@movementmortgage.com

Associate Member Governors Phil Cataldo (2015) Stuart Gordan (2015) Pam Balk (2015) Nikki Gilbert-Bell (2015)

(770) 720-0177 (678) 281-6524 (404) 606-6719 (678) 298-2100

pcataldo@avantus.com sg@mccallaraymer.com pbalk@archmi.com ngilbert@closingsource.net

calendar of events JANUARY 2015

Thursday, January 22

Broker/Mini-Correspondent Mortgage Expo Trade Show & 2015 NMLS Continuing Education Cobb Energy Performing Arts Centre 2800 Cobb Galleria Parkway • Atlanta, Ga. 9:00 a.m.-8:00 p.m.

FEBRUARY 2015 Tuesday, February 10 AMBA Luncheon Villa Christina @ Perimeter Summit 4000 Summit Boulevard • Atlanta, Ga. $35 for AMBA Members/$50 for Non-Members 11:30 a.m.

For information on all MBAG events, call (478) 743-8612 or visit www.mbag.org.

District I Scott Burchett (2014) David Freas (2014) Paul Schouest (2014)

(770) 354-1396 —————— (770) 435-8840

sburchett@ctmtg.com david.freas@suntrust.com paul@smbhomeloans.com

District II Bobby Taylor (2015)

(478) 953-4490

GA 1

bobbytaylor@sunmarkbank.com

District III Marlene Buhler (2015)

(912) 201-7370

mbuhler@thecoastalbank.com

Loretta Salzano Teri Kramer Eric Knowland

Legislative Liaison/ Governmental Affairs Legal Counsel Executive Director Assistant Director

(678) 281-6445 (770) 248-2885 (478) 743-8612 (478) 743-8612

NationalMortgageProfessional.com

Staff Mo Thrash

mo@mccallaraymer.com lsalzano@franzen-salzano.com mbag@mbag.org eric@mbag.org

facebook.com/mortgageprofessional

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Others Cover the World ...We Cover Yours!

Mortgage News Network launches the first weekly video shows 1

The Housing Show with Phil Hall

NationalMortgageProfessional.com

Hash It Out with Frank Garay and Brian Stevens

Recap of key economic events that took place over the past week and a look ahead to events that will potentially impact interest rates in the housing market.

Airs every Monday at 11 a.m. Eastern

Hard-hitting, fact based look at some of the most important issues facing the home finance industry today – with a bit of humor and irreverence thrown in.

Airs every Thursday at 11 a.m. Eastern

Exclusive interviews with the mortgage world’s leaders. Subjects ranging from building the bottom line to dealing with the economic and political issues that impact the buying and selling of residential properties.

Airs every Friday at 11 a.m. Eastern

Gain access to an exclusive FREE TRIAL OFFER from MBS Highway for Mortgage News Network viewers.

Visit www.MBSHighway.com/mnn

Get more content from Frank and Brian on their daily show, The National Real Estate Post, at www.TheNationalRealEstatePost.com

Sign up to receive the Mortgage News Network show alerts at www.MortgageNewsNetwork.com

If you have a product or service for mortgage professionals you can be a sponsor for these videos.

For more information about these sponsorships or Mortgage News Network custom video productions please send an email to Info@MortgageNewsNetwork or call Beverly Bolnick, our National Sales Manager, at 516-409-5555 ext. 4 and she'll tell you how you can be part of the action!

Visit www.MortgageNewsNetwork.com to see these videos and a lot more!

n Georgia Mortgage Professional Magazine n DECEMBER 2014

Master the Markets with Barry Habib

table o

26

N A T I O N A L

RESPA/TILA Integration Part II: Closing Disclosure and Action Plan

By Jonathan Foxx

D E C E M B E R

40 Lykken on Leadership: Ten Ways to Reevaluate Your Business and Prepare for 2015

By David Lykken

2 0 1 4

M O R T

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A SPECIAL FOCUS ON “GROWTH STRATEGIES FOR 2015”

TILA, RESPA and the Year Ahead By Kris Stewart..........................66 The Year 2015: A Focus on Recruitment and Retention

By Kelly Resendez ..............................................................................68 Top Tips for Lenders Seeking Growth in 2015 By John Clifford ....70 Lead Generation: Keeping It Simple in 2015 By Sarah Federico....71 Sales Strategies for the New Year: The Importance of Aiming Before Shooting By Ginger Bell ......................................72 How Will You Grow Over the Next Year? By Brent Emler ..............75 Upgrading Your Leadership Team By Robert Sher ........................77

44 40 Under 40: The 40 Most Influential Mortgage Professionals Under 40

How to Grow Your Business in 2015 Without Begging or Chasing By Brian Sacks ................................................................78 Business Envelopment By Eric Weinstein ........................................80 Preparing for 2015 in the Housing Market By Ashley Lubey..........81 Private Mortgage Insurers Are Ready to Step Up

By David Gansberg ............................................................................82

FEATURES Three Questions Top Producers Ask Themselves

By Gibran Nicholas................................................................................8 The Elite Performer: Be Instrumental in 2015

By Andy W. Harris, CRMS ....................................................................8 Keep Lending Even in a Credit Crunch By Bubba Mills ................10 The Process of Acquiring Reviews By Brian Karoff ........................16 Make Time for Marketing By K. Justin Restaino..............................18

64 What to Expect From the Mortgage industry in 2015

By Matt Hankins

84 NMP Exclusive: An Interview With Paul Anastos, President, Mortgage Master, a Division of loanDepot LC

NAMB Perspective ............................................................................20 Perfecting the Operational Risk Audit By Nicolle Nelson ..............24

V I S I T Company

Web Site

O U R

A Page

AllRegs.............................................................. www.allregs.com ..........................................................40 American Financial Resources ............................ www.afrwholesale.com ......................................Back Cover BetterLoanOfficers.com ...................................... www.betterloanofficers.com ..........................................33 Boomerang........................................................ www.boomerangprospecting.com ..................................37 Brokers Compliance Group.................................. www.brokerscompliancegroup.com ..................................96 CallFurst.com ...................................................... www.callfurst.com ............................................................79 CAMP .................................................................. www.thecampsite.org ......................................................66 Carrington Mortgage Services, LLC ...................... www.carringtonwholesale.com ..............................31 & 39 CHL Mortgage .................................................... www.chlmortgage.com ....................................................5 CMPS Institute .................................................. www.cmpslive.com ........................................................19 Document Systems, Inc./DocMagic ...................... www.docmagic.com ................................................7 & 63 Easy Mortgage Apps............................................ www.easymortgageapps.com ..........................................31 Equity Prime LLC................................................ www.equityprime.com ..................................................73 First Guaranty Mortgage Corp. ............................ www.fgmc.com ..............................Inside Front Cover & 72 Flagstar Bank .................................................... www.wholesale.flagstar.com ..........................................17 HomeBridge Wholesale ...................................... www.homebridgewholesale.com ....................................43 JMAC Lending .................................................... www.jmaclending.com ..................................................27 Listing Booster .................................................. www.listingbooster.com ................................................61 Lykken On Lending ............................................ www.lykkenonlending.com ............................................59 Maverick Funding Corp....................................... www.maverickfunding.com ............................................25

f contents

T G A G E

L U M E

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

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N U M B E R

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SRR Proposes Changes to Mortgage Call Reports

By Ray Hagan......................................................................................30 The Long & Short: The Business of Short Sales By Pam Marron..31 Another Regulatory Rule … Again? By Heather Kerns ..................32 NMP’s Economic Commentary By Dave Hershman........................34 Fraud Detection for the Major Case Special Investigations Unit

By Robert Deutsch ..............................................................................36 FHA’s HECM is Here to Stay By Garrett M. Kolb ............................42 Just Ask Eric & Laura By Eric Weinstein & Laura Burke ..................56 Legal and Industry Developments: December 2014

By Melanie A. Feliciano Esq. ..............................................................58 Third-Party Risk Levels: Not Every Vendor Should be Treated the Same By Andrew Liput ................................................................60 New Hybrid Marketing Methods ......................................................62 Providing a Helping Hand to First-Time Homebuyers

By Michael Hitt ....................................................................................86 NCRA Celebrates 22nd Annual Conference in Palm Springs ......87 Framework for a Consumer-Compliant Compliance System

By Winston McGregor ........................................................................88 Step Inside Ginnie Mae By Ted W. Tozer ........................................93 National Association of Women in Real Estate Businesses Hosts Groundbreaking Inaugural Conference................................94

COLUMNS New to Market..............................................................................12 News Flash: December 2014 ......................................................14 Heard on the Street ....................................................................38 NMP Resource Registry..............................................................90 NMP Calendar of Events ............................................................95

D V E R T I S E R S Company

Web Site

Page

Mortgage News Network (MNN) .......................... www.mortgagenewsnetwork.com ......................................1 NAMB+ ............................................................ www.nambplus.com ......................................................23 NAMBPAC.......................................................... www.namb.org ................................................................3 NAPMW ............................................................ www.napmw.org ....................................................65 & 75 NAWRB ............................................................ www.nawrb.com ............................................................92 New England Mortgage Expo .............................. www.nemortgageexpo.com ............................................69 NMP Magazine .................................................. www.nationalmortgageprofessional.com ........................51 Paramount Residential Mortgage Group, Inc. ...... www.prmg.net ..........................15, 57 & Inside Back Cover PB Financial Group Corp..................................... www.pbfinancialgrp.com ..............................................80 REMN (Real Estate Mortgage Network) ................ www.remnwholesale.com ....................................GA5 & 13 Reverse Mortgage Solutions, Inc. ........................ www.partners.rmsnav.com ............................................82 Secure Settlements Inc. ...................................... www.securesettlements.com ..........................................41 TagQuest .......................................................... www.tagquest.com ........................................................35 The Bond Exchange............................................ www.thebondexchange.com ..........................................34 The National Real Estate Post.............................. www.thenationalrealestatepost.com ..........................74, 83 Titan List & Mailing Services, Inc. ........................ www.titanlists.com ..........................................................9 Top Producer Round Table ................................ www.topproducerroundtable.com ..................................19 United Northern Mortgage Bankers, Ltd............... www.unitednorthern.com ......................................29 & 67 United Wholesale Mortgage ................................ www.uwm.com/younited ................................................11

Dear Mortgage Professional, My name is John G. Stevens, CRMS. I am honored to serve as the 2014-2015 Chair of NAMBPAC, a political action committee dedicated to preserving the American dream and the only PAC working exclusively to protect the interests of consumers and mortgage professionals nationwide.

NAMBPAC is the non-partisan political action committee for NAMB, The Association of Mortgage Professionals. NAMB is the recognized and respected voice of the mortgage originator on Capitol Hill and throughout Washington, D.C., and NAMB supports the operation of NAMBPAC as authorized by, and in accordance with, federal law.

Funds raised by NAMBPAC are used to support Members of Congress who support a strong mortgage market, fair competition and meaningful consumer protection.

On behalf of NAMB and NAMBPAC, I would like to sincerely thank the following individuals and political committees for their generous contributions to NAMBPAC through November 24, 2014: Mike Anderson Chuck Anderson Rocke Andrews Fred Arnold Kevin Ary Jayne Bail Jim Barry Joel Berman Rick Bettencourt Sharon Bitz Doug Braden Joseph Cannarozzi Terry Casey Dana Chahidi George Charles Kay Cleland Terry Clemans John Councilman Roy DeLoach

Michael DeSantis Harry Dinham George Duarte Scott Dudley Don Fader Ginny Ferguson FAMP Federal PAC Bryan Foreman Don Frommeyer Scott Griffin Sylvia Gutierrez Andy Harris Melissa Hayes Lisa Hernandez Carla Highland John Hudson Edmund Irwin Everett Ives Helga James

Erik Janeczko Jon Kaempfer David Kane Charlie Keiser Edmund King Nan Kirkpatrick Linda Knowlton Terri Koubek Fred Kreger Olga Kucerak Kim Lewis Lisa Lund Linda McCoy Tiffany McCoy James L. Nabors, II Danielle Neveu OAMBPAC Jim Pair Nathan Pierce

John Porter Tina Rose Kathy Rubin Diego Sandoval Valerie Saunders Andy Seepersad Lisa Severseike Kane Smeltz John G. Stevens TAMB Federal PAC David Timmerman Michelle Velez Irving Webb Kimber White Cynthia Wingo Brain Yampolsky

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

John G. Stevens, CRMS 2014-2015 Chair NAMBPAC John@JohnGStevens.com

DECEMBER 2014 Volume 6 • Number 12

FROM THE

Do you have a plan for growth in 2015?

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

Growth strategies are defined as a strategies aimed at winning a larger market share, even at the expense of short-term earnings. Four broad growth strategies are Diversification, Product Development, Market Penetration and Market Development. The mortgage profession, without question, has changed dramatically over the past eight or so years. The very menu of products that loan originators have at their disposal has shrunk, and in concert with compliance requirements, has modified the entire mortgage process.

At a recent mortgage industry conference, I ran into an old friend and asked him where he was working. He said jokingly, “I am a compliance company that occasionally does a mortgage.” The humor in his comment reflected the frustration that loan originators experience today. He didn’t work for a compliance company, but was a loan originator for a mortgage broker. He just felt that his focus on origination seemed to shift heavily on compliance versus origination, and his statement just comically communicated how he felt about the current state of the industry.

With that said, how does one grow when faced with obstacles that stand in the way of intended growth? Well first, compliance is not an obstacle, it is a set of rules. Whether right or wrong until changed, we simply need to comply with the rules that have been set forth.

All too often, the biggest cause for frustration comes from a lack of education and not knowing how to navigate quickly through the myriad of compliance layers involved in origination and settlement. Hence, the item on your plan for growth in 2015 should be to continue your education. Not just the education you are required to have in order to maintain your NMLS licensing, but become a “sponge” and absorb as much as you can from the numerous resources available to you. Both the contents of this magazine and our National Mortgage Professional Magazine Webinar Series are excellent sources to keep you abreast of the regulatory and compliance changes facing the mortgage industry.

Your trade associations, NAMB–The Association of Mortgage Professionals (NAMB.org), the Mortgage Brokers Association (MBA.org) and the National Association of Professional Mortgage Women (NAPMW.org) are all great resources available right at your fingertips. Membership within these organizations both supports their efforts to protect the industry and consumer, provide additional opportunities for education and serve as a conduit to network with others in the industry. Don’t sit on the sidelines! As part of your plan for growth in 2015, join these trade associations and their state affiliates and become an active member, a member seeking to play an active role in the industry.

In closing, I’ve said this in the past and I think it bears repeating. Don’t be a complainer, but be a navigator. Complaining gives you nothing but stress. Set your sails in 2015 to be a navigator and become an educated and trusted advisor for your clients. You can set yourself up for great growth in 2015 with ongoing referrals when you show the consumer you know what you are doing. The best marketing plan for growth in 2015 is in your hands. Just look in the mirror … it’s you!

Best wishes for the holidays and a happy, healthy and safe New Year from myself and the entire team at National Mortgage Professional Magazine and Mortgage News Network.

See you next year!

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

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

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

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

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

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

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

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

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

ARTICLE SUBMISSIONS/PRESS RELEASES To submit any material, including articles and press releases, please contact Editor-in-Chief Eric C. Peck at (516) 409-5555, ext. 312 or e-mail ericp@nmpmediacorp.com. The deadline for submissions is the first of the month prior to the target issue.

SUBSCRIPTIONS To receive subscription information, please call (516) 409-5555, ext. 301; e-mail orders@nmpmediacorp.com or visit www.nationalmortgageprofessional.com. Any subscription changes may be made to the attention of “Circulation” via fax to (516) 409-4600.

DECEMBER 2014 n Georgia Mortgage Professional Magazine n

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publisher’s desk

Statements, articles and opinions in National Mortgage Professional Magazine are the responsibility of the authors alone and do not imply the opinion or endorsement of NMP Media Corp., or the officers or members of National Association of Mortgage Brokers and its State Affiliates (NAMB), National Association of Professional Mortgage Women (NAPMW), National Consumer Reporting Association (NCRA) and/or other state mortgage trade associations.

Participation in NAMB, NAPMW, NCRA, and/or other state mortgage trade associations events, activities and/or publications is available on a non-discriminatory basis and does not reflect the endorsement of the product and/or services by NMP Media Corp., NAMB, NAPMW, NCRA, and other state mortgage trade associations.

National Mortgage Professional Magazine, NAMB, NAPMW, NCRA, and/or other state mortgage trade associations do not make any misrepresentations or warranties concerning the regulatory and/or compliance aspects of advertisers, products or services and/or the editorial content contained in NMP Media Corp. publications. National Mortgage Professional Magazine and NMP Media Corp. reserve the right to edit, reject and/or postpone the publication of any articles, information or data.

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

NATIONAL MORTGAGE PROFESSIONAL MAGAZINE’S

EDITORIAL CONTRIBUTORS Featured Editorial Contributors Laura Burke

Ted W. Tozer

Sarah Federico

Brian Karoff

Gibran Nicholas

Eric Weinstein

Melanie A. Feliciano Esq.

Heather Kerns

Kelly Resendez

David Gansberg

Garrett M. Kolb

K. Justin Restaino

Ray Hagan

Ashley Lubey

Brian Sacks

Matt Hankins

Winston McGregor

Robert Sher

Michael Hitt

Nicolle Nelson

Kris Stewart

Jonathan Foxx

Andrew Liput

Editorial Contributors Ginger Bell

David Lykken

John Clifford

Pam Marron

Robert Deutsch

Bubba Mills

Brent Emler

the

just got

M ORT ORTGAGE T GAGE GA GE “YOUR FUTURE URE STARTS T WIT ITH H US�

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n Georgia Mortgage Professional Magazine n DECEMBER 2014

Continental C Conti tiinental i taal H Home ome L Loans oa has joined forces with

NAMB The Association of Mortgage Professionals

National Association of Professional Mortgage Women

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

2014-2015 NAPMW National Board of Directors

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

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

DECEMBER 2014 n Georgia Mortgage Professional Magazine n

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DIRECTORS

P.O. Box 451718 l Garland, TX 75045 Phone: (800) 827-3034 Web site: www.napmw.org

National President Christine Pollard (607) 226-1046 president@napmw.org

Vice President–Western Region Anna Mackovska (323) 321-2222 westernregion@napmw.org

President-Elect Kelly Hendricks (314) 398-6840 preselect@napmw.org

Secretary Cynthia Nutter (360) 258-2206 natsecretary@napmw.org

Vice President–Central Region Judy Alderson (918) 250-9080, ext. 300

Treasurer Kimberly Rozell, CME (607) 229-5008 nattreasurer@napmw.org

Vice President–Eastern Region Cathy Kantrowitz (845) 463-3011 easternregion@napmw.org

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

Vice President–Northwestern Region William “Bill” Sanderson, CME, CMI (360) 713-9264

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

2013-2014 Board of Directors & Staff

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Olga Kucerak, CRMS Crown Lending 328 West Mistletoe l San Antonio, TX 78212 Phone: (210) 828-3384 l E-mail: olga@crownlending.com David Luna, CRMS Mortgage Educators and Compliance 947 South 500 E, Suite 105 l American Fork, UT 84003 Phone: (877) 403-1428 l E-mail: david@mortgageeducators.com Linda McCoy, CRMS Mortgage Team 1 Inc. 6336 Piccadilly Square Drive l Mobile, AL 36609 Phone: (251) 650-0805 l E-mail: linda@mortgageteam1.com Valerie Saunders RE Financial Services 13033 West Lindburgh Avenue l Tampa, FL 33626 Phone: (866) 992-0785 l E-mail: valsaun@gmail.com John Stevens, CRMS Bank of England d/b/a ENG Lending 11650 South State Street, Suite 350 l Draper UT 84062 Phone: (801) 427-7111 l E-mail: jstevens@englending.com

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Three Questions Top Producers Ask Themselves

By Gibran Nicholas 1. Why am I in this business?

Most kids don't dream of becoming mortgage originators when they grow up. I've found that most loan originators fall into this business by accident. Maybe a friend or relative told us the money was good, or the hours were flexible. Maybe we saw someone else making a lot of money originating loans and we said, "Hey, I can do THAT!" This business has a funny way of sneaking up on us in very unexpected ways … for better or for worse. That said, I've observed something really interesting about top producers in our industry. At some point, they stopped.

They just stopped. They took a step back and asked themselves, "Why?" Why am I in this business? What am I really trying to achieve here?

Maybe you've already asked and answered that question for yourself in a meaningful way. Maybe you haven't. Either way, make some time this holiday season to just stop and ask yourself, "Why?" I think you may be surprised at how that one question may open up new ways of thinking about how you choose to spend your time and energy in 2015.

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2. What value is nobody else creating right now for borrowers, real estate agents and financial advisors?

One key to business success is to create unique value for people. But how can you create value for someone when you don't know what the other person values? That's why it's important to continuously ask: l What do borrowers want right now that they aren't getting from my competitors? l What do real estate agents want right now that they aren't getting from my competitors? l What do financial advisors want right now that they aren't getting from my competitors?

Your "Value Creation Plan" for 2015 can be based on the answer to these powerful questions.

3. What am I missing?

Top producers scour the Earth to find out what they're missing. Once they find out what they're missing, they do anything and everything to stop missing it. If you haven't cracked the code on financial planner business yet, stop doing what doesn't work. Start finding out how other top producers have already cracked the code, and start doing THAT. If you haven't figured out a way to consistently convert rate shoppers or stand apart with real estate agents, stop thinking it can't be done. Start learning how other top producers have done it in the past, and what they're doing right now.

If you haven't nailed down the art and science of building a team or managing your time and activities, stop frustrating yourself and others. Start looking at other ways of doing things, and other models that top producers have perfected.

To that end, I'm excited to announce that I'll be right here, each month, sharing best practices from top producers all over the country. I'll also be interviewing them on video, and you can access these Top Producer Round Table weekly videos starting Dec. 16 at MortgageNewsNetwork.com.

Happy Holidays!

Gibran Nicholas is the founder, chairman and CEO of CMPS Institute and Top Producer Round Table Series. Since 2005, he's helped more than 7,000 of America's top loan originators to grow sales and improve their relationships. He may be reached by phone at (888) 608-9800, e-mail gibran@CMPSInstitute.org or visit CMPSInstitute.org.

A production of

SPONSORED EDITORIAL

THE

elite performer Be Instrumental in 2015

By Andy W. Harris, CRMS

t’s hard to believe that 2014 has already flown by and 2015 is just around the corner. I don’t know about you, but it feels like 2014 just started and it’s already coming to an end. We say this every year right? During the holidays and time off, I always reflect on the previous 12 months and then look ahead to the coming New Year. While a simple date on the calendar should not determine a positive motivation level which should be sustained all year, it does help in planning and setting goals around a set timeline.

Instead of discussing these basic goals and resolutions which are common, I believe an action describing how we should conduct ourselves each and every day can be something we aspire to in the coming year.

Defined as being very important in helping or causing something to happen or be done, I encourage everyone to be instrumental in 2015. Each of us were born with gifts meant to improve our lives and the lives of those around us, but in order to reap the benefits we must recognize these gifts and use them effectively. Encourage yourself and others to implement actions that produce a positive outcome every day.

Consistency can be a good or bad thing, depend—Zig Ziglar ing on what actions and behaviors are involved. Be driven.

Have purpose. Be creative. Surround yourself with inspirational people. Be eager to learn and patient to teach. Be on time to work as well as on time to dinner at home. At the end of each day, ask yourself if your actions were instrumental in improving your life or the life of others. If the answer is yes more than no, than you’re going to have a great year.

I

“You were designed for accomplishment, engineered for success and endowed with the seeds of greatness.”

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, email aharris@vantagemortgagegroup.com or visit www.vantagemortgagegroup.com.

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Keep Lending in a and Expectations Surveying theEven Opinions

of the Mortgage Industry’s Top Brass

Credit Crunch Keep Lending Even in a Credit Crunch

“Of the 30 percent of the population who want to buy a home in the next two years, 74 percent haven’t pursued a mortgage or taken any action to see if they could get a loan at all.”

By Bubba Mills ere’s the deal … plain and simple: Throughout much of the country, we’re seeing a sellers’ market in real estate.

Inventory is still slim pickings and many homes are getting multiple offers.

Buyers are also feeling the crunch of slowly (but surely) rising interest rates.

As if that wasn’t enough, as the credit standard rises, more buyers are just simply giving up on buying a home for fear of getting rejected when applying for a mortgage. In fact, in a recent study from loanDepot, 46 percent of potential homebuyers have opted not to apply because of that fear.

The survey also says the fear of rejection is keeping potential buyers from even taking any steps to see if they could get a home loan. Of the 30 percent of the population who want to buy a home in the next two years, 74 percent haven’t pursued a mortgage or taken any action to see if they could get a loan at all.

H

What’s more, half of all Americans don’t even know what the minimum required FICO score is to qualify for a loan.

The segment of potential buyers hit hardest according to loanDepot is younger buyers. Nearly half (48 percent) of all potential homebuyers who don’t currently own a home are between the ages of 25 and 34—many of whom are potential first-time buyers.

So what’s a lender to do when handed this sack of lemons? Here are four tips to make some tasty lemonade: 1. Keep current on your continuing education. If you stop and think about this situation, it’s really a great opportunity to become a better lender, the lender of choice in your area. By staying current on your continuing education, you can reach expert status on most, if not all, the ins and outs of credit and eventually be in a position to help your clients correct their credit reports and improve their credit scores. You also need to be knowledgeable on City/County/State

grant programs for first time home buyers and down payment assistance programs.

2. Hold a credit seminar. Why not partner with a Realtor and hold a seminar in your area to explain the market and nuances of today’s credit market? This automatically makes you a go-to resource for consumers.

It positions you as an expert and increases your credibility. Plus, oftentimes libraries will have space they’ll let you use for free or at a very reasonable price.

3. Connect with a great credit repair company. Do your homework though. Some in that industry aren’t as ethical as you might like them to be. But the good ones are worth getting to know, and they can be a big help. In general, go after the companies that have been in business for at least three years. And check out their Better Business Bureau rating. Also, look for accreditation from a thirdparty national organization, such

as the National Association of Credit Services Organizations.

4. Stay in touch with prospects.

Nothing lasts forever and that includes bad times. Always stay in touch with potential customers. If you don’t have a drip system that helps you stay in touch, get one and use it with prospects. Work with them to ensure they’re taking steps to get their credit on track. By going the extra mile, you’ll begin to develop a reputation that stands out among your competition.

Let me hear from you. How’s business where you live? What are you hearing from potential customers? Do you have a pipeline of prospects? Do you have a plan to keep that pipeline full?

Please send any comments or questions to article@corcorancoaching.com or www.facebook.com/CorcoranCoaching.

Bubba Mills is executive vice president of Corcoran Consulting & Coaching Inc. He may be reached by phone at (800) 9578353 or visit www.corcorancoaching.com.

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800-981-8898 | WWW.UWM.COM/YOUNITED This information is provided to mortgage and real estate professionals only and is not intended nor is it authorized for consumer distribution.

n Georgia Mortgage Professional Magazine n DECEMBER 2014

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United Wholesale Mortgage Unveils New Investment Property Offering

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United Wholesale Mortgage (UWM) has announced the launch of Investor Edge, designed specifically for borrowers looking to purchase or refinance non-owner occupied investment properties. The Investor Edge program provides UWM’s broker partners with a unique opportunity to increase their businesses by catering to a niche segment of borrowers. UWM says that similar to commercial financing, there is no need to verify personal income with Investor Edge and the debt-to-income (DTI) ratio is based solely on the proposed cash flow for the subject property.

“The last few years residential investment purchase property transactions have largely been dominated by all cash investors,” said Mat Ishbia, president and CEO of UWM. “Our Investor Edge program helps level the playing field by giving investors alternative options to an all cash transaction. The launch of Investor Edge is yet another innovative product that helps our partners better compete in their local area markets.”

Program highlights include: Unlimited number of financed properties; approval based on cash flow of property; loan amounts from $75,000 to $1 million; FICO score of 720-plus; and verification of employment history only.

UWM’s partners can log into its EASE web portal to run product eligibility and pricing on borrowers that are a good fit for Investor Edge. The program can also be accessed by UWM’s UMobile application for Apple and Android Devices, which gives brokers real-time access to status updates, the ability to lock loans on the go, communicate with UWM underwriters, and more.

Carrington Mortgage Launches New Product to Support Underserved Borrowers Carrington Mortgage Services LLC has announced the national availability of The Carrington Loan, which

offers borrowers a more transparent, simplified home loan process with no closing costs or upfront financing fees.

Developed in support of Carrington’s commitment to serve the “underserved” market and first-time homebuyers, The Carrington Loan can facilitate home purchases for borrowers in the sub-640 FICO score range.

“Many underserved borrowers, including first time home buyers, still view the path to a mortgage loan as unattainable, complex and often cumbersome. The Carrington Loan simplifies the process and improves the experience to help remove the anxiety, particularly for those who do not have sufficient cash on hand to pay closing costs,” said Carrington Mortgage Services Mortgage Lending Division Executive Vice President Ray Brousseau. “With The Carrington Loan, there is no need to modify the rate after it is presented to the borrower to offset loan costs and loan closing fees, and unexpected increases to estimated closing costs are not an issue. Removing these barriers greatly alleviates the stress on borrowers who desire to fulfill their dream of homeownership.”

Indeed Abstract Adds Customized Default Services to Its Product Line Indeed Abstract, a national title and settlement company, has announced that it has added default services to their comprehensive array of product offerings. “Our growing title and settlement client base has requested that we offer both default and due diligence services. It has been growing steadily and is becoming a significant part of our business,” said Joe Amoroso, managing director of Indeed Abstract.

Services include a full offering of default products, including loan modifications, document execution and recording, customized property reports for portfolio and real estate-owned (REO) due diligence, curative title work

and title policies. With strategic business partners, Indeed creates efficient and cost-effective default services strategies. All of these services are available to companies of all sizes.

Whether it is for an individual loan or a large portfolio of loans, Indeed can accommodate the customer’s needs.

Indeed Abstract conducts business in all 50 U.S. states. They have the ability to create custom services and reports, specific to the customer’s needs. Indeed Abstract’s team of professionals consists of both title and mortgage professionals, giving them a unique understanding of the business and the client’s needs.

“Having the ability to offer these diversified services to our existing customers has been very well-received and has opened us up to a whole new customer base for us with needs that we can fulfill,” said Amoroso.

Caliber Expands Its Fresh Start Program Caliber Home Loans Inc. has announced that it has expanded its Fresh Start Program to allow more eligible and qualified borrowers to realize their goal of homeownership. Caliber’s Fresh Start Program is a specialized mortgage solution designed specifically for self-employed business owners and borrowers who have experienced a recent life or credit event, or investors that are currently unable to find a program in the marketplace that meets their needs as they work to re-establish a strong credit history.

Under the guidelines of the expanded program, more creditworthy borrowers who have experienced a credit or life event, as recently as within the past year, may now meet the requirements to receive a loan.

“Since we launched the Fresh Start Program earlier this year, we have received an excess of positive feedback from borrowers that took advantage of the opportunity to realize their goal of homeownership,” said Joe Anderson,

chief executive officer of Caliber Home Loans Inc. “Based on the success of Fresh Start, Caliber has decided to expand the program to meet the financing needs of even more customers, all while maintaining our commitment to robust underwriting procedures and world-class lending standards.”

“Since the financial crisis, credit has been extremely tight, which has restricted the availability of mortgage products in the marketplace,” said William Pendleton, senior vice president of Specialty Lending. “As a result, many qualified borrowers have been effectively prevented from attaining home financing for the past several years. Our innovative Fresh Start Program provides mortgage financing that extends beyond the limitations of traditional agency loan qualification standards for borrowers who can contribute equity and demonstrate their ability to repay. We are very excited about this expanded offering and look forward to working with our realtor, builder, broker and correspondent partners to help more creditworthy individuals achieve their homeownership goals.”

Wolters Kluwer Preps Customers for New RESPA/TILA Rules

Wolters Kluwer Financial Services (WKFS) has announced that it is prepared to help mortgage lenders meet the combined Truth-in-Lending Act (TILA) and Real Estate Settlement Procedures Act (RESPA) integrated disclosure requirements, which go into effect industrywide on Aug. 1, 2015.

WKFS is now offering live demos of its compliance and business workflow solutions which will help ensure ongoing, up-to-the-last minute compliance with TILA-RESPA requirements. Wolters Kluwer Financial Services offers leading technology, from dynamic, cloudhosted solutions (SaaS) to content engines that can be embedded within

continued on page 18

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EWSFLASH l DECEMBER 2014 l NMP NEWSFLASH l DECEMBER 2014 l NMP NE FHA Loan Limits to Remain Unchanged in 2015

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The Federal Housing Administration (FHA) has announced the agency’s news schedule of loan limits for 2015.

These loan limits are effective for case numbers assigned on or after Jan. 1, 2015, and will remain in effect through the end of the year. FHA’s calculation for maximum loan limits in high cost metropolitan areas of the country will remain the same as the 2014 level of $625,500. The current standard loan limit for areas where housing costs are relatively low will also remain unchanged at $271,050.

Each year, FHA recalculates its national loan limit based on a percentage calculation of the national conforming loan limit. Depending on those limits, FHA’s minimum national loan limit “floor” is at 65 percent of the national conforming loan limit. The floor applies to those areas where 115 percent of the median home price is less than 65 percent of the national conforming loan limit.

Conversely, any area where the loan limit exceeds the “floor” is considered a high cost area. The maximum FHA national loan limit “ceiling” is at 150 percent of the national conforming limit. In areas where 115 percent of the median home price (of the highest cost county) exceeds 150 percent of the conforming loan limit, the FHA loan limits remain at 150 percent of the conforming loan limit.

Areas are eligible for FHA loan limits above the national standard limit, and up to the national ceiling level, based on median area home prices.

Additional information and loan limit adjustments for two-, three-, and fourunit properties, and in Special Exception Areas, are noted in FHA’s Mortgagee Letter 2014-25.

The mortgage loan limits for FHAinsured reverse mortgages will also remain unchanged. The FHA reverse mortgage product, the Home Equity Conversion Mortgage (HECM), will continue to have a maximum claim amount of $625,500, with actual loan

limits based on property value, borrower age, and current interest rates.

Reverse mortgages allow homeowners age 62 and older to age in place by borrowing against the value of their homes without any requirements for monthly payments; no repayment is required as long as a homeowner lives in the home.

The reverse mortgage is repaid, with interest, when the homeowner leaves the home.

Independent Mortgage Bankers Profits Dip in Q3 Independent mortgage banks and mortgage subsidiaries of chartered banks reported a net gain of $897 on each loan they originated in the third quarter of 2014, down slightly from a reported gain of $954 per loan in the second quarter of 2014, the Mortgage Bankers Association (MBA) reported in its Quarterly Mortgage Bankers Performance Report.

“Average company production volume was up in the third quarter, which resulted in a nominal decrease in perloan production expenses,” said Marina Walsh, MBA’s vice president of industry analysis. “At the same time, the average loan balance for first mortgages reached its highest level since inception of the Quarterly Mortgage Bankers Performance Report in 2008.

Nonetheless, production profits were slightly down because of a decrease in secondary marketing income.”

Other key findings of MBA’s Quarterly Mortgage Bankers Performance Report are: l The average production profit was 42 basis points (bps) in the third quarter, compared to an average net production profit of 46 bps in the second quarter of 2014. Since the inception of the Performance Report in the third quarter of 2008, net production income has averaged 54 bps with a median of 50 bps.

l Average production volume was $437 million per company in the third quarter of 2014, up from $378 million per company in the second quarter of 2014, an increase of 16 percent. The volume by count per company averaged 1,901 loans in the third quarter of 2014, up from 1,676 loans in the second quarter of 2014. l The purchase share of total originations, by dollar volume, was 72 percent in the third quarter of 2014, compared to 74 percent in the second quarter of 2014. For the mortgage industry as a whole, MBA estimates the purchase share at 62 percent in the third quarter of 2014. l The jumbo share of total first mortgage originations continued to increase, rising to 9.4 percent in the third quarter, the highest level since the inception of the Performance Report. MBA’s applications data, as well as credit availability data, continues to show strong growth in jumbo production. l The average loan balance for first mortgages also grew to a study high of $231,914 in the third quarter of 2014, from $225,762 in the second quarter. l Secondary marketing income was 261 basis points in the third quarter of 2014, compared to 270 basis points in the second quarter. l Total loan production expenses– commissions, compensation, occupancy, equipment, and other production expenses and corporate allocations–decreased to $6,769 per loan in the third quarter of 2014, from $6,932 in the second quarter. l Personnel expenses averaged $4,401 per loan in the third quarter of 2014, from $4,423 per loan in the second quarter. l The “net cost to originate” was $5,038 per loan in the third quarter of 2014, from $5,074 in the second quarter. The “net cost to originate” includes all production operating

expenses and commissions, minus all fee income, but excluding secondary marketing gains, capitalized servicing, servicing released premiums, and warehouse interest spread. l Productivity was 2.4 loans originated per production employee per month in the third quarter of 2014, up slightly from 2.3 in the second quarter. l Including all business lines, 83 percent of the firms in the study posted pre-tax net financial profits in the third quarter of 2014, up from 81 percent in the second quarter of 2014.

Hammerhouse Seeking Originator Input for Fifth Annual Survey Hammerhouse LLC has announced the launch of its Fifth Annual Survey of Originators’ Opinions, which has become a source of loan originator opinions on critical issues facing the mortgage industry and impacting their production and job performance. The Annual Survey of Originator Opinions has become a resource for leaders and mortgage lenders, as they focus on supporting, attracting, hiring and retaining top production talent with relationshipbased, transferable books of business.

To participate in this Annual Survey of Originator Opinions, visit www.teamhammerhouse.com/2015hammerhouse-industry-survey and enter for a chance to win an iPad or visit the “What’s Hot” section on the company’s Web site at www.teamhammerhouse.com. The survey will take less than five minutes to complete.

“The year 2015 will be the first year of the post-Federal Reserve’s quantitative easing, as well as a projected reduction in mortgage originations from $1.8 trillion in 2014 to around $1 trillion projected in 2015. It will be a year filled with scratching and clawing for purchase business and we expect to see dramatic movement in the industry as consolidation, geographic assessment and product rebalancing intersects with

regulatory compliance and operational efficiency,” said Drew Waterhouse, managing director of Hammerhouse.

“We appreciate and respect the time of those who consistently participate in our annual survey and ask for those who have not yet, to take a few minutes to complete this survey. It helps shape a better, more aware, mortgage industry and creates visibility to the core components that impact and best represent the needs at the street level.”

As a thank you for participation, Hammerhouse will randomly select one respondent to receive an iPad. The winner will come from survey submissions received no later than Jan. 15, 2015.

The raffle winner will be posted on the Hammerhouse Web site on Feb. 2, 2015. Hammerhouse will be quantifying the results from the survey and will make them available on its site on Feb. 16, 2015 for all those who participated.

The Hammerhouse annual survey covers the Six Core Components evaluated during the Model Match process within the mortgage origination industry: Leadership, Culture, Business Model, Operations, Technology and Geography. All mortgage loan originators (bank, mortgage bank, correspondent or broker) are invited to complete the survey. Answers are confidential and will only appear in an aggregate analysis. Results of the survey are used to educate lenders and vendors on the perceptions of loan officers, and to advocate for improvements that will benefit loan officers, leaders, lenders and consumers.

Through a combination of lowered interest rates and modified loan terms, monthly payments are reduced to affordable levels. In addition, many homeowners who remain current following their modification are eligible to earn up to $5,000 over the first five years of their modification, which is applied in repayment of their outstanding principal balance.

Under the revised guidelines announced, all homeowners in HAMP will now be eligible to earn $5,000 in the sixth year of their modification, which will reduce their outstanding principal balance by as much as $10,000. Homeowners will also be continued on page 16

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n Georgia Mortgage Professional Magazine n DECEMBER 2014

The American Land Title Association (ALTA) has reported that title insurance premium volume decreased 10.8 percent during the third quarter of 2014 when compared to the same period a year ago. The title insurance industry generated $3 billion in title insurance premiums during the third quarter of 2014 compared to $3.4 billion during the third quarter of 2013.

Additionally, the title insurance industry posted a net operating gain of $231.6 million for the third quarter of 2014. This is the highest quarterly gain since the third quarter of 2006.

“With the purchase market struggling to gain traction due to weak demand and a continued decline in refinance activity, title insurance premiums dropped again this quarter,” said Michelle Korsmo, chief executive officer of the American Land Title Association. “Despite a decrease in written title insurance premiums, the industry continues to be in a strong financial position posting more than $200 million in net income this quarter. Additionally, the industry has admitted assets of $8.7 billion, including more than $7.8 billion in cash and invested assets.”

The U.S. Department of Housing & Urban Development (HUD) and the U.S. Department of the Treasury have announced enhancements to programs under Making Home Affordable (MHA) to better assist struggling homeowners and communities still recovering from the effects of the financial crisis. The enhancements are designed to motivate homeowners in MHA to continue making their mortgage payments on-time, strengthen the

safety net for those facing continuing financial hardships, and help homeowners in MHA programs build equity in their homes, an important factor in stabilizing neighborhoods.

“This announcement signals our commitment to helping more hardworking families continue the American dream of homeownership,” said HUD Secretary Julián Castro. “These enhancements will expand the opportunity for more folks to stay in their home, stabilizing local communities and continuing our nation’s positive economic momentum.”

Treasury and HUD established the Home Affordable Modification Program (HAMP) in 2009 to provide relief to homeowners facing financial hardship.

NationalMortgageProfessional.com

Title Insurance Industry Generates $3 Billion in Premiums During Q3

HUD and the Treasury Department Announce Enhancements to Making Home Affordable Program

Value Your Reputation The Process of Acquiring Reviews

By Brian Karoff

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The online review ecosystem is an interesting place to be right now. With national brands such as Zillow, Trulia and LendingTree, there are plenty of places to harvest reviews from your borrowers to display to other potential clients.

But why do we need reviews? What is the true value of your reputation?

The process in which to get a review is just as important as than the actual review itself, if not even more so. Setting up the expectation in the beginning during the sales process will give you an open door that has the potential to lead into capturing referrals and greater feedback to grow your mortgage business. Reviews help others gain a sense of trust to buy from you, and over time, you earn a reputation that builds a compounding effect for a successful long-term career. A career built on honestly and integrity which leads to a better life and your performance will show that every day.

How do you currently ask for reviews? Most of the time, the process of asking for reviews from a sales professional can seem passé. The ones who take time to mentally draw out what a review can actually do for their business ask clients for a review in the beginning and check-in with their client during the process. At the end, when it’s time to ask for the review, the client is already poised to give you not only a five-star positive review, but a potential referral because the level of professionalism and satisfaction is very high.

During the sales process, the goal is to have a client like you, trust you, and ultimately, respect you. Don’t give off the perception that asking for a review is just this thing that your boss or manager is telling you to do.

The last time I bought a new car, the salesperson said, “Hey, can you give me five stars so I can look good for my boss? We get bonuses from the manufacturer.” That way of asking de-values what they are really trying to achieve. It made him look like he didn’t care for my business, but only to tactfully fulfill the minimum requirements of his duties.

Stop thinking that you need reviews simply to generate leads or satisfy your boss. Start thinking of how important it is to your reputation that you take the time with each client to go through the mental exercise of professionally requesting a review and a referral. The strategist will always beat the tactician.

You can find out more tips about how to ask for a review by going to BetterLoanOfficers.com, claiming your profile, and reviewing our video tutorial library.

Brian Karoff is the digital marketing manager for BetterLoanOfficers.com, a powerful and easy-to-use online loan officer review management system.

Loan officers can collect, manage and promote their views in order to build trust, secure more referral relationships and close more deals. Brian is a dynamic leader and entrepreneur working with business leaders and executives from all over the world. He has worked with Chet Holmes and Tony Robbins in producing the Ultimate Business Mastery System and consults clients on business growth through marketing and technology.

SPONSORED EDITORIAL

nmp news flash continued from page 15

offered an opportunity to re-amortize the reduced mortgage balance, which will have the effect of lowering their monthly payment. Approximately one million homeowners with HAMP modifications are eligible to earn the increased HAMP incentive.

In addition, in an effort to bolster the safety net for homeowners who face difficulty making their payments in HAMP Tier 1 or similar non-HAMP modifications, Treasury and HUD have introduced enhancements to HAMP Tier 2 and the Home Affordable Foreclosure Alternatives (HAFA) Program.

Housing Market Anticipates Future Losses Clear Capital has released its Home Data Index (HDI) Market Report with data through November 2014. Using a broad array of public and proprietary data sources, the HDI Market Report publishes the most granular home data and analysis earlier than nearly any other index provider in the industry. Moderation continues for the 11th consecutive month. National home price gains fell to 6.7 percent year-over-year and one percent quarterover-quarter. Meanwhile, Distressed Saturation fell to just 16.8 percent suggesting the shortage of lower priced inventory is the catalyst for stalling gains. National trends were echoed at the regional level, with the West seeing the strongest moderation across the country. In fact, for the first time since the start of the recovery three years ago, the West’s yearly rates of growth fell below 10 percent, a sure sign of more moderation to come over the next several months for the nation.

The recovery engine has been stalling, as cash buyers competing for distressed and low-tier inventory helped to jump start the overall recovery, while supporting healthy price growth in this segment. At the height of the recovery in 2013, national prices including distressed sales (the all sale segment of the Clear Capital HDI) outperformed the performing-only sale segment of the market by 4.2 percentage points. Now the all sale segment is outperforming the performing-only sale segment by three percentage points.

These segments’ rates of growth will likely continue to fall in line with each other as investor engagement dwindles—a result of fewer distressed sale opportunities. As this occurs, markets will be more reliant on performing-only sale demand and price growth.

Improvements in the broader economic landscape have not instilled confidence in traditional homebuyers (firsttime, move-up, second homeowners).

The general lack of demand in the performing-only segment, coupled with a dwindling supply of distressed invento-

ry, leaves the future of home prices squarely in the hands of traditional homebuyers, who have yet to show any signs of re-engaging. Performing-only sales are not yet strong enough to support recovery-sized market growth without distressed sales. It’s been a steady descent for national yearly rates of growth. They have dropped five percentage points from a high of 11.7 percent in December 2013. This is due in part to the market’s natural normalization as the correction to the correction subsides and distressed sale inventory dries up. While this is healthy for markets overall, the weakness of price growth in the performing-only segment is further cause for concern. Excluding distressed sales, performing-only national home price growth over the last year was just 4.4 percent, down from a recovery high of 7.2 percent.

Even more concerning is the performing-only segment’s drop in quarterly growth to 0.6 percent, nearly cut in half over the last rolling quarter which saw quarterly rates of growth at 1.1 percent.

“Performing-only sale trends are a bellwether for what’s to come in 2015 ” said Dr. Alex Villacorta, vice president of research and analytics at Clear Capital. “Think of home price growth since the housing collapse as a bouncing ball, where each successive bounce causes some energy to be lost and eventually movement stalls. We see this on a few different levels. First, we see the delta between performing-only and all sales, including distressed sales, merging. This confirms markets are no longer driven as much by investor demand for discounted distressed assets.”

HARP Refis Eclipse the 3.2 Million Mark Nationwide The Federal Housing Finance Agency (FHFA) has reported that the total volume of mortgage refinances increased slightly in the third quarter. According to FHFA’s Refinance Report, total refinance volume for the third quarter exceeded 389,000, while refinances through the Home Affordable Refinance Program (HARP) were down slightly at 44,136.

Since 2009, nearly 20 million mortgage refinances have been completed through Fannie Mae and Freddie Mac, including more than 3.2 million through HARP. FHFA estimates that, as of second quarter 2014, there are more than 722,000 borrowers who have a strong financial incentive to refinance.

Borrowers are considered “in-themoney” if they meet the basic HARP eligibility requirements, have a remaining balance of $50,000 or more on their continued on page 39

Your lender should be your strongest link.

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n Georgia Mortgage Professional Magazine n DECEMBER 2014

Warehouse lines up to $50 million • Pipeline advocates • Jumbo fixed- or adjustable-rate mortgages.

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Get the tools to succeed.

Make Time for Marketing

By K. Justin Restaino In the hustle and bustle of a busy work day, marketing often falls by the wayside. In fact, it’s typically one of those activities that mortgage brokers engage in only when they have free time on their hands. Yet marketing can yield tremendous dividends, and as such, it shouldn’t just be approached when you have nothing better to do. To make more time for marketing activities, we recommend that you try the following: 1. Set an appointment with yourself By making time on the calendar for marketing activities—say, every Tuesday from 1:00 p.m.-4:00 p.m.—you’re investing in the growth of your business. Having those hours set aside and solely devoting them to marketing will prevent you from overlooking this important activity.

2. Eliminate distractions All too often it’s easy to be distracted by a ringing phone, an e-mail or a new text message. Allow calls to go to voicemail and avoid checking your e-mail. You can accomplish your marketing activities that much quicker if you aren’t being constantly interrupted.

3. Create marketing goals Rather than approaching your marketing time with the notion of surfing the Internet for ideas, know in advance what you plan to accomplish each week. This will save you time in the long run and prevent you from idling your marketing appointment away.

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18 4. Delegate Sometimes mortgage brokers spend a lot of time putting out fires, rather than working on the activities that are going to get them new clients.

When possible, choose to delegate those tasks that can be effectively handled by someone else; this will help you to make better use of your time, allowing you to devote greater effort to your marketing initiatives.

When you first try this approach, you may find that it feels unnatural to set this time aside for marketing. However, making marketing a priority is important and as you start to see results from your efforts, you’ll become more comfortable about keeping your marketing appointment with yourself.

K. Justin Restaino is vice president of Titan List & Mailing Services Inc. For more than 13 years, he has led Titan’s Mortgage Division, helping lenders of all capacities grow their businesses utilizing targeted direct mail. With a specialized focus in refinance and purchase markets, Restaino has the insight for proper data and mail application for success. He may be reached by phone at (800) 544-8060, ext. 204 or e-mail justin@titanlists.com.

SPONSORED EDITORIAL

new to market continued from page 12

existing software solutions to help financial institutions of all sizes meet the new regulatory requirements. The company’s consulting and professional services are designed to further close the gap and provide the comprehensive approach organizations need, given the heavy internal operational burden imposed by the TILA-RESPA changes.

Regulatory experts with the company have identified more than 400 changes stemming from the TILA-RESPA requirements that fundamentally impact core banking documents, processes, policies and procedures. Lending institutions will be critically dependent on their software providers to deliver guidance on implementation and technology that affords them seamless compliance and softens this regulatory burden.

“We are working with institutions of all sizes, from small community banks to global financial organizations, in delivering total end-to-end solutions that will ensure business continuation through these disruptive changes, ” said Lisa Fraga, vice president and general manager of Banking Solutions at Wolters Kluwer Financial Services. “At this point, lenders should expect to see a working demonstration of their software providers’ capabilities in order to be on track to have processes and systems in place to commence with necessary testing by May 1, 2015.

Mortech Enhances Secondary Marketing Solution With Historical Pricing Functionality

Mortech, a Zillow business providing mortgage technology software solutions for mortgage bankers and secondary market teams, has announced the availability of historical pricing within their secondary marketing solution. The historical pricing functionality expedites the re-pricing and re-locking process, allowing mortgage lenders to immediately address changes in the lock application.

Historical pricing from Mortech is designed for mortgage lenders looking to increase re-pricing accuracy and workflow, and reduce time and resources on loan re-evaluations. The feature allows mortgage lenders to easily view pertinent archived loan information in the event of borrower credit, appraisal, purchase price, or other changes to the locked information.

Historical pricing takes several loan changes into consideration, including: Investor pricing; lender profit and cost; loan level pricing adjustments (LLPAs); loan officer compensation; service release premiums (SRPs); and average prime offer rates (APOR index).

“Loan data transparency and accuracy are essential for mortgage lenders to succeed in an ever changing mortgage

market,” said Doug Foral, general manager of Mortech. “Without a structured process in place, lenders can spend a vast amount of time and resources researching historical rate data when re-pricing loans. The addition of historical pricing is one of the many tools we’re incorporating into our pricing engine and secondary marketing solutions to provide lenders with the information they need to make the most profitable decisions on a daily basis in today’s mortgage market.”

MBA Announces New Private Insurance Exchange Platform for Members The Mortgage Bankers Association (MBA) has announced a new private exchange which will offer healthcare and other employee benefits for its member companies.

Addressing the challenges of maintaining a competitive employee benefit program, “MBA Health Link” will provide an easy solution for employers wanting to control costs while offering me benefit options to meet the varied needs of their employees. The creation of MBA Health Link is being made possible through a partnership with Arthur J. Gallagher & Company, a U.S.-based global insurance brokerage and risk management services firm.

“MBA is pleased to partner with Gallagher to create MBA Health Link and thus offer healthcare and employee benefits that are exclusively for our diverse membership,” said MBA Senior Vice President, Residential Policy & Member Engagement Pete Mills.

“Industry data show that our members face major challenges in getting control over certain costs, particularly in the healthcare and benefits arena. Where MBA Health Link stands out as such an attractive option for our members is in its ability to create administrative and financial efficiency while delivering high quality benefits to their employees.”

Cost control, predictability, and administrative and compliance responsibilities are the leading concerns for employers when evaluating healthcare options. With the administrative support of the Employee Benefits Consulting and Brokerage operations team of Gallagher, MBA Health Link can more easily help overcome these barriers.

Ocwen Launches REALPortal Platform Ocwen Financial Corporation has announced the relaunch of a free database of loan-level data for mortgages serviced by Ocwen in private label continued on page 61

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NAMB PERSPECTIVE The President’s Corner: December 2014 Several weeks ago, I had the opportunity to speak at a state conference for the Utah Association of Mortgage Professionals (UAMP). As I drove into Sandy, Utah, I was struck by the awesome beauty of the soaring snowcapped peaks directly behind the hotel where I was staying. I must admit it was a real change from leaving sunny south Florida and 85 degree weather.

The convention was held in the South Towne Regional Expo Center which was also hosting a Christmas show. When I drove into the parking lot, there were about 5,000 cars. I didn’t know about the Christmas event also being held, so I thought every mortgage originator in the Western United States was there. It turns out there were a lot of mortgage originators, nearly 800 registered for the event, plus exhibitors so a lot of those cars in the lot were at the

Mortgage Brokers in Dubai Get Certified

By Rocke Andrews, CMC, CRMS

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During the first week of November, I had the opportunity to facilitate a class on the best practices of mortgage brokers in the country of Dubai. The Dubai Land Institute, which oversees real estate transactions in that nation, was putting on the first class to certify mortgage brokers having just recently begun the same for real estate agents.

Dubai had a similar “crash” in real estate values in 2008 to what went on in many other countries. They are now in the process of attempting to prevent or mitigate the chances of a repeat.

As a result of the drop in values and resultant defaults the Central Bank has instituted maximum loan to values. For citizens of Dubai, maximum financing is 80 percent on their first mortgage and 65 percent on additional properties for properties up to about $1.4 mil-

lion. Property values over that amount get their loan to values decreased by 10 percent. Non- citizens can borrow 75 percent on their first and 60 percent on a second property. New construction is available at a maximum of 50 percent financing. Additional requirements are a debt burden ratio of 50 percent and a maximum term of 25 years. The maximum age of a borrower at the time of the last payment is 70 years for citizens and 65 years for non-UAE (United Arab Emirates) nationals. In addition, maximum financing for UAE nationals is eight times their annual income, and seven times for non-nationals.

Presently, mortgage brokers are unlicensed, while lenders must be approved by the Central Bank of Dubai. There are about 20 approved lenders/banks and the brokers there provide the ability to know which bank’s available programs fit the needs of the prospective borrower the best. Brokers perform much the same as they did here before the advent

What Real Estate Agents Want From Mortgage Originators

By John Councilman, CMC, CRMS One of the sessions at the recent Utah Association of Mortgage Professionals (UAMP) Expo featured four top area real estate agents. The topic was based on how mortgage originators can work with real estate agents. The crowd listened closely as they learned what was important to each agent.

The first discussion revolved around how to get your foot in the door. The

real estate agents pointed out that it is unrealistic to simply expect a top agent to throw aside a relationship that has been built of many years with their current funding sources. They stated that there are many ways to get your foot in the door and eventually get to work with top real estate agents. One way is to approach agents who are just starting out. They need excellent originators even more than the seasoned agents.

Often, these new agents become superstars themselves. Find one of these new agents and sit some open houses with them. That is a lonely job were rela-

show. The exhibit hall had more than 50 exhibitors and was packed. This is just another example of how hungry originators and their wholesale partners are for meetings like this.

I learned a lot, as I always do, at every convention. In business that is constantly changing, I find attending events like these keeps me on top of my game. It isn’t just what you learn though. I met a lot of new people and particularly enjoyed the wholesome atmosphere in this beautiful area. Next year, the event will be held in Park City, Utah, one the most exclusive resort areas in the world. I’m told they cut a deal with a gorgeous hotel for very rea-

sonable room rates. It makes you want to go even if you live in another state.

Thanks for your support of NAMB— The Association of Mortgage Professionals and from me personally over the past year. It makes all of the work I do worthwhile. Have a blessed Christmas as we look forward to an exciting and prosperous new year!

of service release premiums and lender rebates. Brokers get paid primarily by the borrower, though some lenders/banks will deliver a premium of 0.5 percent to one percent to reputable brokers who have established a relationship and track record. There is no RESPA or equivalent regulation and premiums are based on supply and demand, and the ability to compete in the market. The broker’s primary competition is the banks retail sales force as well as other brokers.

Brokers earn their fee by being more knowledgeable and professional than the banks sales force, much as they did in the U.S. In Dubai, the borrower must get pre-approved before entering a contract and the brokers job is to get this done in a timely fashion, generally in two to five days. There are no contingency clauses and the buyer would lose their security deposit if unable to secure financing. In order for a mortgage to be enforceable it must be registered by the Dubai Land Institute which verifies the lender is approved by the Central Bank.

There are no private or other unapproved lenders as the lien would be unenforceable. Brokers must learn the

requirements of whichever banks have the most attractive products for the type of lending they are soliciting from their referral partners.

So as in the United States, brokers in Dubai are entrepreneurial. They get customers to pay a little more upfront to save time and money overall by getting the borrowers approved quickly at the right spot. Their knowledge of all of the bank’s lending saves the customers time in a applying to more than one spot, as well as knowing where to go to get the best terms for the transaction at hand.

The country and the brokers see the value in certifying their profession and requested the NAMB certification as a means to show the public their qualifications. So if you are not NAMB certified now is a great time to pursue that goal and we will be offering some test preparation classes in the coming year to help brokers achieve their designations.

tionships are built. When top agents see you in the office and at closings, they will be more open to working with you.

All of the agents said their favorite mortgage originator was usually not someone who had paid for a Marketing Service Agreement to have a desk in the office. All four said that even mortgage companies owned by their shop did not receive the majority of their business.

They believed there were ample opportunities for good originators to work in the office.

Universally, all of the agents said the most important attribute of an originator is whether the loan closes on time.

This can be very difficult to achieve if you are attempting to provide financing for difficult borrowers. You need to set expectations realistically so you don’t promise a 30-day closing on a loan

where you know there will be a lot of conditions. It is better to pass on a loan than to fail. Everyone on the panel had a very negative attitude for loans where the contract is expiring and everyone is under pressure to have to renegotiate an extension. They are rated, and when they refer someone to an originator who makes the client unhappy, it is black mark against them. Your performance is integrally tied to their reputation.

One agent said he liked news and information provided by a loan originator and eventually started doing business with him. Real estate shops need to train their agents about mortgages and loan programs. Be willing to hold training sessions for the manager or owner of the brokerage. It is a great opportunity to become the “expert” for those listening to you. There is nothing

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

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

NAMB PERSPECTIVE better than to have people call you because you are the expert resource.

Each agent said a good personality is important. They like to do business with people they like. Fortunately, not everyone has the same personality so there is room for the originator who is all business and the originator who is very social.

I asked the panel if they had a preference in doing business with a banker or a broker. Every one said they did

business with both, but usually nonbanks of all types. They said banks were better than in the past but still tended to have more rules that torpedoed deals or slowed things down.

Finally, I asked them if they thought it was important for their originator to stay up to date on laws, guidelines and loan programs. They said that was very important. I then asked if they has\d seen their favorite originators at the convention. They were a bit taken back

Finding Reason for the Season

By Fred Kreger, CMC Given that it we are wrapping up the end of one year and heading into the beginning of a new year, I thought it would be appropriate to bring up the word “Gratitude” and What does it mean to be part of something greater and the responsibility that all of us have to give back to our industry?

Over the last couple of years, I have

spoken to my state chapters in California and a few other state chapters about William Buckley’s book Gratitude. Buckley suggests that citizens of the U.S. ought to feel a debt of gratitude toward their country. A debt that can best be discharged by volunteer service of a charitable sort.

Buckley emphasizes, volunteering extends past providing service to the needy and discharging a social debt.

National service leads to an enhanced sense of civic pride. The individuals

l NAMB Testifies Before Congress

who engage in volunteering will find their altruistic impulses aroused.

They will learn about aspects of life that they would unlikely to encounter otherwise. They will even come to realize that there is more to life than self-indulgence. As you enter into this New Year, how will you choose to show gratitude? This industry has given great prosperity and I am asking that you give back this next year and beyond.

I will leave you with a great quote from Theodore Roosevelt from his speech “The Man in the Arena:” The credit belongs to the man who is actually in the arena … who spends himself

in a worthy cause … so that his place shall never be with those cold and timid souls who neither know victory nor defeat.”

Thank you all and Namaste

(No additional costs to NAMB members)

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

Lending Integrity Requirements

l NAMB Participates in Multiple Regulatory/CFPB Panels l Full-Time NAMB Lobbyist on Capitol Hill l NAMB Protects Your Business l NAMB Forms Industry Coalitions l NAMB Education

For detailed information, visit www.namb.org.

Fred Kreger, CMC is the branch manager at American Family Funding, a Division of American Pacific Mortgage. He is also a past statewide president of the California Association of Mortgage Professionals (CAMP) and currently is the vice president and Government Affairs vice chairman for NAMB—The Association of Mortgage Professionals. He may be reached by phone at (661) 505-4311 or e-mail fred.kreger@affloans.com.

Are You an NAMB Lending Integrity Seal of Approval Holder?

l NAMB Works With the CFPB l NAMB Webinars

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

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

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n Georgia Mortgage Professional Magazine n DECEMBER 2014

www.namb.org … JOIN TODAY!

realty office. NAMB is providing the tools and the camaraderie of other originators that will make even the best better. Be certain to take advantage of all of them.

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Why Do I Need NAMB?

but you could hear the wheels grinding.

It’s pretty hard to be totally knowledgeable when you don’t attend NAMB and state functions.

As I talked to some originators in the audience after the session, they were unaware of the incredible speakers and tools available at NAMB National when they are only a few hours drive away.

One had never heard of Greg Frost.

NAMB is currently working on a turnkey package to hold training sessions at a

NAMB PERSPECTIVE The NAMB Certification Program

General Mortgage Associate

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Certified Residential Mortgage Specialist

Certified Mortgage Consultant

The Certification Committee of NAMB— The Association of Mortgage Profes-sionals has been very productive to date in 2014, obtaining many new loan officers who have received the Certified Mortgage Consultant (CMC), Certified Residential Mortgage Specialist (CRMS) and/or General Mortgage Associate (GMA) designations.

NAMB will continue to grow its Certification Program, to enhance its value to our designees, and fine-tune its structure and procedures. The goal of the NAMB Certification Committee is to raise the number of certified mortgage professionals to 1,000 by July 2015, and to launch a marketing campaign to both industry members and the public at-large about the need to utilize a nationally designated mortgage professional.

For more information on NAMB’s Certification Program, contact NAMB Certification Committee member John Stearns, CMC, CRMS by e-mail at jstearns@afmsi.com or call (262) 478-1154.

Jane Durant-Jones, CMC

Hawaii

Louisiana

Virginia Ferguson, CMC

Donna Dodd, CRMS

Michael Anderson, CRMS

Linda Fleischmann, CMC

Patricia K. Morimoto, CMC

Tracy Lynn West, GMA

Dean Henderson, CRMS

Glenn Takasato, CMC

Al Hensling, CMC

Barbara Welsh, CMC

Alabama

Tarius L. Derritt, CRMS

Scott T. Guzik, CMC

Michigan

Linda McCoy, CRMS

Gary Salter, CMC

Robert J. Kenney, CRMS

Timothy Baise, CMC

Penny H. Phillips, CRMS

Michael Thomas, CMC

Steven M. Levitt, CRMS

Chip Cummings, CMC

Robert C. Moos, CMC, CRMS

Eric Kistka, CMC, CRMS

Arizona

Connecticut

Andrew G. Palomo, CMC, CRMS

Pava J. Leyrer, CMC, CRMS

Rocke Andrews, CMC, CRMS

Debra Killian, CRMS

Terry Pogofsky, CRMS

Cal Carlson, CMC, CRMS

Lisa Moriello, CMC, CRMS

Judith Santefort-Frey, CRMS

Minnesota

Bert Carpenter, CMC, CRMS, GMA

Hector Rodriguez, CMC

Shelly Straim, CMC

Jason Decker, CRMS

Randall E. Hotchkiss, CMC

Lou-Ann Smith, CRMS

Tory Tarsitano, CRMS

Christopher Dueffert, CRMS

Prince Williams, Jr., CRMS

Shannon Roepke, CRMS

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DECEMBER 2014 n Georgia Mortgage Professional Magazine n

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Perfecting the

Operational Risk Audit

By Nicolle Nelson One of the great things about the mortgage business is how diverse the industry has become. As the dominance of big banks comes to an end and as more new loan products are created, there’s more variety in the industry than ever. For both lenders and mortgage professionals, the future really is what they choose to make it, and the number of different ways to succeed seem endless.

Unfortunately, mortgage companies do not have a choice when it comes to complying with the growing number of industry regulations and tighter investor guidelines. As a result, many companies address compliance with a succession of quick fixes, pushing off real solutions until a huge problem develops. By then, of course, it’s usually too late.

For more and more lenders, the better alternative to “patchwork compliance” is an internal operational risk audit. An operational risk audit is performed not to please any one business

partner or even an auditor, but simply to make the organization more compliant and to minimize exposure to problems that could lead to trouble.

Yet plenty of confusion exists over what an operational risk audit involves, who takes part in one, and how to do it right—because there are many ways to get it wrong.

Understanding the big picture When most mortgage professionals hear the word “audit,” they think of one of two things. They think of the audits that are required on a percentage of closed loan files for quality, or they think someone is about to get a letter from the IRS. Neither concept is appealing. A proper operational risk audit, on the other hand, can be very appealing—at least, it should be.

That’s because only an operational risk audit allows lenders to find out exactly where problems exist within their businesses and gives them an opportunity to fix the problems before they cause serious harm.

Think of the operational risk audit

as the first step in preventative medicine. Yet, similar to how difficult it is for a patient to diagnose his or her own health, most lenders are not equipped to take on the task of an operational risk audit on their own.

Indeed, the experience that a professional auditor brings to the table by having conducted innumerable audits in the past can be enormously beneficial.

There’s another reason why outside help is needed to determine operational risk. Regulators, investors, agencies and investors need to understand what you or your company is doing to mitigate risk. This requires lenders to have a plan—and most have no idea where to begin. The good news, on the other hand, is that operational risk audits are thorough in nature yet not very complicated. In fact, the process can be boiled down to three simple steps.

The first step is taking a long, hard look at your processes, determining how your business is being held together and whether the policies and procedures that are in place match the com-

pany’s goals. This is where most companies get stuck, particularly if they have grown to the size to which their original policies and procedures are no longer compatible with how they actually do business. Ultimately, the idea is to identify the source of this disconnect and build a path forward.

The second step in the auditing process is separating and ranking each business process in order to determine how efficient (or inefficient) the process is and the extent to which the potential for risk exists. Finally, after the audit is complete, a master policy is created that serves as a roadmap for everything the lender does. The master policy also identifies who is responsible for managing risk with each process. This information can help lenders decide which processes are better left in-house and which are better off outsourced.

So, who is involved?

The short answer is “everyone.” In the grand scheme of things, a mortgage continued on page 30

25

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n Georgia Mortgage Professional Magazine n DECEMBER 2014

Maverick Funding Corp. NMLS#7706, Executive Offices, Offfices, f 9 Entin Road, Suite 200, Parsippany, Parsippany, NJ 07054. Toll Toll o Free 888-616-6866. Licensed by the California Department of Corporations under the California Residential Mortgage Lending Act, License #4131048. Licensed by the California Department of Corporations under the California Finance Lenders Law Law, w,, License #603H799. Illinois Residential Mortgage Licensee, License #MB.6760891, Massachusetts Lender License #ML3257; Michigan 1st Mortgage Broker/Lender/Servicer Registrant #FR0018028; License Licensed d by the New Hampshire Banking Department; Licensed by the NJ Department of Banking and Insurance; Licensed by the Pennsylvania Department of Banking; Rhode Island Licensed Lender; Licensed by the Virginia Virginia State Corporation Commission, License #MC5352; Oregon Mortgage Lending License ML-4961; Licensed Lender SC; Texas Texas e Mortgage Banker Registration; Washington Washington a Consumer Loan License #CL7706, #C Licensed Wisconsin Mortgage Banker Banker,, also Licensed in AL, CO, CT,, DC, DC DE, FL, GA, IN, KY KY, Y, ME, MD, MN, NC, OH, TN, VT,, WV WV.. Equal Housing Lender Lender.. www.nmlsconsumeraccess.org www.nmlsconsumeraccess.org

RESPA/TILA Integration Part II: Closing Disclosure and Action Plan

By Jonathan Foxx

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This second of a four-part series will introduce and treat the numerous features of the Closing Disclosure. In the first part, I discussed the mission of the RESPA/TILA Integration and the Loan Estimate. The third part will be a detailed analysis of the Loan Estimate. The fourth part will provide an in-depth scrutiny of the Closing Disclosure.

Accompanying this article is a Closing Disclosure Table (see pages 47-50) that may be used for certain itemized categories and action requirements. The Table outlines the types of areas of interest in many of the routine requirements of the Closing Disclosure process. Rather than a before-and-after, comparative analysis, the Closing Disclosure Table provides the requirements with the compliance effective date of Aug. 1, 2015.

In the other articles of the two remaining in this series, I will provide charts, tables, form specimens, and annotations for applicable categories and action requirements relating to the RESPA-TILA Integration. In the third part of this four-part series on RESPA-TILA Integration, I will provide a deep dive, line by line outline of the Loan Estimate.

The fourth part will provide a thorough analysis of the Closing Disclosure.

As I indicated in Part I, brand new disclosures have a compliance effective date of Aug. 1, 2015 – a combined set, as in a new disclosure at the commencement of the loan origination and a new disclosure at its closing: these are, respectively, the Loan Estimate and the Closing Disclosure.1 The new set has been dubbed “RESPATILA Integration,” since the consolidation requirements reflect the mandates of the Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank Act), which directed the Bureau to integrate the mortgage loan disclosures under TILA and RESPA Sections 4 and 5.2 For the balance of this article, I will refer to these provisions as the “RESPA-TILA Rule” or (“Rule”). The Bureau often refers to these provisions as the “TILA-RESPA Integrated Disclosure Rule.” Additionally,

I will refer to the consolidated disclosures as “Integrated Disclosures.”

The Rule applies to most closed-end consumer mortgages. It does not apply to home equity lines of credit (HELOCs), reverse mortgages, or chattel-dwelling loans, such as mortgages secured by a mobile home or by a dwelling that is not attached to real property (i.e., land). The provisions also do not apply to loans made by persons who are not considered “creditors,” where such persons make five or fewer mortgages in a year.

However, certain types of loans that are currently subject to TILA but not RESPA are subject to the Rule’s Integrated Disclosure requirements, including construction-only loans, loans secured by vacant land or by 25 or more acres, and credit extended to certain trusts for tax or estate planning purposes. So, creditors originating these types of mortgages must continue to use, as applicable, the Good Faith Estimate (GFE) GFE, Truth-inLending Disclosure (TIL), and HUD-1 Settlement Statement (HUD-1) disclosures required under current law.

There is also a partial exemption for certain transactions associated with housing assistance loan programs for low- and moderate-income consumers.

These creditors are exempt from the requirement to provide the RESPA settlement cost booklet, GFE, HUD-1, and application servicing disclosure statement requirements, and, thus, exempt from the requirements to provide a Loan Estimate, Closing Disclosure, and Special Information Booklet for these loans.

I would also like to answer the question about whether or not creditors may use the Integrated Disclosure on loans not covered by the Rule but subject to RESPA and TILA. The answer is that using the Integrated Disclosures for such purposes is not prohibited on loans that are not covered by RESPA and TILA (i.e., mortgages associated with housing assistance loan programs for low- and moderateincome consumers). But a creditor cannot use the new Integrated Disclosure forms instead of the GFE, TIL and HUD1 forms for transactions, such as reverse mortgages, that are covered by RESPA and TILA that require those disclosures.

Also, to repeat my statement from

Part I, it should be emphasized that the Rule can be encapsulated, as follows: The TILA-RESPA rule consolidates four existing disclosures required under TILA and RESPA for closed-end credit transactions secured by real property into two forms: a Loan Estimate that must be delivered or placed in the mail no later than the third business day after receiving the consumer’s application, and a Closing Disclosure that must be provided to the consumer at least three business days prior to consummation.3 The new Integrated Disclosures must be provided by a creditor or mortgage broker that receives an application from a consumer for a closed-end credit transaction secured by real property on or after Aug. 1, 2015. But creditors will still be required to use the GFE, TIL, and HUD-1 forms for applications received prior to Aug. 1, 2015.

Operationally speaking, as the applications received prior to Aug. 1, 2015 are consummated, withdrawn, or cancelled, the use of the GFE, TIL, and HUD1 forms will no longer be used for most mortgage loans.4

Four General Requirements If the loan requires a Loan Estimate, creditors must also provide the Closing Disclosure, to be received by the consumer no later than three business days5 before consummation of the loan.6 A practical way to view the Closing Disclosure is as a consolidation of the HUD-1 and the final TIL disclosure, containing additional elements. There are four rudimentary requirements of the Closing Disclosure.

Requirement 1: The Closing Disclosure generally must contain the actual terms and costs of the transaction.7 l Creditors may estimate disclosures using the best information reasonably available when the actual term or cost is not reasonably available to the creditor at the time the disclosure is made. l Creditors must act in good faith and use due diligence in obtaining the

information. The creditor normally may rely on the representations of other parties in obtaining the information, including, for example, the settlement agent. l Creditors are required to provide corrected disclosures containing the actual terms of the transaction at or before consummation.8 Requirement 2: The Closing Disclosure must be in writing and contain the information prescribed in § 1026.38, the section of Regulation Z that outlines the content of disclosures for certain mortgage transactions (i.e., Closing Disclosure). Creditors must disclose only the specific information set forth in § 1026.38(a)-(s), as shown in the Bureau’s form (viz., Appendix H-25, the “Mortgage Loan Transaction Closing Disclosure— Model Form”).9 The specific information referred to covers a section-by-section analysis of the Closing Disclosure’s content requirements.

Requirement 3: If the actual terms or costs of the transaction change prior to consummation, creditors must provide a corrected disclosure that contains the actual terms of the transaction and complies with other requirements,10 such as the timing requirements, as well as the requirements for providing corrected disclosures due to subsequent changes.11 Requirement 4: There is a new threeday waiting period; that is, if a creditor provides a corrected disclosure, it may also be required to provide the consumer with an additional three-business-day waiting period prior to consummation.12

Page by Page The Closing Disclosure is an extensive, five-page document with numerous fields, containing information disclosed in the Loan Estimate form, as well as additional information.

It may be categorically organized, as follows: l Page 1: Essentially the same as the first page of the Loan Estimate, captures key mortgage loan terms, pro-

jected payment amount scenarios, and costs at closing. l Pages 2 & 3: Outline the closing costs, other costs, cash to close and summaries of transactions, split between borrower and seller information. l Pages 4 & 5: Provide the total payments, finance charge, amount financed, Annual Percentage Rate (APR) and the Total Interest Percentage (TIP), the total amount of interest paid by the borrower will pay over the loan term as a percentage of the loan amount.13 (Note that disclosing the TIP means that there are now three types of rates disclosed, the interest rate, the APR and the TIP.) These pages also cover disclaimers, such as potential need for appraisals, whether the loan is assumable, whether homeowner’s insurance is required, brief information regarding late payment policies, partial payments, escrow accounts, refinancing not guaranteed, and possibility of servicing transfer.

Salient Observations

Escrow Account The Closing Disclosure provides more information about escrow than current disclosures. This additional information will require corresponding changes to loan originators’ systems and processes.

Specifically, the Closing Disclosure discloses whether the consumer’s loan will have an escrow account and must disclose certain details as to payments made using escrow account funds and

l Changes to the APR greater than 1/8 of a percent (or 1/4 of a percent for loans with irregular payments or periods) that causes the disclosures to become inaccurate; l Changes to the loan product that cause the disclosure to become inaccurate; or, l Adding a prepayment penalty, causing the disclosure to become inaccurate.

The additional three-business-day waiting period after the revised Closing Disclosure is subject to the consumer’s written waiver for a bona fide financial emergency.

But not all changes to the information in the Closing Disclosure require a restart of the waiting period. For less significant changes than those described above, the lender may provide the consumer with an updated Closing Disclosure at or before the closing reflecting such changes.

Consummation vs.

Closing or Settlement Because the three-day waiting period rule uses “consummation” as the triggering event, we have often been asked for the difference between consummation and closing or settlement.14 Actually, consummation may commonly occur at the same time as closing or settlement, but it is a legally distinct event. Consummation occurs when the consumer becomes contractually obligated to the creditor on the loan, not, for example, when the consumer becomes contractually obligated to a seller on a real estate transaction.

The point in time when a consumer becomes contractually obligated to the creditor on the loan depends on applicable state law.15 Thus, creditors and settlement agents should verify the applicable state laws to determine when consummation will occur, and make sure delivery of the Closing Disclosure occurs at least three business days before this event.

Closing Disclosure vs. HUD-1 Settlement Statement For the most part, a creditor must use the Bureau’s Closing Disclosure form16 for any loans subject to the Rule that continued on page 28

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Partial Payment Policy The requirement to disclose the lender’s partial payment policy is a change from current disclosure requirements. Under the Rule, a statement is required by the lender, affirming if may accept periodic payments that are less than the full amount due, may hold them in a separate account until the borrower pays the rest of the payment before applying the full payment, or does not accept partial payments. The new disclosures also include a warning that, if the loan is sold, the new lender may have a different policy.

Please note that, in essence, this is a servicing policy. Thus, the information required to populate the partial payment policy in the Closing Disclosure should be incorporated into the Loan Origination System or embedded into the underlying disclosure template.

Tolerances and Revised Closing Disclosure The Rule provides for circumstances where a change can trigger a new Closing Disclosure and a new waiting period if any of the following events occurs that causes the Closing Disclosure to be inaccurate:

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Closing Cost Details The Closing Disclosure organizes the elements of closing costs into the similar categories as the Loan Estimate, with columns showing costs paid “At Closing” and “Before Closing.”

Consequently, lenders will need to map both the cost estimates from the Loan Estimate form into the Closing Disclosure cost detail section, as well as capture actual amounts and surrounding detail rather than estimates. Those actual amounts will also need to be screened against the tolerances for increases described above to prevent passing any impermissible charges on to consumers.

those the consumer must make directly.

Note, also, that the Rule requires both a warning to consumers that escrow payments may change and also a warning as to the consequences of failing to pay property taxes or to pay property costs.

respa/tila integration part II continued from page 27

are federally related mortgage loans subject to RESPA (which will include most mortgages).17 With respect to other loan transactions subject to the RESPA-TILA rule that are not federally related mortgage loans, the Closing Disclosure is considered a “a model form,” meaning creditors are not strictly required to use this form, but alternative disclosures must contain the exact same information and be made with headings, content, and format substantially similar to the Closing Disclosure.18

Plan of Action

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In this final section, I will outline some guidelines to follow in preparing for the RESPA-TILA implementation. Notwithstanding these suggestions, companies should embark on a training schedule to ensure that all personnel in the loan flow process—including any business partners and agents—are properly educated in the implementation requirements. In the Bureau’s view, companies should consider “the training that will be necessary for your loan officer, processor, closing, compliance, and qualitycontrol staff, as well as anyone else who accepts applications, processes loans, or monitors transaction compliance.”19 The Bureau has set forth several elementary, practical implementation and compliance issues, consisting of advice concerning identifying affected products, departments, and staff; identifying the business-process, operational, and technology changes that will be necessary for compliance; and, identifying impacts on key service providers or business partners. The following are highlights of such suggestions.

Identifying Affected Products, Departments and Staff Compliance must reflect the business model of the company. The first step in compliance with the Rule is to identify all affected products, departments and staff.

According to the Bureau, origination, processing, closing and post-closing departmental staff and processes are likely to be most broadly impacted by these rule changes.20 However, “certain groups within servicing operations may be implicated by the two new disclosures related to escrow account cancellation and partial payment application policies during servicing transfers.”

Because the company may originate certain products for which the existing disclosure regime will persist following the RESPA-TILA rule’s effective date, be certain to closely consider the coverage of the rule to different types of mortgage products.21 Identifying Business-Process Operational and Technology Changes Review the existing business processes,

as well as relevant hardware and software, not only of the company but also the company’s agents, settlement services providers, or other business partners use.22 Note the gaps or concerns affecting the compliance nexus between any systems involved in the loan flow process.

The Bureau suggests that the company should review its technology platforms and determine which version of MISMO is currently supported.23 Evaluate the current integrations between the company’s technology platforms and those of its relevant third party service providers, such as document generators and settlement service providers, to determine required updates, as needed.

Identifying Impacts on Key Service Providers or Business Partners Third-party updates may be necessary to:24 l Update transaction coverage and calculations; l Obtain required information or verifications; l Incorporate new disclosures; and, l Make sure software, compliance, quality-control, and recordkeeping protocols comply with this rule.

Software providers, or other vendors and business partners, may offer compliance solutions that can assist with any necessary changes. These key partners may depend on the company’s business model. All creditors will likely need to carefully coordinate readiness and compliance with the network of settlement services providers on whom they rely for closing services.

The Bureau states that “in some cases, a company may want to negotiate revised or new contracts with these parties, or seek a different set of services.”25 Specifically, “creditors should be in close touch with all key business

partners and vendors to ensure that their process and technology changes will meet a company’s business and compliance needs and are scheduled to occur on a timeline that supports collaborative readiness.”26 Therefore, it is important to understand the extent of the assistance that vendors, settlement services providers and other business partners provide and be prepared for the consequences that may result from such assistance.

Closing Logistics At the closing, the Final TIL and the HUD-1 are prepared by two different parties: the lender and the closing agent respectively. But, due to the Rule, there is a combining of such information that is now existing in two separate systems, in order to create the Closing Disclosure. The result of this change will create significant challenges to lenders and, of course, settlement agents. The Rule allows lenders to request the assistance of settlement agents in the preparation of the Closing Disclosure, but it leaves the ultimate responsibility (and, it should be noted, also the liability) with the lender. Because the Rule allows preparation of all or part of the Closing Disclosure by settlement agents, there are certain legal responsibilities of settlement agents with respect to preparing a form containing information and disclosure responsibilities under both RESPA and TILA. Lawyers Title recently published in their newsletter some insights into these challenges.27 For instance, as noted in the newsletter, “one of the most notable closing process changes concerns the delivery of the final Closing Disclosure to the borrower. Instead of a borrower receiving the final HUD-1 Settlement Statement at or directly before closing, borrowers must now receive the final Closing Disclosure form three business days prior to ‘consummation’ (generally, the day loan documents are signed). This is sometimes referred to as the ‘three-day waiting period.’”28 Receipt means actual receipt, con-

firmed by the borrower. As the newsletter correctly observes, “if actual receipt of the Closing Disclosure cannot be confirmed, the delivery will be deemed received three business days after the Closing Disclosure is delivered (i.e., placed in the mail) by the lender or settlement agent (sometimes called the ‘three-day delivery rule’).”29 A confirmed receipt of the Closing Disclosure permits certain changes to the loan terms and transaction costs on the Closing Disclosure between the delivery of the Closing Disclosure and the final closing, such changes limited to: l Addition of a prepayment penalty; or l Annual Percentage Rate (APR) becomes inaccurate, meaning a change of more than 1/8th percent; or l Change in Loan Product.

But the confirmed receipt of the Closing Disclosure is a requisite of the foregoing permissible changes: “Any of the above changes require delivery of a new Closing Disclosure containing the changes and another three-day waiting period prior to signing.” 30 Certain changes other than the foregoing permissible changes that are subject to prior confirmed receipt by the borrower, may be changed in the Closing Disclosure at the closing.

The actual closing charges passed on to the consumer must comply with the zero and ten percent tolerances for increases over the amounts disclosed in the Loan Estimate.

Chart of Readiness Tasks The Bureau published the Rule in November 2013,31 thereby giving companies twenty months to be ready by the compliance effective date of Aug. 1, 2015.32 Even though my firm manages the compliance support for a leading loan origination system (LOS) and also provides ongoing implementation readiness for our clients, the scope of the Rule is so extensive that the time-

Chart of Readiness Tasks for RESPA-TILA Integration Company and Functions

Tasks and Actions

Loan originators using proprietary LOS

l Develop Business Requirement Rules in the LOS l Implement & Test Changes l Conduct Staff Training

Loan Originators using non-proprietary LOS

l Contact Service Provider for Updates l Test Upgrades l Attend Vendor System Training

Mortgage Brokers

l Train on New Forms l Review Current Vendor Processes l Review Interaction With Lenders

Settlement Agents

l Train on New Forms l Review Current Vendor Processes l Review Interaction With Lenders

frame permitted for such implementation still does not seem sufficient.

Most changes actually will be technological, such as the updates and changes required by the loan origination systems. However, all changes must reflect a company’s size, complexity, loan products, and risk profile, and assuredly the inherent features of its business model.

I offer the Chart of Readiness Tasks as a modest guide, though it is not meant to be exhaustive, which offers some direction to taking actions needed for implementation of the Rule. Please see the Closing Disclosure Table, accompanying this article, for more details.

Jonathan Foxx is president and managing director of Lenders Compliance Group, Brokers Compliance Group, Servicers Compliance Group and Vendors Compliance Group, national companies devoted to providing regulatory compliance advice and counsel to the mortgage industry. He may be contacted by phone at (516) 442-3456, by e-mail at jfoxx@lenderscompliancegroup.com or visit www.LendersComplianceGroup.com.

mandated that the Bureau propose for public comment rules and model disclosures that integrate the TILA and RESPA disclosures by July 21, 2012.

11—Comment 19(f)(1)(i)-1.

12—§ 1026.19(f)(2).

13—§ 1026.38(o)(5).

3—TILA-RESPA Integrated Disclosure Rule, Small Entity Compliance Guide, September 2014, 2.1. Note: The September 2014 guide provides updates to the March guide with respect to information on where to find additional resources on the rule; additional clarification on questions relating to the Loan Estimate and the seven-day waiting period; and, additional clarification on questions relating to Timing for Revisions to Loan Estimate. In this article, I will use the September Guide, endeavoring to provide text and citations as primary sources.

The complete rule and the Official Interpretations are available at: http://www.consumerfinance.gov/regulations/integrated-mortgage-disclosuresunder-the-real- estate-settlement-procedures-act-regulation-x-and-the-truth-inlending-act-regulation-z.

14—§ 1026.2(a)(13).

15—§ 1026.2(a)(13) and Comment 2(a)(13)-1.

Estate Settlement Procedures Act (Regulation X) and the Truth in Lending Act (Regulation Z) which was published in the Federal Register on Dec. 31, 2013.

The UCD Appendix B: Closing Disclosure Mapping to the MISMO v3.3 Reference Model contains the data required by the CFPB’s Closing Disclosure and is mapped to the Mortgage Industry Standards Maintenance Organization (MISMO) version 3.3 Residential Reference Model.

16—§ 1026.38(t).

24—Op. cit. 18, 16.3.

17—§ 1026.38(t)(3)(i).

25—Idem.

18—§ 1026.38(t)(3)(ii).

26—Ibid.

19—TILA-RESPA Integrated Disclosure Rule, Small Entity Compliance GuideSeptember 2014, Consumer Financial Protection Bureau, 16.4.

27—Lawyers Title, eJournal, June 2014.

28—Idem.

20—Idem, 16.1.

29—Ibid.

21—Ibid.

30—Ibid.

4—Idem. 3.1.

22—Op. cit. 18, 16.2.

5—§ 1026.19(f)(1)(ii).

23—The data standards to support the new Loan Estimate and Closing Disclosure forms will exist in MISMO version 3.3 and later. A common industry dataset, called the Uniform Closing Dataset (UCD), has been established to support the Consumer Financial Protection Bureau’s (CFPB) Closing Disclosure. The Closing Disclosure is part of the CFPB’s Integrated Mortgage Disclosures final rule under the Real

31—Integrated Mortgage Disclosures under the Real Estate Settlement Procedures Act (Regulation X) and the Truth In Lending Act (Regulation Z), 12 CFR Parts 1024 and 1026, Final rule; official interpretation, Bureau of Consumer Financial Protection, Nov. 20, 2013.

6—§§ 1026.19(f) and 1026.38.

Footnotes 1—Integrated Mortgage Disclosures Under the Real Estate Settlement Procedures Act (Regulation X) and the Truth-in-Lending Act (Regulation Z), 78 FR 7973, Dec. 31, 2013.

7—§ 1026.19(f)(1)(i).

2—Section 1032(f) of the Dodd-Frank Act

10—§ 1026.19(f).

8—Comments 19(f)(1)(i)-2, -2.i, and -2.ii.

9—§ 1026.38(t).

32—This is actually a longer lead time than the Bureau provided the new mortgage rules that came into effect on Jan. 10, 2014.

29

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SRR Proposes Changes to Mortgage Call Reports

By Ray Hagan The State Regulatory Registry (SRR) recently issued proposed changes to Mortgage Call Reports (MCR) submitted through the Nationwide Mortgage Licensing System and Registry (NMLS).

MCRs are quarterly reports of loan activity and reports of financial condition submitted through the NMLS that are required by the Secure and Fair Enforcement for Mortgage Licensing Act of 2008. The two types of MCRs are the Standard MCR (S-MCR) and Expanded MCR (E-MCR).

Both types of MCRs consist of the Residential Mortgage Loan Activity Report (RMLA) and the Financial Condition Report (FC). The RMLA report collects individual information such as application, line of credit, and repurchase while the FC report collects company financial information.

The E-MCR is required for a company that indicates it is a Fannie Mae- or Freddie Mac-Approved Seller/Servicer or Ginnie Mae Issuer. However, most companies file the S-MCR. The SRR is seeking comment to four proposals in regard to the NMLS MCR, including: 1. The definition of application; 2. Required reporting on the amount and count of closed loans that qualify as “Qualified Mortgages;” 3. Required nationwide and additional state-specific servicing reporting; and 4. Additional fields to capture changes in loan application amount.

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To avoid the confusion that exists in state and federal laws when it comes to defining the term “application,” the SRR is proposing a uniform definition which will be applicable to the S-MCR and the E-MCR. According to the SRR, “an application is an oral or written request for an extension of credit encumbering a one- to four-family residential property.” This includes prequalification requests resulting in an adverse action. In addition, the proposal also outlines what application date should be used for reporting.

Loans which would fall under the “application” definition include, but are not limited to: l One- to four-family residential properties (including second homes and investment) as well as preapprovals; l One- to four-family residential properties for construction (made directly to the borrower); l Lines of credit (reported at maximum approved credit line); l Reverse mortgages; l Refinance loans; and l All purchases loan requests in which an Equal Credit Opportunity Act (ECOA) notice is issued.

The SRR is also proposing that all companies completing the MCR must submit additional information in regard to qualified mortgages (QM). According to the proposal, there are three main groupings for QMs and they include: 1. “General definition” in which any loan that meets the minimum product feature requirements with a debt-to-income (DTI) ratio of less than or equal to 43 percent; 2. “GSE eligible” in which any loan meets the minimum product feature requirements and is eligible for purchase or guarantee, regardless of the DTI; and 3. “Small creditor” in which the organization has less than $2 billion in assets and annually originates 500 or less first mortgages.

The SRR says it expects to publish final changes to the MCR in November 2014 and implement these changes as soon as January 2015, with the first reporting deadline of May 15, 2015.

Ray Hagan is senior regulatory compliance analyst at AllRegs. First introduced in 1989, AllRegs is used by virtually all of the top 100 lenders, as well as throughout numerous governmental agencies, including Fannie Mae, Freddie Mac, the FHLBs, FHA, VA, RHS, Ginnie Mae and more. For additional information, call (800) 8484904 or visit www.allregs.com.

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perfecting the operational risk audit continued from page 24

lender’s operations and the choices that it makes directly impact its performance, and no employee is immune from effects of these decisions. That doesn’t mean that every person in the company must drop everything to focus on the audit. But a properly performed audit ought to leverage as many staff resources as possible in order to create a complete picture of the organization’s health and exposure to risk.

The very beginning of the operational risk auditing process involves gathering executives and senior management to have a discussion about risk. After the audit is underway and the initial findings are in, generally speaking, the same team is often the one that prioritizes areas of risk to address. Apart from this team, when separating and examining each process for potential weaknesses, it’s important that every staff member associated with a process is involved in the audit to some degree.

If there have been past audits, the staff members who took part in them or even reviewed the results should be available and made part of the new audit. Some lenders we work with go through great lengths to make sure all executives, senior managers and key compliance staff are familiar with past audits and actually use the audits to train and educate staff. We have found that most mortgage professionals value this level of transparency because their livelihoods depend on operational efficiency as well.

This level of understanding about operational risk throughout the organization benefits everyone, even the consumer. Following the completion of an operational risk audit, for example, it is important for a lender’s compliance staff to educate the entire company on operational risk and why certain changes are being made. At the end of the day, when a borrower asks his or her loan officer why they must do things differently than their friend or family member did to get a mortgage, the loan officer ought to have an answer.

Formulating a game plan So how does a lender begin? Many large companies are familiar with operational risk audits and do them regularly. But for many smaller and growing lenders who have never done a proper operational risk audit, getting the process started can seem daunting. I speak with many companies that are at the stage in which they know they need an operational risk audit to help safeguard their organizations and build for the future, but aren’t sure how to take the first step or even who to call for help.

The first step in perfecting the operational risk audit is choosing the right partner. When looking at providers, it

has been my experience that the most capable of auditors in our industry have deep expertise in helping other lenders and have access to an extensive knowledge base of real-world examples that have worked for other organizations. The very best providers possess a keen understanding of the fact that no two lenders are exactly like. The true experts in this field assess operational risk by taking into account a company’s current resources and goals, and help create a customized master policy that works for that specific lender.

When lenders partner with this type of expert, they generally realize not only a savings of time and money, but they are far better able to meet current and future compliance challenges. That’s because they will have a working plan in place that can be adjusted as new rules and guidelines come into play. These types of providers can also help lenders create a strategy for outsourcing processes that take advantage of variable cost structures that fit the goals and resources of the organization.

While it is good to perform an operational risk audit regularly, perhaps at yearly intervals, lenders should have in place an ongoing system for selfauditing that catches issues that are having a negative impact on borrowers or creating previously unseen risks. One of the benefits of having a specialist create the operational risk audit is that lenders are able to conduct follow-up self-monitoring internally, which also allows them to make adjustments when unforeseen circumstances arise—as they almost always do.

One final note—the key to perfecting the operational risk audit is technology. Automation offers a level of data accessibility that makes monitoring compliance simple, as it does when it comes to auditing loan files for quality. It’s about good data, because without it, you cannot prove loan quality and you can’t figure out where you need to go. And it’s about strong internal reporting, which turns good data into guidance.

The bottom line is that mastering operational risk, identifying areas for improvement and then making those changes gives lenders an extraordinary amount of freedom. With compliance, there is no choice—it’s do it or die. But after a successful operational risk audit, a lender’s options soar, and the sky becomes the limit.

Nicolle Nelson is vice president of business development at SLK Global, a business process management (BPM) firm that performs operational risk audits to improve processes while reducing costly mistakes. She may be reached by phone at (480) 395-8253.

The Long & Short: The Business of Short Sales

Real Hardship: Be Grateful That You Don’t Have It

By Pam Marron

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Loss on three options 1. Short sell: The homeowner works with the lender on a lengthy process that, to this day, requires delinquency of the mortgage. Hardship must be explained by the homeowner and acknowledgment is part of the approval process for the lender short sale. Credit is incorrectly coded as a foreclosure after 120 days of delinquency which results in a new mortgage denial years later when past short sellers are eligible for a new conventional loan. And, a continued on page 58

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Troubled by negative comments directed at Sens. Elizabeth Warren, Robert Menendez and Jeff Merkley about their questioning of Federal Housing Finance Agency (FHFA) Director Mel Watts’ reluctance to allow principal reduction for underwater homeowners, I had to write.

Every discussion about how to help millions of homeowners that are still underwater (in a negative equity position) starts like this: “If they hadn’t taken out a second mortgage to buy all of those toys” or “Bought more house than they could afford,” they would not be in this position.

Here’s the reality of the majority of these cases. Divorce happened.

Families grew or kids moved out, resulting in need of a move for growth or downsizing. Jobs were cut and folks had to move to regain employment, or couldn’t afford their existing mortgage with a new job obtained. All of these reasons are why folks have to move. But, when an underwater homeowner must move and a short sale is contemplated, there is harsh judgment for how they got underwater, even when the need for a move is from real hardship.

The problem worsens when lenders require mortgage delinquency first to approve the short sale. This is still required today and I have seen very few exceptions where short sellers were allowed to make payments to the closing date. Little attention is given to the lender servicing practice that requires the delinquency. Instead, loads of press has reported on the “strategic defaulters,” those who can make their mortgage payment, but choose not to. There has been virtually no press that many so-called strategic defaulters weren’t making their payment because it was the only option they were given to get short sale approval and exit their home … advice given to them by their lender.

I am a mortgage broker in Florida, where 28 percent of home mortgages are still underwater. Three years ago, the percentage was around 62 percent.

My sites were set on helping folks back into the real estate market when they could re-enter. During these years, a pattern became evident. Underwater homeowners were being told by their lenders that the only way they could get approved for a short sale was to go delinquent. These homeowners were bewildered that their credit had to be stellar to get the mortgage initially, and now they were being told that to exit the home the credit had to be delinquent.

Not believing this, desperate homeowners allowed me to be on calls with their lender to confirm what they were telling me. It was clear, and with multiple lenders and homeowners. The requirement to be delinquent on mortgage payments in order to get short sale approval was told directly to affected consumers by their mortgage lenders, and on recorded calls.

The reality was that many underwater homeowners were willing to make mortgage payments during the short sale process, but mortgage lender servicing rules required these homeowners to be delinquent.

Underwater homeowners face a lose-lose proposition. If the homeowner must sell, but does not have the funds to pay the difference needed between the mortgage balance and the lower house value, a short sale, foreclosure or renting out the home are their only options.

Another Re

By Heather Kerns uring the last decade, the mortgage industry has been no stranger to change. The industry constantly sees fluctuations in market conditions, interest rates and other external factors. After the financial crisis in 2008, the U.S. government instituted the Consumer Finance Protection Bureau (CFPB) under the Dodd-Frank Act. The CFPB has, over the course of the last three years, issued 61 new rules affecting the mortgage industry. How does an organization deal with so much change caused by the regulatory environment? They key to dealing with these changes include several factors; proactive participation and review of upcoming proposed rules from the CFPB, address internal policies, processes and systems to absorb the proposed changes in a more flexible manner and communicate with your counterparties, as this is typically the biggest risk to organizations when your trading partners are not on the same page. This is all well and good, but the reality is that it is difficult to prioritize so many changes and it is an expensive proposition as well.

So where to begin? First, start with the CFPB proposed rules. The rules are posted on the CFPB’s Web site. Read the rules and distribute them internally with your organization’s legal group or risk management area, and understand where the newly proposed rule impacts your organization. Identify business processes and policies that may be impacted and conduct a gap analysis to determine where the changes may need to be made. Document the proposed changes in order to determine the level of effort for your resources, policies and processes. Then, prioritize the process changes. I would suggest starting with a review of your policies. Once a policy is required to change in order to meet the new rule, then identify those processes that will be impacted due to the policy update. The one thing an organization wants to avoid is non-compliance to a regulatory ruling. Being proactive will help to prioritize the needed changes, but will also assist your organization to remain compliant and track compliance to the new ruling. Additionally, look to see if there are resources available internally that can assist with navigating through these changes. There are organizations in the market that specialize in gap analysis and solutions that can reduce the time to understand the changes and identify impacts on your organization. Yes, this may cause some impact to your budget, however, your organization will not need to reduce any internal resources that keep your organization running or cause a decrease in revenue.

Second, address the systems that the proposed rule may impact. Use the work already conducted through the gap analysis of your policies and processes to determine the systems that are impacted. Review the systems at the granular level of functionality, data, integration (both internally and externally) and the architecture. Remember that some of the technology you use is managed by a software vendor, so be proactive in reaching out to understand what their plan of attack for remediation entails. The mortgage industry’s biggest asset is data. It is critically important to understand if you currently collect the necessary data to implement the changes to your organization due to the pending rules and understand how to collect the data or push the data to your counterparties. This too must be documented within your gap analysis to determine what must be and might be collected in order for your systems to function and execute the appropriate new rulings; thus turning your gap analysis into a program road map. Using this roadmap, your organization can then determine priorities and cost in your overall budgeting process.

If your organization finds that the proposed rules will increase the need for more information (data) to execute your policies or to demonstrate compliance, a suggestion would be to use an industry standard to communicate and exchange data with your counterparties. This is critical because the mortgage industry passes data from one counter party to another; whether this is the loan application from a lender or broker to a potential investor for loan approval, or the closing of a loan and passing the closing documentation to an investor and/or servicer, or transferring information to support transfers of servicing or transitioning the loan information from the primary market to the secondary market. Data is the critical component, specifying the information in a common language will greatly increase your organization’s ability to be successful. So if your organization has not adopted a data standard, now would be a great time to instill data standards into your roadmap and basically kill two birds with one stone. Using data standards, such as the Mortgage Industry Standards Maintenance Organization (MISMO), can provide your organization flexibility when regulations change or are added to the industry resulting in the need for more information to be used to execute the ruling or to demonstrate compliance to the ruling. This common language can assist your organization to become more flexible and provide ease of communica-

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egulatory Rule … Again? areas of your organization, begin to combine efforts. If you need to open the engine to fix a head gasket and your pistons need to be replaced, you only open the engine once! The same goes for processes and systems. Look at those rules that impact the same systems and combine your requirements.

The key to regulatory changes in the industry and staying ahead of these changes is to be proactive! Review the proposed rules on the CFPB Web site to under-

stand the impacts on your policies, processes and systems. Document the gaps and use a roadmap to identify these initiatives. Communicate to your counterparties your organization intentions. Communicate the need to your organization and pull in those specialized firms to assist your organization in the analysis and roadmap process. ONLY open the hood one time, overlap the proposed rule changes when applicable in order to implement once as opposed to having multiple projects that

may double and triple your costs. In the end, it is all about taking a proactive stance and the CFPB practically gives you an early heads up on rules, so use the gift of proactive practices for your organization to remain competitive and compliant in this ever-changing industry.

Heather Kerns is a senior manager at Actualize, managing all MISMO offerings for the firm. She may be reached by e-mail at hkearns@actualizeconsulting.com.

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tion with your counterparties. The initial cost can be a bit high, but once your organization has made the transition adding new functionality using the data standards can reduce the amount of analysis time to your future projects.

When addressing the regulatory changes to the industry it is imperative to communicate your organizations plan to become compliant with the regulation rules. This includes both your organizations internal communications as well as your external communications to your counterparties to ensure they understand your position. Starting with internal communications; include both the objective of the changes and clear scope statements. Using the roadmap, communicate to your organization the areas which will be impacted, what the overall plan. The roadmap sets the expectation to your resources, as well as drives the requirements for process changes, system changes and policy changes. Once your initial communication to the impacted areas is complete then your organization can begin the detailed level of planning and prioritization to determine budget of each initiative. Use this information to then set your organization’s prioritization for the projects to complete the changes to support the regulation.

External communications are a bit more delicate. Begin by having conversations with your counterparties to determine if they are aware of the pending rules. Ensure that your counterparties know your organization is being proactive in reviewing the proposed rules and planning for the changes with the understanding that some of the rules may change during the proposed rule to final rule process. The best rule of thumb is to account for 80 percent of the rule to be approved as the final and deal with the 20 percent of fallout as changes to your scope and roadmap. Use these communication sessions to determine how information (data) will be collected and identify what new data may be required. If transitioning over to a data standard like MISMO, be very clear to your counterparties and make them aware of the new requirements. Be careful not to simply “Set a Date,” as your organization would be better off working with your counterparties to determine the best course of action for integration, end to end testing and the time it will take to complete the effort. Once your organization and counterparties have an agreement, then and only then should your organization start to put a stake in the ground for specified dates of rollout and adoption to begin of the final rule requirements.

It may sound simple, but when you have multiple proposed rules impacting multiple or the same areas of your organization, it becomes a spaghetti plate of priorities. One thing to keep in mind is when proposed rules impact overlapping

N A T I O N A L

M O R T G A G E

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

M A G A Z I N E ’ S

economic commentary

POLAR

By Dave Hershman

DECEMBER 2014 n Georgia Mortgage Professional Magazine n

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e have had some pretty optimistic projections recently from economists. For example, the following is from the Wall Street Journal’s monthly survey of economists”

W

“Faster job growth and stronger consumer confidence are already putting the U.S. expansion on a steady trajectory heading into 2015 and falling energy prices are offering another boost …”

VORTEXES

While we share this enthusiasm, we also must remember that absolutely the same predictions were made at the end of last year. What happened? It was the weather. By the time America dug out from all the snow, it seemed the economy was playing “catch-up” all year.

Well, the weather this November reminded us how important Mother Nature can be. Just ask Buffalo, the recipient of five to eight feet (that is feet, not inches) in a week. The Thanksgiving weekend was no better with a snowstorm hitting the northeast region—and it is not even winter

AND

PREDICTIONS

yet. Of course, we are hoping that winter is over in December and it is not just starting!

On the other hand, the weaker start to the economy was not just about the weather. The real estate recovery also took a pause in 2014. The early bad weather hurt, but in reality slower real estate sales were not just about a weaker market. The real estate statistics were pumped up previously by investors buying foreclosures—many times in bulk. As foreclosures have decreased, so did these sales and the easing of distressed sales was a major factor contributing to the pause, at

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least statistically.

Meanwhile, real estate sales have been increasing steadily during the second half of the year, despite the loss of this segment of the business.

In essence, the market is normalizing and we fully expect that the first time homebuyer will again replace the investor as the most important segment of the real estate market. It will take some time, but the fundamentals are in place.

The employment report showed that our severe November weather was not a factor in hampering the economy and confirmed our belief that the fundamentals are strong. The strong gain in jobs of over 300,000 continued a year in which the economy has added well over 200,000 jobs on a monthly basis. Right now, we have a good chance to add the most number of jobs annually since 1999.

To this news, we can add that car sales had their best month in a decade and the service sector expanded at its highest rate in nine years.

All-in-all it was a strong week for the economic data. One would expect that shortly this success will start showing up in the form of higher real estate sales. We could experience a strong spring real estate market!?

Dave Hershman is a top author in the mortgage industry with seven books published. He is also the founder of the OriginationPro Marketing System, and currently the director of branch support for McLean Mortgage. He may be reached by e-mail at dave@hershmangroup.com or visit www.originationpro.com.

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info@tagquest.com

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Fraud Detection for the

Major Case Special Investigations Unit

By Robert Deutsch

DECEMBER 2014 n Georgia Mortgage Professional Magazine n

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During the peak mortgage years and ensuing crisis, I was tasked to build and manage the major case special investigations unit for a mortgage insurance company. The unit focused on the system detection and investigation of complex cases and populations of loans associated with organized fraud schemes or other phenomenon driving an anomalous high fraud rate.

The immediate and primary need of the unit was the development of a systematic method of organized fraud detection. Prior to the creation of the major case unit identifying organized fraud was a hit or miss proposition. This article will discuss the principles, strategies, techniques that were found to be effective in system identification of organized fraud. To develop an effective fraud detection strategy and search criteria it was necessary to create certain operational definitions, listed below: l Proven Actionable Fraud: A previously investigated case that resulted in a finding of material fraud. l Fraud Rate: The percentage of proven actionable fraud cases in a given population. l Fraud Impacted Region: A defined geographical region with a minimum fraud rate of 20 percent or greater that of the general special investigations unit. l Special Investigation: A population of loans that met the following general criteria and was designated as a

special investigation: l Within a defined geographical region reflecting a one-year historical fraud rate of greater than 50 percent. l Associated with a regional originator having an anomalous early payment default rate of greater than 45 percent. l Specific loans named in an external source such as a criminal complaint or bankruptcy filings (discussed further under a following heading).

A rule had to be created as well. In order to activate a population as a special investigation it had to be IDENTIFIABLE on the system. It was not uncommon for individual investigations to reveal a number of similar fraudulent loans associated with a common denominator, such as a high volume originator for example; however, if relative to the volume of loans associated with the originator, the fraud rate was no higher than that of the general investigations unit, there were insufficient system level identifiers or the loans were not within a regional special investigation then it served no purpose to activate the population as a special investigation.

Regardless of the perception, to classify a population as a special investigation with neither a statistically significant fraud rate or with at least one system level identifier, then the efforts and resources of the major case unit were being expended merely to duplicate the general special investigations unit activities and resulted in skewed performance metrics of the major case unit. More about this is discussed below.

The obvious search strategies were not the most effective. Detection should start from a point of known risk exposure not potential exposure.

Several different detection strategies were employed before a consistently effective approach was found. A “big data” approach to organized fraud detection that is, comparing known fraud characteristics to a population then culling a sub-population based on an extrapolation or interpolation, was largely ineffective. Using potential indicators such as personal, financial and product data failed to identify a greater percentage of schemes, possibly because at the system level a single loan appears identical to fraudulent loans associated with a scheme and further, all demographics and socio-economic levels were susceptible.

From 2001 through 2007 as a result of relaxed underwriting practices, low interest rates and alternative loan programs such as stated and no income products, borrowers across the economic spectrum were able to enter the housing market.

All groups were susceptible to fraud schemes, fraud for property, investor fraud and strawbuyer schemes just to name a few. In Indiana, for example, a significant population of a small town at the middle income level were victims of an investment property scheme, in Stonestown, Ga., a population of borrowers with solid credit and higher income were victims of an inflated value scheme.

Using external sources such as court filings, media, tips, regulatory enforcement actions rarely resulted in identifying fraud schemes on the system and

required considerable time and resources in both external and internal research only to find that none or only a small number of loans were associated with the scheme. Even when the external source included specific transactional details, such as a criminal complaint for example, it was more effective to isolate geographic regions using zip codes or street names then testing fraud rates and mapping historical fraud cases looking for neighborhood or subdivision clusters.

The starting point or independent variable should be known exposure not potential exposure. Another reason to avoid focusing on just searching for individual schemes is that perpetrators do communicate with each other and within a scheme impacted region, it is more the rule then the exception that similar schemes will be operating, as well as the same scheme having several different known fraud indicators. In one Midwestern state for example, appraisal schemes known as “create-a-market,” were so prevalent that certain companies stopped relying on any comparables in the area to estimate value and in one western state the same false down payment scheme used three different false depositories to evidence funds.

There was a positive relationship between geographical fraud density of a certain rate and organized fraud in the region. Generally when the actionable fraud rate rose to 20 percent-plus that of the general SIU within a defined geographical region it was more effective to activate the region as a special investigation. The population would be identified as a special investigation on the system

and the types of fraud and root causes were better understood. The following is an example of how a regional special investigation was activated using an elevated actionable fraud rate within a zip code then mapping the fraudulent loans to identify a specific scheme in the population.

A case study

exposure not potential exposure.”

Enhancing fraud detection The blending of intuition, expertise and technology: Fraud detection is improved when both the investigative and technological professionals collaborate. Investigators can explain how closely certain red flags correlate to fraud cases and provide greater context in how the fraud is being perpetrated as well as other relevant information such as geographical and fraud characteristic

patterns. The analytics team can then potentially build that information into the query depending on the data points that have been captured in the case management system.

Conclusion The end result, four years after the peak fraud years had been processed through the pipeline, was the identification of over 50 special investigations with an aggregate fraud rate approxi-

mately 35 percent higher than the general investigations unit and findings more often substantiated with an adjudicated fraud scheme or strengthened through investigative familiarity with similar fraud prevalent in the region.

Robert Deutsch has been an investigator for more than 20 years, investigating complex fraud schemes and high profile insurance cases. He has built and managed a major case unit, an investigative vendor outsourcing network and is currently a fraud and investigative consultant in the San Francisco Bay Area. He may be reached by e-mail at rd94123@yahoo.com.

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www.BoomerangProspecting.com

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In the early stages of the real estate boom, the state of Minnesota was severely impacted by both organized fraud schemes and individual fraudulent loans. One prevalent factor was found to be a number of real estate “flipping” seminars being conducted throughout the state. Some individuals expanded flipping strategies into a “create-a-market” scheme. A single investor would purchase numerous houses using several different LLC’s within a neighborhood, perform some basic repairs then use the same homes to value the entire neighborhood which is a violation of appraisal standards. Since there were no system level indicators the most effective way to identify the scheme was isolating the population by fraud rate within a zip code. When the population was defined then mapped specific patterns emerged showing actionable fraud rate by neighborhood.

The methodology in establishing a geographical region was critical to identifying actionable organized fraud. Too broad an area such as a metropolitan statistical area resulted in a population statistically similar to the normal departmental fraud rate. Using zip codes resulted in populations containing 20 percent to 30 percent higher levels of actionable fraud. Once the population was identified then mapping fraud type and neighborhood allowed for targeting specific loans within a cluster. Investigating specific clusters helped to understand the drivers of fraud within the population whether it be a fraud scheme, a region vulnerable to fraud and being preyed upon by individual originators or a nonfraudulent phenomena such as depressed regional economic conditions.

The search perspective is the purpose of the search, whether it be identifying non-regulatory compliant transactions, industry research or fraudulent loans resulting in loss mitigation. The search purpose impacts the search criteria usually by narrowing or widening the selection criteria. The less stringent the internal process that the fraud case will subjected to, the wider the search criteria and presumably the larger the resulting population such as anti-money laundering alerts. A loss mitigation perspective generally results in a more narrow search criteria than a regulatory perspective as the process involved in invoking a nonpayment clause is generally more selective. For example, in a general fraud search criteria the query may be looking for all loans that potentially contain material fraud. From a loss mitigation perspective the query may be searching for all loans that contain material fraud and specific characteristics that have warranted a mitigating disposition.

“Detection should start from a point of known risk

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.

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Secure Settlements and Poli Mortgage Group Announce Vetting Services Contract

are proud to be their partner in this endeavor and look forward to a long and mutually beneficial relationship.”

Secure Settlements Inc. (SSI) has announced that it had concluded a multi-year exclusive agreement with Poli Mortgage Group Inc., headquartered in Canton, Mass., for the SSI Closing Guard vendor management and risk monitoring product and service.

The SSI and Poli Mortgage relationship will encompass comprehensive risk evaluation, reporting and ongoing monitoring for all closing agents handling Poli Mortgage residential mortgage loans nationwide. The program is being rolled out across the 15 states where Poli Mortgage operates licensed lending offices beginning this month following several months of discussions, negotiations, vendor management approvals, and on-boarding. The contract is the latest in a series of written service agreements reached by SSI with mortgage lenders, credit unions, national and community banks around the country.

“We are dedicated to fulfilling the compliance and risk management directives of our regulators for quality control and loan quality assurance,” said Chip Poli, founder, CEO and president of Poli Mortgage. “We also care about our borrowers and know that consumer protection is a critical part of every lender’s enterprise risk management platform. We looked at other vendors, however the SSI program was the most comprehensive and efficient as a tool to fit within our operations while offering a reliable solution to our compliance needs in this area.”

SSI President Andrew Liput said, “We are honored to have been chosen as the exclusive vendor for these critical vendor evaluation and reporting services and look forward to supporting the efforts of Chip and his staff to manage quality control, consumer protection and overall loan quality assurance. We

Rushmore Opens New Branch in Puerto Rico Residential mortgage loan servicer Rushmore Loan Management Services LLC has announced that it has begun operations in Puerto Rico. The company, which services performing, re-performing and nonperforming loans, opened its San Juan office on Nov. 3. It is the third location for Rushmore, and the first outside the continental United States.

“Expanding our operations to include Puerto Rico is a great opportunity for our future growth while ensuring personal, high-quality service to Puerto Rican borrowers,” said Rushmore Loan Management Services LLC CEO Terry Smith. “Rushmore’s customers will have the convenience of making payments online, at any FirstBank branch throughout the Island and at our onsite facility in San Juan.”

Smith says Rushmore currently has 50 local employees staffing the new office.

“We have recruited some of the best local talent to join our staff and are we servicing residential loans and REOs right out of the gate,” Smith said.

Rushmore is the first specialty high touch servicer on the Island. Opening the Puerto Rico site aligns with the company‘s long-range strategy of buying additional mortgage portfolios, acquiring new sub-servicing residential loan pools and purchasing mortgage servicing rights.

“We’ve been successful in this role stateside, and now look forward to expanding our services to Puerto Rican borrowers and local residential loans,” Smith said.

Caliber Closes Deal to Acquire Cobalt Mortgage

Caliber Home Loans Inc. has announced that it has completed its acquisition of substantially all of the assets of Cobalt Mortgage Inc. “The closing of this transaction marks an exciting new chapter for Caliber and we are pleased to welcome our new employees and customers to Caliber Home Loans,” said Joe Anderson, chief executive officer of Caliber Home Loans. “Cobalt is an excellent partner to further Caliber’s growth trajectory into new markets, including the Pacific Northwest, while allowing us to extend our retail lending solutions to more communities across the country. With our broader reach, we are now able to partner with more Realtors and Builders to provide future homeowners with a wider variety of mortgage solutions that are uniquely tailored to meet their borrowing needs.”

“We are pleased to bring the Caliber brand to the Pacific Northwest and look forward to providing more products and offerings to our customers,” said Cobalt Mortgage Co-Founders Keith Tibbles and Ernie Gehre. “Our outstanding reputation in the retail lending business makes us an attractive partner for borrowers, and I would like to thank all of our dedicated team members for their many contributions to Cobalt. We look forward to working with the Caliber team to solidify our position as the retail lender of choice.”

Prospect Mortgage Selects SSI’s Closing Guard to Manage Closing Agent Risk Prospect Mortgage LLC has announced that it will imple-

ment the Secure Settlements Inc.’s (SSI) Closing Guard tool to enhance risk management policies and procedures. SSI is the first vendor management firm to specialize in closing table risk. The company’s Closing Guard tool evaluates the backgrounds, licensing, insurance and trust accounts of agents as a method to identify potential threats before a closing takes place. It requires all settlement agents having access to a borrower’s loan documents and mortgage proceeds to first pass through a vetting and risk assessment process.

Prospect has chosen to implement Closing Guard through SSI to enhance quality control (QC) processes, conduct comprehensive risk evaluations, detect and prevent fraud and report and continually monitor all closing agents handling its residential mortgage loans in all states where the company conducts its loan mortgage business.

“As an industry leader, our corporate culture continually seeks to not just meet, but to exceed, regulatory expectations for quality control and loan quality assurance,” said Dana Stites, Prospect Mortgage’s senior vice president of operations and risk management. “We take the management of third-party service providers seriously for operational risk, investor confidence and consumer protection. Prospect spent several months evaluating various providers to help us manage settlement agent risk and it was impressed with Secure Settlements’ Closing Guard tool.”

“We are pleased and honored to have been chosen by Prospect for these critical risk management services,” said SSI President Andrew Liput. “In our extensive dealings with the Prospect leadership team, we saw first-hand their serious commitment to quality control, consumer protection and overall loan quality assurance. We are proud to be their partner in this important endeavor.”

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mortgage, have a remaining term on their mortgage of greater than 10 years, and their mortgage interest rate is at least 1.5 percent higher than current market rates. Nationwide, these borrowers could save, on average, as much as $200 per month on their mortgage.

Also in the third quarter 2014 report: l HARP volume represented 11 percent of total refinance volume in the third quarter of 2014. l More than 25 percent of all HARP refinances for underwater borrowers (those with a loan-to-value ratio greater than 105 percent) were for 15- and 20-year mortgages through the third quarter. l Year-to-date through September 2014, HARP continued to account for a substantial portion of refinance volume in certain states.

HARP refinances represented 33 percent of total refinances in Georgia and 31 percent of total refinances in Florida, nearly double the 16 percent of total refinances nationwide over the same period.

ber of potential buyers of REO properties and is consistent with the Enterprises’ practice of requiring fairmarket value for those properties.”

Under existing GSE rules, former borrowers must wait a minimum of three years after a foreclosure to be eligible to receive a loan purchased or guaranteed

by Fannie Mae or Freddie Mac. The purchase of an REO property for the benefit of the previous owner must also still be intended for use by that owner as their principal place of residence.

National Mortgage Professional Magazine invites you to submit any information on regulatory changes, legislative updates, human interest stories or any other newsworthy items pertaining to the mortgage industry to the attention of: NMP News Flash column Phone #: (516) 409-5555 E-mail: newsroom@nmpmediacorp.com Note: Submissions sent via e-mail are preferred. The deadline for submissions is the 1st of the month prior to the target issue.

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© 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 website: www.nmlsconsumeraccess.org. 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 413 0904. CO: Check license status of your mortgage loan originator at http://www.dora.state.co.us/real-estate/index.htm. GA: Georgia Residential Mortgage Licensee 22721. IL: Illinois Residential Mortgage Licensee. KS: Supervised Loan License SL.0000313. KY: Mortgage Loan Company License MC21112. 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 ML4886. PA: Licensed by the Department of Banking. RI: Rhode Island Licensed Lender, Lender License 20112809LL. VA: Licensed by the Virginia State Corporation Commission MC5382. WA: Consumer Loan License CL2600. Also licensed in AL, AR, CT, DE, DC, FL, ID, IN, ME, MD, MI, MT, NM, NC, OK, SC, TN, TX, UT, WV and WI. NOTICE: All loans 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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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.

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The Federal Housing Finance Agency (FHFA) has directed the government-sponsored enterprises (GSEs), Fannie Mae and Freddie Mac, to alter one of their policies relating to the sale of real estate-owned (REO) properties in their current inventory.

The change will permit the two companies to sell existing REO properties to any qualified purchaser at the property’s fair-market value, as determined by the GSEs. Prior to today’s directive, the Enterprises required homeowners who have been through foreclosure and want to buy their home back to pay the entire amount owed on the mortgage.

This requirement similarly applied to anyone buying the home for the benefit of the previous homeowner. Under the new policy change for existing REO properties, former homeowners who are able to repurchase their home—or a third-party able to purchase on their behalf–may do so under the fair-market value policy that already applies to other purchasers of REO properties.

The policy change is limited to Fannie Mae and Freddie Mac REO inventory of single-family homes as of Nov. 25, 2014. Fannie Mae and Freddie Mac have approximately 121,000 properties in their combined REO inventory.

Certain property exclusions may apply and will be handled by the Enterprises on a case-by-case basis.

“This is a targeted, but important policy change that should help reduce property vacancies and stabilize home values and neighborhoods,” said FHFA Director Mel Watt. “It expands the num-

JANUARY 2015

Your turn

nmp news flash

LYKKEN ON

leadership

Ten Ways to Reevaluate Your Business and Prepare for 2015

By David Lykken t’s that time of year again. As December rolls around, we all start to plan our New Year’s resolutions—both in our person-

I

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al lives and in our professional lives. It’s a good time to reflect back on the things we’ve done right and the things we probably could have done better. As you’re making your plans, setting your goals, and developing your strategies for 2015, I thought it might be helpful

to provide a little context. Here are 10 areas you may want to look into as you begin the New Year …

Reevaluate your workforce One mistake I think people in the industry often make as their building their teams is to only make changes reactively. If there is an unproductive part of the business, we close that division. If there is an unproductive (or counterproductive) person, we let that person go. And we only hire someone if there is a specific position that needs filled. Why not start 2015 off proactively in this area? Don’t wait to put out the fires; instead, prevent them. Look for weak areas in your team. Look for roles that may be missing. Building an all-star team is an ongoing process.

Reevaluate your incentive structure Speaking of your team, it isn’t enough that your hire the right people. You also have to keep them! I’m not just talking about raises and bonuses. I’m talking about non-financial incentives as well—anything that makes people want to keep working for you. Plenty of research has suggested that people want to feel like their work is meaningful, they want to feel a sense of belonging, and they want more autonomy in their roles. Do you know specifically what motivates your people? Have you asked them?

Reevaluate your products and services Are you offering the best you have to offer? Are you packaging it in a way that people can easily understand and appreciate? It’s a crowded marketplace, and our industry has been hit hard in recent years. However, it appears that

consumers are coming out of the recession slump and beginning to spend again. I’m becoming more optimistic about people buying homes. As more people begin to seek out mortgages again, will you be prepared? How are you setting your offerings apart from the competition? How are you positioning yourself to win?

Reevaluate your brand image When people in your area think of your organization, what image comes to mind? Have you done much in developing your brand in the minds of the consumer? What does your logo look like?

Does it need redesigned? Do you have a tagline or slogan that sums up what it means to do business with you? Does that motto need reworked? You want to stay true to your core values, of course. But consumer tastes are changing, and the way you present yourself should change with them. Stay current. Stay relevant.

Know who you are and, more importantly, make sure everyone else knows too.

Reevaluate your digital presence I sometimes feel like I talk too much about this area, but I think it’s because there are so many in our industry who are resisting it. It seems like many of us are thinking, “If we just ignore the Internet, it will go away!” But that’s not the case. There’s a whole new way (that’s not really so new anymore) that people are communicating and doing business with one another. Does your company have Web site? Is it easy to use? Are you using email for customer service and marketing communications? What about social media? Have you looked into Facebook and Twitter?

If not, you might want to think about it.

Your competition is already there!

Reevaluate your community involvement

Reevaluate your organizational values

I have always thought that one of the best ways for an organization to draw positive attention to itself was to involve itself in the local community.

There are many ways that you can become an integral part of the area in which your company operates. You can sponsor local sports teams or support local events. You could participate in parades or community fairs. One of my favorite ways to contribute is to get involved with education. Teach courses at your local college or high school on personal finance or home ownership.

Whatever it is, think of something you do in 2015 to show that your local community is important to you. You’ll be amazed by how well it improves your organization’s image. People really appreciate it when you show them how much you care.

It’s never too late to pause and ask yourself why you’re doing what you’re doing. What are you in business for?

How do you define your purpose in the marketplace and in the industry? In our personal lives, we often use the new year to reflect on ourselves and the kind of people we want to be. We consider changing things that we think may be holding us back. The new year is also a good time for us to do the same thing with our businesses. What about your organization’s core values needs to be tweaked? Do you even know what your organization’s core values are? If not, now is a good time to sort that out. An

organization without an aim is an organization that is bound to be lost.

Figure out who you are and then charge headlong in 2015—showing everyone else why they want to know who you are as well.

David Lykken is 40-year mortgage industry veteran who has been an owner operator in three mortgage banking companies and a software company. As a former business owner/operator, today David loves helping C-Level executives and business owners achieve extraordinary results via consulting, coaching and communications, with the objective of eliminating corporate dysfunction, establishing

and communicating a clear corporate strategy while focusing on process improvement and operational efficiencies resulting in increased profitability.

David has been a regular contributor on CNBC and Fox Business News and currently hosts a successful weekly radio program, “Lykken on Lending,” that is heard each Monday at noon (Central Standard Time) by thousands of mortgage professionals. He produces a daily one-minute video called “Today’s Mortgage Minute” that appears on hundreds of television, radio and newspaper Web sites across America. He may be reached by phone at (512) 501-2810 or by e-mail at dlykken@mbs-team.com. dlykken@mbs-team.com.

Reevaluate your compliance I am convinced that most of the times people in our industry get into trouble for legal issues, it is due to negligence.

I’ve been in the industry over 40 years, and it is full of good people. But, even if you have the best of intentions, you can’t let your guard down. You’ve got to stay on top of the regulatory environment. You’ve got to know the “do’s and “don’t’s,” and they are always changing.

As you go into 2015, it is a good time to take a look at your organization to see if there are any areas of compliance in which you are falling behind. Again, you don’t want to have to put out fires when, if you’re prepared, you can prevent them instead.

Reevaluate your data In case you haven’t heard, we have entered an age of “big data.” Those who succeed will be the ones who are able to harness the information that is at their fingertips and churn it into actionable insights. You have mountains of data within your organization that, if properly analyzed, could help you in knowing how to design your services and target the right customers. Do you have someone specifically assigned for managing data? A business analyst or data scientist? If not, it’s something you may want to look into...

n Georgia Mortgage Professional Magazine n DECEMBER 2014

The increased focus on compliance in recent years has forced many organizations in our industry into rethinking their corporate structures. Investing in the workforce and technology necessary to be in compliance sometimes takes more capital than organizations can put up on their own. This, I suspect, is one of the reasons why I’ve seen such an interest lately in mergers and acquisitions. Depending on the state of your specific organization, the beginning of the year may be a good time to look into buying, selling, or partnering with another organization to make you more competitive and more capable of serving your customers.

NationalMortgageProfessional.com

Reevaluate your ownership

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FHA’s HECM is Here to Stay

heard on the street continued from page 38

loanDepot Announces the Mortech Announces Integration With MCT Acquisition of Mortgage Master

By Garrett M. Kolb In my 35 years of mortgage lending, there has never been a product like the home equity conversion mortgage (HECM). The industry has seen its share of products but none like the often misunderstood reverse mortgage.

The U.S. Department of Housing & Urban Development (HUD) has made several significant changes to the program over the past 18 months implementing borrower safeguards to mitigate risk to the Mortgage Insurance Fund. HUD’s changes appear to have worked in the short term, but still missed the long term issues facing the industry. Maintaining the collateral per the terms of the deed requires a cash flow analysis and the ability to set aside reserves to cover the expense of occupying the property.

The much anticipated Mortgage Letter No. 2014-22 released in November during the National Association of Reverse Mortgage Lenders’ (NRMLA) Annual Meeting brings sense and sensibility to the program.

Ask industry insiders about this Mortgagee Letter and the response will be “Financial Assessment.” This new guidance termed as Financial Assessment, provides much needed change to align the product with a time tested disposable income analysis utilized in the early days of FHA and VA lending.

HUD states:

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“For borrowers who do not demonstrate their willingness to meet their loan obligations, life expectancy set-asides—full or partial—will be required.”

“The mortgagee must evaluate the mortgagor’s willingness and capacity to timely meet his or her financial obligations and to comply with the mortgage requirements.”

“In conducting this financial assessment, mortgagees must take into consideration that some mortgagors seek a HECM due to financial difficulties, which may be reflected in the mortgagor’s credit report and/or property charge payment history. The mortgagee must also consider to what extent the proceeds of the HECM could provide a solution to any such financial difficulties.”

In short, Financial Assessment is a disposable income test to ensure the future payment of taxes, insurance and property maintenance are within the borrower’s ability to fund and provides a reserve (set-aside) when the analysis reflects otherwise. The guidance includes a review of the borrower’s credit history with specific guidance on recent late payments to help determine the “willingness” factor.

Why offer a reverse mortgage without knowing if the client can afford the cost of maintaining the property? It sounds simple, but in the case of the HECM too many businesses did not do their homework and put themselves, the mortgage servicer and the MIP fund at risk.

It is impossible to write policy that eliminates all risk but HUD’s newest guidance takes a giant step in the right direction. Analyzing the borrowers’ disposable income and mandating tax and insurance set-a-sides when needed, mitigates future problems for the borrower and all stakeholders.

The HECM has come full circle as a legitimate financial tool.

Garrett M. Kolb is senior managing director of correspondent and wholesale lending for Reverse Mortgage Solutions Inc. Garrett joined the RMS production team in 2011, and brings 35 years of sales management and financial services experience. He may be reached by phone at (888) 471-7191 or email gkolb@rmsnav.com.

SPONSORED EDITORIAL

loanDepot LLC has announced the signing of a definitive agreement to acquire Mortgage Master Inc. Both companies’ combined retail loan funding volume in October 2014 was $1.75 billion, with nearly $70 million in top-line revenue.

Upon closing, the loanDepot brands as a combined company will operate 130 retail lending branches across the country, four Web production centers, and employ 3,700 full-time associates including more than 1,200 licensed loan officers serving borrowers in all 50 states. The transaction between loanDepot and Mortgage Master is expected to close in early 2015 subject to regulatory approvals.

The combined company will maintain and operate the loanDepot.com, imortgage and Mortgage Master consumer brands, offering borrowers across the country vital access to the financing, information and expertise they need to pursue their lending needs. The LDWholesale brand will continue helping brokers grow their businesses by delivering competitively-priced products with high-touch, high-tech service.

“By welcoming our colleagues at Mortgage Master to loanDepot, we are creating a very powerful and exciting opportunity for the organization, consumers, and our employees,” said Anthony Hsieh, chairman and chief executive officer of loanDepot LLC. “Our business models, our cultures, and our product offerings are highly complementary. The combined company will position us to accelerate our expansion in the northeast while continuing to build our national consumer lending businesses offering both mortgage and non-mortgage lending products.”

As part of the agreement, Mortgage Master’s Founder and CEO Leif Thomsen and President Paul Anastos will continue to lead the Mortgage Master brand.

“We are extremely excited to join the loanDepot team,” said Thomsen.

“Our goal was to position Mortgage Master so we could continue offering the best programs at the best prices, while delivering more innovative products, marketing services and technology resources for our employees to ensure best-in-class services to borrowers. This partnership empowers us to do this while creating substantial growth opportunity for the Mortgage Master brand. We are looking forward to working alongside the great leadership throughout loanDepot and working towards a shared vision on the future of the business. This is the most excited I’ve been about our company in a very long time!”

Mortech, a Zillow business providing mortgage technology software solutions for mortgage bankers and secondary market teams, has announced the integration of mortgage pipeline hedging and risk management provider, MCT Trading Inc. into Mortech’s product and pricing engine, Marksman. Using MCT’s real-time trading and best-execution product, MCTlive, lenders can now manage hedging, trading, and pipeline risk all in one place.

While using Mortech’s Marksman, mortgage lenders can seamlessly transfer their pending and locked loan scenario data from Marksman, directly to MCTlive, ensuring that loan officers’ pipelines of locked loans are accurately priced and optimally hedged.

“By adding hedging into their secondary marketing solutions, lenders are better equipped to make smarter lending decisions,” said Doug Foral, general manager of Mortech. “The partnership between Mortech and MCT is a win-win for our customers.”

“We’re excited about the integration of the two systems and believe they’ll complement our efforts to provide our shared customers the very best service and support,” said Chris Anderson, senior vice president at MCT Trading Inc. “This partnership between MCT and Mortech will result in higher efficiencies and informational exchange improvements.”

Mid America Mortgage Acquires Affinity Lending Solutions

Mid America Mortgage Inc. Owner and Chief Executive Officer Jeff Bode, and Houston-based Affinity Lending Solutions LLC President and Chief Executive Officer Scott R. Valby have announced their intention to integrate Affinity’s production operations and branch network into Mid America’s mortgage platform. As part of the transaction, Mid America will acquire an interest in Affinity’s pipeline and certain assets, and offer employment to the employees in Affinity’s 14 origination centers.

Mid America is a mortgage banking company primarily engaged in the business of originating, selling, and servicing residential mortgage loans. Bode has a demonstrated history of success, having managed three financial services companies and a mortgage software company during his career. Since its forcontinued on page 60

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www.HomeBridgeWholesale.com This is a business-to-business communication provided for use by mortgage professionals only and is not intended for distribution to consumers or other third parties. It is not an advertisement; as such term is defined in Section 2 26.24 of Regulation Z. Product information is subject to change without notice. HomeBridge Wholesale is a division of HomeBridge Financial Services, Inc. NMLS #6521 Š HomeBridge Financial Services, Inc. All rights reserved.

n Georgia Mortgage Professional Magazine n DECEMBER 2014

HomeBridge Wholesale is a national wholesale lender offering Conventional, Government,

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Jumbo Loans to $2.5 Million

National Mortgage Professional Magazine’s 40 Under 40 The 40 Most Influential Mortgage Professionals Under 40

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n our sixth annual “40 Under 40” feature, you will find a list of the top mortgage professionals under the age of 40, as voted on by their peers, who exemplify professionalism and top production in today’s housing market. Despite the rough waters of the U.S. economy and the ever-shifting landscape known as the mortgage

industry, these 40 professionals have persevered in a time of regulatory uncertainty.

In assembling this list, we at National Mortgage Professional Magazine took some criticism when we began this endeavor. Many felt a list of this nature ignored many, and others felt that a list of this type is a “thing of the past,” while some even cited age discrimination, but we firmly stood by our decision to assemble this group. Like their industry pioneers before them, these individuals are the ones who carried the torch of professionalism in the year 2014 and beyond.

We’d like to congratulate all of the following individuals named to our “40 Under 40” list for 2013—in no particular order but alphabetical— and thank all the nominees for their participation in our “40 Under 40: The 40 Most Influential Mortgage Professionals Under 40” feature.

Ben Brashen

Leigh Ann Brown

Mark S. Fisher

PROFESSIONAL

Licensed Mortgage Loan Originator United Northern Mortgage Bankers l Bronx, N.Y. www.unitednorthern.com Mark S. Fisher started as a mortgage loan originator in 2011, and has consistently doubled his business year over year by his dedication to an extraordinary client experience and his strong growing relationships with real estate agents and attorneys. He also prides himself on superior mortgage guideline knowledge, which helps him think like an underwriter and structure difficult deals. Going forward Mark is looking forward to continually growing his business and helping to shape a positive reputation for the mortgage industry.

MORTGAGE

Marketing Director Angel Oak Home Loans LLC l Atlanta www.angeloakhomeloans.com Leigh Ann Brown was previously a marketing director for Chick-filA in Orlando, Fla. Joining the mortgage industry with little industry background has allowed Angel Oak to differentiate themselves from their competitors by creating unique and appealing marketing material. She created the unique “Angel Oak Back Stage Tour,” where their licensed mortgage advisors can build relationships by inviting their referral partners to the office to meet their senior leadership team, dedicated in-house operations team and an overview of Angel Oak Companies. It has been a huge success and Leigh Ann has helped create new relationships with the real estate community by inviting them to meet their team. She is currently serving on Angel Oak’s Leadership Council, the Mortgage Bankers Association of Georgia (MBAG) and is involved in organizing companywide events for the Make-A-Wish Foundation.

General Sales Manager TagQuest Inc. l Medford, Ore. www.tagquest.com Chuck Dye is general sales manager of TagQuest, a full-service marketing firm dedicated to assisting mortgage companies reach their desired goals. Chuck is responsible for the day-today operations of the sales department. He has more than 17 years of experience in sales and finance. Chuck has excelled throughout his career, winning national awards and recognition. Chuck’s customer service skills and client retention are remarkable. Chuck started with TagQuest in 2008 during its infancy and has been a key player in the company’s growth from a fledgling company, to a multi-million dollar company and leader in the mortgage marketing realm. In his spare time, he is the father of two great teenagers, Micayla and Isaiah, as well as an avid outdoorsman.

NATIONAL

President & CEO Mortgage Mapp l Bellevue, Wash. www.mortgagemapp.com Ben Brashen founded Mortgage Mapp with the mission of making mobile marketing a successful tool for mortgage professionals as a fast and easy way for loan officers to create a personalized app for their mobile phones. Along with more than a decade of experience as loan originator, Ben also hosted the hugely popular radio show “Brashenomics” on 1150 KKNW. The show featured various industry professionals and provided perspective on the latest developments in the world of real estate. Ben also authored The Newlywed Homebuyers Guide. The book addressed the financial collaboration and sociological aspects of married couples buying a home together. Ben lives in Kirkland, Wash., with his wife, Paige, and their two kids, who are all very big Seahawks fans.

Chuck Dye

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Chris Brown

UNDER 40

Senior Vice President, Wholesale Lending Division United Mortgage Corporation l Melville, N.Y. www.umcbrokerdirect.com Jason Frangoulis is a visionary leader in the mortgage industry, with a proven track record building productive relationships with mortgage brokers, real estate agents and lenders.

He has vast experience and extensive knowledge in all functions of mortgage banking, including but not limited to, originations, processing, underwriting, marketing and product knowledge. Jason has become well-known in the mortgage industry as a mentor to his peers and clients by educating them with his expertise specializing in Fannie Mae’s and Freddie Mac’s conventional loan programs and mortgage guidelines.

n Georgia Mortgage Professional Magazine n DECEMBER 2014

Jason Frangoulis

40

Mortgage Specialist Puget Sound Capital l Olympia, Wash. www.pugetsoundcap.com Since entering the industry in 2001, Christina has prided herself on top-notch product knowledge to take on the toughest of transactions, solid customer service and communication, along with a strong value of community support and giving back. She sees her company as a valuable community partner and because of this, she has helped craft basic financial education classes for low- to moderate-income citizens, served on a few boards of nonprofits and, most currently, chaired their Asset Building Coalition, which has taken a mission of moving for-profit and non-profit partnerships to a new level, while supporting those with limited incomes. A love of industry and her community is what drives her to improve.

General Manager Mortech, a Zillow Business l Lincoln, Neb. www.mortech.com As the general manager of Mortech, Doug Foral drives business strategy, product and employee development for Zillow’s Mortech brand. He identifies new business initiatives with complementing mortgage technology companies and manages the direction of Mortech’s current product line. He is also responsible for working closely with Zillow’s mortgage division to capitalize on product synergies. Prior to becoming general manager, Doug contributed as a national sales executive, vice president of sales and director of operations for Mortech.

In these roles, he mentored the sales, training, account management and marketing teams, developed many trusting relationships with customers and played a large role in expanding Mortech’s product offerings. Doug attended Nebraska Wesleyan University in Lincoln, Neb. where he received his Business Administration Degree.

NationalMortgageProfessional.com

Christina Daniels

Doug Foral

MAGAZINE’S

Home Loan Advisor Certified Mortgage Planners l Orlando, Fla. www.whenweownahome.com Chris Brown and his team absolutely love financing and refinancing real estate … and it shows. In addition to being known for delivering world class service in his local market, Chris’s vision is much bigger than himself. For several years now, Chris has donated 100 percent of every 10th loan commission to charity and to serve the Orlando community.

Whether it is an official charity, a single mom that lost her job and just needs rent covered, or a young entrepreneur that simply needs a break, those dollars serve the greater good of the Orlando area. His vision is to give away $640,000 every year. Chris’s model is truly unique. Visit www.whenweownahome.com to learn more.

DECEMBER 2014 n Georgia Mortgage Professional Magazine NATIO NAL n M NationalMortgageProfessional.com ORTGAGE PROFESSIONAL

MAGAZINE’S

40

UNDER

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Jeffrey John Gibson Managing Director of TPO (Wholesale and Correspondent) First Guaranty Mortgage Corporation Tysons Corner, Va. www.fgmccorrespondent.com Jeffrey John Gibson has been with First Guaranty Mortgage Corporation (FGMC) for more than six years. Gibson is an inspiration to anyone who knows that rolling up your sleeves and working hard will earn your way up the corporate ladder. He joined FGMC in 2008 as a DE Underwriter, and worked his way to become product development and training manager. In 2011, he was promoted to managing director of TPO (wholesale and correspondent). Prior to FGMC, Gibson was senior mortgage underwriter for Aurora Loan Services for four-plus years, processor II for Wells Fargo Home Loans. He broke into the mortgage industry in 2001 as a file coordinator for First Nationwide Mortgage Corporation.

Kerri Girouard Manager of Client Development Mortgage Returns l St. Louis, Mo. www.mortgagereturns.com Kerri Girouard is a client and industry-focused leader at Mortgage Returns, whose top priority is ensuring her 3,000 loan officers at more than 40 lenders are getting the best return from their marketing investment. Each quarter, Kerri provides her clients with statistics on production and performance, marketing return-on-investment (ROI), customer retention, individual loan officer performance and performance compared to peer group. She consistently provides her clients with 40 percent higher prospect conversion rates annually and 30 percent higher purchase transactions year over year. She is a master trainer and an expert in client service and success. Furthermore, as the company’s client development manager, she oversees the western United States territory and the entire team of account managers that serve our more than 200 mortgage company clients.

Farzad Heidari Account Executive Real Estate Mortgage Network Inc. (REMN) Los Angeles www.remnwholesale.com After starting his mortgage career in 2001 while at UCLA, Farzad Heidari landed in wholesale and correspondent lending in 2004. With his ability for leading brokers and bankers in achieving success they have never before experienced; the broker community in the Los Angeles area sees Farzad as a necessity to their business. His ability to facilitate efficiencies from origination to funding yields significant results. A top producer at Real Estate Mortgage Network (REMN), he has made a major impact in the CA market for the company. One of his main objectives as an active board member of the California Association of Mortgage Professionals (CAMP) is to influence the younger generation of mortgage professionals to be more active and involved in the organization.

Tom Hurst President StreetLinks Lender Solutions, an Assurant Company l Indianapolis www.streetlinks.com As an original founder of StreetLinks, Tom Hurst has played a pivotal role in the company’s growth and success for over 10 years. Since leaving the aviation industry in 2002, Tom’s passion and unwavering dedication to quality, service and innovation have helped to propel both StreetLinks and the mortgage industry forward, taking the company from a small Midwest appraisal firm to one of the largest and fastest-growing independent appraisal management companies (AMCs) in the country. As president of StreetLinks, Tom remains an integral part of StreetLinks’ growth, product development and commitment to pushing the status quo, keeping the company at the forefront of valuation technology and innovation.

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Amy Goldstein Senior Loan Officer BMIC Mortgage Inc. l North Bethesda, Md. www.bmicmortgage.com Amy Goldstein has been a senior loan officer for BMIC Mortgage for the past 15 years. A born and bred Washingtonian, Amy’s customers praise her not only for her product knowledge, but the market areas in which she serves.

She is currently licensed in Washington, D.C.; Maryland and Virginia. Real estate is in Amy’s blood, as her father is a longtime mortgage broker, and her husband Eric is a real estate agent. Amy currently resides in North Potomac, Md.

Jenna N. Gray Mortgage Consultant CMG Financial l San Ramon, Calif. www.cmgfi.com Jenna N. Gray has been recognized as a Five-Star Professional in Diablo Magazine for three consecutive years. She was awarded the 2013 Oxford Book Award, a National Entrepreneurial Achievement Award for Excellence in Business, and serves as the preferred lender for the top producing real estate team of a well-established company in California and Hawaii. Gray has dedicated countless hours to supporting charities, including One Warm Coat, Susan G. Komen and Love a Child Missions in Bay Point, Calif. She is a respected professional who juggles work and volunteerism successfully.

Gray has been in the financial industry for more than 10 years, and is earning her BS in business administration with an emphasis in real estate finance from UC Berkeley’s Haas School of Business.

Chad Jampedro President GSF Mortgage Corporation l Brookfield, Wis. www.gogsf.com Chad Jampedro’s duties include overseeing operations, capital acquisition, production, recruiting and secondary marketing departments of GSF Mortgage. His exposure to multiple highlevel aspects of the lending industry have contributed to a unique perspective and the ability to associate the duties and objectives of each department into an operational plan.

Under Chad’s direction as president, GSF has been awarded the USDA Platinum Million Dollar Lender three times; been named among Mortgage Technology’s Top Tech-Savvy Lenders twice; the Inc. Hire Power Award in 2013 and most recently, both the Journal Sentinel’s Top Work Places and Best in Class. GSF maintains an A+ rating with the BBB and is a Five-Star Zillow Lender.

Michael Kelleher President Easy Mortgage Apps LLC l Salem, Mass. www.easymortgageapps.com Michael Kelleher is co-founder of the Native App platform sweeping the mortgage industry. He has a passion for disruptive technology and enjoys any conversation on how to make mortgage processes more mobile friendly. He is widely regarded as a resource to bounce ideas off of about user experience, design thinking, mobile strategy and transparency in the mortgage mobile space. He loves to cook, dance and play bocce with his father.

He has a fascination about the impact of disruptive technology and looks forward to sharing it with the world.

CONTINUED ON PAGE 52

General Requirements

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By providing it to the consumer in person.

By mailing, or by other delivery methods, including e-mail.

Electronic delivery methods subject to compliance with the consumer consent and other applicable provisions of the Electronic Signatures in Global and National Commerce Act [15 U.S.C. 7001 et seq.; § 1026.38(t)(3)(iii)].

The chart was provided by Lenders Compliance Group exclusively for National Mortgage Professional Magazine.

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Delivery Method [§ 1026.19(f)(1)(ii)]

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Creditor is responsible for ensuring that the consumer receives the Closing Disclosure form no later than three business days before consummation [§ 1026.19(f)(1)(ii)(A); Comment 19(f)(1)(v)-3]. See also, delivery via a settlement agent.

Creditor is responsible for ensuring that the Closing Disclosure meets the content, delivery, and timing requirements [§§ 1026.19(f) and 1026.38].

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For any loans subject to the TILA-RESPA rule that are federally related mortgage loans subject to RESPA (which will include most mortgages), form H-25 is a standard form, the Bureau’s Closing Disclosure form, meaning creditors must use the form H-25 [§ 1026.38(t)(3)(i)].

For other transactions subject to the TILA-RESPA rule that are not federally related mortgage loans, form H-25 is a model form, meaning creditors are not strictly required to use form H-25, but the disclosures must contain the exact same information and be made with headings, content, and format substantially similar to form H-25 [§ 1026.38(t)(3)(ii)].

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Using the Bureau’s Closing Disclosure Form [§ 1026.38(t)]

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Consummation may commonly occur at the same time as closing or settlement, but it is a legally distinct event.

Consummation occurs when the consumer becomes contractually obligated to th creditor on the loan; not, for example, when the consumer becomes contractually obligated to a seller on a real estate transaction.

The point in time when a consumer becomes contractually obligated to the creditor on the loan depends on applicable State law [§ 1026.2(a)(13) and Comment 2(a)(13)-1].

Creditors and settlement agents should verify the applicable State laws to determine when consummation will occur, and make sure delivery of the Closing Disclosure occurs at least three business days before this event.

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Consummation and Closing or Settlement Definitions [§ 1026.2(a)(13)]

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For loans that require a Loan Estimate and that proceed to closing, creditors must provide a new final disclosure reflecting the actual terms of the transaction called the Closing Disclosure.

The form integrates and replaces the existing HUD-1 and the final TIL disclosure for these transactions.

Creditor is generally required to ensure that the consumer receives the Closing Disclosure no later than three business days before consummation of the loan [§ 1026.19(f)(1)(ii)].

Closing Disclosure generally must contain the actual terms and costs of the transaction [§ 1026.19(f)(1)(i)].

Creditors may estimate disclosures using the best information reasonably available when the actual term or cost is not reasonably available to the creditor at the time the disclosure is made.

Creditors must act in good faith and use due diligence in obtaining the information.

Creditor normally may rely on the representations of other parties in obtaining the information, including, for example, the settlement agent.

Creditor is required to provide corrected disclosures containing the actual terms of the transaction at or before consummation [Comments 19(f)(1)(i)-2, -2.i, and -2.ii].

Closing Disclosure must be in writing and contain the information prescribed in § 1026.38. The creditor must disclose only the specific information set forth in § 1026.38(a) through (s), as shown in the Bureau’s form in appendix H-25 [§ 1026.38(t)].

If the actual terms or costs of the transaction change prior to consummation, the creditor must provide a corrected disclosure that contains the actual terms of the transaction and complies with the other requirements of § 1026.19(f), including the timing requirements, and requirements for providing corrected disclosures due to subsequent changes [Comment 19(f)(1)(i)-1].

New three-day waiting period. If the creditor provides a corrected disclosure, it may also be required to provide the consumer with an additional three-business-day waiting period prior to consummation [§ 1026.19(f)(2)].

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If the Closing Disclosure is provided in person, it is considered received by the consumer on the day it is provided.

If it is mailed or delivered electronically, the consumer is considered to have received the Closing Disclosure three business days after it is delivered or placed in the mail [§ 1026.19(f)(1)(iii); Comment 19(f)(1)(ii)-2].

If the creditor has evidence that the consumer received the Closing Disclosure earlier than three business days after it is mailed or delivered, it may rely on that evidence and consider it to be received on that date [Comments 19(f)(1)(iii)-1 and -2].

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Creditors must ensure that the consumer receives the Closing Disclosure at least three business days prior to consummation [§ 1026.19(f)(1)(ii)(A)].

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Consumer Receipt [§ 1026.19(f)(1)(iii)]

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Business Days [§§ 1026.2(a)(6), 1026.19(f)(1)(ii)(A) and (f)(1)(iii)]

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Waiving the Three-Business-Day Waiting Period [§ 1026.19(f)(1)(iv)]

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Creditors may contract with settlement agents to have the settlement agent provide the Closing Disclosure to consumers on the creditor’s behalf.

Creditors and settlement agents also may agree to divide responsibility with regard to completing the Closing Disclosure, with the settlement agent assuming responsibility to complete some or all the Closing Disclosure [Comment 19(f)(1)(v)-4].

Any such creditor must maintain communication with the settlement agent to ensure that the Closing Disclosure and its delivery satisfy the requirements described above, and the creditor is legally responsible for any errors or defects [§ 1026.19(f)(1)(v) and Comment 19(f)(1)(v)-3].

The settlement agent is required to provide the seller with the Closing Disclosure reflecting the actual terms of the seller’s transaction.

The settlement agent may comply with this requirement by providing the seller with a copy of the Closing Disclosure provided to the consumer (buyer) if it also contains information relating to the seller’s transaction [Comment 19(f)(4)(i)-1].

The settlement agent may also provide the seller with a separate disclosure, including only the information applicable to the seller’s transaction from the Closing Disclosure [§ 1026.38(t)(5)(v) or (vi), as applicable].

NOTE: If the seller’s disclosure is provided in a separate document, the settlement agent has to provide the creditor with a copy of the disclosure provided to the seller [§ 1026.19(f)(4)(iv)].

In rescindable transactions, the Closing Disclosure must be given separately to each consumer who has the right to rescind under TILA, although the disclosures required for adjustable rate mortgages need only be provided to the consumer who expresses an interest in a variable-rate loan program [§ 1026.19(b)].

In transactions that are not rescindable, the Closing Disclosure may be provided to any consumer with primary liability on the obligation.

NOTE: The CFPB provides this implementation tip–“some creditors may desire that each obligor to a transaction subject to § 1026.19(f) receive a Closing Disclosure to obtain a signature of customary recitals or certifications that are appended to the disclosure pursuant to § 1026.38(t)(5).”

Creditors must ensure that consumers receive the Closing Disclosure no later than three business days before consummation [§ 1026.19(f)(1)(ii)(A)].

Consummation is the time that a consumer becomes contractually obligated on the credit transaction, and may not necessarily coincide with the settlement or closing of the entire real estate transaction [§ 1026.2(a)(13)].

Timeshare transactions: the creditor must ensure that the consumer receives the Closing Disclosure no later than consummation [§ 1026.19(f)(1)(ii)(B)].

For purposes of providing the Closing Disclosure, the term business day means all calendar days except Sundays and the legal public holidays specified in 5 U.S.C. 6103(a), such as New Year’s Day, the Birthday of Martin Luther King, Jr., Washington’s Birthday, Memorial Day, Independence Day, Labor Day, Columbus Day, Veterans Day, Thanksgiving Day and Christmas Day. This requirement imposes a three-business-day waiting period, meaning that the loan may not be consummated less than three business days after the Closing Disclosure is received by the consumer. If a settlement is scheduled during the waiting period, the creditor generally must postpone settlement, unless a settlement within the waiting period is necessary to meet a bona fide personal financial emergency [§ 1026.19(f)(1)(iv)].

NOTE: Business day is given a different meaning for purposes of providing the Closing Disclosure than it is for purposes of providing the Loan Estimate after receiving a consumer’s application.

Consumers may waive or modify the three-business-day waiting period when: u he extension of credit is needed to meet a bona fide personal financial emergency [§ 1026.19(f)(1)(iv)]; u The consumer has received the Closing Disclosure; and u The consumer (1) gives the creditor a dated written statement that describes the emergency, (2) specifically modifies or waives the waiting period, and (3) bears the signature of all consumers who are primarily liable on the legal obligation [§ 1026.19(f)(1)(iv)]. u The creditor is prohibited from providing the consumer with a pre-printed waiver form [§ 1026.19(f)(1)(iv)].

The chart was provided by Lenders Compliance Group exclusively for National Mortgage Professional Magazine.

The three-business-day waiting period requirement applies to a corrected Closing Disclosure that is provided when there are: u Changes to the loan’s APR; u Changes to the loan product; or, u The addition of a prepayment penalty.

If other types of changes occur, creditors must ensure that the consumer receives a corrected Closing Disclosure at or before consummation [§ 1026.19(f)(2)(i) and (ii)].

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The settlement agent must provide the seller its copy of the Closing Disclosure no later than the day of consummation [§ 1026.19(f)(4)(ii)].

Imposing Average Charges Instead of Actual Amount Received [§ 1026.19(f)(3)(i)-(ii)]

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Amount imposed on the consumer for any settlement service must not exceed the amount the settlement service provider actually received for that service. However, an average charge may be imposed instead of the actual amount received for a particular service, as long as the average charge satisfies certain conditions [§ 1026.19(f)(3)(i)-(ii); Comment 19(f)(3)(i)-1].

An average charge may be used if the following conditions are satisfied [§ 1026.19(f)(3)(ii)]: u The average charge is no more than the average amount paid for that service by or on behalf of all consumers and sellers for a class of transactions; u The creditor or settlement service provider defines the class of transactions based on an appropriate period of time, geographic area, and type of loan; u The creditor or settlement service provider uses the same average charge for every transaction within the defined class; and u The creditor or settlement service provider does not use an average charge: For any type of insurance; for any charge based on the loan amount or property value; or if doing so is otherwise prohibited by law.

If the creditor develops representative samples of specific settlement costs for a particular class of transactions, the creditor may charge the average cost for that settlement service instead of the actual cost for such transactions. An average charge program may not be used in a way that inflates the cost for settlement services overall [Comment 19(f)(3)(ii)-1].

Creditors should consult the commentary to § 1026.19(f)(3)(ii) for additional guidance on using average-charge pricing [See Comments 19(f)(3)(ii)-1 through -9].

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NOTE: The CFPB provides this implementation tip–“for example, the imminent sale of the consumer’s home at foreclosure, where the foreclosure sale will proceed unless loan proceeds are made available to the consumer during the waiting period, may be considered a bona fide personal financial emergency” [Comment 19(f)(1)(iv)-1].

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For any other changes before consummation that do not fall under the three categories above (i.e., related to the APR, loan product, or the addition of a prepayment penalty), creditor still must provide a corrected Closing Disclosure with any terms or costs that have changed and ensure that the consumer receives it.

For these changes, there is no additional three-business-day waiting period required.

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If one of the following occurs after delivery of the Closing Disclosure and before consummation, the creditor must provide a corrected Closing Disclosure containing all changed terms and ensure that the consumer receives it no later than three business days before consummation [§ 1026.19(f)(2)(ii); Comment 19(f)(2)(ii)-1]: u The disclosed APR becomes inaccurate: If the annual percentage rate (APR) previously disclosed becomes inaccurate, the creditor must provide a corrected Closing Disclosure with the corrected APR disclosure and all other terms that have changed. The APR’s accuracy is determined according to § 1026.22 [§ 1026.19(f)(2)(ii)(A)]. u The loan product changes: If the loan product previously disclosed becomes inaccurate, the creditor must provide a corrected Closing Disclosure with the corrected loan product and all other terms that have changed [§ 1026.19(f)(2)(ii)(B)]. u A prepayment penalty is added: If a prepayment penalty is added to the transaction, the creditor must provide a corrected Closing Disclosure with the prepayment penalty provision disclosed and all other terms that have changed [§ 1026.19(f)(2)(ii)(C)].

Note: This period may be waived if the consumer is facing a bona fide personal financial emergency [§ 1026.19(f)(1)(iv)].

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Creditors must re-disclose terms or costs on the Closing Disclosure if certain changes occur to the transaction after the Closing Disclosure was first provided that cause the disclosures to become inaccurate.

There are three categories of changes that require a corrected Closing Disclosure containing all changed terms: u Changes that occur before consummation that require a new three-business-day waiting period [§ 1026.19(f)(2)(ii)]. u Changes that occur before consummation and do not require a new three-businessday waiting period [§ 1026.19(f)(2)(i)]. u Changes that occur after consummation [§ 1026.19(f)(2)(iii)].

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Settlement agents must provide a revised Closing Disclosure if an event related to settlement occurs during the 30-day period after consummation that causes the Closing Disclosure to become inaccurate and results in a change to an amount actually paid by the seller from what was previously disclosed.

The settlement agent must deliver or place in the mail a corrected Closing Disclosure not later than 30 calendar days after receiving information sufficient to establish that such an event has occurred [§ 1026.19(f)(4)(ii)].

Creditors must provide a revised Closing Disclosure to correct non-numerical clerical errors and document refunds for tolerance violations no later than 60 calendar days after consummation [§ 1026.19(f)(2)(iv)-(v)].

NOTE: An error is clerical if it does not affect a numerical disclosure and does not affect the timing, delivery, or other requirements that are imposed by § 1026.19(e) or (f) [Comment 19(f)(2)(iv)-1].

Examples: u If the Closing Disclosure identifies the incorrect settlement service provider as the recipient of a payment, the error would be considered clerical because it is non-numerical and does not affect any of the delivery requirements set forth in § 1026.19(e) or (f). u However, if the Closing Disclosure lists the wrong property address, which affects the delivery requirement imposed by § 1026.19(e) or (f), the error would not be considered clerical.

If the creditor cures a tolerance violation by providing a refund to the consumer, the creditor must deliver or place in the mail a corrected Closing Disclosure that reflects the refund no later than 60 calendar days after consummation [§ 1026.19(f)(2)(v)].

Source: TILA-RESPA Integrated Disclosure Rule, Small Entity Compliance Guide—September 2014, Consumer Financial Protection Bureau. The Closing Disclosure Table is extrapolated from several sections of this guide, as a primary source, in order to provide text and citations.

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Limited circumstances. Creditor must provide a corrected Closing Disclosure if an event in connection with the settlement occurs during the 30-calendar-day period after consummation that causes the Closing Disclosure to become inaccurate and results in a change to an amount paid by the consumer from what was previously disclosed [§ 1026.19(f)(2)(iii); Comment 19(f)(2)(iii)-1].

When a post-consummation event requires a corrected Closing Disclosure, creditors must deliver or place in the mail a corrected Closing Disclosure not later than 30 calendar days after receiving information sufficient to establish that such an event has occurred [§ 1026.19(f)(2)(iii); Comment 19(f)(2)(iii)-1].

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For changes other than to the APR, loan product, or the addition of a prepayment penalty, creditor is not required to provide the consumer with the revised Closing Disclosure until the day of consummation. However, a consumer has the right to inspect the Closing Disclosure during the business day before consummation [§ 1026.19(f)(2)(i)].

If a consumer asks to inspect the Closing Disclosure the business day before c onsummation, the Closing Disclosure presented to the consumer must reflect any adjustments to the costs or terms that are known to the creditor at the time the consumer inspects it [§ 1026.19(f)(2)(i))].

Creditors may arrange for settlement agents to permit consumers to inspect the Closing Disclosure [§ 1026.19(f)(1)(v) and Comment 19(f)(2)(i)-2].

NOTE: An example of a post-consummation event that would require a new Closing Disclosure is a discovery that a recording fee paid by the consumer is different from the amount that was disclosed on the Closing Disclosure. [Comment 19(f)(2)(iii)-1.i].

Other post-consummation events that are not related to settlement, such as tax increases, do not require a revised Closing Disclosure [Comment 19(f)(2)(iii)-1.iii].

Guidance on when a creditor receives information sufficient to establish that an event has occurred after consummation, see Comment 19(e)(4)(i)-1.

The chart was provided by Lenders Compliance Group exclusively for National Mortgage Professional Magazine.

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Dan Keller

Vice President Maverick Funding Corporation l Warwick, R.I. www.maverickfunding.com Zachary Levesque has been a member of the mortgage banking industry for 14 years. He has held a management position for more than eight of those years, and he continues to work up the corporate ladder. Zachary was recently promoted to vice president and maintains a focus on bringing new talent to Maverick Funding. He takes his job very seriously and treats every client with the utmost respect!

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Mortgage Advisor Caliber Home Loans l Seattle www.thedankellergroup.com Dan Keller is a next-generation mortgage advisor at Caliber Home Loans in Seattle, Wash. He has built his business on the book, Raving Fans. The idea behind Raving Fans is to find out what your clients are looking for and deliver above their expectations. Dan has been a mortgage professional since 2008 with a strong background in financial planning and internet marketing. One of his strengths in today’s tough lending marketing is his ability to understand lending guidelines and solve problems. Along with those skills, Dan possesses an unusually high work ethic (he calls it “hustle”).

Zachary Levesque

Ryan Kohl Owner/Vice President Express Capital Mortgage Inc. l Chandler, Ariz. www.expresscapitalmtg.com Ryan Kohl created Express Capital Mortgage in 2007. In 2010, he began on focusing on finding financing for foreign national investors. Today, more than 95 percent of their business is focused on foreign (primarily Canadian) borrowers. Ryan has built key relationships with multiple lending institutions to provide “bankable” loan products for this special niche market. As a company, their volume is consistently growing each month as they travel to Canada and educate to investors about the programs available to them.

Reno Manuele President Neighborhood Loans l Lombard, Ill. www.neighborhoodloans.com As president of Neighborhood Loans since 2009, Reno Manuele has worked studiously to ensure that every client who comes to his firm gets the friendly, quality service that they deserve ,as well as taking care to make sure that they understand the mortgages that they apply for. He has built his company up to be one of the fastest growing, most trustworthy and competitive mortgage firms in the Chicago area, with plans to expand in the near future. Reno was named in the 2012 “Who’s Who” publication of Chicago Agent Magazine in addition to having been listed as one of National Mortgage Professional Magazine’s “40 Most Influential Mortgage Professionals Under 40” in 2012.

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Karen Lane VP, Wholesale Underwriting Manager United Wholesale Mortgage l Troy, Mich. www.uwm.com Currently vice president of underwriting for United Wholesale Mortgage, Karen Lane has worked her way up in the mortgage industry. Over the last 20 years, she has worn many hats, such as processor, loan originator, post-closer, and presently, underwriting. While other people yawn while reading guidelines, Karen has a passion for it. She loves simplifying hard to understand information to make it easy for clients and team members alike. She is a problem-solver, always seeking to find innovative ways to get loans approved.

Karen is a born leader, striving to help her team members to get better every day.

Her motivation is fueled from her inner-sense of continuous improvement. As she shuts down her computer each night, she always asks herself, “What can I do to get better tomorrow?”

Anthony Latham President/Owner National Title Solutions Inc. l Woodridge, Ill. www.ntsnational.com After graduating from North Central College in Naperville, Ill., Anthony Latham joined a local title company working in the closing department. After a short time with the company, he was promoted to Florida vice president of operations. In 2007, when most people were running from the industry, he opened National Title Solutions Inc. (NTS). Starting as a twoperson operation licensed in one state, NTS has grown to become one of the fastest growing and respected title agents in the country. Licensed in more than 35 states, NTS is built on providing exceptional customer service, as well as educating consumers about title insurance products. Anthony is part of numerous chambers and associations. He also serves on the board of directors for I Support Community Naperville.

Jonas Moe VP, Product Strategy Ellie Mae l Pleasanton, Calif. www.elliemae.com Jonas Moe is vice president of product strategy for Ellie Mae. Tasked with maintaining Ellie Mae’s status as a technology innovator and leader, Jonas is personally responsible for strategy, development, product quality and revenue goals for all of the company’s product lines, including Ellie Mae’s all-in-one Encompass mortgage management solution. Jonas’ responsibilities include not only reaching out to lenders to understand their needs and the technologies they use to run their businesses, but also working with the CFPB and helping regulators gain insight on how new rules will affect lenders. Jonas is also the founder of Ellie Mae’s community outreach program, EllieCares, leading the company’s corporate philanthropy efforts, which include fundraising, recruiting volunteers, and committing more than $1 million a year to various charities.

Shawn P. Murphy Executive Vice President ValuAmerica l Pittsburgh www.valuamerica.com Shawn Murphy is executive vice president of ValuAmerica, where he has the responsibility of setting the strategic direction, along with managing the business development, operations and compliance divisions. Shawn is co-founder of ValuEscrow Inc., a California escrow company, where he serves as president and is responsible for overall performance of the company. Additionally, Shawn is currently serving as the 2014-2015 chairman of the Signing Professionals Workgroup (SPW). Outside of the workplace, Shawn is actively involved within his local community by inspiring the youth through coaching youth sports and serving as a Junior FIRST LEGO League coach. Shawn also enjoys watching sports, playing golf and traveling. More than anything Shawn enjoys spending time with his family.

Laird Nossuli

Robert Pieklo

David B. Ricketts

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Area Manager Bank of England d/b/a ENG Lending l Denver www.boedenver.com David B. Ricketts is the area manager of Bank of England in Denver, Colo. After completing his degree in management from Indiana University of Bloomington, he immediately got into finance and began working for Norwest Financial. David currently holds a position on the CHFA Leadership Advisory Group and is an active community leader. David has been with Bank of England for four years as an area manager and has been recognized by National Mortgage Professional Magazine in the publication’s Top 40 Under 40 for the last four years. He continues his pursuit to serve the Rocky Mountain region with efficient, quality standards.

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Chief Strategy Officer/EVP eLEND eLEND/American Financial Resources Inc. Parsippany, N.J. www.elend.com As chief strategy officer, Rob Pieklo is responsible for all corporate initiatives through all channels of business. As executive vice president of eLEND (AFR’s consumer direct division), Rob gets to grow something from the ground up utilizing technology and automation vs. soaring costs and regulation.

Having the experience of running various departments within the organization has been vital in his management development. Entering the business as a loan originator in 2002, he quickly realized the potential in the industry. Rob ran capital markets and oversaw agency/investor relationships, servicing and warehouse facilities from 2011 to late 2014. Rob will ensure AFR/eLEND stays ahead of industry changes as the company continues its amazing growth story.

Director of Business Development DocMagic Inc. l Torrance, Calif. www.docmagic.com Steve Ribultan is a well-respected and recognized industry leader in the mortgage technology space. He has a proven track record of successfully driving high-impact technology initiatives in the mortgage compliance, document and eSign arena. He is an entrepreneurial-minded mortgage professional who understands what it takes to catapult organizations to the next level to produce stellar results. Steve is currently the director of business development at DocMagic. He has worked for several leading mortgage technology software companies, including OpenClose, Commerce Velocity and Portellus. In the midst of numerous constantly changing compliance regulations, Steve has been instrumental in working with various mortgage technology vendors to integrate disparate technologies to streamline processes and ensure compliance adherence.

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Managing Director Mortgage MarketSmart (iEmergent) Urbandale, Iowa www.mortgagemarketsmart.com Laird Nossuli joined iEmergent in 2004 as the director of operations, and has been integral to the strategic development of the company. She is responsible for all marketing and business development efforts, and spends most of her time working with clients and partners. Her decade of experience helping banks and lenders utilize iEmergent’s forecasts and market intelligence effectively directly impacted her role in the creation of the Mortgage MarketSmart application, and she continues to work closely with iEmergent’s technology partners in its design and development. She received a graduate degree from the University of Michigan and graduated from the Honors Program at Swarthmore College. Laird lives in Des Moines, Iowa, with her husband and two young children.

Steve Ribultan

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Licensed Mortgage Loan Originator Residential Home Funding Corporation White Plains, N.Y. www.rhfunding.com Jacqueline Sendra started out as a telemarketing refinance queen, whose larger than life personality and dedication to educating borrowers quickly moved her from behind the phone and into some of New York City and Long Island’s top real estate offices. Jacqueline trains and mentors other real estate professionals. Jacqueline’s main focus has been to empower those around her to succeed. She attributes her success to the idea that only with teamwork can we be the best we desire to be. Jacqueline is involved in multiple charitable organizations, including the MS walk and fundraising annually (her mother is affected by the disease), brain tumor walks, and a 200-miles-plus bicycle ride with Tour de Pink to support young women battling breast cancer. Last year, her team “Why We Ride” raised more than $90,000.

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Chief Operating Officer MCT Trading l San Diego www.mct-trading.com Philip Rasori has more than a decade of experience in capital markets operations serving lenders in the residential mortgage banking industry and serves as chief operating officer of MCT. He pioneered MCT’s mortgage pipeline hedging algorithms, which form the foundation of the company’s highly regarded HALO (Hedging and Loan sales Optimization) Program. Philip also developed several key metrics that have become standard industry parlance, including “beta pull-through” factors. Notably, he has consulted with GSE agencies and the U.S. government on hedging best practices for community banks. He also serves on the board of Village Hopecore International, an innovative non-profit currently working to alleviate poverty through micro loans, business training and health promotion in Africa.

Certified Mortgage Planner Partners Mortgage l Folsom, Calif. www.teamscottloans.com Evangeline Scott began her lending career more than 10 years ago. She is known for her get it done approach to business and providing outstanding service. Her experience, honesty and hands on approach is an asset during every transaction and shines through with each client she helps. Evangeline is committed to helping people achieve homeownership. She has always been a top producer, but that is not what drives her. She loves what she does and the impact that she is able to have in peoples’ lives ... one loan at a time!

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Vice President, Private Client Division Meadowbrook Financial Mortgage Bankers Garden City, N.Y. www.mfmbankers.com Rajin Ramdeholl is vice president of the Private Client Division of Meadowbrook Financial Mortgage Bankers. Rajin oversees daily operations of a thriving team and has to his credit a series of successes in building dynamic mortgage lending teams throughout his career. He formulates and implements new marketing strategies and meets with brokers, real estate agents and other prospective new clients on a regular basis. He specializes in working with major real estate agents, builders and investors who are seeking expert help, but he also enjoys originating mortgage loans as well. With his educational, professional and financial background, Rajin is respected and trusted by his clients. He truly exemplifies and represents what Meadowbrook stands for: Stability, Strength and Integrity.

Matthew Skas

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Mortgage Advisor Peoples Home Equity l Oak Brook Terrace, Ill. www.peopleshomeequity.com Matthew Skas has been in lending for five years and was part of an original team that opened the Oakbrook Terrace, Ill. Branch of Peoples Home Equity. Matthew focuses on growing his agents, as well as his team members’ business. Matthew helps add value to his agents by driving traffic to open houses, teaching methods to obtain fresh leads, as well as providing top notch service to all clients going through the mortgage process.

John G. Stevens Utah Area Manager Bank of England d/b/a ENG Lending Sandy, Utah www.engutah.com John G. Stevens is the proud father of three beautiful children and husband to his wonderful wife, Mindy. John dedicates his life to serving others, and making their lives easier. As the Utah area manager for the Bank of England, he works tirelessly to make the mortgage process easier for everyone involved. But if you ask him, he gives all of the credit to the amazing underwriters, processors and staff. John is also chair of the Utah County Planning Commission, a Rotarian, a Kiwanian, and an Honorary Colonel for the Pleasant Grove Police Department.

Tonya Beckley Todd SVP, Affordable Housing Programs Mountain West Financial Inc. l Redlands, Calif. www.mwfinc.com Tonya Todd leads the affordable housing team at Mountain West Financial, and is responsible for the company’s participation and involvement in downpayment assistance programs.

She works closely with non-profit organizations and Housing Finance Agencies (HFAs) to develop lending products that meet first-time homebuyers needs. Operationally, Tonya is responsible for the implementation, administration, and maintenance of these programs and works daily with internal divisions including loan underwriting, loan purchasing, secondary marketing and loan servicing to ensure programs are successful for both MWF and housing partners. Prior to joining MWF, Tonya worked for nearly nine years at Bank of America on the affordable housing team where she managed master servicing programs for HFAs, including all aspects of the CalSTRS Home Loan Program.

Luke Tomaszewski CEO/Chief Appraiser eValuation ZONE Inc. l Chicago, Ill. www.eValuationZONE.com Luke Tomaszewski has been spearheading the development of new forms for the valuation industry ranging from appraisal to BPO and inspection forms. Luke has recognized the growing need in today’s market for more technology driven valuation products. Due in no small part to the fact that the mortgage industry, on the whole, is working with forms and technologies that have been available for over a decade or more, Luke and his staff are bridging the gap of technology and today’s market demands. eValuation ZONE is a forward thinking company that is committed to being at the forefront of the appraisal and lending community for decades to come.

Matthew Vanfossen Chief Operating Officer Absolute Home Mortgage Corporation Woodland Park, N.J. https://matthewv.ahmcloans.com Over the past decade Matthew Vanfossen has built a reputation as an expert in centralized management, as he has successfully built and managed multiple entities in a multitude of industries including mortgage, real estate, insurance and technology.

With a combination of his creativity and technological skill set, Matt is responsible for all of Absolute Home Mortgage Corporation’s custom marketing material (both digital and print), corporate and branch Web sites, investor presentations, logo integration, internal corporate newsletter, as well as the overall corporate appearance and brand maintenance. Responsible for AHMC’s ever-growing branch platform, Matt has developed an easy to use and efficient environment that is attractive to both current and prospective branches of AHMC.

Neena Vlamis President A and N Mortgage l Chicago, IL www.anmtg.com Neena Vlamis is president and co-founder of A and N Mortgage. She had a personal volume of more than $110 million in 2013. Her razor sharp focus has led the company to an A+ Better Business Bureau rating since its inception. An inveterate problem solver with a passion for home mortgages, Neena thrives on finding the perfect mortgage product for each client’s financial circumstance and helping her team of consultants do the same. Whether patiently guiding clients through the mortgage process, educating real estate partners about new products or being mommy to her three children, ages 10, eight and four, Neena loves what she does.

Fowler Williams President & Director Crescent Mortgage Company l Atlanta www.crescentmortgage.com Domiciled in Atlanta, Fowler Williams, CMB joined Crescent Mortgage Company, a national wholesale and correspondent lender, in 1999. At Crescent, he has served as account executive, national sales manager, executive vice president of sales and operations, and since 2011, as the company’s president and as a director on its board. In 2014, Fowler was a featured speaker on compliance, technology, and profitability at various community bank and credit union organizations as well as at MBA’s Secondary Conference, Independent Mortgage Bankers Conference, and Annual Convention. He serves on the President Advisory Group, Membership and Community Bank Advisory Board for the National Mortgage Bankers Association and on the Customer Advisory Board of Freddie Mac. He holds the highest designation in the mortgage industry, Certified Mortgage Banker.

Jonathan Yosha Vice President of Secondary Marketing matchbox LLC l Woodbury, N.Y. www.matchboxllc.com Jonathan Yosha is vice president of matchbox LLC, where he is responsible for managing the Secondary Marketing Division.

Over the past decade, Jonathan has worked with more than 100 bankers to increase their gain on sales through operational, hedging and lock-desk efficiencies, along with proactive margin and pipeline management. His belief in utilizing technology to improve workflow, execution and management of departments has allowed clients to reduce risk and margin leakage/profit erosion and led to tremendous revenue growth, upwards of $100,000-plus per month. He has built lock desks, converted broker-to-bankers, and assisted lenders in obtaining GSE/Ginnie Mae approvals and implemented strategies/workflows to deliver to the agencies and create Ginnie Mae securities. He continues to proactively advise/translate industry changes across the country.

The Next 40 Mortgage Professionals to Watch …

Due to the numerous submissions we received for the “40 Under 40” list, there are those who are making serious waves in the industry who could not be overlooked. They, like those on the “40 Under 40” list, will be leaders in the industry for years to come, so keep an eye out for the following mortgage professionals as they continue to shape the industry:

Peoples Home Equity

Edwin Arocho

Senior Loan Originator

Maverick Funding

Jason Barto

Vice President of Sales

LoanDepot

Tony Blodgett

Regional Vice President

Jennifer Brabson

Marketing Director

Brian Call

President

Joe Caltabiano

Senior Vice President of Mortgage Lending

Neil Caron

Vice President of Retail Production

Michael Chan

Vice President

Nathan Chandler

Chief Operating Officer

Peter Citera

Director of Mortgage Education

John Clerkin

Vice President

Justin Dudek

Senior Loan Officer

Jessica Eden

Mortgage Banker

Mia Ferreira

Director of Compliance

Michael Gonzales

Branch Manager

Caleb Guillory

President

Robert Hart

Vice President of Strategic Partnerships

Dawn Holden

Vice President, Direct Lending Group

Matt Jolivette

Senior Vice President/Mortgage Broker

Joshua Jones

Branch Manager/Senior Loan Officer

Laura Lawson

Chief People Officer

Angie Lee

Senior Vice President, Corporate Communications

Lisa Lund

President

Jessica Manna

Founder

Brad Mauritzen

Vice President

George Ockovic

Branch Manager/Licensed Loan Originator

United Northern Mortgage Bankers

Jared Penn

Sales Manager

First California Mortgage Company

Christopher Picone

President/Owner

Joni Pilgrim

Director of Sales and Business Development

Jasen Portero

Senior Software Engineer

John Taylor

Project Manager

Stacie Jo Taylor

Senior Loan Officer

Randy Temple

Vice President of Technology

Tanya Themistokleous

Chief Marketing Officer

Ariana Veloz

Business Development Operations Manager

Kip Warzon

Senior Mortgage Consultant

Torrey Weiss

Vice President of Business Development

Wes Woodruff

Licensed Mortgage Advisor

New American Funding Village Mortgage Rubicon Mortgage Advisors Guaranteed Rate Freedom Mortgage ComplianceEase Linear Title & Closing Real Estate Institute matchbox LLC Supreme Lending LeaderOne Financial Peoples Home Equity Open Mortgage TagQuest Inc. ClosingCorp.

Umpqua Bank Home Lending Associated Mortgage Brokers Mortgage Master Inc. United Shore Financial Services LLC BLU Lending d/b/a MCS Mortgage Bankers Lund Mortgage Team Inc. Mofiya Envoy Mortgage

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Applied Business Software Hometown Lenders LLC First Guaranty Mortgage Corporation United Wholesale Mortgage The Closeline Companies Primary Residential Mortgage Inc. Inlanta Mortgage Peoples Bank Angel Oak Home Loans LLC

Just Ask

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By

Eric Weinstein & Laura Burke

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

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

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

Hugh from California asks …

I work as a loan officer for a big bank.

We have very strict quotas and I have missed mine for the last few months.

Recently, my boss asked me to come in and “talk” with him. I keep putting him off, but the whole thing gives me a nose bleed. What do I do?

Eric’s reply to Hugh …

You know there are other places to

work, right? Big banks pay low and expect large volume because they can.

Some loan officers feel they need the “credibility” of a large bank to get business. Not true. Many of my real estate agents could not even tell you the name of the company where I work. They send business to me, not some company. I am sure your customers feel the same way about you. My advice is to meet your boss and get it over. Move on to a small mortgage broker shop where volume is not as much of a concern because you work from home and cost them practically nothing. They usually pay more and that makes your “break even” volume less for them and yourself.

Never work a job where the anxiety causes you to physically hurt yourself.

No amount of money can compensate for that. What is the use of being the richest man in the graveyard?

Laura’s reply to Hugh …

Address the issue. Why is your volume down? Can you do something to improve it? Having a discussion with your boss will open the door to discuss options. Either he will be in a position to discuss solutions or options with you, or an alternative. If this is your first conversation of this kind, it should be more of the probing question kind; of what can we do to improve production. You

k Eric & Laura can then seriously review the situation and determine if you can improve production, and if so would you be willing to do what it takes to do so, staying with this company.

As Eric said some smaller companies may be willing to offer reduced production levels in exchange for working at home. However you may find that most do have restrictions due to the new laws of paying minimum wage, look before your leap. The grass may not always be greener, only different.

two years and my production was low.

I was approached by an associate in the business to move to another company that offers reverse mortgages. I have never originated a reverse mortgage, are they safe, true and can you make money marketing them?

Eric’s reply to Paul …

I have been doing loans for more than 20 years and have done, maybe two or

three in my career. On the other hand, at my old company Carteret Mortgage, we had an entire division of the company devoted to that and they did very well. Yes, they are a safe and true product that uniquely fulfills a niche in the mortgage industry for certain circumstances.

If the question is can “you” make money at it, meaning me, then the answer is “no,” But the answer may

be different for you. Reverse mortgages are geared to a certain segment of borrowers. My business is refinances, first-time homebuyers and real estate agent referrals. You don’t get many reverse mortgage customers from that. If you live in a retirement community, socialize with an elderly clientele or have an continued on page 59

Steve from Staten Island asks …

Do you think it is okay to send Christmas cards to my clients? I know that not everyone celebrates Christmas, so what should I do. I would like to say thank you for their business.

Paul from Chicago asks …

I have been a loan officer for about

n Georgia Mortgage Professional Magazine n DECEMBER 2014

Laura’s reply to Steve …

Nice statistics Eric! Only send Christmas greetings to those you are 100 percent sure celebrate the religious holiday, otherwise I suggest sending a generic holiday card, or New Year’s greeting. A simple “thank you for your business” card also works.

I do send Christmas cards to many of my clients, as well as generic cards.

Everyone likes a gift, so if gift giving, simply state: “Thank you for your business” then it is generic enough for even the “Grinch.”

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Eric’s reply to Steve …

Let me answer that with a question.

Would you think it is okay for me to send you a “Happy Hanukah” card? If you are like me, you would say sure. It is a nice sentiment, even if one doesn’t necessarily share the particular celebration. Some people, however, are easily offended, unlike us. Here is an interesting factoid, religion in the U.S. in 2013: 24 percent Catholic, 51 percent Protestant, two percent Jewish, and 23 percent other or no religious denomination.

Statistically, you have about a one in four chance of potentially upsetting someone. I don’t agree that they should be angry over a card, but that is why Baskin & Robbins has 31 flavors.

Everyone is different. Why take the chance? Just use the generic “Happy Holiday’s” card. This way you reduce your offense to only 23 percent of the population.

If, after all this, you are still hell bent to send Christmas cards, take comfort in the Rick Nelson song that says, “If you can’t please everybody, then …

Legal and Industry Developments: December 2014

By Melanie A. Feliciano Esq. Massachusetts Flood Insurance Notice Required If you are a lender and originate mortgages in the state of Massachusetts, a Flood Insurance Notice is required to comply with the disclosure requirements of new Section 69 under Chapter 183 of the General Laws of Massachusetts, which was enacted by Massachusetts House Bill 3783.

Section 69 provides that if a creditor or creditor’s representative requires in a mortgage, note or otherwise that a purchaser or owner of residential property purchase or pay for flood insurance on the property, the creditor or creditor’s representative and the insurance producer, as defined in section 162H of chapter 175, shall provide a notice to the purchaser or owner at the time the purchaser or owner of the residential property is notified of the need to purchase or pay for flood insurance.

Section 69 prescribes the language for the notice that needs to be provided to the purchaser or owner.

Note that the Massachusetts Division of Banks, Office of Consumer Affairs & Business Regulation, has provided a model Notice of Flood Insurance Coverage that is deemed to satisfy the requirements of Section 69.

The Division of Banks has also published FAQs regarding Chapter 177 of the Acts of 2014, which is a body of law intended to further regulate flood insurance.

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Single-Family Housing Guaranteed Loan Program Interim Final Rule, Effective Dec. 1, 2014 Published in the Federal Register on Dec. 9, 2013, 7 CFR Part 3555 Interim Final Rule (the “Rule”) which can be found online at http://goo.gl/HJi8pv, establishes a framework that updates, reorganizes and simplifies the Single-Family Housing Guaranteed Loan Program (SFHGLP). The Rule is designed to enhance the effectiveness of the SFHGLP by streamlining processes, reducing regulations, improving customer service and strengthening the United States Department of Agriculture’s (USDA’s) ability to manage the Program.

The new Rule is effective for all guaranteed loans issued conditional commitments on Dec. 1, 2014. The Rule has one technical handbook (HB1-3555) (the “Handbook”) that is to be used to administer the SFHGLP efficiently and ensure that legal requirements are met. The Handbook will contain Administrative Procedures currently in the existing rule, as well as guidance now published in multiple Administrative Notices (AN).

Note that the Rule requires a new Request for Single Family Housing Loan Guarantee Form RD 3555-21 (found online at http://goo.gl/CSc7Z1) to be provided to the applicant during the application stage of the loan origination process. Form 3555-21 serves to document that the approved lender, or their agent, properly screened a mortgage loan applicant on the General Services Administration SAM.gov Web site as part of their eligibility determination of the applicant. This “check” or screening should occur prior to the request for commitment and be no greater than 30 days prior to loan closing.

To access the Handbook and review all resources and materials related to the new Rule, please visit the USDA’s LINC Training and Resource Library online at http://goo.gl/4JA3Mx. Melanie A. Feliciano Esq. is DocMagic Inc.’s chief legal officer and currently serves as editor-in-chief of DocMagic’s electronic compliance newsletter, The Compliance Wizard. She received her JD from the Georgetown University Law Center, and is licensed in California and Texas. She may be reached by phone at (800) 649-1362 or e-mail melanie@docmagic.com.

SPONSORED EDITORIAL

the long & short continued from page 31

foreclosure requires a seven-year wait rather than the two-year wait after a short sale, per Fannie Mae and Freddie Mac Seller Guides.1 And recently, we are seeing Fannie Mae2 and Freddie Mac3 coming back after past short sellers for deficiencies, per the Sept. 24, 2013 FHFA Recovery Reports.

2. Foreclosure: The homeowner ceases to make payments or is turned down for a short sale. Credit is coded as a foreclosure which results in a seven-year wait for a new conventional mortgage.

3. Renting out an underwater home: Many did this years ago when a move from the home had to be done. However, many who rented are now preparing for a short sale, financially wiped out after years of making up the difference between rent received and the mortgage payment.

Many tried this option hoping to eventually have enough equity to sell the home without a loss. However, the rate of appreciation has not happened quickly enough, and those who are still trying to dig out of these properties often have little or no choice but to short sale. And for those underwater homeowners trying to stay in their home, a refinance available called HARP 2.0 has had limited success because many lenders cap the amount of negative equity … for a program that has no cap on negative equity! And, if you have a conventional mortgage that is not owned by Fannie Mae or Freddie Mac, there is no refinance for you.

So how do you answer the common perception that “those who are underwater got there on their own accord” and “what will be done for all who are NOT underwater?”

Here are the answers: l Be grateful that you are not in the shoes of those still underwater, that your credit is not wrecked, and that you can get on with your life. l U.S. Housing: Seriously work on and get implemented HARP 3.0, or an alternative refinance plan that allows unlimited loan to value (like it is supposed to!) for all conventional mortgages including Fannie Mae and Freddie Mac. Give a pricing incentive to lenders who apply REAL written guidelines to these loans, instead of so many overlays and limits that fewer homeowners can get any benefit.

This is not a handout. These are performing loans and banks will make a profit while building goodwill. l Don’t take advantage of these folks, who are either locked out or

still having trouble getting a conforming mortgage, even though Fannie Mae and Freddie Mac have specific rules that allow these mortgages. Non-QM mortgages at higher rates have come into the mortgage marketplace and qualified consumers must often settle for a higher rate with non-QM lenders even though they meet criteria for a new mortgage with Fannie Mae and Freddie Mac. l Pay attention to the credit of these consumers that is being destroyed!

There seems to be little regard for credit that continues to be screwed up for folks who have gone through a short sale. Credit is the key to the growth of our country. New credit products promising better service continue to be pushed, while consumers with credit problems who have proof of the real credit have to pay enormous amounts of money just to get corrections. l Stop ignoring the underwater mortgage problem and judging those affected as “strategic defaulters en masse.” The majority of those affected are trying to get on with their lives and want to contribute. There will always be takers, but4 reporting of strategic default has been over stated. l Ask these folks what really happened, and you will hear unbelievable stories of hardship where great thought went into how to dig themselves out. l States that have Hardest Hit Funds available for underwater homeowners need to promote this.

For all homeowners who are not underwater, be damn glad you are not.

Pam Marron is senior loan officer with Innovative Mortgage Services Inc. She may be reached by phone at (727) 375-8986 or e-mail pmarron@tampabay.rr.com.

Footnotes 1—Requirements for an FHA, VA and USDA mortgage are different.

2—“FHFA Can Improve Its Oversight of Fannie Mae’s Recoveries from Borrowers Who Possess the Ability to Repay Deficiencies,” FHFA Inspector General (http://fhfaoig.gov/Content/Files/AUD2013-011_0.pdf).

3—“FHFA Can Improve Its Oversight of Freddie Mac’s Recoveries From Borrowers Who Possess the Ability to Repay Deficiencies,” FHFA Inspector General (http://fhfaoig.gov/Content/Files/AUD2013-011_0.pdf).

4—“Unemployment, Negative Equity, and Strategic Default,” Federal Reserve Bank of Atlanta, August 2013 (http://www.urban.org/events/upload/Ger ardi-Kerkenhoff-Ohanian-WillenStrategic-Default.pdf).

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“in” with that market, then yes, I think it is viable opportunity.

Laura’s reply to Linda …

Your husband gets to claim the home office, he is running a home-based business from home, and you may not be. However, you may be able to write off the cost of paper, business cards, phone, computer and fax by a percentage that is equal to your use. He takes the home deductions on the actual space if he is using it solely for his work. You may eventually want your own computer somewhere else in the house as the room he is using is to be exclusively for his business. The IRS doesn’t care if it is in the basement, or the garage is set up as an office, the two biggest criteria the IRS is looking to see that you meet are: You must use the area regularly and exclusively for a trade or business, and you must be able to show that you use the area as your principal place of business, or meet clients or customers there.

I do and I don’t agree with Eric, the IRS is not an entity to mess with, as they are the only gun toting government agency allowed to levy your bank account without a court order.

With that being said, you also want to claim the deductions that you are entitled to, which is why there are people like me, to make sure that every person is entitled to their legal tax benefits without the IRS imposing inaccurate penalties. They would never do that, would they?

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Laura’s reply to Paul …

I personally think reverse mortgages are a great tool for those 62 years of age an older to help plan a retirement strategy. It is a great way to pay off an existing mortgage and have no payments, it can also allow much needed renovation or repair, and can simply give a person over the age of 62 some financial freedom. With that being said, I believe that you would need to take a class on how to originate a reverse mortgage, to fully understand how they work and what is involved.

As Eric said, your leads would come from different sources. But I think Eric sold it a bit short by stating if you live in a retirement community. A reverse mortgage is for anyone over 62 years of age and meets certain criteria, and credit is not one of the criteria. I believe all communities have single family, or town houses that are owned by baby boomers 62 and older.

There are many avenues to market for the reverse mortgage loan, and yes they can also be used to purchase a home. Real estate agents should know they are available to their clients. I would venture to say many roofing companies, and other home repair companies would also like to include reverse mortgages as a viable, tool for a mortgage for some seniors who need the work done, and cannot afford to increase their monthly payments.

My answer is yes, check it out, they are truly good, and useful mortgages, and bring with them a good income for those originating them.

close fourth. For what will amount to less than $1,000 in tax savings, why would you possibly want to pull the tail of that tiger? My advice is to seek the advice of a qualified tax accountant. His advice will to probably be to seek psychiatric care for even suggesting the idea.

Linda from Kansas City asks…

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

www.LykkenOnLending.com

n Georgia Mortgage Professional Magazine n DECEMBER 2014

Disclaimer: All answers are for informaI am a loan officer and use my home tional purpose only, and are not office a lot for business, but my hus- intended to practice law, or provide tax band also runs a home-based busi- advice or tax opinions. After reviewing ness from home too. Can I still claim our information we recommend seeking the home-based business deductions legal counsel or the advice of a tax protoo, if we use the same desk and fessional. computer?

Eric Weinstein worked in banking, on the commercial real estate side until Eric’s reply to Linda …

Since the expenses you are deducting 1991, when he fell in love with residenmust be used “exclusively” for your tial lending. In 1995, he started a small business, be sure your husband is not mortgage company in his basement already claiming them as a deduction. called Carteret Mortgage Corporation, Obviously, the IRS will take a dim and which in 2003, grew to one of the litigious view of you deducting the largest mortgage broker companies in same items twice, including the floor the United States. He may be reached by space of the area you use. It has phone at (703) 505-8692 or e-mail ewealways been my long held solemn instein4u@gmail.com. Laura Burke is an opinion that there are three groups of author and trainer with 20-plus years of people you don’t antagonize: The experience in the mortgage arena. She mafia, space aliens and the IRS. may be reached by e-mail at lauraUnwashed muscular bikers come in a lynnburke@gmail.com.

Third-Party Risk Levels: Not Every Vendor Should be Treated the Same

By Andrew Liput

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When the Consumer Financial Protection Bureau (CFPB) issued Bulletin 2102-03, forever changing the way that banks and lenders nationwide look at third-party relationships, they offered only a bare outline of detail regarding what that risk management should include. The general directive included: Risk evaluation, ongoing monitoring and verification of internal controls. Since then, lenders have tended to interpret these requirements in ways that reflect their own risk appetite and compliance culture. Some seek to merely “check the box,” while others are intent on crossing every “T” and dotting every “I.” Clearly, not all vendors are alike, and while there has not been any written guidance on the matter, comments from the CFPB seem to imply that a company should address the risk of a third-party vendor in relation to the level of potential harm they might cause to a consumer. Therefore, it is logical to assume that there is a qualitative measurement of risk that a lender can perform and thereby place third parties in different risk buckets, applying different risk management standards to each bucket in relation to the risk level associated with the activity. For example, a vendor who has no access to a lender’s consumer data and records should obviously be evaluated differently than one who did.

The highest risks are generally third parties who have access to consumer data, as well as those who interact directly with consumers in the loan process. This group should include IT consultants, appraisers, mortgage brokers and settlement agents, among others. The lowest risks should include very large, well-capitalized and highly managed entities such as investors, national title underwriters and large accounting firms. Space does not permit me to expound further and discuss all the different risk levels and groups however it is worth noting that our research makes it clear to us that settlement agents are the highest risk third-party vendor a lender will encounter.

The reasons for this are logical and easy to enumerate.

Settlement professionals, including attorneys, escrow agents, title closers, notaries and others who handle funds disbursement and documents at a closing, have access to more sensitive data and documents than anyone else, while also having access to the mortgage proceeds. This places them in perhaps the most critical, and therefor the highest risk area in the loan process.

The fact that most lenders have fraud technology which helps them identify bad actors and other risk factors at the front end of the manufacturing process (origination, processing and underwriting) and rarely any type of tool at the back end (closing and post-closing) makes the vetting and monitoring of settlement agents perhaps the highest priority for any lender today.

Need more proof? An independent study conducted by the Financial Crimes Enforcement Network (FinCEN), which is the official repository for industry Suspicious Activity Reports (SARs) filings, found that over the past five years, escrow and settlement services are the largest and fastest growing areas of mortgage fraud. Given the fact that the industry has embraced complex and effective front end fraud deterrence and prevention tools for years but is only now beginning to embrace closing and settlement fraud programs, the report is not surprising. However, the good news remains the continued progression towards widespread settlement agent vetting, monitoring and reporting that is currently transforming the settlement industry. It is weeding out bad actors, encouraging best practices, and providing lenders with critical data to help them make better choices for closing services. Everyone wins in the end: Lenders, agents and consumers.

Andrew Liput has been a corporate, real estate and banking attorney for more than 25 years He is the founder, CEO and president of SSI, the first data intelligence and risk analytics firm to offer specialized vendor management services addressing settlement agent risk to mortgage lenders and banks nationwide.

He can be reached by e-mail at aliput@securesettlements.com.

SPONSORED EDITORIAL

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mation in the 1940s, Mid America has created a substantial footprint in the mortgage industry as a nationwide lender licensed in over 40 states with more than 300 employees.

Bode anticipates substantial cost savings from combining the two organizations. Cost reductions will come from a variety of sources, including the reduction of overlapping technology and the cost-effective management of vendor relationships and marketing expenses.

Further, the utilization of Mid America’s proprietary software system, Mortgage Machine, will open doors for Affinity’s operations staff. In addition, Affinity is expected to benefit by leveraging Mid America’s broad product set to deepen relationships with existing Affinity customers. Similarly, Mid America is expected to benefit from the 21st century marketing strategies currently employed by Affinity with realtors, builders, and affinity groups across the country.

Guild Mortgage Opens New Branch in Memphis Guild Mortgage Company, one of the fastestgrowing independent mortgage banking companies in the country, has opened a new branch in Memphis, its first in Tennessee, as part of its planned expansion into the Southeast. Guild Mortgage, founded in 1960 in San Diego, operates more than 250 branch and satellite offices in 23 states and generated a loan volume of $7 billion in 2013. The new branch in Tennessee marks the 20th branch in the Southeast.

Tim Smith, who has more than 17 years of experience as a top-producing sales manager, has been named branch manager of the location. Prior to joining Guild, he was the producing sales manager for American Mortgage Service Company, and prior to that he owned and managed First Choice Mortgage Services for 10 years.

“After speaking to several other mortgage banking companies, I found that Guild offered an outstanding selection of mortgage products that are perfect for the Memphis market,” said Smith. “Guild is a cultural match as well. They have advanced technology for handling every part of the loan process and a strong customer service ethic. I’m pleased to join such a strong and constantly evolving company.”

Guild Mortgage has grown from a single office in San Diego to become one of the leading independent mortgage banking companies in the country because of its entrepreneurial culture, quality of people and commitment to customer service. Guild offers a traditional range of residential mortgage

products and funds most of its loans, which provides consistency and also speeds approvals. It has pioneered programs to help first-time homebuyers achieve their dreams of home ownership, often through government loan programs, helping responsible people obtain a loan.

Valuation Partners Integrates With LendingQB

Valuation Partners has announced its integration with LendingQB’s loan origination system (LOS). Lenders using LendingQB now have seamless access to Valuation Partners’ line of compliant appraisal products and services. The integration will enable lenders to order appraisals from Valuation Partners from within LendingQB, reducing appraisal order time and duplicate entries. From a dropdown option on the LendingQB screen, a click of the mouse on the Valuation Partners button quickly places an appraisal order.

Without leaving LendingQB, lenders also can receive automatic status updates, and receive and upload completed appraisal reports. Valuation Partners’ quality control and appraisal review is included. In addition, appraisal invoices can be sent directly to specific lender branches on LendingQB. “Our new integration with LendingQB gives our current and prospective lender clients direct access to Valuation Partners appraisal products and services without having to use more than one system,” said William Fall, CEO of Valuation Partners.

“Lenders around the country using LendingQB now can save time and money by leveraging our strong geographic valuation expertise.”

Altisource Acquires Owners.com to Expand Online Business

Altisource Portfolio Solutions SA has announced it has acquired the Owners.com business to expand Altisource’s growing position in the residential real estate industry. The acquisition adds an innovative, flat-fee MLS service to Altisource’s offerings, enabling the company to serve the fastgrowing category of limited service home sellers. Owners.com will operate alongside Altisource’s online real estate auction marketplace, Hubzu.com.

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new to market continued from page 18

CoesterVMS Releases New Appraisal Quality and Compliance Tool

Quandis Launches New Site to Assist Military Personnel Quandis Inc. has announced that it has launched a Web site to help address President Barack Obama’s New Executive Actions to assist military servicemembers, veterans and their fami-

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CoesterVMS, a provider appraisal management and technology, has launched Appraisal Intelligent Review (AIR) system for the lending and appraisal industries.

The system gives lenders and appraisers full access to CoesterVMS’ robust system so they can take advantage of its quality control, analytics and compliance tools.

AIR is currently available for all of CoesterVMS customers and vendors.

AIR helps lenders and appraisers with the general appraisal requirements for Fannie Mae and FHA and assists with lender, investor and property specific overlays all from one end-to-end system built by CoesterVMS’ research and development team.

“It walks lenders step by step through the appraisal process and tells them what was wrong with the report, what we did to address it, what the appraiser did to address it as well as walk them through a customized review process that’s very user friendly and requires almost no training,”

said Brian Coester, chief executive officer of CoesterVMS. “The system is also fully scalable to any bank, investor, state specific or lender requirement and will be much more detailed than most quality control systems available on the market today.”

CoesterVMS offers system access to appraisers directly. This is an effort to give the appraisal community an advantage when working with various lenders and investors. AIR ensures the scope of work and specific lender and investors requirements are met before the report is sent to the AMC, and ultimately, the lender.

lies. In an official release issued by the White House, President Obama outlined a program termed a “voluntary partnership” with financial lenders across the country to help deliver important financial and home loan-related protections to the military community. Part of the program is to prevent foreclosures on active duty personnel in accordance with the Servicemembers Civil Relief Act (SCRA) of 2003 by proactively querying the Defense Manpower Data Center (DMDC) for status no less than once a quarter, according to the White House.

As a result, Quandis has launched QSO (Quandis Servicemember Outreach), a Web site with back-end technology that

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mortgage-backed securities (MBS), powered by the REALPortal platform.

Ocwen uses the REALPortal platform, licensed from Altisource Solutions, to provide mortgage investors with access to the most accurate data on loans serviced by Ocwen, as well as analytical tools and details on processes, procedures and loan performance. The relaunch addresses a variety of requests from mortgage loan investors to enhance functionality, access to data and bandwidth. Additional functionality is being planned for near-term implementation.

REALPortal is fully searchable by MBS deal name and includes loan-level data for each active, Ocwen-serviced, transaction from the date Ocwen began servicing the deal. The database was compiled over the last ten years and was recently beta tested with enhanced user functionality, improved bandwidth and open access to more data.

“Ocwen strives to be the most transparent mortgage servicer in the industry, and to provide mortgage loan investors with valuable data and analytics to support their portfolio management process,” said Ronald Faris, president and CEO of Ocwen. “The broad re-launch of REALPortal offers Private Label MBS investors granular loan data and analysis on mortgages collateralizing more than 3,000 MBS transactions.”

Access to Ocwen’s REALPortal service is free, and interested parties can register a log-in and password at www.realportal.com. Ocwen will provide a training Webinar for interested investors in the near term.

“CoesterVMS has always had a great system and built technology that we really need as a lender,” said Saudia Casper, director of quality control at First Mortgage in Ontario, Calif. “AIR is something that we couldn’t be more excited about as a customer, as it will really help us maintain a full-spectrum quality control system.”

New Hybrid Marketing Methods The new age of Internet-generated leads has become saturated. Mortgage professionals are being told they are buying one type of lead and then received something completely different. Since its inception in 2011, the Consumer Financial Protection Bureau (CFPB) has been cleaning house in the financial sector with a keen eye on the mortgage industry. The Internet is the only place they have not conquered. With predatory lending gone, along with those who practiced it, there has been major growth in new marketing methods.

The term “marketing” has become almost synonymous with compliance. This doesn’t mean you have to stay away from it. In fact, it’s been one of the main reasons marketing efforts are working so well today. With so many hoops to jump through, a lot of people are simply staying away from marketing all together. New marketing campaigns are combining traditional marketing methods like direct mail and telemarketing and integrating online additions to them. These new hybrid campaigns allow recipients to respond by phone, mail, e-mail or online. Combining the old with the new, these methods are producing response rates that are higher than we’ve seen since 2010!

Mortgage direct mail response rates are back over one percent (VA excluded). The TCPA amendments that took effect in late 2013 have brought increased results due to less market saturation. The new rules don’t allow the use of robo-dialers. If you’ve ever used outbound dialing as your source for new leads (without robo-dialers) now is the time to get back to it. For the first time since 2010, we’ve seen acquisition costs (per closed loan) under $500 with these forms of direct marketing.

The first quarter of 2015 is predicted to be the biggest quarter in the mortgage industry since 2012! With the New Year comes new opportunity.

January is the time to get back into the mortgage business. If this is your plan, get educated on these new hybrid marketing campaigns now, and bring yourself unsurpassed growth in 2015.

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TagQuest Customer Spotlight Each month, we talk with our clients to see how their campaigns are performing. Here’s what heard from Chris D., a California mortgage lender. l Product: Direct mail l Volume: 20,000 pieces per month (5,000 per week) l Response rate: 1.35 percent (270 phone calls) Highlights of the campaign that work well for you “We just switched from live transfers and we really like being able to customize our own criteria and lower our lead cost.”

Highlights that might appeal to other mortgage professionals “Higher return-on-investment and consistency that we can depend on.”

Based in Medford, Ore., TagQuest Inc. is a full-service marketing firm developed throughout the ever-changing mortgage industry. Utilizing industry knowledge, marketing expertise, and technology we implement any or all aspects of your marketing and/or advertising campaigns. With a proven track record, more than 10 years in business, and decades of experience TagQuest knows what it takes to produce unprecedented results in today’s fast-paced mortgage environment. For more information, call (888) 7178980 or visit www.tagquest.com.

SPONSORED EDITORIAL

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allows lending entities to easily upload and scrub their loan portfolios in order to accurately identify active military service members. QSO performs detailed data scrubs of the Department of Defense (DoD) Web site that includes name permutation, validation and normalization. This means that all possible active duty military personnel name variations and statuses are checked to ensure SCRA compliance.

“The White House has spoken loud and clear: Banks and servicers must make every possible attempt to locate active military personnel, make them fully aware of their benefits, and adhere to the SCRA,” said Scott Stoddard, chief executive officer of Quandis Inc. “It is completely remiss of banks and servicers to ignore the White House’s request to partner with them and bring relief to service members, veterans and their families.”

QSO also arms servicers and banks with information to proactively reach out to individuals that have been identified as being eligible for various benefits under SCRA, notify them of their options, and simplify the application process. QSO provides dashboards and reporting for each search activity and a history log along with the ability to generate docs, reach out to borrowers via e-mail, and track outreach program efforts and responses.

VirPack Launches New Doc Portal to Assist Borrowers and Lenders VirPack has announced the launch of its Borrower Portal product, a Web portal that enables lenders using VirPack’s Document Management and Delivery System to provide their borrowers with a variety of Web-based capabilities to make the lending process more efficient and secure. The VirPack Borrower Portal presents borrowers with a list of documents they need to provide to the lender based on the loan type and purpose. Borrowers can securely upload the requested documents, securely download documents sent to them by their lender, monitor loan status and exchange secure messages with their lender and other loan participants.

“Our aim was to develop a Web portal for lenders to provide to their borrowers to reduce the time required by both the borrower and the lender during origination, loan processing and underwriting,” said Cy Brinn, chief operating officer at VirPack.

Through the use of VirPack’s Borrower Portal, lenders save time gathering documents and communicating with their borrowers resulting in a higher level of customer service that strengthens their borrower relationships. Internally, after a document is uploaded to a lender through the Borrower Portal, one or more lender staff receives notifications that the documents have been added to the borrower’s file.

Lenders can use the Borrower Portal to request additional documents from the borrower and borrowers are able to go online to track their loan status and stay

up to date with document requests and messages.

DST Adds Custom Tasks to DispoSolutions REO Platform

Default Servicing Technologies LLC (DST), creators of the DispoSolutions REO management platform and the ValuationSolutions enterprise collateral valuation management technology, has announced that users of the company’s software solutions can now add custom tasks, adding an unparalleled level of flexibility to the tools.

“Now that the servicing industry is more experienced with short sale and REO workflows, they have developed their own internal processes for these departments,” said Amy Bergseth, vice president of operations for DST. “They want software that will allow them to continue to use the workflows they have developed and perfected, but that can also track that work in order to maintain a compliant audit trail.

Going outside of the software opens up the company to non-compliance risk, but servicers don’t want to be shackled to the functionality built into a technology platform. Our new custom task feature solves these problems.”

Building on the software’s existing task customization features, the upgrade allows real estate-owned (REO) staff administrators to design and create tasks directly through their accounts. Users can build tasks section-by-section by adding fields such as headings, text boxes, photo upload, document upload, calendar widgets and more. Once added, setting additional options in each field can make custom tasks as simple or comprehensive as required for the client’s workflow. When launched, custom tasks provide a powerful new tool for collecting data from agents, closing companies and other staff members within the workflow.

DST’s Web-based software is compatible with all mortgage servicing platforms and can be easily integrated into other legacy systems as required. To receive a copy of the most recent release notes or to see a demo of the software, contact the company.

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

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1.800.649.1362 I www.DocMagic.com

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What to Expect From the Mortgage Industry in 2015

By Matt Hankins

M

ore than eight ye a r s have passed since the worst housing market crash of all time occurred in the United States.

Following the burst of the housing bubble in mid-2006, we entered a severe recession and subprime mortgage crisis. In the years since, we’ve seen home prices fall, foreclosure rates rise and mortgage delinquencies soar.

Despite those challenges, the housing market is making a slow and steady (albeit sometimes bumpy) recovery. According to CaseShiller, data prices have returned to price levels consistent with the end of 2004, wiping out a decade of home price appreciation for American home owners.

As 2014 comes to an end, now is an opportune time to review the major developments and data that emerged in the mortgage industry over the course of the calendar year.

While it wasn’t the absolute worst of years, it was one of the worst that mortgage professionals have seen in the last two decades. What follows is a look at 2014 trends and 2015 predictions.

Trends over the past year More all-cash offers are on the table All-cash buyers peaked in the first three months of the year at 33 percent of the market. According to recent data by RealtyTrac, all-cash sales accounted for 33.9 percent of all sales of single-family homes and condos nationwide in the third quarter of 2014. This trend suggests to me that the pendulum has swung too far on underwriting and credit, thus making the industry extremely unfriendly to consumers. As a result, a larger portion of buyers are still paying for homes in all cash.

While it is easy enough to think this trend is being driven by investment firms buying real estate-owned to rental properties with large insti-

tutional funds, there are other factors to consider. Currently, distressed sales are at all-time lows, which suggest that a good portion of these buyers are regular people paying all cash.

Perhaps there’s a subtle warning to heed here: If we don’t as an industry become more user-friendly in a world where “ease of use” changes at the speed of light, our industry as we know it may very well be displaced.

A harsh reality for first-time homeowners The reality is this: First-time homeowners are going to have a very difficult time getting a mortgage.

According to the National Association of Realtors (NAR), firsttime home purchases are now at record lows. They have accounted for only 28 percent of existing home sales year-to-date; that’s six percentage points below the five-year average and well below the long-term target of 40 percent. There are two main reasons for this.

First, 24-35-year-olds were hit hard by the recession. This is the age group that typically makes up the majority of first-time homebuyers.

Additionally, today’s recent college graduates are first and foremost focused on getting jobs and paying off their college debt; they’re not thinking about buying a home in the near-term future.

The second reason is the Federal Housing Administration (FHA). One of the things the FHA does is provide mortgage insurance to first-time homeowners. During the financial crisis of 2008, the FHA was essentially forced to raise its fees to cover a number of defaults. However, years later those fees have not been lowered, making it difficult for potential and worthy buyers to purchase a home.

If we expect the housing sector to someday make a full recovery, firsttime homeowners need to be supported, not discouraged.

Volumes are way, way down Since peaking at nearly $4.2 trillion

“… today’s recent college graduates are first and foremost focused on getting jobs and paying off their college debt; they’re not thinking about buying a home in the near-term future.”

REcharge!! Get ready for 2015 with NAPMW

between 4Q’02 and 3Q’03, mortgage originations have fallen off more than 70 percent. The $1.2 trillion of total volume in the past 12 months (4Q’13-3Q’14) is actually the lowest such stretch in 14 years. This trough in originations has been driven primarily by refinance volume, or rather the lack thereof. After climbing to seven-year highs in 2012, refi volumes have crashed to a third of what they once were.

The one bright spot seemed to be purchase volumes, which in 2013 reached pre-recessionary levels at $730 billion. However, even that was short-lived, as purchase originations are down 10 percent in just the past nine months. So while the purchase market now comprises more than 60 percent of all mortgage originations, the highest level since 2000, the outsized proportion is skewed by the depressed denominator in the equation. All in all, it has not been a fun year for mortgage shops, whether purchase or refi oriented. Maybe more worrying—next year’s outlook appears equally as bleak.

The year of the borrower My hope is that 2015 will be the year of the borrower. I hope as industry professionals we focus on making our product easier to consume while maintaining our underwriting standards. Those who succeed in this approach will likely capture the share the banks are shedding and also steal share from others in what is projected to be another soft year for industry volumes.

Matt Hankins is a principal at growth equity firm Sterling Partners who focuses primarily on financial servicesrelated investments. His representative portfolio companies include Pingora Asset Management, a specialized manager of mortgage servicing rights, and Prospect Mortgage, an independent residential retail mortgage lender. Prior to Sterling, Matt worked at Metropolitan Capital Bank and JPMorgan. He can be reached by e-mail at mhankins@sterlingpartners.com.

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2015 trends and predictions

Private securitizations The industry saw a little more than $5.1 billion in private label securitizations through September 2014, down almost 60 percent from the comparable period in 2013. Between the regulatory environment, the rating agencies, hesitant lenders, and other uncertainties, it seems unlikely that this sector of the market is ready for a rebound this calendar year.

Similarly, the most talked-about, least-executed transaction on Wall Street may be non-Qualified Mortgage (non-QM) loans. Lack of data in this sector indicates the trend has failed to live up the hype, likely due to market uncertainties.

That said, after years of downplaying the market opportunity for private securitizations, 2015 may be the year of the private securitization. Now that the prime jumbo sector of the market appears to be competitive, lenders are looking for other niches through which to secure product. As an investor in a nationwide originator, I frequently field calls from investors looking for product, and I therefore predict that this market will open up next year.

The National National Association Association of of

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Smaller banks and independents are poised to reap big rewards Since peaking in the second quarter of 2012, the top five banks have dropped from 53 percent of origination market share to 33.3 percent in the first quarter of 2014. This bodes well for independents or smaller banks. In a $1 trillion market, this means there is roughly $197 billion in origination that is up for grabs—a scenario that would not exist had the big banks not shed share.

This same trend also occurred in servicing, where the top five banks dipped from 64.6 percent to 55.5 percent over the same period of time. This leaves approximately $700 billion of unpaid principal balance there for the taking.

Low interest rates don’t infer more home purchases Several times in 2014, the Mortgage Bankers Association (MBA) reported that applications for U.S. home mortgages rose as refinancing picked up following a sharp drop in interest rates. However, the interest rate environment is actually a poor indicator of when someone will purchase a home.

In reality, a low interest rate is surprisingly not a large deciding factor when it comes to a purchasing decision, like it is for a refinance decision. There are other, more powerful incentives that cause consumers to buy a home, such as access to credit, household formation, employment and broader affordability, including home prices and rental rates.

“With 1,888 pages of identifying requirements and over 400 regulation citation changes, the TILA-RESPA rule is being called an industry game-changer.”

TILA, RESPA and the Year Ahead Five steps toward compliance with this new regulation

By Kris Stewart

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Although Aug. 1, 2015 might seem distant, the risks surrounding the new Truth-in-Lending (TILA) and Real Estate Settlement Procedures Act (RESPA) integrated disclosure rule are higher than ever. In meeting these requirements, your financial institution will need to start making changes now to stay ahead

of the rule and ensure they are sufficiently prepared.

What exactly is changing? In a nutshell, the new rule consolidates four existing documents into two new disclosures. The early TILA disclosure and traditional good faith estimate will be combined into a new disclosure called

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the “Loan Estimate,” and the final TILA disclosure and HUD-1 Settlement Statement will be consolidated into a new disclosure called the “Closing Disclosure.”

At first glance, the change may sound deceptively straightforward.

Keep in mind these changes represent the most significant revisions to these rules in 40 years, which means that the regulation will affect U.S. mortgage lenders in unprecedented ways.

With 1,888 pages of identifying requirements and over 400 regulation citation changes, the TILA-RESPA rule is being called an industry gamechanger. The new rule includes detailed requirements for producing and delivering the two disclosures in ways that will impact your entire mortgage operations, including your business processes, technology, policies and procedures, vendor relationships, employee readiness and customer service. Additionally, failure to comply with the rule could result in astronomical fines and penalties, costing you thousands of dollars each day and lost business.

With so much at stake, it is critical that lenders develop a plan, not only to implement the document changes required by the TILA-RESPA integrated disclosure rule, but one that also addresses how you intend to manage the operational and workflow changes that will follow.

However, with a regulation of this magnitude, the longer you wait, the more at risk your organization becomes. Lenders are encouraged to start planning immediately (if it is not already underway) as the consequences of inaction or inadequate preparation are significant.

The following five steps offer guidance on what your organization should be doing now to ensure readiness by the mandatory compliance date.

1. Prepare to test, test and test again As vendors begin to alert banks as to when they will receive their system updates, now is a good time to begin building out your test plans and test

cases. Most system updates are expected to arrive during the first quarter or early second quarter of 2015. Given the magnitude of this change, it’s important that you keep in touch with your systems and document vendors to ensure they are committed to delivering your system updates in a timely manner.

So, what do you need to think about in terms of preparing for testing? The first step is to plan to understand and test the documents. The Loan Estimate and the Closing Disclosure are documents that are dynamic in nature. The content in the documents will vary based on features of your loan products. Test cases will need to take into account what aspects of your products will cause variation in the content of the disclosures.

Remember, it’s important to put a plan in place that tests both your documents and workflow changes. For example, the regulation requires delivery of the closing disclosure no later than three business days prior to consummation. You’ll want to ensure that your process works to deliver a final document in time to meet this requirement. While you cannot use the new documents prior to Aug. 1, there is nothing preventing you from providing the existing disclosures early. So once you’ve identified how you are going to handle process changes, look for ways to test early and refine.

2. Prepare the front and back office Prior to receiving the system update, lenders should finalize how they intend to work with mortgage brokers on the front end and title agents on the back end. It is important to iron out who is going to produce the required documents and what the new workflow process will look like. Ultimately, the lender is solely responsible for the accuracy of the disclosures, so taking the time to resolve these issues now will prevent big headaches later.

3. Employee readiness Although the specifics may vary by

organization, training will likely be necessary for your loan officers, processors, closing agents, notaries, quality control (QC) staff, and compliance and vendor management teams.

Ideally, lenders should begin orienting staff early to make sure your team is gaining a general understanding of what’s changing. With changes of this magnitude, it’s often helpful to set the stage early from a training perspective and then provide the detailed, role-specific training closer to the effective date of the change.

Repetition helps! Although user training is at a later stage, it’s not too early to start developing your training plan, outlining dates for execution and determining the materials you’ll need to support it. However, when it comes to your training materials, don’t rein-

vent the wheel. The test cases you executed earlier are excellent resources to leverage for training.

4. Evidence of compliance Record retention is a critical aspect of TILA-RESPA compliance, as it demonstrates a lender’s adherence to processes, such as timing requirements, and not just the documents themselves. However, it can get confusing as different documents require different retention periods. The general rule for the Loan Estimate disclosure is to retain records for three years after consummation which, remember, is not the date it was issued, but when the loan was consummated. The Closing Disclosure record retention is five years after

consummation. If the loan is sold or transferred, both the creditor and the transferee have to retain records for the remainder of the five years.

Because of the lengthy retention periods, lenders need to ensure they have the storage capacity to manage this, making electronic file storage your best bet.

5. Improving the customer experience Most importantly, you’ll need to prepare your organization to ensure this transition is as seamless as possible for customers. With the TILA-RESPA threeday timing requirements, it’s more vital than ever to get your initial and closing disclosures to borrowers on time. Make sure that employees in customer-facing roles fully understand the revised docu-

ments, the new timing requirements, and any other details that could negatively impact the customer experience.

The five steps outlined above provide an excellent starting point as to what you can be doing now to prepare.

Regulatory changes like TILA-RESPA are huge events, and managing the implementation can be challenging.

Although it might be tempting to dive right in, it is important to take a step back and put a solid plan in place that will help you effectively manage your TILA-RESPA implementation from start to finish.

Kris Stewart is principal regulatory consultant and senior manager of Compliance Professional Services for Wolters Kluwer Financial Services.

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“To many business owners, abandoning set goals for growth or metrics and instead focusing on improving our customer and loan officer experience may seem scary.”

The Year 2015: A Focus on Recruitment and Retention

By Kelly Resendez

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Every year, leadership teams in the mortgage industry face similar questions in respect to business planning.

The fear of rising interest rates has typically driven that conversation and perpetuated a need to build market share within the purchase world.

For 2015, however, my organization has chosen to do something different—to not let the fear of rising interest rates drive business decisions or overarching strategy.

Our main goals in 2015? Remain nimble; reduce friction for our clients and within our organization while focusing on retention over recruitment.

We recognize that the ever-changing rate environment will continue to be just that: Ever-changing. We have simply decided to not let it scare us anymore or serve as the impetus for our actions. We will instead focus on building a strong, sustainable culture internally to bring in and retain customers, rather than focusing solely on the market share.

sales experience, we also offer our mortgage consultants the ability to take leads while developing their database and referral partnerships.

While both recruitment and retention are both equally difficult right now, it is vital to focus on both.

Looking internally: To many business owners, abandoning A focus on culture Planning for 2015

set goals for growth or metrics and instead focusing on improving our customer and loan officer experience may seem scary. However, we believe that the prior can actually cause pain. If you look at most companies, they haven’t really gained much if they didn’t have an emphasis on retaining and developing their current sales team. If a company doesn’t have an environment to keep a loan officer fulfilled and challenged, neither the company nor the loan officer benefit and it isn’t a useful setting for the long-term.

In a recent conversation with Jeff Babcock, managing director at Stratmor Group, he shared, “Over the last few years, loan officer recruiting has been a zero-sum game of musical chairs with an aging set of players.”

As we expect the recruiting market to become more competitive, we are positioning ourselves to be different than our competition. Not only are we offering a comprehensive four-month training to those without mortgage

As an organization, we focus on recruiting the right cultural fit for our team, versus a high volume producer. And, creating a culture based on collaboration and sharing has allowed us to create an environment that not only entices the “right” loan officers, but offers the necessarily elements to retain them.

We continue to invest in supporting our self-generating loan officers. We have embraced the fact that we need to support them differently than ever before. We have found that the most successful loan officers have production or marketing assistants; so we equip every loan officer with that support.

This ensures we have a team in place for all of our loan officers; not just the ones who are our top producers. With this approach, each and every loan officer has an equal opportunity to succeed, and in turn, drive business.

Customer relations optimization We are doing many things to strengthen the hold in the marketplace and believe they are strategies that will help us to attract, and more importantly keep, customers. The main focus of our loan officers is on developing new referral partners and generating leads. In order to do this, we have created a support system to assist them.

Our coaching system, called the “Egoless Path to Sustainable Success,” has proven to be a beneficial approach with proven and measurable results. It has three parts: Opportunity, Pipeline Management and Database Management. The three parts must all occur for full effectiveness.

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l Maximize opportunity: Customers have many options when shopping

for mortgage products and as a mortgage provider, you must be ahead of the curve. We have found it is usually not the quantity of opportunities that affects a loan officer’s success but rather how they incubate and follow up. We have selected one of the best CRMs to ensure we maximize every lead we get.

Personal connections are a must— a tactic as simple as e-mailing loan proposals to every customer is an easy, but useful, approach. One step further is to mail personal notes every single time to your referring party and new customer, and add them to drip campaigns and schedule follow-ups.

Organization is essential ... be organized and use a calendar as a reminder to call your customers back. If you don’t schedule it, you’ll likely forget it.

Most of these things seem so simple, yet are rarely done by most loan originators. Many real estate agents will tell you they have switched lenders in the past because of the lack of follow up a loan officer had on the leads given to them. l Manage your pipeline: Starting at the beginning of the transaction, set expectations that you can meet or exceed (always under promise and over deliver; failure is over promising and under delivering). As a leadership team, we have really had to step in and manage this, as it can drastically affect your brand within the community.

Most customers understand that getting a mortgage can be difficult and oftentimes confusing. They are looking for a loan officer they feel is open and honest—and is also knowledgeable enough to help them navigate potential hurdles.

We require a timeline when clients go into escrow and ensure that we communicate during important milestones in the transaction, such as contingency removal, appraisal due, loan approval, target signing day and funding.

Note that the most important time to communicate to a customer is if something goes wrong or the news isn’t “perfect.” Fight the urge to hide your head in the sand if that happens—communicating is completely within your control while the rest of the transaction often isn’t.

Honesty and clarity can create a customer for life, as well as encourage referrals. l Work your database: If you do a great job of obtaining customers and communicating with them throughout the process, you’ll likely have no problem receiving referrals.

But, you have to ask for them. We believe that this should be the main source of referrals for most loan originators but they fail constantly

on doing it. Again, we have chosen to systemize this so that the thinking is done for them.

Staying the course with culture and customers To reiterate: The rate environment will always be ever-changing. We cannot control it, but we can control our own strategies surrounding who we hire and how we develop our existing sales team.

Many companies in the past that grew both their sales team and production, but neither increased net profit. The growth actually caused a cultural decline and the customer experience declined. Companies can succeed and be consistent when they put efforts toward retaining the talent they have and constantly improv-

ing efficiencies within the loan process.

While changes in interest rates can cause the industry to shift, companies who build a team that can adapt to those changes and have a solid customer base—and referrals—will be able to best navigate the ebbs and flows. That results in a strong business, a happy workforce and excep-

tional customer satisfaction. And that? Makes for a happy new year.

Kelly Resendez is executive vice president of sales and business development at Paramount Equity Mortgage. She leads a sales team solely focused on self-generated business and assists with mortgage originator recruitment and training. She may be reached by phone at (916) 290-9999.

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“The more knowledgeable lenders are, the smoother and easier the experience will be for the borrower.”

Top Tips for Lenders Seeking Growth in 2015

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PMIs, customer service is really the strongest differentiator. Working with a strong and seasoned sales team at both the national and local levels is crucial to deal flow. What’s most important is ensuring the PMI has a consistent and

By John Clifford reliable presence not only during the origination phases but also when supEight years removed from the start of the Mortgage Bankers Association port is needed throughout the life of the housing crisis, lenders now find (MBA) Annual Conference, only 14 per- the loan. themselves at a new crossroads. The cent of respondents described the housnumber of loan refinances has dwin- ing industry as technologically Bring buyer dled, a rise in interest rates looms and advanced. To this end, smart lenders benefits to the table needed investments to keep up with will seek out PMIs who will place extra Typically, a mortgage insurer will view mortgage-related technology advance- resources behind their technological lenders as their primary customers. But ments are practically unavoidable. And platforms in 2015. there is added value for firms who despite some signs of improvement in Among the areas of improvement embrace a collaborative, full-service employment numbers and U.S. home where PMIs can help streamline the approach, and help their lenders prices, the pendulum is still making its process for lenders are: Document “brand themselves” to their customers, swing back over to a purchase market, image management, which allows a the borrower. A dedicated, growthheightening the need for new and dif- lender to change the way work is focused mortgage insurer will help their ferent approaches to maintain business assigned and completed; product pric- lenders reach more borrowers by equippipelines. ing engine tools, enabling loan officers ping them with tools to differentiate The above issues are certainly on to quickly compare rate quotes for dif- themselves among competing lenders the minds of private mortgage insur- ferent PMI products and select the one in their markets. ers (PMI) as well, as they look to best that best fits the borrower’s needs; and One example is specialized training accommodate the lenders with whom loan origination system (LOS) integra- that PMIs often offer to lenders. For they partner. To help address market tions that allow you to order MI quickly example, my firm, Genworth, offers challenges in 2015 and beyond, we and securely through established elec- courses ranging from underwriting a must all continue navigating the cur- tronic interfaces. self-employed borrower to learning rent housing ecosystem while adoptUpgrading or acquiring a new LOS the essentials of industry automated ing best practices to cultivate growth. may be in your future, so be prepared underwriting systems to fraud prevenHere are some top tips to help accom- to weigh the options and select LOS tion, analyzing credit, and even sales plish this: features that will make the most posi- and marketing training to help tive impact on your institution’s value lenders further build their origination Seek out strong proposition. Some are stronger in sec- business. The more knowledgeable underwriting support ondary marketing capabilities, while lenders are, the smoother and easier and fast technology others may provide more customiz- the experience will be for the borrowcapabilities able underwriting policy tools, for er. Training courses are typically Speed-to-close is critical to building instance. Make certain you are work- offered in both classroom and your business and, when at its best, is ing with an LOS vendor with a good Webinar formats. Many of the availsupported by solid underwriting and market reputation, a track record of able trainings can even be applied to efficient technology processes. meeting deadlines for regulatory continuing education credits, which Working with a mortgage insurer that changes and a history of supporting can be important for achieving cercan quickly, but effectively conduct customer needs with timely responses tain designations or meeting necesdue diligence during the initial phases to customization and error correction sary lending requirements. of the origination process will ulti- requests. Then, work with your PMI mately save time and stress for partner to ensure that an integration Keep an eye lenders and their borrowers. exists to simplify the MI ordering on the industry Staying ahead of the technological process.

PMI has grown significantly since the curve is equally important for mortgage While these and other technological 2008 financial crisis, and with the purinsurers. Despite technology advances advancements could reduce the need chase market increasing, all signs are within the mortgage industry, many for certain in-person interactions, we pointing to another strong showing in lenders perceive it as being antiquated. remain emphatic that great customer 2015. Competitiveness over FHA has According to a recent Genworth poll of service still begins with doing business also improved due in part to signifi302 housing executives conducted at face-to-face. For lenders dealing with cant changes made over the past two

years. For one thing, the collection of FHA insurance premium is no longer cancelable for borrowers putting less than 10 percent down, instead being required for the life of the loan. With a typical FHA loan term lasting 30 years, the extra expense can really add up. PMI, however, can be cancelled once certain equity levels are reached, regardless of original LTV. FHA loans have also become more expensive and difficult to approve.

Conversely, as more lenders have begun expanding their credit boxes in low FICO and higher debt-to-income (DTI) areas; PMI is now a better option for borrowers versus FHA. Recent data shows the PMI market increased to $52 billion in the third quarter of 2014 (up from $42 billion in Q2) while the FHA market only grew by $3 billion to $42 billion (up from $39 billion) over the same period.

From a regulatory perspective, one area likely to impact growth for lenders in 2015 is if a reduction in guarantee fees (G-fees) were to be approved. This would make certain GSE loans more affordable for borrowers and, in many cases, a better option than FHA. This improved home affordability would provide lenders with greater origination opportunities and more borrowers with the opportunity to achieve homeownership.

We are at a landmark point in the mortgage and mortgage insurance industries with a wide array of progressive, technological and service-oriented change looming. While industry optimism has increased since the financial crisis, constituents must continue collaborating on best practices to enable steady growth in 2015 and beyond.

John Clifford is senior vice president of Commercial Operations for Genworth’s U.S. Mortgage Insurance Division. John is responsible for products, account development, marketing and public relations, customer experience, commercial analytics, sales support and customer training.

He has worked for Genworth (formerly GE) since 1999. He may be reached by email at john.clifford@genworth.com.

“The key to lead generation is to cast a strategic net.”

Lead Generation: Keeping It Simple in 2015

By Sarah Federico

This seems like a no-brainer, but many loan officers miss out on new business by not utilizing their current clients as referral sources. Do you ask your clients if they know anyone who may need help with a loan? You may answer yes to this, but my next question usually is: Where in the loan process do you make “The Ask?” Many loan officers ask for a referral at the end of the process. My preference is to ask for referrals from the beginning of the loan application. Simply say: “Who do you know that is currently looking to buy a home?” or something to the same effect at the initial appointment, the appraisal, approval and closing. This can absolutely be done without seeming pushy or annoying. Your client trusts you enough to buy a home

2. Utilize a database A database of past, potential and current clients, as well as referral partners, is an incredible way to easily gain new business. If you do not have and actively maintain a database, creating one should now be your number one priority. Compile your contact list and segment it into specific categories. Keep in touch with your database by sending emails of market updates or a monthly newsletter. Set the standard of calling your database at least twice a year and send them cards on their birthdays. Insert your personality and creativity in this, the possibilities are endless! The goal of your database is to ensure that after a client or referral partner does business with you, they do not forget you. Stay at the forefront of their mind by staying in touch and the next time they need a loan, you will be the first person they call.

Database upkeep does not need to take a lot of your time and can easily be automated. Create a contact schedule for your database at the beginning of the year, stick to it, and watch the leads steadily come in.

3. Set goals Ensure your efforts in creating leads are strategic by setting goals from the beginning. Take time to sit down and evaluate your business. Where are you currently? Where do you

4. Identify areas for future leads It is time to go fishing, but where will you catch the most fish? Based on your business, personal strengths, and community, determine the strongest areas for you to gain quality leads. This could be at networking events, homebuyers associations, trade shows or professional organizations—the list is truly endless. In accordance to the goals you have set, decide the areas you want to target for leads and focus your attention on them. Keep it simple by honing in on two or three “fishing holes” and execute a strategic plan to gain leads from each.

5. Make a plan and be prepared After choosing your areas to target future leads, create a plan for each.

For example, if you have decided to focus on the local business association; access their schedule of events for the year or quarter and block the dates in your calendar. Make it easy for yourself to attend by making these days a non negotiable in your schedule ahead of time. The next step is to be prepared for these events by creating marketing material to bring along with your business cards. During networking events, be approachable and engage as many people as possible throughout your time there. It is important to pass out your own business card but more important to collect them. If you have the potential lead’s information, you can guarantee contact will be made in the near future instead of leaving it up to them.

7. Track your results Keep track of how many leads you gain from each area you have strategically targeted. Create a spreadsheet and document the amount of time and money, along with the conversion rate of lead to loan. Some areas may be more beneficial than others and you may want to make adjustments to your strategy based on your results.

Setting your goals in the beginning and then tracking your results will guarantee you are spending your precious time as wisely as possible.

While these seven tips might seem like work, with careful planning they can truly make a significant impact to your business. The key to lead generation is to cast a strategic net.

Simplify your strategy by utilizing the resources you currently have, setting goals, being prepared, following up and measuring your success. Your time is extremely valuable, and by following these tips, I guarantee you will work smarter and use your valuable time wisely.

Sarah Federico is vice president and training director of XINNIX, the Mortgage Academy, based in Atlanta, Ga. She may be reached by e-mail at sarah@xinnix.com.

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1. Ask your current clients for referrals

with you, and if you are doing your job well, they will happily tell their friends and family to do the same.

By only asking for a referral at the closing, you are giving yourself one opportunity to gain more business.

Increase your odds by asking for referrals and doing it regularly.

6. Follow-up I cannot stress this enough, once you have met potential leads, follow up with them! Immediately following a networking event, send handwritten thank you notes to the people you met. In the next few days give them a follow-up call. The next step is to set an in person meeting for coffee or lunch. Make this process simple by setting the dates for each of these steps in your calendar. Along with following- up, enter all new business contacts into your database. Some of these people may not need you for a loan right now or even in the next few months, but adding them to your database contact schedule will make sure that when they do need a loan, you will be top of mind.

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Creating new leads for your business is crucial to your success. Whether you are striving to build your business, maintain your current production or take it to the next level, generating leads should be a major part of your strategy. Have you ever had a strong couple of months of production followed by a slump? You’re not alone; and the reason for this may be that while you are busy guiding loans through the pipeline, future opportunities aren’t being created. I know the schedule of a loan officer is busy, so how can you create future business while taking care of your current pipeline? While creating leads can seem like a daunting task, it doesn’t have to be.

Keep your process simple by following these seven tips to gaining new leads and in turn, earning more business.

want to be? Set your goals for the year. Determine how many loans a month you need to accomplish these goals and approximately how many leads each month will turn into loans. Setting goals from the start will make it easy for you to be organized in your efforts to obtain leads.

“Writing goals, having a clear plan and a solid vision makes a difference … it’s a proven fact!”

Sales Strategies for the New Year: The Importance of Aiming Before Shooting

By Ginger Bell purpose for shooting. They could shoot the arrow anywhere and wherever the arrow ended up would be where the arrow ended up. Not much to it, right?

Now, on the other hand, if you gave an archer a target and challenged them to hit the bulls-eye—everything changes.

“The greater danger for most of us isn’t that our aim is too high and miss it, but that it is too low and we reach it.”— Michelangelo Give someone a bow and arrow and tell them to, “SHOOT!” and their first response would be: “At what?”

When there is no target, there is no 72

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You now gave them something to aim at, something to focus on, something to challenge their skills against, something to measure their progress with, and something that gives them effort and most importantly purpose.

This is accomplished by adding on simple thing … a target.

That’s what a goal does to a person’s life—It changes everything.

Goals are the guiding light, the bullseye to focus on, to set your sights at. It is also not merely enough to write down your goals. You must also have a plan reach those goals.

In order to understand the importance of setting goals we begin by looking at the top reasons people do not achieve their goals: 1. Fail to write down goals and post them in plain view 2. Fail to make a plan to achieve goals 3. Fail to commit or live up to commitments made 4. Fail to make goals that were achievable in the first place In fact, studies show that 74 percent of people do not ever put their goals in writing. A study was conducted with the 1979 Harvard MBA graduating class. Students were asked the following questions: 1. Have you set clear, written goals for your future?

2. Have you made plans of how you are going to accomplish them?

The results came back with the following results:

l l

l

l

down were earning twice the amount of the 84 percent who had no goals.

Thirteen percent-goals-not in writing: Earning twice as much as the 84 percent with no specific goals.

What about the three percent who had written down their goals and had a solid plan of how they were going to achieve those goals?

Of the three percent who had written goals and plans: They were earning 10 times as much as the other 97 percent combined!

Writing goals, having a clear plan and a solid vision makes a difference … it’s a proven fact! So, why do so few people take the time to write down their goals and plans? It’s hard to say. The reality is that you are in charge of your life and your destiny, so if you want to get to the top of your game, you have to begin with a foundation. Below are seven key steps to follow when establishing goals.

Seven steps to goal-setting The key to effective goal-setting is to begin with the end in mind. Follow these seven steps as you begin your goal setting: 1. Identify the goal a. Write down your goal b. Be clear c. Write down exactly what you want to achieve d. Be specific

2. Date the goal l Three percent had written goals and a. Put a date and time on it plans. b. Limit the time–start and finish l Thirteen percent had goals but they weren’t in writing.

3. List the obstacles to overcome to l Eighty-four percent had no goals at achieve your goal all. a. Identify the obstacles b. What can you do to help to preFast forward to 1989. The same vent them from occurring group was interviewed 10 years later to find out how successful they were and 4. Create a support team to help the results were astonishing: achieve your goals a. Create groups/people to hold you accountable l Thirteen percent of the class who b. People will help if you ask had goals, but did not write them

5. Create a list of skills and knowledge you possess a. Do you have the skills needed to accomplish your goal b. Do you need to develop certain skills c. Make a plan to build the skillset 6. Write down an action plan a. Make it detailed and specific b. More likely to enact it if written

It is what you say to yourself that counts. Goal achievement is completely up to you! Do not merely write down your goals. You want to focus on your goals each and every day. Spend a few minutes every day giving yourself positive self-talk.

Visualize yourself accomplishing your goal. Set your mind to it and be determined to reach your goal. Ninety percent of achievement is the process.

Daily action items 7. List the benefits of reaching your goal a. What’s in it for you? b. What is your incentive? c. Is it strong enough to ensure achievement?

Once you have written your goal(s) and created your plan be sure to follow up! You must take action every day!

l If you want to lose weight–how many pounds do you need to lose per week–how many miles do you need to walk/run, sit ups do you need to do, etc.? l If you want to build new business, how many new sales calls do you need make each day? l If you want to stay in touch with existing clients, how many emails/calls do you need to make each day? l If you want to close so many loans, how many new applications do you need to take each day?

In order to reach a goal, you must take action steps toward reaching that goal.

Begin by determining what you need to do each day to make progress towards Whatever the goal is, you must create your goal. Think about what those a plan on how you are going to get activities are: there. You must have daily, weekly, l If you want to save money–how monthly activities that will move you many pennies do you need to save toward that goal. It is important to remember when you reach those goals per day?

to celebrate! Share what you have done! Call someone! E-mail your manager! E-mail your friends!

Be the best at what you do! It’s a “game� every day!

Focus on the following to always be on your “A-Game:� l l l l l l l l l

Do your best every day!

Wake up early Love what you do Dedicate yourself to being a lifelong student Convert anger to resolve Convert barrier to breakthrough Take every “no� as a “not yet�

Watch very little or no television Read for 20 minutes every morning continued on page 74

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Constant 24 hour turn time standard.

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Relationships are everything.  Ɋ . Čź ÉŠÉŠ(!ÉŠ ( ÉŠ & .#)(-"#*ƒ - ÉŠ- ,0# ÉŠ& 0 &-~  Ɋ /-.)'ÉŠ, . ÉŠ-., . !# -ÉŠ.)ÉŠ-/#.ÉŠ3)/,ÉŠ*,)É„ÉŠ& ~  Ɋ /**),.ÉŠ. 'ÉŠ 0 #& & ÉŠ1" (ÉŠ3)/ÉŠ( ÉŠ." '~  Ɋ )(-#-. (.ÉŠ, . ÉŠ-" .ÉŠ*,# #(!ÉŠ.)ÉŠ &&)1ÉŠ ),ÉŠ *, # . & ÉŠ),#!#( .#)(ɊɇɊ)1-~

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n Georgia Mortgage Professional Magazine n DECEMBER 2014

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sales strategies for the new year continued from page 73

l Call people you care about and tell them how much you care about them l Tell yourself you’re the best l Surround yourself with positive people and things l Read and listen to positive books, CDs and tapes l Say all things in a positive way– How you can not why you cannot l Believe you can achieve it l Don’t listen to others who tell you that you cannot l Start now and work at it every day

Positive reading material Reading about success will help you

stay focused on success. Below are some great life-long books that never go out of style. Share them with your business partners as a gift to help them reach their goals as well. In fact, one of the greatest ways to help you accomplish your goals is to find out what someone else’s goal is and help them accomplish it.

1. Brian Tracy, Goals! Download the ebook at http://www.youblisher.com/files/publications/14/82019/pdf.pdf 2. Napoleon Hill, Think and Grow Rich 3. Dale Carnegie, How to Win Friends and Influence People

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4. Norman Vincent Peale, The Power of Positive Thinking 5. Earl Nightingale, The Strangest Secret, Download the e-book at http://www.markvictorhansen.co m/strangest_secret.php Remember it’s “your attitude!”

You control it! Attitude is something you give yourself each and every moment of each and every day!

Others can catch it from you.

Sometimes it takes time to develop an attitude of success. There is no “Instant Positive Attitude,” only “Instant Negative Attitude.” It is up to you to create the attitude you want. You have a choice!

Increase your business in 2015.

Figure out what you want for success in the coming year by getting more business from existing customers; building new customers; and getting more from your existing customers.

Next, talk to your business partners to find out what their needs and goals are for 2015. Determine if they have more business for you.

Evaluate your business partners. If you are an account executive, evaluate your clients. Always be sure to ask for more business. Find out what you can do to help them get more business in 2015 and it will help you get more business too!

Build new business in the new year Start thinking about ways that you can build new business. Two examples of how to build new business are through cold calling and networking.

While cold calling is not the favorite thing for many salespeople, it is still one of the most effective ways to build a book of new business. You must have a strategy in mind though to stay focused and to not become disappointed.

www.TheNationalR ationalR Re ealEstatePost.com

l Make a plan l Remember the goal is simply to set an appointment, not make a sale l The secret to cold calling is to engage, not sell l Be prepared l Have flyers l Tell them what you can do to make their life easier l Training

l Products l Service Don’t like cold calling? Get involved! Think about all the things you can do to get involved in the industry. l Write an article for an association or trade magazine (like the one you are reading now) l Give a presentation l Hold a free seminar l Network at a business function l Get a referral Begin networking right now by sending the author of this article an e-mail (ginger@morfmedia.com) and see how you can strategically work with what they are doing on various projects. You never know what we can do together to help each other build business. In creating your sales strategy, always give value first. Be focused on helping others. Strive to do your best, always and often. Establish longterm relationships. Have fun and be positive. l Set your goals l Review your customers l Determine who you can get business from in 2015 l Determine how much new business you need to attain goals l Set plan to build new business l Do something everyday l Be persistent Napoleon Hill said it best, “A goal is a dream with a deadline.” Goals give you a direction and your plan holds you accountable to getting there. Think about what goals you want to accomplish in 2015 and start putting them into action!

Ginger Bell is the best-selling author of Cracking the Success Code, a book she co-authored with Brian Tracy.

Ginger is a renowned education specialist in the mortgage banking industry. She was recently named senior vice president of e-Learning for Morf Media Inc., an international gamification e-Learning technology company. She will be responsible for building industry-specific customer and partner e-Learning requirements. She may be reached by e-mail at ginger@morfmedia.com.

“Growing our business and committing to healthy business practices depend on our willingness to grow as individuals first.”

How Will You Grow Over the Next Year?

By Brent Emler

There has to be a fundamental shift in how we perceive our role in people’s lives. I could have used the word “customers” there, but the reality is that if we don’t start seeing our clients as people first, we are going to lose the edge we need to really see our business flourish.

The tendency is to look at a faceless crowd and assume the monumental task of reaching them all with positive results. This is not only impossible, it’s backwards.

Businesses today must bring the face of their audience into focus first and

Database segmentation Database segmentation is the first step. Organize your contacts in a way that makes relationship marketing possible. Knowing your audience well allows you to create very specific groups to which you can send targeted, valuable material. You might currently have a list of clients but within

continued on page 76

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n Georgia Mortgage Professional Magazine n DECEMBER 2014

The short answer is: Develop Healthy Relationships

then authentically speak to who they really are in order to gain their respect. Just like being a good friend, being a good professional requires that you listen well. Once you’ve heard and acknowledged a need, you are in a better position to provide valuable and effective solutions. That establishes trust. I think we can all agree that trust is the foundation upon which healthy relationships are built. So start communicating with authenticity and warm curiosity.

That’s not so difficult if you have a client base of 10 or 20 people but how do you promote warmth and authenticity when you have a large client base of possibly hundreds or even thousands? How do you employ a marketing strategy to reach and stay connected to your existing clientele in a personal way while still devoting resources to the addition of new clients?

A close friend of mine and his brother moved to a completely new area to launch a mortgage company years ago. They were committed to their company’s tagline: “… a passion for extraordinary service.” They did not build their business by blanketing their new area with ads and marketing pieces. They understood that if they were to make a mark, they’d have to value each and every potential client in an extraordinary way. And they did! Their remarkable success was due to the fact that they developed true and lasting friendships with their clientele and allowed the business to come as a result. I remember stopping by a routine office party they would throw (only one short year after being in business) and seeing more than 200 people in attendance. The attendees weren’t “clients” or “referral partners” or “networkers,” they were friends. Their business saw incredible and rapid growth due to this simple approach.

that list, there are young, first time home-buyers, senior citizens, young families, and “empty-nesters”.

Grouping your clients in this way does a couple of valuable things.

First, you can speak directly to the challenges faced by that particular segment in a very personal way and provide the solution they need.

Second, this ensures that your marketing budget has maximum impact.

You wouldn’t send a campaign about reverse mortgages to the majority of your contacts. Segmenting contacts in

NationalMortgageProfessional.com

After an unseasonably mild autumn, I awoke this morning to the frigid, icy reminder that we are transitioning quickly towards winter. The cold brings with it some warmth, however, because it’s a harbinger of a time of year when we spend more time focusing on what’s really important—our relationships with friends and family. The holiday season is more than something we blindly and happily experience … it is a time of reflection and opportunity.

I think we sometimes forget that health and wholeness start within our personal sphere and cascade down through the various segments of life importance. Growing our business and committing to healthy business practices depend on our willingness to grow as individuals first.

More than ever, people respond to authenticity. The old ways of formulaic strategy aren’t as effective as they once were. People are much more savvy and disenfranchised by the transparent ploys intended to influence their decisions. So how do we break through these layers of resistance and make a mark both personally and in business?

Database marketing becomes “relationship marketing” the moment you commit to this basic philosophy: “Business comes as a result of relationships” rather than “Relationships come as a result of business.”

how will you grow over the next year? continued from page 75

this way allows you to get the right message to the right people with a better rate of return.

Perhaps you have 100 real estate agents to which you’d like to market to. Within that list, you may have five or 10 agents who have predictably referred business to you.

Segment your real estate agent list to ensure that the majority of your marketing dollars are spent building relationships with those valuable referral partners.

Content marketing

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Content marketing is made effective by segmenting your database. Like I mentioned, you wouldn’t want to send information about a reverse mortgage to the majority of your contacts. It’s important to develop relevant content for each of your audience segments.

Content marketing can be presented in a variety of formats such as news, video, e-books, infographics, informational articles, etc. The focus of content marketing is not so much about selling but about consistently communicating through relevant and interesting material. It’s about relationship building. An e-mail campaign might

not be as effective as a print campaign for your senior clients and certainly, email will be more effective than print with your first-time homebuyers.

As you develop your marketing strategy and subsequently, your portfolio of marketing material, carefully consider what type of communication will most effectively reach the target audience.

Systems and technology Systems and technology bring database segmentation and content marketing together to facilitate your actual marketing tasks. If you’re trying to manage your database and marketing initiatives without using a system specifically built to execute your vision, you will find yourself frustrated, disorganized, inconsistent, and ultimately, ineffective.

There are many CRM/marketing systems on the market today. One of biggest mistakes mortgage companies make when choosing their system is that they focus entirely too much on offering their loan officers an overabundance of features, while allowing simplicity and ease-of-use to take the back seat.

Simplicity is what will ensure high loan officer engagement. You can offer 100 different bells and whistles, but at the end of the day, if the system doesn’t have a simple, intuitive user-interface, you will lose your team’s interest before you even get off the ground.

Secondly, choose a system that can integrate with your loan origination software (LOS) and pricing engine.

This ensures that new updates and edits flow seamlessly back and forth without requiring double entry and to eliminate disparate data. The more steps you can remove for your loan officers, the more practical their marketing tasks will become.

Most of all, the system you choose needs to be cost effective, nimble and customizable in order to meet your specific marketing needs.

Take the time to learn your system well, to organize your contacts, and import clean data. What’s the point of an email campaign if the email address you have is invalid or misspelled? It’s impossible to schedule the send of a birthday card if you’re missing an address. Use this time to reach out to your contacts and update their information. Let them know you’ll be sending valuable information along the way and hope to stay in touch over holidays, birthdays, and other life events.

Commitment Commitment to your philosophy is vital. Stay educated and knowledgeable about your audience. Don’t forget that you cannot replace a friendly phone call with a piece of mail.

Use your task and reminder system to space out your calls and maintain a clear notes history to keep valuable, personal information about your contacts: What they do for recreation, what they like to drink, how many children they have and what ages, what their hobbies and interests are. After all, we’re trying to make marketing a very personal and valuable venture.

As we move closer to 2015, use this holiday season as a time of reconnecting with those in your sphere of influence. Reimagine your marketing strategy and prepare to take new steps in your commitment to authenticity, warmth, and consistency. Take this time to research the best system for you and your team and approach the New Year with energy and confidence.

Brent Emler is director of sales and marketing at Velma.com, a customizable marketing software provider exclusive to the mortgage industry. He may be reached by e-mail at brent@velma.com.

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

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

WWW.NATIONALMORTGAGEPROFESSIONAL.COM

“A dysfunctional CEO is usually impossible to overcome.”

Upgrading Your Leadership Team

By Robert Sher ers. With scale, longer term planning is required, and leaders will be held accountable for results. And in the mortgage industry, the compliance burden has grown, with no quarter given for smaller players.

Delivering high performance and staying competitive in a consolidating market is no easy task. Building and maintaining a strong top team for a midsized company requires the following steps:

Consider the case of Comstock Mortgage, based in Sacramento, Calif.

Craig Sardella had founded Sacramento First in 2003, and merged it with

Robert Sher is the author of Mighty Mid-Sized Companies: How Leaders Overcome Seven Silent Growth Killers (Bibliomotion; September 2014) and the founder of CEO to CEO. Sher has worked with executive teams at more than 80 companies to improve the leadership infrastructure of mid-sized organizations.

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1. A functioning board of directors.

Far from being a board of opinions, the board must be stocked with experts on an array of topics so that the board can provide world class support and guidance to the management team. Board members must act in a fiduciary capacity, not just as an advocate for their ownership interests.

Outside (non-owner) board members are crucial as well. A good board holds management accountable to achieving its plans without micromanaging (unless management is failing). High on the list of board duties is hiring and firing the CEO. 2. A great leader in the CEO seat. A dysfunctional CEO is usually impossible to overcome. The CEO must either be excellent and ideal to take the company forward, or be actively and eagerly learning new skills and leadership approaches. CEOs who wish it were still like “the old days” or who can’t objectively reflect on their own behavior are a big roadblock. Boards that fail to upgrade a dysfunctional CEO are failing to perform their duty.

3. A C-suite that embraces change and the next level of discipline.

Identify those leaders who want to step up their game, then mentor and coach them. Dismiss those

Comstock & ATM Mortgage in 2007. “We both needed bigger net worth to remain competitive,” Sardella said.

They grew Comstock through more acquisitions during the 2008 downturn, and the board swelled with a group of successful entrepreneurs.

“Each of us as owners were very successful, but it wasn’t easy working as a team and as a board. I served as president for the first five years, but it made sense to bring in an outsider into the role in 2008, and I refocused my energy on acquisitions and production. By 2013, we’d nearly doubled our originators volume,” Sardella said.

Comstock grew its volume to $750 million during a downturn in the industry, even while competition continued to be a drag on growth and profitability.

“We could see how larger, better capitalized competitors could afford incredible leadership teams and could afford to retain their servicing while maintaining profitability,” Sardella said. “Net worth was a driving force in upping the game in our industry.”

In September 2014, Comstock sold to Guild Mortgage, which has 12 times the loan volume.

“Our ability to grow profitably since 2007 into a strong mid-sized firm with a headcount of 200 made us a very attractive acquisition for Guild and a strong next step for Comstock’s owners,” said Sardella.

Mid-sized mortgage companies can be profitable and successful as the business environment changes but only if they embrace the leadership changes required to maintain growth while managing the increasing complexity.

NationalMortgageProfessional.com

A maturing industry requires its leaders to act differently. As industry players grow larger to manage compliance burdens and to gain access to capital, leadership styles that worked in the past can become dysfunctional. For mid-sized mortgage businesses to continue growing, they will need to upgrade their leadership teams through coaching, mentoring and recruitment.

The mortgage industry has local roots. Back in the 1970s, when S&Ls played a more prominent role, most lenders worked within their own community. Mortgage lenders knew their borrowers and the business was relationship driven. As a simpler business than today, well-networked sales professionals could easily start their own business and be very successful. The business was very entrepreneurial. Like most startups and small businesses, the key was relationships and a small team to “do the work.”

However, many amazing salespeople make terrible managers and leaders. Similarly, many entrepreneurs also make terrible managers and leaders. Yet the mortgage industry was filled with successful salespeople and entrepreneurs. No wonder leadership challenges grew as consolidation began and mid-sized businesses spanning broader geographies became more common.

In mid-sized companies—those with revenues between $10 million and $1 billion—leadership must solve challenges that are more complex (like IT systems, multiple offices, capitalization) requiring many specialists to work together as a team.

These projects can take months to execute, requiring project management skills. Ownership of the firm is often by external sources like private equity firms or the public, placing stringent demands on company lead-

who choose to resist change. Even with a great leader, companies can only go so far. Beyond a headcount of 75, continued growth requires a team of leaders. Many midsized firms in every industry get stuck because the CEO tolerates dysfunctional leaders.

4. Design the organizational chart for the future. Outline the right management structure and job descriptions for taking the company to the next level. Typically, this includes the C-suite, the VP level and the director level. Beyond just drawing boxes on a page, identify the key skills and experience each position will require. Once you’re done, start to fill in names from your current team that you are convinced will do a superlative job (perhaps with some training). More than likely, there will be gaps.

5. Devote resources to recruiting a strong team. Small companies often find a friend willing to do the job and stick him or her in the seat. Well-run mid-sized companies are much more diligent about finding the ideal candidate. They continuously scan for top talent and maintain relationships with them so they can recruit them when the time is right. They invest in head hunters to reach into the industry and beyond, finding quality candidates willing to consider a change. They leverage their board and investors (think private equity firms) who have connections to proven leaders. Recruiting isn’t something mid-sized companies tinker with occasionally when in need. It is an ongoing effort with disciplined campaigns around filling key positions. Do it well.

Today, the mortgage industry has many mid-sized and larger players with strong executives leading those organizations. These leaders should be part of your network.

“Once you understand ‘positioning,’ your business will not only grow in 2015, but it will come to you much easier and faster than you have ever imagined!”

How to Grow Your Business in 2015 Without Begging or Chasing What you are currently doing may be hurting you

By Brian Sacks

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The year was 1985, and as a brand new loan officer, I was full of ambition but had no real knowledge or relationships. So I did what my manager told me to do: “Go out there and meet and greet agents. Get to know them.”

While this was probably good advice back then, it truly doesn’t work well in the market and environment of 2015. Yes, you can still meet agents for one-on-one sessions and you can visit open houses and do inoffice training sessions and hold meetings, but here is a dose of reality you probably already know …

Many agents no longer spend their days in their offices. With technology today, agents can find listings, show homes and even write contracts on mobile devices.

I currently work with two large brokers who don’t even have a physical office other than 300-square-feet of space since all of their agents work from home and use up-to-date technology to perform their duties.

But what about doing a marketing services agreement (MSA) and being the in-house loan officer you ask?

Nationally, the in-house loan officer only gets 23 percent of the business in the office where they are located, assuming they don’t have a “fatal” deal.

Couple all of this with the fact that consumers are now much more savvy and often have their own relationships in place, and you can see the issues that could prevent you from growing or in some cases even maintaining your production levels.

What is an LO to do to grow their business?

I will start by summing it all up in one sentence and then we’ll go a bit deeper so you can see how to implement the various components of this simple sentence: “Pick a niche, become the expert, let everyone know about it so that you can get buyers and real estate agents chasing you.”

Yes, I realize this sounds simple, but before we dig in, let me go back to my manager that I started this article with and his advice. See those were the good old days before computers, before social media, and even before Google.

Were you taught the same way?

There was a common theme of simply going out and “Chasing” … meeting new agents, builders and other potential referral sources. But here’s another piece of advice you might want to really think about: Whomever is chasing is at a disadvantage. Whomever is being chased has the total advantage.”

This is true in love as well as in life and of course in business. You must set yourself up as the one being chased if you want to truly succeed.

So let’s break this down into what constitutes chasing and how to set yourself up so you start getting real estate agents, prospects and referral sources chasing after you.

It frustrates me when I see people offering programs that continues this cycle of creative ways for you to “chase” new business. Human nature forces us to back away when people are chasing us. Whether it’s physically, by e-mail or verbally, the natural reaction is to simply avoid people who are chasing you.

Instead, get them to chase you!

The days of saying you provide “Excellent Service,” and “Have Great Rates” are over. Those two items are a given for just showing up to the conversation. So as I promised, let’s dig in deeper to how you can get agents chasing you.

First, let me tell you what does not work so well: 1. Donuts or food.

2. Open house spread sheets or footlong broker open subs.

3. Single property Web sites.

4. Paying for desk space or joint marketing.

Now I ing with after we tionship. to create

am not opposed to investa close partner, but only already have a good relaI am opposed to investing the relationship.

How to get agents to chase you Stop for a minute and think about what an agent really wants? What did you come up with? I hope you said “pre-approved buyers” that you can refer to them. Yes, you must control that buyer and here are just a few techniques I use and you can as well.

1. Have a radio show in your town: This is really a big secret, but many radio stations will sell you a half-hour or an hour of time. You can then get sponsors and have the show paid for. This makes you an instant celebrity in your area and generates new clients for you to get pre-approved and referred to a real estate agent.

2. Teach courses at your board of Realtors: This is where you can meet real estate agents and instantly be seen as an expert.

Most classes are 90 minutes long and you can teach them about the specifics of a particular program.

3. Pick a niche: This goes along with number two, but pick a niche and let the real estate agents know that this is your area of expertise. Some of the most common niches you can master are reverse mortgages, creditchallenged buyers (FHA Back to Work), construction loans, 203(k) loans, jumbo programs, no PMI programs, etc. There are numerous others just don’t be plain vanilla. Find a product or program and master it–then let everyone know about it.

4. Become a resource for your local media (TV, radio and print): Everyone wants to work

with a “celebrity” and the media is constantly looking for experts.

Why shouldn’t that expert be you?

It’s simply a matter of setting up a relationship with editors of the publications or producers of the radio or TV shows. You can see a sample of how to do this at www.YouTube.com/BaltimoreMortg ageLen The issue is that once we try to become everything to everyone we often wind up becoming nothing to anyone and we are forced to start “chasing.”

How to get buyers to chase you 1. Become the “local mortgage expert” and celebrity by using numbers one and four above.

Everyone likes to work with a celebrity and an expert. This is all about positioning yourself and promoting your expertise.

2. Do targeted and consistent direct mailings to apartment complexes.

Why? Simply because this is where the renters are. There is a science to mailing to apartment complexes, but I will cover that in a future article. For now, just identify the complexes within a two or three mile radius of your office where the rents are comparable to what a mortgage payment would in the area.

to Work program, send mailings to folks who have been discharged from a bankruptcy one to two years ago. If your niche is VA, then send a mailing to veterans, or go to your local VA or military reserve and offer an educational session.

How about the niche of working with divorce buyouts? You could easily connect with a divorce attorney in town. Often, you would be able to do a refinance for the remaining spouse and a mortgage for the spouse that has moved out.

There are literally dozens of other 3. Do targeted direct mail to ideas I could share, but let’s just sum up prospects who qualify for the what you have learned: niche you have now chosen to be the expert in. As an example, if l You MUST control the buyers so your company offers the FHA Back agents chase you.

l You MUST become the expert in a niche and let everyone know about it. l Once you understand “positioning,” your business will not only grow in 2015, but it will come to you much easier and faster than you have ever imagined!

Brian Sacks is a nationally-renowned mortgage expert who has career closing of more than 5,924 transactions for in excess of $1 billion. He has trained, consulted and coached, tens of thousands of loan officers and company owners over the past 29 years on how to close more loans, make more money and still have a life. You can download his report, “The Four Tools You Can Use to Immediately Grow Your Business,” a www.AgentsChaseYou.com. Brian may be reached by phone at (443) 324-8424 or e-mail loanofficertips@gmail.com.

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www.callfurst.com

“So my business development plan for 2015 is to go outside and meet people.”

Business Envelopment

By Eric Weinstein friend you haven’t met yet.” To me, it is more like Sigourney Weaver in “Alien” trying to sit down for coffee with the creature. I am basically a very shy awkward person, if you haven’t figured that out by now.

Meeting new people scares me to death. Being dorky looking does not help … I am sure.

So, how did I ever become a loan officer? This job is like 90 percent selling.

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

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The year of our Lord 2015 is quickly approaching, and I have got to come up with a plan. I hate the time for business development. It is like going out to meet new friends. I hate making new friends. In fact, I am not too thrilled with the ones I have now. I wonder how many would actually give me a kidney if I needed one.

People say, “A stranger is just a

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Apartments and units (5+ residential units) • Up to 70% on refinance and purchases • Stated but verified rental income of property • Loan terms: 1 year, 3 year, 5 year, 7 year and 10 year; fixed IO or fully amortized • Rates from 8.00% and up • Programs with no PP available depending on LTV, term and prepayment penalty • We have 2nd position loans available for our commercial products up to 60% CLTV • 5-7 days closing available

Commercial (industrial, retail, church, mixed-use, gas station, auto related, manufacturing, etc.)

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Disclosures: per FDIC Regulations Section 6500 Part 226, Subpart C, 226.24. The amount of each payment that will apply over the term of the loan is based on simple annual interest applied to the unpaid balance. Loans range from 1 day to 60 months, are interest only and include a balloon payment due at term. Finance charges apply. Payments do not include amounts per property taxes or insurance premiums.

This is not a commitment to lend. Rates and points are subject to change without notice. NMLS #357614

Let me summarize the three years of my Master’s Degree in about the only thing I can remember from it. I dare say that no matter what problem you are having in your life, one of the 108 billion people who live or have ever lived on the Earth had a similar problem at one time and wrote a book about it. I learned you can’t know every single detail in life. You can, however, look it up.

Let’s fast-forward to my second year in the mortgage industry: The first year went swimmingly with refinances, so I never had to worry about selling. In the second year, you could hear crickets in the office, it was so slow. I had bills to pay, kids and a wife to support and was ready to just give up. Then, I thought about buying a book on selling.

It was “Zig Ziglar’s Secrets of Closing the Sale and it changed my life. Besides all the sales techniques and advice, the gist I got from it was, to be a good salesman, all you have to do is be a good person.

Don’t think about it as selling, consider it as a friend educating another friend about the merits of a certain thing. Explain the process, educate them on how it works and why, give them good advice. If it is not right for them, refer them to something that is, whether you sell it or not. Be price competitive and go the extra mile so they are happy after the transaction.

But that all assumes you already have the customer to which you are selling. How do you get that client in the first place? My business is mainly real estate agent referrals.

In effect, real estate agents are my customers. So how do you meet these agents?

In episode 13, season two of “The Big Bang Theory,” Sheldon isolates the exact formula for making friends. Look it up at http://bigbangtheory.wikia.com/wiki/The_Fri endship_Algorithm.

In a nutshell, you talk to someone, discuss their interests, select

the “least objectionable activity” and partake in that interest. That is basically how I met my wife. The fact that after a few years she turned into the monster from “Alien” is not the point.

Shocking as it sounds, it turns out real estate agents are people too. I have met and become very good friends with all my agents. They refer me to their friends, and then I become friends with them and the friends they refer. Have you ever heard the saying that everyone is six friendships away from Kevin Bacon?

There is theory that everyone in the world is six friendships away from everyone else (visit http://news.bbc.co.uk/2/hi/uk_new s/magazine/8029774.stm for that whole Kevin Bacon story).

Statistically speaking, of the seven billion people who currently inhabit the Earth, you are bound to get a few to do a mortgage with you.

So my business development plan for 2015 is to go outside and meet people. I am asking my real estate agents to introduce me to more agents. I am asking my friends and customers to refer me to new friends and customers. Spreading things by word of mouth does work.

If it can work for Ebola, it can work for you. Maybe you will end up having coffee with Sigourney Weaver and doing her mortgage. You never know.

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) 505-8692 or e-mail eweinstein4u@gmail.com.

“Establish a well-constructed business plan for 2015 that gives you room to grow, adapt, and bend in all the ways the market will demand.”

Preparing for 2015 in the Housing Market Learning to be adaptable and flexible

By Ashley Lubey

Ashley Lubey is copywriter and public relations specialist for CMG Financial.

She graduated from Saint Mary’s College of California with a bachelor’s degree in communications. She may be reached by phone at (925) 983-3207 or e-mail alubey@cmgfi.com.

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n Georgia Mortgage Professional Magazine n DECEMBER 2014

economy, and consumer confidence is a gradual one. The industry has made changes to prevent another catastrophic decline from happening again. And while the industry has made these advancements and improvements, only time can fix the last remaining broken pieces.

Consumers need time to begin trusting and engaging in the market once again.

In order to complete the recovery process, rules and regulations continue to be subjected to amendments with the promise of boosting the economy and assisting homebuyers.

Stronger and more stringent guidelines allow borrowers to obtain the mortgage loan that best fits their financial situation while preventing defaulting on the loan in the future.

This is where flexibility and adaptability become essential. The housing market is known for its continuous changes and fluctuations when it comes to pricing, rates, and mortgage loan products. Companies are expected to remain on top of their game and deliver critical, up-to-date information on these topics at any given moment.

Throw in new and adapted regulations that must be followed and the recipe for a downward spiral has been written. It is crucial that a professional company be prepared and willing to adapt just as quickly as the changes are made. Being flexible and adhering to new rules quickly proves a company’s knowledge, expertise, and foundation in the field.

The housing market crash forced many businesses out of the market. So what’s the difference between businesses that crashed along with the market and those that were able to ride it out? Adaptability. Companies were

should have the sole focus of providing an exceptional service and product without the consumer ever knowing your business model has been turned on its head behind the scenes.

So how do you elevate your company as being flexible and adaptable in the marketplace? Keep an eye on the news. Future changes and new policies are generally announced months in advance giving businesses ample time to prepare. By remaining on top of the news and following important mortgage news sources, you will be able to anticipate future changes through trends. Develop a process to follow when adjustments need to be made.

Amendment, implementation, and notification are the three common steps taken when adapting policies and regulations. Existing policies need to be updated to reflect the latest changes. They then need to be implemented in the workforce. And all employees must be notified of the changes and provided training where necessary. The smoother this process flows, the more quickly business will adjust, resume, and succeed.

Set up your business for success in 2015 by adopting a flexible and adaptable attitude. The market is not done trying to right itself after its dramatic decline. Companies are still struggling to keep up and business in the industry is still fighting to climb to a stabilizing level. Avoid becoming the next company unable to cope with the changing market. Establish a well-constructed business plan for 2015 that gives you room to grow, adapt, and bend in all the ways the market will demand. The year 2015 could very well end up being the year we need to finally see the growth, confidence, and stability in the market that will boost the industry and carry its success into the future.

NationalMortgageProfessional.com

The year 2015 is shaping up to be one full of surprises and monumental advances in the mortgage industry. As the holidays approach and the housing market peters off with the introduction of cold weather and hectic schedules, we are able to take a step back and consider what is to come in the market and how best to prepare. Looking back on 2014, we saw mortgage rates fluctuate drastically, the housing market make some impressive strides towards improvement, and rules and regulations subjected to multiple adjustments. So what is the best way to approach business in 2015 to ensure your company excels? Let’s explore the two main qualities that will be essential to adopt in order to survive a unique year in the housing market: Flexibility and adaptability.

Housing values and mortgage rates gradually began working together in 2014 giving homebuyers the conditions they needed to make home ownership more affordable, reliable, and accessible. Since the crash of the housing market approximately seven years ago, the market continues to struggle to recover and gain stable footing in an economy that is also still on the mend. The rapid and incredible decline in the housing market naturally has left consumers wary even to this day. Most approach the idea of buying a home uneasily after witnessing or becoming a victim of the crash.

This is a major hurdle the industry must overcome. While 2014 was a productive year for recovery, we have a long way to go before we see a completely stable market. The year 2015 seems to be headed towards buoying itself as another recovery and stabilization year. But progress towards a balance between the housing market,

forced to quickly learn how to protect consumers, provide tools and advice needed in stressful situations, and recreate business models that worked more fluidly in the new economy. I believe the key is to develop and implement policies and guidelines that are rigid and accurate but that can be edited to best fit current situations in an ever-changing industry. It is also important to maintain flexibility.

Many companies tout flexibility as a main characteristic when conducting business with clients, partners, and consumers through providing customer service that meets the needs of each unique situation. This same flexibility is key when dealing with the government and regulators. Always be prepared to make the changes necessary to continue abiding by all laws of the industry. An open mind will also help give you the wiggle room necessary to be successful. A company that is flexible and able to adapt to changes is better equipped to provide the service necessary to survive in an incredibly competitive industry.

Both the crash of the housing market and the explosion of information saturating society have prodded consumers to take a more involved and active role in their decision-making process. By conducting research on the Internet and social media and becoming educated on their options, consumers have thereby demanded companies provide relevant information and unparalleled service in order to earn their business. Where does that leave mortgage companies today? Only the fit will survive! Being able to effectively and quickly adapt to the economy allows the focus to remain on the consumer by offering exceptional customer service. No consumer is going to choose to work with a company flailing to figure out how to adjust to a fluctuating market when another company has it dialed in and is prepared to go about business as usual. The focus must remain on the consumer and their needs during what can be a stressful and confusing process. Don’t fall victim to poor business practices due to lack of preparation. A business

“As we stand on the edge of 2015, six years into the so called ‘recovery,’ it is worth taking stock of how far we have come since the depths of the housing nadir, and to identify what is holding back a stronger recovery.�

Private Mortgage Insurers Are Ready to Step Up

By David Gansberg

Why is the housing market still weak and what can we do about it? As one always does at this time of year, it’s important to take a moment to reflect on the deeper trends impacting our industry and how we can work to improve the situation.

Where we are relative to the housing nadir As we stand on the edge of 2015, six years into the so called “recovery,� it is worth taking stock of how far we have come since the depths of the housing nadir, and to identify what is

DECEMBER 2014 n Georgia Mortgage Professional Magazine n

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holding back a stronger recovery.

There has been a significant rebound in home prices—the S&P/Case-Shiller national index is up 20 percent since bottoming in late 2011, with recent year-over-year growth of five percent. The volume of purchase mortgage originations has increased from $500 billion in 2011 to $661 billion during the past 12 months. The percent of mortgages in foreclosure has declined significantly and now comprises only about 2.4 percent of the total market (after peaking at 4.6 percent in 2011). The list of improvements goes on. So, by most any measure, the housing market is in much better shape today than several years ago. That’s the good news.

The bad news, the nation’s mortgage market is still nowhere near what a normal, healthy market should look like at this point in the economic recovery. The Mortgage Bankers Association (MBA) is forecasting total mortgage originations of $1.184 billion in 2015, up only six percent from 2014, and one of the lowest levels of originations since 2000. The overall level of homeownership has declined from a peak of 69 percent of households during 2004 to 2006, to 64 percent at the end of September 2014.

As we all know, there are many factors contributing to the state of the current market. On the origination side, we’re experiencing historically tight credit underwriting standards, a market dominated by the government-sponsored enterprises (GSEs), as well as market participants that are adjusting to significant regulatory changes and uncertainty. On the borrower side, rising home prices have reduced the affordability for first time homebuyers, and increased the inability of many first-time homebuyers to save enough for a downpayment. Fannie Mae’s National Housing Survey in May 2014 found that the majority of younger renters still aspire to own a home, but are pessimistic about their ability to get a mortgage. Down payments and credit

scores were cited as their top concerns. Debt-to-income levels and FICO scores of many potential homebuyers have been worsened by exploding student debt levels, exacerbated by large cuts in state funding for colleges and universities.

Sadly, these secular trends suggest homeownership rates will not return to pre-crisis levels anytime soon and there will be a higher percentage of investor owned homes going forward. This is unfortunate since home equity is the largest form of wealth for many households, and the sooner a family buys a home the more time they have to accumulate equity.

Improving mortgage availability as a national imperative It’s not all bad however. One positive is that there is increasing agreement that the solutions enacted to address the housing crisis have resulted in a number of unintended consequences that are holding back the housing market. This is the critical “missing link� holding back stronger consumer consumption, robust job growth, and ultimately, to driving the nation’s broader economy to a higher growth rate. For example, new construction is only about two percent of GDP at the moment, less than half the more normal level of five percent. Most economists believe that there is a significant multiplier effect with housing, with each new single family housing start creating three to four new jobs for a year.

So in a broad economic sense, it is a national imperative that all mortgage market participants find and implement solutions which improve mortgage availability in the coming year.

Stepping up to these challenges My industry, private mortgage insurance (PMI), is a less well-known segment of the mortgage industry that provides vital support to the U.S. housing market. At the center of

For the good of the housing market, we need to find ways to expand the market of high-quality borrowers to include somewhat lower FICOs, higher LTVs, and a broader range of mortgage product types—just as the MI industry has done since its inception prior to the Great Depression in the 1930s.

Like the government-sponsored enterprises (GSEs), the private MI industry is currently insuring one of the highest quality books of business we have ever seen. For example, the MI industry’s recently insured loans have average FICO scores of 750; loan-to-value ratios of 93 percent and nearly all mortgages are 30-year fixed

Restoring the housing market requires everyone’s efforts Just as there is no one contributing factor driving the problems in today’s mortgage market, there is no one solution to propel the market back to good health. The recovery of the U.S. housing market is dependent on its many market participants making changes or contributions to get the

nation’s housing market back on a more solid and balanced footing. We hope the cumulative effect of enough small steps taken by various players in the mortgage industry to expand opportunities for first-time homebuyers will finally move the industry back to full health.

My firm’s (Arch MI) parent company raised $500 million and, as an industry, we’ve collectively raised over $2.6 billion in capital to support existing mortgage portfolios and to apply to new mortgage originations. This stronger sector of the industry will only help this recovery.

As 2014 wraps up and we look ahead to the coming year, we know 2015 will face new tests and challenges. Our industry is ready to add stability to the mortgage finance system, to pay valid claims while, at the

same time, making homeownership a reality for millions of Americans and in doing so, providing the vital growth that the housing market needs.

David Gansberg is president and chief executive officer of Arch Mortgage Insurance Company, responsible for managing all aspects of Arch’s U.S. Mortgage Insurance group. He has spearheaded the creation of several successful insurance operating companies at Arch and has continually assumed positions of increasing responsibility. Prior to his current role, David held a variety of positions with subsidiaries of the Arch Capital Group, most recently serving as executive vice president of Arch Reinsurance Company, responsible for a variety of underwriting and operating areas.

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Widening the credit box for the health of the mortgage market

loans. While this is great for the risk profile of the insurance companies, a wider credit box as well as prudent underwriting standards would be better for the health of the overall mortgage market.

At the Mortgage Bankers Association (MBA) Annual Convention and Expo, Fannie Mae CEO Timothy J. Mayopoulos said Fannie Mae will soon begin buying 97 percent LTV mortgages. At the same time, Federal Housing Finance Agency (FHA) Director Mel Watt has also revealed that he supports the reintroduction of these. While the details of Fannie’s, as well as Freddie’s three percent-down program have yet to be announced, in a recent interview, Mayopoulos stated that private mortgage insurance would have a substantial role to play in expanding this.

While some critics have stated that this is backtracking to lending standards which could result in increased defaults, this is exactly where private mortgage insurance comes into play.

My firm has been working with our lenders to expand opportunities for homeownership through changes in credit guidelines, complementary homebuyer education programs, and by working with lenders, on ways to support expanding lending to nonQM loans. We currently insure 97 LTV mortgage loans under the right circumstances which typically include high credit scores, limits on maximum loan sizes and primarily fixed rate mortgages. While such loans are regarded as a higher risk, private MIs have a concentrated knowledge of the industry. We understand these risks and we can quantify them, and in playing our part spanning mortgage finance, insurance and risk mitigation we are rising to the challenge of helping to increase the availability of mortgages to allow qualified homebuyers to purchase homes.

NationalMortgageProfessional.com

mortgage insurance is our mission to protect lenders against credit risk, while extending the possibility of responsible homeownership to qualified borrowers. My company offers this via private capital to ensure that this protects the housing market by keeping first-loss exposure away from taxpayers and centered toward the private market.

The PMI industry was not immune to the effects of the economic downturn but in the past few years, the industry as a whole has undergone significant changes for the better. Our industry is soon to adopt new stringent capital standards mandated by the GSEs which will further strengthen the financial positions of those that meet these and their ability to pay insurance claims in future housing downturns. PMIs also have implemented new governing insurance rules, or Master Policies, that provide clear and strong coverage protections for lenders. Furthermore, the MI industry has developed new ways to help support the GSEs goals of risk sharing by participating in a number of new, innovative structured risk transactions.

All of these changes are leading the industry to a strong position which increasingly helps drive the mortgage market forward. And, by propelling the housing market to enable more Americans to own their own homes, private mortgage insurance is one segment of the mortgage finance system that is stepping up.

NMP E X C L U S I V E

NMP E X C

An Interview With

Paul Anastos, President Mortgage Master, a Division of loanDepot LLC

DECEMBER 2014 n Georgia Mortgage Professional Magazine n

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P

aul Anastos is

Will Mortgage Master continue

president of Mortgage

to expand its retail platform

Master, one of the

across the U.S.?

country’s largest

Yes ... Mortgage Master will be a

privately-owned

retail platform where we operate

mortgage companies

as a division of loanDepot. As a

headquartered in Walpole, Mass.

result, Mortgage Master will

The company, founded by Leif

benefit from loanDepot’s 50 state

Thomsen in 1988, just agreed to

license approvals, which will allow

merge with loanDepot LLC the

us to quickly expand our

nation’s second largest non-bank

distributed retail capabilities to

consumer lender. Upon closing of

National Mortgage Professional

remain a standalone brand?

new geographies. Additionally,

the transaction, the loanDepot

Magazine recently sat down with

Paul Anastos: Mortgage Master

loanDepot’s direct seller status

brands as a combined company

Paul to get some insight into the

will continue doing business as

with Fannie Mae, Freddie Mac and

will operate 130 retail lending

merging of these two lending

Mortgage Master. After the

Ginnie Mae will provide consistent

branches across the country, four

leaders.

transaction is completed,

pricing and improved execution

loanDepot LLC will be our

for Mortgage Master loan officers

Web production centers, and employ 3,700 full-time associates

Paul, thank you for taking the

corporate parent. We do not plan

to continue to expand our

including more than 1,200

time to speak with us today.

to change our name and we will

platform across the nation.

licensed loan officers serving

Could you start by telling us if

simply become a “division of”

borrowers in all 50 states.

the Mortgage Master name will

loanDepot LLC.

What impact will this

NMP E X C L U S I V E

L U S I V E

loans for any customers looking

transaction have on Mortgage Master’s loan officers?

For the most part, our loan officers have not had much direct competition or overlap with any

“As banks continue to withdraw from the mortgage market, a significant opportunity

to borrow money for debt consolidation, renovations, repairs, furniture, etc.

has been created for Mortgage Master

loanDepot brands. Any overlap

and other entities to grow.”

should be minimal, if any.

Do you anticipate any channel conflict to be a byproduct of this transaction?

loanDepot brings a number of capabilities that can help

While we are like-minded, we

accelerate Mortgage Master’s

have virtually no overlap in our

continued plan of improved

Culturally speaking, both

positions us to win every

business models and the markets

execution and growth, including its

companies have like-minded

relationship and deal, maintaining

we serve. Historically we have

50-state-licensed footprint and

management teams with like-

the best product, price, and

been successful because we don’t

direct agency sales with Freddie

minded goals. This was one of

fulfillment in the industry.

believe in growing for the sake of

Mac, Fannie Mae and Ginnie Mae

the single most critical factors

that will ensure exceptional pricing.

for us in making the decision to

Will the transaction have any

growth. Therefore, it was

move forward with loanDepot.

impact on Mortgage Master’s

extremely important to find a

Mortgage Master’s loan officers

Operationally/systematically

growth/expansion plans going

partner that shared our view and

will be able to offer new products

speaking, we will work to

forward?

had a structure and geographic

to our customers. For example,

improve support through

We are confident it will have a

focus that complemented our

beginning in early 2015 as a

enhanced technology and

positive impact as we expand our

own. We intend to run the models

loanDepot brand, we will be

infrastructure where we will add

reach, enhance our already

independent of one another as we

positioned to offer unsecured

items such as greater MSA

superior product options, offer a

know each of our businesses have

consumer loans of up to $35,000

opportunities, streamlined

more streamlined process,

unique characteristics and need to

to borrowers, which can be

approval processes for

improve our technology

be treated as such.

amortized for a term of five years

condominiums, internal co-op

infrastructure and have greater

or less and approved within 24-48

approvals and much more.

overall support. We hope this

What are the benefits to

translates to continued growth

customers?

Through our new agreement,

What benefits did Mortgage

with good people throughout the

We plan to continue to offer our

purposes, such as paying down

Master see in the merger with

U.S., while maintaining the

customers a diverse range of

or consolidating debt and

loanDepot?

reputation and brand name

products at very competitive

performing home improvements.

After careful consideration and

Mortgage Master has built over

rates. In addition, we expect our

We’ll continue to look for

extensive discussions, we

the last 25 plus years.

customers to benefit from

products such as this, which our

determined a strategic move like

competitors simply can’t offer.

this was by far the best and most

Are there any new products or

specifically more competitive

efficient solution. As banks

new services that will now be

high-balance pricing. Our

Will Mortgage Master continue

continue to withdraw from the

offered to new and existing

conforming, high-balance

to hire production personnel in

mortgage market, a significant

customers?

conforming and government loan

2014 and beyond?

opportunity has been created for

Yes. For a while now, we’ve

offerings will allow us to offer

Yes, definitely. We share a similar

Mortgage Master and other

wanted to further develop our

greater options with little-to-no

vision with our colleagues at

entities to grow.

relationships with the agencies.

overlays. Our product menu will

This move positions us to

also expand to include Fannie

favorable pricing opportunities,

loanDepot with respect to the

We are extremely confident

industry and how we want to

that our brand will benefit greatly

immediately offer consistent

Mae HomeStyle/Renovation

continue to grow. It’s a shared

by growing through this

guidelines and reduced overlays

Products, VA Renovation, and

vision of growing long-term and

partnership and continue on as

on conforming loans. This derives

more competitive MI pricing and

taking advantage of the

an industry leader. This move

from a proven model of already

options, to name a few. Beyond

opportunities that exist for a

positions us to take market share

selling directly to the GSEs on all

the product benefits, we plan to

larger combined entity.

both locally and nationally.

conforming, government, and high

provide even greater levels of

Further, as competitors

balance loans. Once loanDepot’s

service and unmatched

Do you anticipate any cultural

consolidate and struggle to find

new consumer lending division is

technology to all of our

or operational integration

their way, this partnership keeps

launched, we will also be

customers through our greater

challenges?

us ahead of the market and

positioned to offer consumer

national presence.

n Georgia Mortgage Professional Magazine n DECEMBER 2014

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85

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business hours. The funds could

growing or cannibalizing our own

Providing a

Helping Hand to First-Time Homebuyers 86

DECEMBER 2014 n Georgia Mortgage Professional Magazine n

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By Michael Hitt

F

or many Americans, buying and moving into a first home stands as one of the most enjoyable milestones of adulthood. Yet, eating pizza by candlelight amid a pile of moving boxes is an experience that many young people are missing out on—despite historically low interest rates.

For many young borrowers, it’s more difficult to buy a first house than it was for their parents, even when the young home buyers have solid incomes and strong credit histories.

A 2014 National Association of Realtors (NAR) survey found that firsttime buyers accounted for only 33 percent of home purchases—down five percentage points from 2013. Rising college debt levels, a difficult job market, and stricter mortgage lending rules all play a part in lower home ownership rates.

A recent study indicates that it takes an average 12.5 years to save up a 20 percent downpayment, which most lenders require to issue a mortgage.

So, a young couple—or a single person—who begins saving now likely won’t have saved enough for a downpayment before 2027, according to research by RealtyTrac that assumed an annual savings rate of 5.6 percent.

The median price for an existing home was $219,800 in August, accord-

ing to NAR, and the median price for a new home was $275,600. That translates into a 20 percent downpayment of $43,960 to $55,120. Of course, housing costs—and downpayments—are even higher in markets like California, the New York Metro region and the D.C. area.

For qualified borrowers with strong credit scores, mortgage insurance provides alternatives while providing assurance to lenders. Here are some of the down payment options borrowers have by using mortgage insurance—or saving 20 percent to put down—in the case of a typical $275,600 new home: l Five percent downpayment (with private mortgage insurance): $13,780 l Ten percent downpayment (with private mortgage insurance): $27,560 l Twenty percent downpayment (without mortgage insurance): $55,120 In addition, mortgage insurance offers additional freedom and flexibility for qualified borrowers, including: l Lender-paid mortgage insurance (MI) can give the purchaser more buying power—for the same monthly payment. l Borrowers with the ability to put some money down can achieve significant savings by paying for MI with a single up-front premium at closing. The upfront MI payment is

sometimes paid by the seller, the builder or another party as part of the sale negotiations, and it can also be financed as part of the mortgage loan. l A single upfront premium can give the borrower more buying power than with a government-backed mortgage insurance program such as FHA. With a five percent downpayment, a borrower can get as much as 20 percent more house with private mortgage insurance than with FHA.1 It’s also important to remember that private MI coverage can be cancelled when it’s no longer needed—and by law the servicer must cancel coverage when the mortgage reaches 78 percent LTV. FHA’s coverage is not cancellable if the loan-to-value (LTV) ratio is greater than 90 percent (meaning the buyer’s downpayment is less than 10 percent).

It is cancellable after 11 years if the LTV is less than or equal to 90 percent. Over the life of a 30-year mortgage, FHA insurance premiums can total as much as four times the cost of cancellable private mortgage insurance.

By enabling first-time homebuyers to take advantage of a low downpayment, lenders can help more young buyers and families to purchase now—before interest rates and home prices rise.

Acting now will allow first-timers to achieve the equity—and, potentially,

the benefits of rising home values— that can be so important as these nowyoung buyers later age into their retirement years.

As senior vice president–insurance operations, Michael Hitt oversees underwriting, loss management, loss mitigation, investigations and appeals. His goals for the operations team are to make the right decision on every loan and maximize efficiency and productivity without sacrificing quality, which are the guiding principles of United Guaranty’s risk management philosophy. A Clemson University graduate, Hitt joined United Guaranty in 1996. He was named vice president–insurance operations in 2012 and SVP in 2013.

Footnote 1—Assumptions: 95 percent LTV United Guaranty, and 96.5 percent LTV FHA, single premium paid at closing, property located in a stable housing market, two borrowers with a representative credit score of 760, 30-year conventional loan. Interest rate of 4.625 percent for Performance Premium; 4.25 percent for FHA. Results in a payment of $3,990 at closing and $1,173 monthly payment conventional loan with United Guaranty and $3,378 at closing and $1,174 average monthly payment during first five years for FHA. Performance Premium pricing as of May 12, 2014.

FHA rate source: FHA Mortgagee Letter 2013-4.

NCRA Celebrates 22nd Annual Conference in Palm Springs 01

02

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01 Terry Clemans, NCRA executive director; Nancy Fedich of CIS, the NCRA 2014 President’s Award Winner; and 2014 NCRA President Maureen Devine of Strategic Information Services 02 NCRA 2014 Annual Conference Keynote Speaker Dan Lier delivers his presentation 03 The Welcome Reception at the Riviera Hotel kicked off the 22nd Annual NCRA Conference 04 Kay Clemans, Steve Hamby of Trans Union, NAMB CEO Don Frommeyer, Barb Frommeyer and NCRA Executive Director Terry Clemans at the Rat Pack feature event, sponsored by Meridian Link 05 Mike Brown of CIS, 2015 NCRA president; Immediate Past NCRA President Maureen Devine from SIR; and Terry Clemans, NCRA executive director

By Terry W. Clemans

Congress may take.

One of the key events at the conference each year is the association’s annual change in leadership. “Thank you” to Springfield, Mass.-based SIR’s Maureen Devine for serving as 2014 NCRA president and to Mike Brown as 2015 president from Allamuchy, N.J.-based CIS. Thank you to three members of the board retiring this year: Tom Conwell (Credit Technologies), Sharon Bieszk (Midwest Mortgage Reports), and Nancy Fedich (CIS). Welcome our new directors Scott Ledbetter (Property Solutions) and Mike Thomas (CIC). It has been an honor and pleasure to work with such dedicated professionals who take time away from their businesses to help guide NCRA throughout the year.

Of course it was not all work, as we had to have some fun with a welcome reception for networking and catching up with longtime friends and new ones alike. This year the big bash was keeping with the Riviera Hotel theme, a “Rat Pack” party complete with the ultimate Frank Sinatra tribute band, the “Dry Martinis” and their wonderful lead, Nick D’Edgio, who was a spot on Sinatra impersonator. Thanks to all of those who worked so hard to plan and participate in NCRA’s 22nd Annual Conference in Palm Springs! We look forward to seeing everyone next year in Washington, D.C. Terry W. Clemans is executive director of the National Consumer Reporting Association (NCRA). He may be reached by phone at (630) 539-1525 or e-mail tclemans@ncrainc.org.

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Management Analyst in the Office of Field Policy and Management at the U.S. Department of Housing & Urban Development (HUD), represented HUD’s interests to the group.

From inside the industry, we had Don Frommeyer, chief executive officer and immediate past president of NAMB—The Association of Mortgage Professionals, participate in two sessions. Don was a panelist with Christi Lawson of Foley and Lardner LLP and Dr. Gary Lacefield of the Risk Mitigation Group discussing RESPA, and then provided an update on NAMB during a separate session. During lunch, one of the FICO 9.0 developers, Can Arkali, walked us through the data behind the changes to their newest credit score. Two of the three national repositories, Trans Union and Experian, took the stage to address a variety of issues from new products and services, data safety, and the ever-changing compliance issues brought about by the information hackers lurking the web. Additionally, presentations from several nationally known industry attorneys discussed everything from NCRA’s latest Supreme Court Amicus brief on the Texas Housing disparate impact case, resident screening and private investigator issues, compliance and best practices and to round out the session, Robert Strand from the American Bankers Association (ABA) provided us a housing focused review of the economy.

Of course with this year being the midterm election, Maureen Thompson, NCRA’s lobbyist from The Hastings Group, and I had the opportunity to review the results and analyze the path the 214th

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ast month, the National Consumer Reporting Association (NCRA) hosted their 22nd Annual National Conference for the housing consumer reporting industry. The event included 155 industry professionals who traveled to the beautiful California Palm Desert for three days of education and networking. For NCRA’s venue this year, we avoided the typical modern golf resort, as NCRA was in the Palm Desert in 2006 at the Renaissance Esmeralda Resort, this time electing to go with the retro-themed Riviera Hotel where Frank Sinatra and his “Rat Pack” hung out in bygone days, as the Riviera was one of the hottest places to be in Palm Springs in the “swinging 60s.”

The hotel was such a hot spot in the 1960s that it was even one of the stars in the movie, “Palm Springs Weekend,” as Connie Stevens and Robert Conrad lunched poolside in the film. Nancy Sinatra made the hotel her home during the 1966 filming of “The Wild Angels.”

Others who frequented the Riviera in those days read like a 60s Hollywood who’s who list: Elvis Pressley, Bob Hope, Raquel Welch, Dezi Arnaz, Sonny & Cher (Sonny Bono’s first restaurant was at the Riviera), and many more. It was an honor to perform at the Riviera in those days, with the very stage used for the NCRA Conference hosting some of the greatest acts of that era. Sinatra’s last performance at the Riviera was in 1988 as he

opened with “Come Rain or Come Shine.”

Whatever the location, NCRA’s conference always features a packed agenda filled with sessions addressing some of the most pressing topics in today’s housing consumer reporting industry. We started off each day with acclaimed business coaches this year featuring Dan Lier (sponsored by Trans Union) and then Robb Braun for the keynote sessions to help our members keep growing professionally. After starting each day with some inspiring messages and business building lessons, we then dove into the industry issues. To cover those, we assembled some of the leading representatives in the industry and government to address the specific challenges the housing consumer reporting industry is dealing with today.

A highlight in this year’s agenda from the governmental perspective was from a member of the group hand-selected by Sen. Elizabeth Warren to create what became the Consumer Financial Protection Bureau (CFPB), Edwin Chow, who is currently the Director of the CFPB’s 17-state western region and Hoa Phan from the CFPB’s financial services examination team. The CFPB discussed their role in actively monitoring and regulating the consumer reporting industry. The Federal Trade Commission (FTC), who shares regulation of the consumer reporting industry, sent former Deputy Directory of the Division of Consumer Protection and current Northwest Director, Charles Harwood, to talk about the FTC’s Fair Credit Reporting Act (FCRA) actions of the past year. Erich Yost, a

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Framework for a Consumer Complaint–Compliance Systems

By Winston McGregor

T

he mortgage servicing industry will remain in the crosshairs of regulators for the expected future and the importance of rectifying consumer complaints cannot be overemphasized. As surprising as this may seem, many mortgage servicers have disjointed systems (possibly through mergers or using a patchwork of old tracking methods) as they capture consumer data and attempt to produce reports. However with the increasing regulatory requirements and staggering penalties for non-compliance highlight the need to go beyond just getting data to acquiring meaningful actionable information is of utmost importance.

Consumer complaints is one area the Consumer Financial Protection Bureau (CFPB) will surely audit and based on prior actions they will not be lenient in handing down penalties. In addition, this is a prime criteria used by financial institutions to evaluate if to engage a third-party debt buyer or other third parties (i.e., mortgage servicers).

Regulatory examiners will investigate the impact and causes of a mortgage servicer’s consumer complaints, thus a strong consumer complaint system will help in demonstrating a good faith

effort to prevent and address consumer issues.

A mere database may allow a mortgage servicer to “get by” for a while, but in the long term a comprehensive “consumer complaint system” will prove superior. Before tackling the big picture of designing and integrating regulatory requirements into a consumer complaint system, a recommended first step is to distill the regulatory requirements to a quick reference outline. For illustrative purposes, I’ll use the amended requirements of Real Estate Settlement Procedures Act (RESPA)1. Let’s take a closer look at the framework for a consumer complaint system.

System integration, scalability and security Any consumer complaint system needs to be flexible enough to interface with various other systems—upload internal legacy data, account information from outside sources and download account information as needed. Other basic system elements are to provide accurate and timely updates of consumer laws and regulations, also, permit multisite and group use.

Furthermore, the system must have the capability to grow with business demands and incorporate regulatory changes. As such, the capability to add applications, users, locations, functionalities and so forth must all be considered during system design.

Information security is of particular concern given the sensitive information housed by mortgage services and the recent barrage of corporate security breaches. The challenges of granting access to more users and covering a regional or national area require stringent security protocols. Whether a cloud based or traditional hosting system is used, going forward, every system’s flexibility and security will be tested.

Capture, retrieve, display The system must go beyond the basic functions of capture and retrieval of rudimentary account information and linking to or directly recording conversations. Besides having dropdown options, the system must permit free style data entry to clarify borrower discussions and or requests. For example, in addition to the covered errors, such

“Consumer complaints is one area the Consumer Financial Protection Bureau (CFPB) will surely audit and based on prior actions they will not be lenient in handing down penalties.”

as failure to accept a conforming payment, failure to promptly apply an accepted payment or failure to refund escrow payment within 20 days and so forth, there is a “catch all” category that requires input (description of the alleged error, for example).

In order to give effective and efficient service, information must be accurate and readily accessed by personnel. A dashboard that displays an ata-glance insight into the consumer’s file is most valuable. The dashboard should display all pertinent information for a representative to intelligently discuss and advise borrowers.

Additionally, real-time data or as close as possible to real-time should be displayed. Whether the request is from a consumer, owner of the loan (bank) or internal personnel the dashboard must reflect accurate, timely and easy to understand information.

Task management A “best in class” consumer complaint system’s built-in logic will automatically notify personnel of the next steps, allow management to assign tasks, and feature follow-up task reminders.

According to the required next steps (i.e., error resolution, mitigation option, appeals, etc.), the system generates the appropriate standardized response which is mailed baring circumstance that requires manage-

documents and data into a servicing file within five days.”2 The capability to promptly and accurately create performance report metrics is a vital tool for identifying consumer touch points, guide development of pointed action plans and aide management decision making.

Monitor A proactive approach to monitoring will greatly preclude regulatory violations.

In general, not specific to RESPA, an effective monitoring system includes, among other features, regularly scheduled reviews of: 1. Disclosures and calculations for various product offerings 2. Document filing and retention procedures 3. Posted notices, marketing literature and advertising 4. Review internal compliance communication systems to management and staff 5. Insure complete and accurate consumer compliance law updates are integrated into the consumer complaint system 6. Of course, monitoring the various aspects of consumer complaints and the system’s functionalities3

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A well-designed consumer complaint monitoring system allows the institution to identify areas of continued compliance weakness and verify the success of corrective actions which would avoid the compounding of regulatory miscues.

Reports

Footnotes 1—12 C.F.R. §1024 [RESPA (Regulation X)].

2—12 CFR 1024.38(c)(2)(i).

3—FDIC-Compliance Examination Manual Compliance Management System (www.fdic.gov/regulations/compliance/manual/index.html).

Winston McGregor, JD, MBA, CAMS has worked for more than 20 years with Fortune 100 companies on compliance, legal drafting and negotiating. As a compliance and operational consultant, he bridges the gap between legal requirements and practical business operations, as his recommendations emphasize clarity, practicality and ease of understanding. In addition, he is a published author in the acclaimed The Banking Law Journal and Asset Recovery Management. He may be reached by phone at (702) 325-9434 or e-mail wfmcgregor@gmail.com.

Love your job? Love your company? We want to hear about it. We're compiling a list of the best mortgage companies to work for. There will be a total of 200 winners selected on a National and Regional basis.

Go to http://nationalmortgageprofessional.com/submittopjobs to vote for your company. Please only one submission per person or your company may be disqualified. Your company must be involved in originating mortgages, be at least two years old with a minimum 15 employees.

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n Georgia Mortgage Professional Magazine n DECEMBER 2014

A major thrust of the reporting function is to turn an abundance of data into actionable information. For example, the reports generated, among other functions, reveal patterns, trends and issues of possible concern for management and a board of directors.

Management can self-identify potential issues (i.e., training, procedures, responsiveness, etc.) then isolate the problem and implement corrective action.

The reports use real-time data to filter criteria such as: location, product, type of issue, action taken, representatives involved, mitigation option offered, roll-up by business unit, and so on. According to the security access protocols, the reports should be sharable companywide. Additionally, ad hoc reports request by the board, internal auditors and the like must be produced promptly and accurately. Note that a mortgage servicer must maintain records to facilitate the “compiling such

Conclusion An institution’s comprehensive consumer complaint system leverages technology and uses analytical tools to drive efficiency. Pro-actively mitigating risk, while timely and accurately addressing inquiries enhances consumer brand satisfaction and blunts escalations before consumer concerns become full-fledged CFPB consumer complaints.

NationalMortgageProfessional.com

ment’s attention.

If the next steps are not addressed within the predetermined timeframe, the system automatically sends an escalating e-mail to management. The tracking and the notification (reminder-escalation) elements of the system drives accountability, timely task completion and compliance.

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StreetLinks Lender Solutions (800) 778-4920 www.streetlinks.com sales@streetlinks.com StreetLinks Lender Solutions provides an innovative and comprehensive suite of valuation and service solutions used by lenders, servicers and appraisers nationwide to improve everyday business operations.

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heard on the street continued from page 60

sion, the company has opened a new operations center in nearby Mansfield, Mass., which will support the Braintree office and other local branches.

“We’re proud of having helped so many Massachusetts residents buy their first homes through MassHousing, which gives first-time buyers the education and assistance to own a piece of the American dream,” said Brian Koss, executive vice president of Mortgage Network. “Brian and his team in our new Braintree office are well-positioned to continue this trend.”

GLASS

Mortgage Professionals to Watch

COLORETTI

l United Wholesale Mortgage (UWM) has announced the appointment of Justin Glass to the position of chief digital officer (CDO) where he will focus on UWM’s innovation and client service experiences.

Mortgage Network Continues New England Expansion in Massachusetts

l The United States Senate has confirmed President Barack Obama’s nomination of Nani Coloretti to serve as Deputy Secretary of the U.S. Department of Housing & Urban Development (HUD). As the second most senior official at HUD, Coloretti will manage the Department’s day-to-day operations, including a $45 billion annual budget and approximately 8,500 employees.

Mortgage Network Inc. has announced the opening of a new branch office in Braintree, Mass., focusing on helping borrowers throughout Boston’s South Shore region with their home financing needs, and offering a full range of mortgage loans that include conventional, non-conventional, government and reverse mortgage loans.

The new office will be led by Brian Moloney, who has 39 years of mortgage banking experience in the South Shore area of Boston in addition to an extensive knowledge of mortgage loan products. Joining Moloney will be senior loan officer Wayne Olson, loan officers Joe Cappola and Jeff Boggier, and sales assistant Karen Regan. As part of Mortgage Network’s continued expan-

l Inlanta Mortgage has announced its expansion in the state of Michigan with the addition of a new mortgage branch office in Grand Haven, Mich. to be managed by longtime local resident and veteran loan originator Kolbey Nelson. l ServiceLink, A Black Knight Company, has announced that Stephanie Saunders and Lyndi DeLisio have joined its national sales team. Saunders will serve as national sales executive and will support the company’s Default Sales

NELSON

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self-directed online real estate marketplaces, and this acquisition fits perfectly with the future of our company,” said Altisource Chief Executive Officer William Shepro. “It allows us to combine the expertise we offer the online home auction industry through Hubzu with an innovative residential sales model to create a unique, best-in-class real estate e-commerce engine. As the real estate market continues to evolve, this acquisition puts us in a strong position to work with real estate agents, home buyers and home sellers to deliver value through the fast growing limited service home sales market.”

Last year, the limited service and self-directed real estate category accounted for 30 percent of all home sales, according to research from the National Association of Realtors (NAR).

Owners.com was launched in January 1996 and today has become one of the largest marketplaces of self-directed home buyers and sellers. Last year consumers listed approximately 35,000 properties for sale on Owners.com with an aggregate asking price of approximately $11.5 billion. Owners.com offers home sellers access to the key professional listing boards necessary to market a home and professional transaction support during the process.

“Altisource has brought incredible technology innovation to real estate,” said Owners.com Chief Executive Officer Steve Udelson. “We are very excited to join such an exceptional organization with the same focus on creating efficiencies in real estate that benefits all parties involved, including agents and consumers. The Owners.com team is committed to creating more market impact, and we are confident that being part of Altisource will amplify our ability to drive change and grow our business.”

LEBLANC

Division. Lyndi will serve as a national sales representative for origination sales for ServiceLink, where she will focus on the VA, home equity and distributed retail programs.

l Cheryll A. LeBlanc has joined Mortgage Network Inc. as a district manager, based in the company’s Auburn, Mass. branch office where she will be responsible for opening new Mortgage Network offices in the central Massachusetts area.

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HAMILTON

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DUCHOUQUETTE

l Patricia Hamilton, a sales leader with more than 30 years of mortgage industry experience, has joined The StoneHill Group as business development manager.

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

New Ginnie Mae Tool Will Increase Issuer Effeciveness, Strengthening Ginnie Mae’s Model

By Ted W. Tozer The evolving housing finance landscape has forced everyone in the industry to evaluate the best way to continue providing a valuable service to their stakeholders and efficiently manage risk. That is also our focus at Ginnie Mae. We are successfully balancing the interests of our more than 400 Issuers, while providing a blueprint for success. To that end, Ginnie Mae will launch its Issuer Operational Performance Profile (IOPP) tool in early 2015.

The new IOPP tool provides Issuers with a framework and methodology where they can gauge their effectiveness against Ginnie Mae’s expectations about Issuer performance. IOPP also measures an Issuer’s operational and default performance against their peers. The launch of the IOPP will help Ginnie Mae continue to ensure that a safe, effective, and government-backed channel for the flow of capital for U.S. mortgages exists, reducing risk to the taxpayer and providing much-needed capital for the government.

Essentially a “scorecard,” the IOPP will provide a method in which Issuers 93 will be scored based on a pre-determined set of metrics. The IOPP will ensure Issuers are performing well, or if they aren’t, it will provide a way for them to identify and examine areas for improvement so adjustments can be made.

This tool will improve Ginnie Mae’s management capability and allow Issuers to better manage their performance. The IOPP will also help drive internal consistency in monitoring the business activities across the broader population of Ginnie Mae Issuers and lay the basis for providing constructive feedback to our Issuers.

In the early phases of the development of the IOPP tool, Ginnie Mae worked closely with Issuers for help defining and validating the metrics that would be most useful to the IOPP and the Issuers. By involving the Issuers in the IOPP’s development, the Issuers had a stake in the process and helped ensure Ginnie Mae was focused on identifying metrics which Issuers were able to influence to help improve their performance and outcomes within the IOPP. While Issuers contributed to the determination of the metrics, Ginnie Mae weighted each metric within the IOPP based on its significance and importance to Ginnie Mae. Within the IOPP, each Issuer will be rated against a predefined peer group, based on portfolio unpaid principal balance (UPB). The end result will be two scores for each Issuer—one for operational management and one for delinquency management—both of which will be calculated and reported each month.

The operational management score will be based on key metrics such as failure to report UPB, timely reporting of UPB corrections, and a compliance review metric based on findings from Ginnie Mae’s most recently-completed compliance review of the Issuers. The metrics behind the delinquency management score will be based on early payment defaults, 60- to 90-plus day roll rates, DQP ratio, workout effectiveness, DQ time and percentage of loans in foreclosure.

Ginnie Mae is looking forward to launching the IOPP in 2015 and working with its Issuers to continue to provide stability to the housing finance industry and to meet its mission of bringing global capital to provide affordable housing opportunities to millions of Americans.

Ted W. Tozer is was sworn in as president of Ginnie Mae on Feb. 24, 2010, bringing with him more than 30 years of experience in the mortgage, banking and securities industries. As president of Ginnie Mae, Tozer actively manages Ginnie Mae’s $1.5 trillion portfolio of mortgage-backed securities (MBS) and more than $460 billion in annual issuance.

n Georgia Mortgage Professional Magazine n DECEMBER 2014

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l John Duchouquette has joined the Collateral Analytics team as senior vice president, focusing on executive account management and developing new markets. l FFC Mortgage Corporation, a New York-based lender, has announced the hiring of Keith J. Dugas as regional vice president for the southern United States. l The Mortgage Bankers Association (MBA) has announced that Kelley J. Williams has joined the association as associate vice president of legislative affairs. l Wipro-owned Opus Capital Markets Consultants LLC, a provider of mortgage due diligence has announced the appointment of John Levonick as chief compliance counsel. l Default Servicing Technologies LLC, creators of the DispoSolutions REO management platform and the ValuationSolutions enterprise collateral valuation management technology, has announced that the firm has hired industry veteran Doring Lloyd as vice president of business development. l Michael Arman has joined Procida Funding, manager of the 100 Mile Fund specializing in the $3-$30 million market, as chief financial officer, overseeing all accounting, tax compliance, treasury, reporting, loan servicing and systems for

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the fund and its manager, and also serve as a conduit between lenders, participants and investment partners.

Churchill Mortgage has announced that Eric Webb has joined the company assistant vice president and underwriting manager, bringing more than 25 years of industry expertise in underwriting, closing, operations, credit policy, risk management and quality assurance to Churchill.

GSF Mortgage has announced the addition of Bill DiBernardo, CMPS as branch manager in the company’s Bricktown, N.J. location. GSF has also announced the addition of Dorothy “Dottie” Spitaleri as a mortgage loan originator to the firm’s team in Sarasota, Fla. Jon Gordon has also joined the GSF team as branch manager in GSF’s Colorado Springs, Colo. location.

Embrace Home Loans has announced a number of nationwide appointments, including Jeffrey Daniels and Jeff Tramel as a senior loan officers, and Michael Abbott as mortgage loan officer in the company’s Franklin, Tenn. office; Marc Welz as sales manager and loan officer in the company’s Middletown, R.I. office; and Marc Covino as senior loan officer in the Wilmington, Del. branch.

HomeUnion has named Joe Barr, Ph.D. as their new chief analytics officer.

Data Facts Inc. has announced Mortgage Lending Sales Director Janice Cabell’s territorial oversight expansion into Texas and surrounding areas.

Gateway Mortgage Group has announced the addition of Steve Frink as regional vice president, where he will be responsible for retail production and expansion efforts in the Southeast U.S. region.

Reverse Mortgage Funding LLC has announced that it has hired Eric Ellsworth as western regional sales leader for retail distribution, where he will execute RMF’s plan to drive sales growth in the western states.

National Association of Women in Real Estate Businesses Hosts Groundbreaking Inaugural Conference

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he National Association of Women in Real Estate Businesses (NAWRB) recently held their Inaugural Conference in Long Beach, Calif., providing more national awareness, opportunities, and access to capital for women and women-owned businesses specializing in the housing economy.

For the first time since passage of the legislation and outside of Washington, D.C., a woman-owned business association leader, NAWRB, organized and sponsored this unique event for the women-owned business community to put laser focus on the opportunities created by Dodd-Frank Section 342. By bringing together in one venue the author of Dodd-Frank Section 342, Congresswoman Maxine Waters, representatives from the Office of Minority and Women Inclusion (OMWI) at the federal agencies, the regulated entities including Freddie Mac, Fannie Mae, Wells Fargo, Chase, MUFG Union Bank and Morgan Stanley, the Small Business Administration (SBA) Women’s Business Ownership, and the

National Women’s Business Council (NWBC), conference delegates were provided with unprecedented insight to the legislation’s purpose, key WomenOwned Business (WOB) statistics, and the regulated entities’ meaningful efforts to increase opportunities for women employment and WOB suppliers to their organizations.

Rep. Waters’ opening keynote address was conducted as an interview in a living room-style setting. NAWRB CEO Desirée Patno proposed questions regarding Rep. Waters’ first-hand perspective on the progress of Section 342, and what can be done to provide greater awareness and implementation of the OMWI requirements across the federal agencies. Rep. Waters outlined her vision behind authoring the section which included opening up opportunities in the private sector and government procurement opportunities, and ensuring women and minorities were getting real opportunities that may have previously suppressed.

“This is the first OMWI awareness event of this type (sponsored by and for

the business community) outside of D.C.,” said Rep. Waters, as she reiterated the importance of events such as the conference to facilitate the adoption and integration of the requirements at the ground level.

The NAWRN Conference continued with an OMWI panel, featuring Stuart Ishimaru, OMWI Director, CFPB and Melodee Brooks, OMWI Senior Deputy Director, FDIC who were on hand to address the conference delegates on their agency’s mission, their roles, and discuss opportunities through their agencies for women and WomenOwned Businesses (WOB) in the housing economy. This and subsequent panels provided the delegates with specific information and best practices they could implement immediately upon return to their businesses.

Section 342 established the requirement for an OMWI for each federal agency that must include a director to implement standards such as equal employment opportunity with racial, ethnic, and gender diversity; an assessment of diversity policies and

practices within their respective agencies as well as the regulated entities under their jurisdiction; and increased participation in programs and contracts by women-owned and minority-owned businesses. Section 342 also promotes “inclusion in all levels of business activities,” according to the legislation.

“Although the OMWIs and the regulated entity requirements are not as well-known due to the young age of Dodd-Frank, continued outreach programs and awareness are essential to realize the impact of the legislation and to facilitate implementation in the business communities across the U.S. There is still a long road until the duties in Section 342 are operating to the best of their abilities, but with strong advocates such as NAWRB, minorities and women are one step closer to gaining access to and winning more opportunities and representation,” said Patno.

“After first covering the OMWIs four years ago, it was truly an honor to have their history-making presence at this incredible event.”

calendar of events N A T I O N A L

JANUARY 2015 Thursday-Friday, January 29-30 California Association of Mortgage Professionals 2015 Sales & Marketing Conference Hilton Los Angeles/Universal City 555 Universal Hollywood Drive Universal City, Calif.

For more information, call (916) 448-8236, e-mail info@ca-amp.org or visit www.thecampsite.org.

Wednesday-Friday, March 18-20 American Land Title Association (ALTA) 2015 Business Strategies Conference Sheraton Philadelphia Downtown 201 North 17th Street Philadelphia For more information, call (202) 296-3671, visit www.alta.org or e-mail service@alta.org.

Monday-Wednesday, May 18-20 American Land Title Association 2015 Federal Conferenceand Lobby Day Mandarin Oriental Hotel 1330 Maryland Avenue SW Washington, D.C. For more information, call (202) 296-3671, visit www.alta.org or e-mail service@alta.org.

OCTOBER 2015 Wednesday-Friday, October 7-10 American Land Title Association 2015 Annual Convention Westin Copley Place Boston 10 Huntington Avenue Boston, Mass.

For more information, call (202) 296-3671, visit www.alta.org or e-mail service@alta.org.

APRIL 2015 Thursday, April 2 Texas Mortgage Roundup 2015 Hyatt Regency San Antonio 123 Losoya Street San Antonio, Texas For more information, call (860) 922-3441, e-mail info@agilityresourcesgroup.com or visit www.txmortgageroundup.com.

JUNE 2015 Friday, June 5 2015 Southwest Mortgage Fest Embassy Suites Hotel & Spa 1000 Woodward Place Northeast Albuquerque, N.M. For more information, call (860) 719-1991, e-mail info@agilityresourcesgroup.com or visit www.swmortgagefest.com.

Saturday-Monday, October 17-19 2015 NAMB National Conference Luxor Resort and Hotel 3900 South Las Vegas Boulevard Las Vegas For more information, call (860) 719-1991, e-mail info@agilityresourcesgroup.com or visit www.nambnational.com.

Wednesday, April 29 2015 Midwest Mortgage Matchmaker Conference Ameristar Casino Resort & Spa 1 Ameristar Boulevard Saint Charles, Mo. For more information, call (314) 690-1504, e-mail information@mamp.biz or visit www.mortgage-matchmaker.com.

Monday-Wednesday, June 22-24 Ultimate Mortgage Expo 2015 The Hotel Monteleone 214 Royal Street New Orleans, La. For more information, call (860) 719-1991, e-mail info@agilityresourcesgroup.com or visit www.ultimatemortgageexpo.com.

MAY 2015 Tuesday, May 12 2015 Great Northwest Mortgage Expo Crowne Plaza Downtown Portland 1441 NE 2nd Avenue Portland, Ore. For more information, call (503) 567-9326, e-mail info@oamponline.com or visit www.greatnorthwestexpo.com.

AUGUST 2015 Thursday-Friday, August 20-21 Louisiana Mortgage Lenders Association (LMLA) 2015 Education Conference The Hilton New Orleans Riverside Hotel 2 Poydras Street • New Orleans, La. For more information, call (225) 590-5722 or visit www.lmla.com.

To submit your entry for inclusion in the National Mortgage Professional Calendar of Events, please e-mail the details of your event, along with contact information, to newsroom@nmpmediacorp.com. * Looking for additional exposure at key industry events?

Call 516.409.5555, ext. 4 to discover how to maximize your event coverage.

Sunday-Wednesday, October 18-21 Mortgage Bankers Association Annual Convention and Expo 2015 San Diego Convention Center 111 West Harbor Drive San Diego, Calif.

For more information, call (800) 793-6222 or visit www.mortgagebankers.org.

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n Georgia Mortgage Professional Magazine n DECEMBER 2014

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 www.mbanj.com.

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

NationalMortgageProfessional.com

FEBRUARY 2015 Tuesday, February 17 Florida Association of Mortgage Professionals (FAMP) Broward Chapter 2015 Annual Trade Show Bonaventure Resort Conference Center and Spa 250 Racquet Club Road Weston, Fla. For more information, call (954) 986-0808 or e-mail admin@browardfamp.org.

M O R T G A G E

DECEMBER 2014 n Georgia Mortgage Professional Magazine n NationalMortgageProfessional.com

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