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March 2013

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Volume 5, Number 3

Company

Web Site

Page

ZINE

A Special Look at “Trends in Mortgage Lending” The Road to 2015: Recovery, Consolidation and Mortgage Production Forecasts By Rick Roque ........42 Quality Control Trends Positively Impacting the Market By Tommy A. Duncan, CMT..................................45 Leveraging Technology to Move Lenders Back to Core Business By Lisa M. Weaver, CMB ..........................46 2013: How to Not Compromise With Adoptable Trends By Leonard Ryan ......................................................47 New Trends and Challenges in Mortgage Qualification and Servicing By Ron D’Vari, Ph.D., CFA ..........48

America’s Choice Home Loans .......................... www.achlonline.com ............................................25 American Financial Resources Inc. .................... www.afrwholesale.com ..................Inside Back Cover Brokers Compliance Group................................ www.brokerscompliancegroup.com ........................37 Calyx Software ................................................ www.calyxsoftware.com ......................................12 CBC National Bank .......................................... www.cbconnex.com ............................................49 Cendix ............................................................ www.zairmail.com/mortgage_marketing ................12 Credit Plus, Inc. .............................................. www.creditplus.com/undisclosed-debt-monitoring ..17 Data Facts........................................................ www.datafacts.com ..............................................19 Document Systems, Inc./DocMagic .................... www.docmagic.com ..............................................9 Equity Loans LLC .............................................. mathew@equityloans.com ......................................5 FindMortgageJobs.com .................................... www.findmortgagejobs.com ..........................14 & 48 First Guaranty Mortgage Corp. .......................... www.fgmcwholesale.com ......................................39

Features The More You Know, the Better You Are!

By Joan Piantadosi..................................................................4 The Elite Performer: Paddle the Waves of the Future

By Andy W. Harris, CRMS ........................................................4

HomeBridge .................................................... www.homebridgewholesale.com ..........................11 Hometown Lenders ........................................www.whotookmybacon.com ..................................13 Meadowbrook Financial Mortgage Bankers Corp. .. www.mortgagesalesjob.com ..................................29 Menlo Park Funding ........................................ www.menloparkfunding.com ................................45

HECM Counseling: A Powerful Borrower Safeguard

By Ralph E. Rosynek Jr. ..........................................................6

NAPMW .......................................................... www.napmw.org ..................................................16

Procedures and Examinations: Part I—Mortgage Brokers By Jonathan Foxx ....................................................8

REMN (Real Estate Mortgage Network)................ www.remnwholesale.com/safeguard ......................7

Bonded With NAMB: Am I Paying Too Much for My License Bonds? By Mason Grashot, CPA ..................10 Lykken on Leadership: Be a Leader; Not a Cheater By David Lykken ..........................................14 Competition in the Mortgage Industry By Matt Seu ..........18 For Managers Only: Developing a Company Culture By Dave Hershman ..................................19 NAMB Perspective ........................................................20

Banks Look to Mitigate Big Data Risks Through Information Governance By Jim McGann ............26 Make the Grass Greener on Your Side of the Fence

By Jean LeBlanc ..................................................................28 NMP Mortgage Professional of the Month: Melinda Wilner, Wholesale Underwriting Manager, United Wholesale Mortgage By David J. Coster ......................30

FHA Insider: FHA Continues to Bail Itself Out on the Shoulders of New Borrowers By Jeff Mifsud ........34 HECM to Undergo Major Changes ................................38

Columns Heard on the Street ........................................................6 NMP News Flash: March 2013 ......................................12 NMP Mortgage Professional Resource Registry ..........52 NMP Calendar of Events ................................................56

Reverse Mortgage Solutions .............................. www.RMPath.com ................................................51 Streetlinks LLC ................................................ www.streetlinks.com ....................Inside Front Cover TagQuest ........................................................ www.tagquest.com ..............................................33 The Bond Exchange .......................................... www.thebondexchange.com ................................42 Titan List & Mailing Services, Inc. ...................... www.titanlists.com ..............................................41 United Wholesale Mortgage .............................. www.uwm.com ........................................Back Cover Vanguard Funding LLC ...................................... www.unleashvpower.com ....................................15

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New to Market ................................................................36

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Postal Service to Stop Delivering Mail on Saturdays: No Impact on Timing of Disclosures

By Melanie A. Feliciano Esq. ....................................................34

Residential Home Funding Corp. ...................... www.RHFBranch.com ..........................................35

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Credit Report Accuracy Debate Renewed

by FTC Report and CBS 60 Minutes: 40 Million Mistakes By Terry W. Clemans ..................................24

PB Financial Group Corp. .................................. www.pbfinancialgrp.com ......................................12

Volume 5 • Number 3 1220 Wantagh Avenue • Wantagh, NY 11793-2202 Phone: (516) 409-5555 • Fax: (516) 409-4600 Web site: NationalMortgageProfessional.com STAFF Eric C. Peck Editor-in-Chief (516) 409-5555, ext. 312 ericp@nmpmediacorp.com Joel M. Berman Publisher - CEO (516) 409-5555, ext. 310 joel@nmpmediacorp.com David J. Coster Senior Editor davidc@nmpmediacorp.com Robert Peter Ottone Assistant Editor (516) 409-5555, ext. 314 robertpo@nmpmediacorp.com Joey Arendt Art Director joeya@nmpmediacorp.com Jon Blake Advertising Coordinator (516) 409-5555, ext. 301 jonb@nmpmediacorp.com Beverly Koondel National Account Executive (516) 409-5555, ext. 316 beverlyk@nmpmediacorp.com Scott Koondel Billing Coordinator (516) 409-5555, ext. 324 scottk@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.

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 Credit 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.

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Onward we march to the Hill This month, I will have the privilege of being an active part of the NAMB Annual Legislative & Regulatory Conference in Washington, D.C. This event provides a unique perspective into the halls of Congress as a portion of the event will involve members of NAMB lobbying their elected officials on Capitol Hill. It’s all about strength in numbers and I am hoping that our visits to our elected senators and representatives will be a great experience for all parties involved. NAMB’s lobbying team, as voting constituents, will take part in meetings with our decision-makers in D.C. and educate them on the issues impacting you, the local mortgage professional. You are the one who keeps the American Dream of Homeownership alive and well in their community and every other American city.

On the education front, we as mortgage professionals today must keep track of the issues facing our business on a daily basis. From LO compensation, to the latest mandates handed down by the Consumer Financial Protection Bureau (CFPB) via the Dodd-Frank Act, it seems like mortgage professionals today have a full-time job in addition to originating loans … a career in keeping track of these ever-changing regulations and following these rules. To that end, firms like Lenders Compliance Group, led by National Mortgage Professional Magazine regular contributor Jonathan Foxx, comes into play. Jonathan will be presenting a full-day compliance symposium during the NAMB Legislative Conference in D.C. with the aim of arming attendees with the info needed to educate their elected senators and representatives.

“In an era of exponential growth in regulations affecting residential mortgage lenders and originators, we find ourselves on the cusp of new ways and means to reconstitute our commitment to provide safe and sound loan originations,” said Foxx. “Some people feel that too many regulations mire us in process. Others feel enforcing existing regulations is generally sufficient. Most believe that there has never been a more oppressive regulatory environment. But the truth is that regulations have always been with us, at times growing and occasionally receding.”

Jonathan has lent his keen mind for all things regulatory to our magazine since its inception, and this month is no exception. To accompany his presentation in D.C. during the NAMB Legislative Conference, Jonathan has provided our publication with a companion piece on page 8 of this issue, titled “Procedures and Examinations: Part I—Mortgage Brokers.”

“Many years ago I coined the term ‘mortgage risk management,’” said Foxx. “I wanted compliance to be associated with managing the risk parameters that are inherent in residential mortgage loan originations.

‘Compliance,’ as a term, seemed too broad. What I advocated then, as now, was identifying, mitigating, reducing or eliminating risk. Regulations will come and go, but mortgage risk will always remain.”

The trending marketplace As already stressed, the trends in compliance and the avoidance of risk are issues that we must keep up with in the industry in order to remain compliant and survive in today’s marketplace. This month, we have several authors who will share their thoughts on regulatory trends and other forces that will shape the marketplace for years to come. Rick Roque of Menlo Company gets things underway on page 42 with his article on the state of the industry over the next two years. Tommy A. Duncan of Quality Mortgage Services LLC looks at the positive direction the industry has headed in since tighten quality control (QC) standards have been implemented in his article on page 45. Lisa M. Weaver, CMB of ISGN discusses technological trends and their impact on the industry in her article on page 46, and on page 47, Leonard Ryan of QuestSoft discusses regulatory compliance in his article “2013: How to Not Compromise Compliance With Adoptable Trends.” Rounding out our focus this month is NewOak’s Ron D’Vari, Ph.D., CFA on page 48 with his look into trends and qualifying borrowers in today’s regulatory environment.

Our Mortgage Professional of the Month …

This month, we had the pleasure to chat with wholesale underwriting manager for United Wholesale Mortgage, Melinda Wilner. Melinda stresses the success of her company lies deep within its quick turntimes and its deep-rooted dedication to stellar customer service. Check out Melinda’s story by David J. Coster on page 30 of this issue.

It all matters…

Compliance, the ability to keep ahead of the daily twists and turns the industry throws at us, and the ability to make a living … does it ever get simple for us? Do we want simplicity? We stressed when the government mandated new industry rules. We feared that the mortgage profession may become a thing of the past, crushed by the big banks. But has that happened? In my opinion, the increase in regulations has had a cleansing effect on the industry, eradicating the bad actors and bringing back a renewed sense of pride across the board. As my good friend Jonathan Foxx explains: “The residential mortgage loan flow process and compliance with all the mortgage acts and practices are cemented together. And there will always be some tension between sales and compliance. However, a stable mortgage industry depends on being receptive to the fulfillment of appropriate mortgage risk management.”

I could not have said it any better myself.

Sincerely,

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

Copyright © 2013 NMP Media Corp.

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

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From The Publisher’s Desk

NATIONAL

March 2013

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O F F I C E R S

The Association of Mortgage Professionals

National Association of Professional Mortgage Women

2701 West 15th Street, Suite 536 v Plano, TX 75075 Phone #: (703) 342-5900 v Fax #: (530) 484-2906 Web site: www.namb.org

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

NAMB 2012-2013 Board of Directors

National Board of Directors 2012-2013

Donald J. Frommeyer, CRMS—President Amtrust Mortgage Funding Inc. 200 Medical Drive, Suite D v Carmel, IN 46032 (317) 575-4355 v dfrommeyer@amtrust.net

President Candace M. Smith, CME (512) 306-6354 president@napmw.org

Vice President—Northwestern Region Debbie Tofte, GML (425) 483-3359 dtofte@gmail.com

John Councilman, CMC, CRMS—Vice President AMC Mortgage Corporation 11920 Fairway Lakes Drive, Suite 2 v Fort Myers, FL 33913 (239) 267-2400 v jlc@amcmortgage.com

President-Elect Jill Kinsman (206) 344-7827 jill.kinsman@usbank.com

Vice President—Western Region Lyman King III, CMI, CME (916) 967-4653 lking@gemcorp.com

Fred Arnold, CMC—Treasurer American Family Funding 24961 The Old Road, Suite #101 v Stevenson Ranch, CA 91381 (661) 284-1150 v fred.arnold@affloans.com

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

Secretary Sara Vasura (703) 255-7460 svasuranapmw@gmail.com

Kay A. Cleland, CMC, CRMS—Secretary KC Mortgage LLC 200 South Wilcox Street #224 v Castle Rock, CO 80104 (720) 810-4917 v kay@kcmortgagecolorado.com

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

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

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

Vice President—Eastern Region Katrica J. Driscoll, MML, CME, CMI (919) 877-5683 kdriscoll4@nc.rr.com

Parliamentarian Hulene Works (972) 494-2788 admin@napmw.org

Rocke Andrews, CMC, CRMS—Director Lending Arizona LLC 1996 North Kolb v Tucson, AZ 85715 (520) 886-7283 v randrews@lendingarizona.net

National Consumer Reporting Association

Rick Bettencourt—Director Mortgage Network 300 Rosewood Drive v Danvers, MA 01923 (978) 777-7500 v rbettencourt@mortgagenetwork.com

Andy W. Harris, CRMS—Director Vantage Mortgage Group Inc 15962 SW Boones Ferry Road, Ste. 100 v Lake Oswego, OR 97035 (503) 496-0431, ext. 302 v aharris@vantagemortgagegroup.com Olga Kucerak, CRMS—Director Crown Lending 328 West Mistletoe v San Antonio, TX 78212 (210) 828-3384 v olga@crownlending.com

Dick Morin—Director Consumers First Mortgage P.O. Box 918 v Kennebunk, ME 04043 207-985-2895 v dick@consumers1stmortgage.com Valerie Saunders—Director RE Financial Services 13033 West Lindburgh Avenue v Tampa, FL 33626 (866) 992-0785 v valsaun@gmail.com

Daphne Large President (901) 259-5105 daphnel@datafacts.com Maureen Devine Vice President (413) 736-4511 mdevine@strategicinfo.com Donald J. Unger Ex-Officio (303) 670-7993, ext. 222 don@advcredit.com Mike Brown Treasurer (800) 925-6691, ext. 4350 mike.brown@ncogroup.com Nancy Fedich Director–Chair Legal Committee (908) 813-8555, ext. 3010 nancy@cisinfo.net William Bower Director–Chair Tenant Screening Committee (800) 288-4757 wbower@continfo.com Tom Conwell Director–Liaison Legislative Committee (800) 445-4922, ext. 1010 tconwell@credittechnologies.com

Judy Ryan Director–Chair Strategic Alliance Partnership Committee (800) 929-3400, ext. 201 jryan@kroll.com Renee Erickson Director–Chair New Membership Committee (866) 932-2715 renee.erickson@acranet.com Sharon Bieszk Director (262) 542-1700 sbieszk@wititle.com Mary Campbell Director (701) 239-9977 mary@advantagecreditbureau.com Terry Clemans Executive Director (630) 539-1525 tclemans@ncrainc.org Jan Gerber Office Manager/Member Services (630) 539-1525 jgerber@ncrainc.org

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John Stevens—Director Bank of England d/b/a ENG Lending 11650 South State Street, Ste. 350 v Draper UT 84020 (801) 427-7111 v jstevens@englending.com

2013 Board of Directors & Staff

MORTGAGE PROFESSIONAL MAGAZINE

Linda McCoy—Director Mortgage Team 1 Inc. 6336 Piccadilly Square Drive v Mobile, AL 36609 (251) 650-0805 v Linda@mortgageteam1.com

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D I R E C T O R S

Donald E. Fader, CRMS—Director SMC Home Finance PO Box 1376 v Kinston, NC 28503-1376 (252) 523-5800 v dfader@smchf.com

701 East Irving Park Road, Suite 306 v Roselle, IL 60172 Phone #: (630) 539-1525 v Fax #: (630) 539-1526 Web site: www.ncrainc.org

The More You Know, the Better You Are!

By Joan Piantadosi

Joan Piantadosi, President and CEO of Titan List & Mailing Service, Inc., will share her experience before the opening of their print and mail facility.

The saying “what you don’t know wont hurt you” may be true, but not in business! Before opening our print facility 10 years ago, early on we offered direct mail as part of our list brokerage and vended out our production. In doing so we learned first hand the complications that many companies experience when sending their marketing to an outside vendor. To avoid these complications, here are some points to consider when choosing a third party vendor to ensure they are qualified to execute the services you need.

• Ask your vendor if they handle all aspects of your marketing in-house. This is where so much frustration comes into to play. I have found it is almost impossible to have firm control of your campaigns if the vendor uses a company separate from themselves for any aspect of your mail drop. In addition, a company that manages your print and mailing in house will have more control on short-notice orders or rush delivery jobs. If they do not have the data, print and mailing under one roof they are susceptible to outside variables that could affect your campaigns.

• It is a requirement to be approved with the respective credit bureaus to receive their sensitive information. You want a provider that can help facilitate the sign up process if you’re not already approved. It is common for unscrupulous vendors to sell credit data in non-compliant manners, or misrepresent county derived data as credit driven information. If you receive ‘pre-screened data’ from a provider and were not required to go through an approval process, you may be exposed to compliance violations that are being pursed heavily by the CFPB and FCRA. BEWARE OF THIS!

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• Most data providers & marketing firms earn their living by reselling the data multiple times. This means the data you purchase may have been purchased by one of your competitors as recently as the same day. This is a problem if consumers are receiving multiple offers from competing mortgage companies at the same time. Look for a company that omits your orders from their own clients within at least a 30 day window to ensure minimal overlap with your competitors. YOU WANT TO BE EXCLUSIVE AS POSSIBLE!

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• Ask your marketer if your mail piece is exclusive to your company, or if your design is one of their stock designs. Avoid companies that only provide stock designs and instead look for those that build custom proofs for each client.

Because of their limits, mortgage marketing companies that offer stock designs typically use the same piece in the same areas you market in. Choose a marketing firm that can offer custom designs and changes to your piece in a flash due to the constantly changing industry.

• Make sure your marketing company can show you proof of the mail being delivered to the U.S. Postal Service! During my original experience vending out print, I found I could not get the proof of the mail drop and postage from third party printers. Because of this I could not give my clients what they deserved: the peace of mind knowing their campaign went out the day it was supposed to and for the quantity it was supposed to be and the cost paid for postage. GET THE PROOF! • At the very least investigate the background of the marketing company you hire. At worst case, always ask for multiple referrals doing business with them repeatedly for 12 months or longer. This shows the company is reliable and can perform on a long term basis.

When you partner with a firm that handles all aspects of your campaign, from data, design, mail and print, you end up with your own marketing department at your finger tips.

Joan Pianatadosi, President and CEO of Titan List & Mailing Service, Inc., has led her company as a full service marketing firm for the mortgage industry for the past 15 years. As one of the very few marketing companies that handles all aspects of your campaign in house, from the data acquisition to your design, print and direct mail, their clients are in control of every aspect of their campaign with no middle man. Clients are able to make one phone call and have the confidence their campaigns are executed and delivered as paid. Please visit www.titanlists.com or call 1-800-544-8060 for more information.

Sponsored Editorial

Paddle the Waves of the Future

T

he year 2012 was a busy year in our industry. Many experienced one of the most successful years in their careers fueled by historically low interest rates and consumers refinancing their mortgages. It’s no question that the majority of national production was derived from refinance business, but the future also looks bright for growth in the housing markets and more home purchase business. The year 2013 appears to be off to another good start for our industry, but it’s important that we are always allocating time for marketing and compliance to effectively paddle through the waves of the industry.

All too often, we’ve seen rapid increases in origination volume, followed by rapid recruiting and staff placement to handle the volume. At times, some can be initially unprepared for the volume and fall short on meeting deadlines and execution requirements. On the other hand, we’ve seen rapid decreases in origination volume, resulting in rapid layoffs and restructuring to avoid thumb twirling support staff. Remember, only transactional-based origination volume pays the bills and salaries. Consistency can be difficult in a market that tends to be unpredictable, but you have more control on your own individual production level regardless of your surroundings.

Picture, for a moment, that you’re sitting in a rubber raft in the middle of the ocean. The sun is out, you’re relaxing with your life vest on, and any small waves seem to be a small inconvenience as you’re able to simply paddle around them. You feel so comfortable and relaxed that you’ve decided to throw out the paddles and life vest for more room and stopped navigating to let the waves and wind take you where they may. Now imagine that the waves appear to be getting larger and you realize a storm is rolling in. Caught off guard, you also realize that you no

“It takes both rain and sunshine to make a rainbow.”

—Unknown longer have your life vest or paddles and are in danger of being thrown overboard. If you were a little less comfortable earlier you might have reconsidered your actions.

You may have been able to float through 2012 without a paddle, but it’s important that you’re always well prepared for whatever waves the industry may bring. Working hard on prospection and marketing while also staying well informed on the industry and regulatory changes, will allow you to paddle with the good waves and steer away from the bad ones. The goal is to keep consistency in your business and not get thrown overboard by being unprepared. Sneaky waves are always the worst.

Ideas to help paddle with the good waves: n Realize that housing numbers are looking better and rates are still historically low and may likely remain there for some time. Build a marketing and prospecting plan to target new home buyers in your local market. n Create a niche and build a team that is sustainable regardless of the market conditions and interest rates. Get your database organized and build those referrals. n Take advantage of opportunities and seize them. Market share is here for the taking. Many will come and go with these generic spikes in refinances, but experienced and dedicated professionals have a big opportunity to gain more market share. n Get involved with your trade groups. continued on page 32

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HECM Counseling: A Powerful Borrower Safeguard

By Ralph E. Rosynek Jr.

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Perhaps one of the most powerful borrower safeguard components of the Federal Housing Administration’s Home Equity Conversion Mortgage (HECM) program is the mandatory requirement for all parties to the transaction to undertake FHA-approved HECM counseling.

The counseling protocol is designed to increase borrower understanding of the product options, features and benefits. Additionally, counselors discuss loan details, financial stability issues and the borrower desire to remain in their home. These discussions help and educate the prospective borrower in gaining a greater understanding of financial risk and other factors necessary to consider when making an informed decision as to whether a reverse mortgage is the right choice for their situation and goals.

Counselors also utilize a Financial Interview Tool (FIT) to assess whether or not the borrower should be able to sustain themselves in their home and meet their financial obligations after obtaining the HECM, including the payment of real estate taxes and maintenance of hazard insurance.

Generally, the discussion of counseling requirements occurs at the time of pre-qualification. The borrower is provided a list of approved counseling agency contact information by the loan originator, in addition to program information and a loan comparison summary of at least three available products. Further information on approved counseling agencies and session details can also be accessed by visiting HUD’s Web site to check the HECM Counseling Roster at www.hud.gov.

Many lenders require counseling with a HUD-approved counselor MUST be completed prior to application. All participants to the transaction are required to be counseled, including attorney’s, non-borrowing spouses, individuals being claimed on or off the title and remainderman.

The resulting session certificate of counseling must be signed by all borrowers and parties to the transaction, before any processing action or fees incurred for the application or services ordered on behalf of the borrower(s) can take place.

There are two types of HECM counseling available:

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n Face-to-face counseling: Borrower(s)/participants must always be provided with an option to attend face-to-face counseling. n Telephone counseling: Borrower(s)/participants complete the required counseling session via telephone.

The counseling session is required to be an arm’s length transaction with no significant involvement by the loan originator or any other interested loan transaction support provider. Except for providing basic session information and agency contact information, the focus of the loan originator should be to educate the borrower. Borrower(s) MUST pay for counseling if unable to find a no-cost counseling source. The counseling session fee charged by the approved agency ranges from nocost to $75-175. The lender is not permitted to pay for counseling or participate in the session.

RMS provides complete HECM Program training, product availability and partnership access to mortgage professionals through the company RMPath wholesale and correspondent channels. For more information on the HECM Program, e-mail rrosynek@rmpath.com or info@rmpath.com.

Ralph E. Rosynek Jr. is senior vice president, national production manager for RMS, Reverse Mortgage Solutions Inc. He may be reached by phone at (281) 404-7970 or e-mail rrosynek@rmsnav.com.

Sponsored Editorial

Rene Stone to Lead New Garden State REMN Branch and Announces HomeBridge Correspondent Sales Team

Real Estate Mortgage Network Inc. (REMN) continues to expand its footprint in New Jersey with a new branch location in Monmouth County, N.J. Located in the Borough of Shrewsbury, this new REMN office will be led by veteran New Jersey mortgage professional Rene Stone, who joins the company in the role of branch manager. Stone will lead a team of nine associates in REMN’s new Shrewsbury office, providing area homebuyers, homeowners and real estate professionals with the high levels of quality and customer service that REMN is known for nationwide.

Rene Stone comes to REMN with nearly 30 years of mortgage industry experience, including time spent as a partner in a local lending firm and most recently, as VP with Aurora Financial Group. Stone’s team of local, experienced mortgage professionals is well versed in the intricacies of the current mortgage climate and the unique needs of Monmouth area residents.

Associates joining Stone in the new REMN location include Michael Beagan, Dawn Benedickson, Tiffany Franco, Paula Frendel, William Green, George Monks, Brenda Valente, Roger Wilbert and Paul Winters.

“I chose to build a team with REMN in Monmouth County because the company is not only dedicated to customer service and speed in the mortgage industry, but they also have the unique range of lending products that cater to the different types of buyers and owners that live in our area,” said Stone.

REMN has also announced that their conduit platform, d/b/a HomeBridge, is nearing their anticipated launch date of HomeBridge Correspondent for the first quarter of 2013. Additionally, under the leadership of Bela M. Donine, managing director, HomeBridge Correspondent announces their correspondent national sales team that includes the following industry veterans: Jim Loving (Midwest Region), Diane Keane (Southeast Region), Patricia Hamilton (Western

Region), Jennifer Salsbury–Caldwell (Western Region), Michelle Dawson (Western and Pacific Northwest Regions), Stuart Blend (Southwest Region), Bill Bevan (Key Accounts).

“HomeBridge Correspondent will utilize core principles that have assisted REMN for more than two decades,” said Donine. “It is our intention to prove ourselves as a viable conduit for banks, community banks, credit unions and mortgage bankers seeking highly-qualified experience and exceptional service.”

First Preferred Mortgage Re-Brands Itself to Michigan Mutual Inc. First Preferred Mortgage Company, a Port Huron, Mich.-headquartered full-service residential mortgage lender, has announced that it has re-branded and will now be known as Michigan Mutual Inc. Company President and Chief Executive Officer Mark Walker made the announcement. The company, founded in 1992, will effective immediately change its name to its wholesale division’s brand name—Michigan Mutual Inc.—and will be recognized nationally, serving homebuying and refinancing needs, in addition to servicing a network of mortgage brokers, banks and credit unions through the company’s wholesale division.

The move is another chapter in the company’s growth story—as they have grown to more than 400 employees, from 100 employees in 2009. The company has also continued to expand its footprint nationally from its corporate locations in Port Huron and Southfield, Mich., with a network of wholesale and retail office locations—including community branches in Birmingham, Mich.; Livonia, Mich.; Plymouth, Mich.; Brighton, Mich.; and their most recently opened branch in St. Louis, Mo. In 2012, the company continued to grow and evolve and closed 10,882 residential loans, totaling $1.83 billion. The company’s leadership determined it was best to join its expanding enterprises under one brand name to better leverage marketing resources and create a stronger national presence.

“It made strategic business sense for us to unite our growing company under one brand name that embodies our

deep pride in the state of Michigan as we continue our national expansion plan,� said Walker. “Our mission is built on the fact that we are building a great company to serve our communities. For us, there was no better way to pave the path to our company’s bright future than with this exciting brand change.�

Mortgage Master Continues Expansion Into the Midwest

Altisource to Purchase Several Ocwen Assets

Altisource Portfolio Solutions SA has entered into non-binding letters of intent with Ocwen Financial Corporation to acquire certain feebased businesses related to Ocwen’s recently acquired Homeward Residential Holdings Inc. mortgage servcontinued on page 10

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Flagstar Bancorp Inc. has agreed to sell the assets and operations of DocVelocity, its document imaging business for mortgage lenders, to

DocVelocity has marketed, sold and supported a complete solution for over 100 lenders. Flagstar has a long history as a leader in paperless mortgage processing.

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Capsilon Set to Purchase DocVelocity From Flagstar

change management at Flagstar. “That’s a differentiator in the marketplace that we intend to maintain.�

The sale of DocVelocity will be seamless for Flagstar customers, as they will continue to benefit from the DocVelocity solution, staff and Flagstar’s paperless processing. Customers will deal with the same people, call the same sales and support team, use the same application and get the same best-in-class paperless service.

For six years, Flagstar and Capsilon have worked closely together to replace inefficient paper-based processes in mortgage lending with an innovative technology solution. While Capsilon has focused to date mainly on developing and operating the technology,

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Mortgage Master has announced that it has expanded its geographic footprint into the Midwest by hiring Brian Jensen as Midwest regional manager to drive the Company’s growth throughout the Midwest and has opened a new branch office in Chicago, Ill. to help support this growth. Jensen joins Mortgage Master with more than 21 years of mortgage industry experience, while Craig Achtzehn was named area manager of the company’s newest branch office in Chicago and brings with him 11 years of mortgage and real estate experience.

Both Jensen and Achtzehn are being charged in their new positions with attracting high quality loan officers and branches, expanding production volumes and market share in the Midwest while providing some of the lowest pricing and best-in-class service to borrowers. “The Midwest is the perfect location for Mortgage Master’s next phase of its geographic expansion,� said Paul Anastos, president of Mortgage Master. “Our expansion plans have always been predicated on hiring the highest quality mortgage professionals first, and we are extremely pleased to have Brian and Craig become part of the Mortgage Master team.

Their significant experience in working with top industry talent, market knowledge, and their leadership skills will help Mortgage Master continue to deliver dynamic service and the best possible pricing to borrowers throughout the Midwest.� “I am thrilled to be joining Mortgage Master as it begins its 25th year as a responsible mortgage lender,� said Jensen. “We are off to a great start by adding Craig to lead our key Chicago branch and we just hired a top operations manager to build out a high quality operations team in the Chicago area.

We believe it is critical to our success to have a quality operations team in place locally to partner with our loan officers throughout the Midwest.�

Capsilon, a provider of cloud-based document sharing, imaging and collaboration solutions for mortgage lenders.

Capsilon developed much of the technology that DocVelocity has marketed and sold since 2007, and which Flagstar has used to provide paperless mortgage processing to its wholesale customers.

Following the transaction, Flagstar will continue to use the DocVelocity service.

Terms of the transaction were not disclosed. The transaction is not expected to have a material financial impact on Flagstar. “DocVelocity has played an important part in establishing and solidifying Flagstar’s position as a leader in paperless mortgage processing for our customers,� said Jason Dufner, senior vice president of

Procedures and Examinations PART I: MORTGAGE BROKERS

By Jonathan Foxx

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Perhaps the most difficult task of the independent mortgage professional is to obtain and maintain a full set of policies and procedures. All too often, a broker’s approach to compiling adequate policy statements is reactive; that is, the demand comes about in order to meet a regulator’s expectations or in anticipation of a forthcoming examination.

Many brokers simply make it their business to always be prepared, especially in this highly regulated financial services industry. I have said many times, preparation is protection! Indeed, I have written extensively on this theme.1 Nevertheless, all the policy statements in the world will not impress a regulator if that policy’s stated requirements are not really implemented. In other words, the examiner will determine if a firm’s procedures are actually being followed.

Let’s put it this way: a policy statement, without implementation, is merely pontification!

Examiners have long since past the point where they’re seriously willing to accept as viable a standardized policy from a ‘manual mill.’ In fact, some examiners keep a list of these one-sizefits-all policies, and they are keenly aware of the stratagem of using an offthe-shelf policy to satisfy a regulatory mandate.

I have a friend who is now a senior regulator with a federal agency. These days, he does not go to field examinations. However, he once told me that,

“A policy statement must address the company’s business philosophy, goals, objectives, procedures, required actions, remedies, and, of course, the metrics with which to judge them.”

when he previously conducted banking examinations, sometimes he would go from one institution to another and he found the same policies – only the company name had changed on the documents! When he saw that happening, it vexed him sorely, and he would then challenge the institution to prove that it was in fact following the guidelines specifically stated in the policy statements. Needless to say, the results were– to put it mildly–quite a bit mixed.

In this article, the first of a two-part series, I am going to provide a chart of certain core policies and procedures that a mortgage broker should obtain and continually update, as regulations change. I will also provide some useful policy implementation guidance relating to preparing for a state banking examination.2 In part two of this series, I will address the central policies and procedures that are needed by mortgage bankers.

Before getting started, I feel constrained to offer a Caveat Emptor! (Buyer Beware!) Obtaining a boilerplate document with your company’s name on it is regressive, and it is a tactic that Examiners are now regularly criticizing in adverse findings. As I have intimated above, these days regulators are fully aware of this objectionable ‘short cut’ to compliance.

An insufficient policy statement may cause adverse examination findings.3 Indeed, in some cases, template-driven policy and procedures may cause Examiners to escalate their regulatory review. Drafting and implementing a policy statement that conforms to the way an institution does business is a priority responsibility of management, where the purchase price of a policy and procedure should not be an operative consideration.

Policies and procedures Mortgage brokers This table to the right4 provides an overview of the core policies and procedures needed by mortgage brokers.5

Preparing for an examination Most state banking departments prioritize their administering of licensees on the extent to which these institutions implement their own policies and procedures. High on the list of such priorities are compliance with licensing regulations

n Audit and assess the integrity of the compliance management with respect to implementing state and federal consumer protection statutes and regulations; and n Issue supervisory and administrative actions when compliance is defective, deficient, or actually produces significant violations of law.

Mortgage risk management

and specific mortgage acts and practices, such as the Real Estate Settlement Procedures Act (RESPA, Regulation X), Truth-in-Lending Act (TILA, Regulation Z, Loan Originator Compensation), Equal Credit Opportunity Act (ECOA, Regulation B), and the other alphabet soup of federal and state guidelines.

Generally, banking departments consider themselves to be consumer advocacy agencies and, as such, they approach examinations in a three-fold process: (1) Examining the licensee; (2) Investigating allegations from consumers relating to the licensee; and (3) On-site or off-site visitations to audit a licensee’s operations or its implementation of previously identified corrective actions.

The primary means of monitoring the licensee is through examinations.

Therefore, banking departments seek to evaluate the following elements: n Conduct a compliance review to determine implementation of relevant laws and regulations;

Assembling the appropriate policy statements and implementing them is a principal feature to risk management. My firm deals with such engagements all the time for our clients, and I can vouchsafe that banking departments these days understand fully a focus on mitigating risk. For instance, management’s lack of such focus on risk inevitably leads, among other things, to consumer complaints, licensing violations, defective advertising, and disclosure deficiencies. Compliance and loan production are cemented together and the success of both is dependent on the success of each. Therefore, examiners will conduct both a loan level review of loan files and also consider many other aspects of the company’s loan flow process.

Consider this … unlicensed loan activity is a significant challenge to mortgage brokers. An institution’s risk management should contain a formal policy and procedure that outlines the requirements for conducting licensed activity. The examiner always has the edge, because the department is able to reconcile the field examination findings with actual licensable activity, which, by comparing the two, may inevitably uncover unlicensed activity. A “loan processor,” who is acting as a loan officer without having obtained a license, is conducting unlicensed activity. continued on page 32

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v MARCH 2013

heard on the street

Bonded With NAMB

Am I Paying Too Much for My License Bonds?

By Mason Grashot, CPA

Not if you’re paying premiums of $5 per thousand (or 0.50 percent) of the bond amount! The premium you pay is certainly dependent on various underwriting factors:

1. Do you have decent credit? Not great. Just decent. You probably do or you wouldn’t be licensed.

2. Do you have any skeletons in your past?

Bankruptcies, felonies, prior bond claims, etc. You probably don’t or you wouldn’t be licensed.

3. How much bonding do you need?

There is a level of bonding that is based primarily on underwriting the owner(s) personally.

Above that level, business and personal financial statements are considered as the primary focus of the underwriting.

4. What bond carrier is bonding you? Some are simply better than others at this particular line of business. Some carriers view mortgage bonds as more risky than other types of bonds. Their pricing and underwriting process is very relative to that perception of risk.

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5. What bond agent/broker do you use? That broker is your path to the surety market. Their knowledge of and access to bond carriers has a direct relationship with what the price and process is for your bond.

By far, the variable that obviously has the biggest impact on your bond pricing is number five—your broker. That’s where your access to the marketplace starts—or stops.

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The mortgage bond market has changed significantly over the past few years. While the industry bubble was being inflated, carriers started becoming increasingly nervous about what would happen when it eventually popped. Some proactively began to increase prices, tighten underwriting, raise qualifications and limit exposures. Once the bubble burst, others reactively did the same and some even stopped writing mortgage bonds entirely.

While average surety pricing used to be at a widely-available rate of $7.50 per thousand a few years ago, it quickly moved up to $10 per thousand. Several carriers positioned themselves at even higher rates in order to absorb the flurry of claims and uncertainty brought on by the industry’s implosion and increased regulation. Those carriers that had been writing mortgage bonds for years and had large exposures were suddenly faced with gamechanging events and conditions that forced them to endure financial losses and realign their perspective of risk.

Other carriers (and brokers), seeing a competitive window of opportunity due to the change in the marketplace, introduced rates as low as $6 per thousand and even $5 per thousand.

Stop throwing away extra money year after year after year. If you have had your bond for a while and your price hasn’t changed, it’s probably worth asking your bond broker why. If you don’t like the answer or the price, it’s probably worth a little time to shop for a new broker—and probably one who specializes in surety. Search online. Talk to your colleagues.

Ask your trade association. Sometimes the first answer isn’t always the best answer.

Mason Grashot, CPA is president of The Bond Exchange, a national insurance agency focused on surety bonds with a unique specialty practice centered on the mortgage profession. As the endorsed strategic partner of NAMB—The Association of Mortgage Professionals, The Bond Exchange services thousands of surety bonds through programs designed specifically for the mortgage industry. For more information, call (501) 224-8895 or visit www.thebondexchange.com.

Sponsored Editorial

continued from page 7

icing and origination business platform and Ocwen’s anticipated purchase of the mortgage servicing platform from Residential Capital LLC for a combined purchase price of $218.6 million.

“These fee-based business acquisitions are strategically valuable to Altisource, helping us maintain our business model with Ocwen, expanding our footprint and providing significant revenue and earnings growth to Altisource,” said William B. Shepro, chief executive officer of Altisource. “We believe the combined purchase price will provide a projected unlevered pretax return to Altisource of approximately 20 percent.”

The letter of intent for the Homeward Residential Fee-Based Businesses contemplates that Altisource will acquire from Ocwen all of the capital stock of Beltline Road Insurance Agency Inc., Power Default Services Inc., Power REO Management Services Inc. and Power Valuation Services Inc., the Mortgage Asset Recovery Special Services Division of Stratus Asset Management Group LLC and certain designated intellectual property and information technology assets related to Homeward Residential Holdings Inc. platform.

“By selling these non-core assets, Ocwen is able to achieve a greater projected return on the Homeward and ResCap servicing acquisitions and to continue to focus primarily on growing our core residential and commercial servicing businesses,” said Ronald M. Faris, chief executive officer of Ocwen.

“Having an outlet for disposition of peripheral mortgage-related assets significantly enhances Ocwen’s competitive positioning for future servicing platform acquisitions that include noncore operations.”

Open Mortgage Says Aloha to Honolulu Branch Open Mortgage’s CEO Scott Gordon has announced the opening of a new branch in Honolulu, Hawaii, which will be represented by Branch Manager Wendy Oshiro. Wendy’s expertise focuses on helping seniors maintain their independence with a loan product known as Home Equity Conversion Mortgages (HECMs), or reverse mortgage products. They can be for equity purposes or for purchasing a new primary residence.

Wendy began her career as a secondary mathematics teacher for 16 years.

However, her teaching career was cut short when both of her parents lost their independence within a year apart of each other. This was a difficult and stressful time for Wendy’s entire family. Within a short period of time, Wendy learned about many health care issues like those

involving long-term care, long-term outof-pocket costs, and financing options.

Wendy experienced first-hand the emotional impact the loss a loved one’s independence can have on their quality of life as well as the lives of their immediate family members.

Wendy’s experience with her parents is why she is now a senior advocate in the reverse mortgage industry. “As a Reverse Mortgage Specialist and educator, I help my clients make wellinformed decisions. I teach them how a reverse mortgage works, along with the benefits, features, and costs of this unique product so they can decide what’s right for them,” said Oshiro.

Ally Bank to Sell Business Lending Mortgage Operation to Walter Investment Ally Bank, the direct banking subsidiary of Ally Financial Inc., has announced that it has reached an agreement to sell its Business Lending mortgage operation to Walter Investment Management Corporation. Ally Bank announced that it would pursue alternatives for the Business Lending operation in the fourth quarter of 2012, and the transaction is expected to close on Feb. 28, 2013. Business Lending is comprised of the Bank’s correspondent and wholesale broker origination channels and operations. The transaction includes approximately 300 mortgage professionals, 1,770 active client relationships and the intellectual property to operate the business.

“We are pleased to be transferring Business Lending to a well-respected, strategic buyer like Walter, who values the high quality of our people, platform and relationships and is committed to building its origination capabilities,” said Ally Bank President and Chief Executive Officer Barbara Yastine. “This is a positive outcome for our 300 Business Lending employees and enables Ally Bank to direct more resources toward our priorities of growing our leading direct banking franchise, as well as supporting Ally’s auto finance operation.”

Ally Bank will honor all commitments taken through Feb. 28, 2013.

Upon closing, the employees and client relationships will transfer to Walter, which expects to be fully operational in correspondent and wholesale originations on March 1, 2013. Ally Bank will continue to originate a modest level of jumbo and conventional conforming residential mortgages for its own portfolio through a select group of correspondent lenders. continued on page 40

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This information is provided for the use of mortgage professionals only and is not intended for distribution to consumers or other third parties. Product information is subject to change without notice. HomeBridge is a division of Real Estate Mortgage Network, Inc. NMLS #6521. HomeBridge is licensed or operating with a license exemption under the name Real Estate Mortgage Network, Inc. d/b/a HomeBridge except in the following states; AK, IL, MD, MN, NY, RI, VA “Real Estate Mortgage Network, Inc.”; VT: “Real Estate Mortgage Network, Inc. d/b/a HomeBridge Funding” © Real Estate Mortgage Network, Inc. d/b/a HomeBridge. All rights reserved.

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DocMagic Sees Spike in Social Media Connectivity Through Facebook Contest

DocMagic Inc. has announced that Jeremy Davis, an employee of Franklin American Mortgage Company based in Tennessee, is the Grand Prize winner in its “Vote for DocMagic� campaign, the company’s first Facebook contest.

DocMagic has embraced gamification as a tactic for quickly building out its online following. The contest, which ran from October through December of 2012, resulted in the company’s online followership increasing by 350 percent. “This was a very successful test of our ability to interact with DocMagic users through this social media channel,� said Dominic Iannitti, CEO of DocMagic. “With nearly 1,000 industry Facebook users visiting the page and engaging with our mascot, we see Facebook as a viable communication channel and gamification as an effective tactic for bringing new visitors to our page.�

The “Vote for Doc� Sweepstakes was restricted to mortgage lenders, mortgage lending professionals and others from the mortgage lending industry.

The contest was successful in expanding DocMagic’s Facebook page connections by 350 percent. As the winner, Davis will receive an expense-paid trip for two to Washington D.C. for four days and three nights, including airfare, hotel, and a tour of the Capitol.

The “2012 Presidential Doc� bunny mascot, the focus of this contest, was one of the most popular DocMagic bunnies ever. Hundreds of visitors to the Facebook page were sent the stuffed mascots. Some DocMagic users are avid collectors of the mascot, which is updated each year with a whole new persona and sent free to DocMagic customers.

Servicing Settlement Pays Out Nearly $45 Billion Nationwide to Date The nation’s largest mortgage servicers have distributed $45.83 billion in di-

rect relief to over 550,000 homeowners, or roughly $82,000 per homeowner as part of the National Mortgage Settlement, according to a progress report released by independent settlement monitor Joseph A. Smith of the Office of Mortgage Settlement Oversight. Almost one year ago, the Department of Justice, Department of Housing Urban Development (HUD) and 49 state attorneys general reached a landmark agreement with the nation’s five largest mortgage servicers to address mortgage loan servicing and foreclosure abuses. “As we reach the one year anniversary, the latest report marks a major milestone in our efforts to assist struggling homeowners,� said HUD Secretary Shaun Donovan. “We have already surpassed our initial expectations and the settlement is testament to the fact that large scale principal reduction can be used an important tool in our efforts to prevent foreclosures without incurring negative results.�

The report demonstrates significant progress on the broadest and most robust principal reduction program in the nation’s history. More than $22.48 billion of the overall completed consumer relief has come in the form of debt forgiveness.

Because of the settlement, the principal reduction helps borrowers stay in their homes, lowering monthly payments on over 266,000 loans and actually reducing struggling homeowners’ loan balances by more than $84,000 on average.

This is in addition to the funds that states allocated for settlement-related purposes, including over $250 million for housing counseling and another $50 million to legal aid. “Now that we have clear signs that our housing market has gained momentum, and it is clear that this settlement is providing some of the critical tools for that momentum to continue,� said Donovan. “The job’s not done—and we will continue to watch the banks like hawks to ensure they live up to their obligations as they complete their consumer relief requirements and we measure their progress on implementing new and improved servicing standards.�

FHA Takes News Measures to Manage Risk As part of an effort to strengthen the Federal Housing Administration’s (FHA) Mutual Mortgage Insurance Fund (MMI Fund), continued on page 16

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v MARCH 2013

By David Lykken

Be a Leader; Not a Cheater hroughout history, there have been two types of people in spheres of leadership: Those who have actually been great leaders and those who have wished to merely be seen as great leaders. These two types of people reflect the positive and negative sides of human nature.

There is the more positive side of us that wants to truly make a difference in

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the world … and then there is that darker side that only wants the credit for making a difference without having to do the work.

We see it in our athletics. The recent “doping” scandal with Lance Armstrong has opened up the question of the incentives professional athletes across all sports face in competition. And we have seen it for years in business, most

notably with the inflated financial picture presented to the world by Enron.

We see it everywhere: Politics, scientific research, religion, education, you name it. In every space, there are people at the top looking for shortcuts to fame and notoriety. Fraud, if you can get away with it, is a much less costly means to an end. You don’t have to do the work; you just have to reap the rewards. And then you can bask in the light of being the great leader everyone thinks you are.

I heard a preacher once say, “Sin will take you further than you are willing to go and cost you more than you are willing to pay.” The same can be said of fraudulent behavior in leadership.

Fraud will take you further than you are willing to go and cost you more than you’re willing to pay. Ethical ramifications aside, it is rarely in a person’s best interest to use fraud as a means to gaining an edge. More often than not, you will be found out.

Before you start high-fiving me and shaming all of those evil leaders giving decent folks a bad name, consider this.

Fraud doesn’t always originate from evil intentions of bad people. Sometimes, it can come from good intentions of good people. I was blown away by a report came out last December indicating a recent spike in mortgage fraud. My view was that fraud was on the decline in the industry. Regulation is at all-time highs as are the penalties and the incentives simply aren’t there for people to engage in fraudulent behaviors. Or so I thought …

Several weeks ago, I had the opportunity to interview on my radio program, “Lykken on Lending” (www.LykkenOnLending.com) a man named Mike who had gone to prison for mortgage fraud. Mike was apologetic for his behavior and took complete responsibility for the time he had served. However, he revealed a common misconception that is infinitely important for mortgage professionals to

understand. Many people falsely assume that the people who get in trouble for mortgage fraud are generally schemers will evil attentions to scam and weasel their way into success. Mike’s story reveals something different.

Mike was in a crunch to pay off some business expenses and decided, one day, to borrow $5,300 from an escrow account—with every intention of paying it back the following week. Well, the next week came around and he found himself in the same position. That one choice started a seven-year downward spiral that eventually led to a $6.7 million decline in his escrow account, negatively affecting 43 families. “I chose one day to do what was easy instead of doing what was right,” Mike says. It starts small. It starts innocently. One bad decision is all that it takes.

Mike says that the worst part is “Knowing what you’ve done to the people you respect. And you can’t get it back. Once you do it, you can’t get it back.” Even after getting out of prison, Mike will be dealing with the consequences for the rest of his life. He has lost all of his money. But he says the more important losses are his relationships. He lost a twenty-three year marriage. He lost the trust of his family and the respect of his professional connections. “The stigma doesn’t go away,” he says. Mike will be dealing with the financial and emotional consequences of his fraud for the rest of his life. It just isn’t worth the shortcut. “It’s not if you get caught,” says Mike, “it’s when you get caught.”

It is so easy to start down the slippery slope. There are good people on the fringe, making some occasional bad decisions. What amazes me is how easily and innocently mortgage professionals can get pressured into committing fraud. It can be just a little white lie to help someone get a loan. It can be failure to verify employment up until the

becoming through taking shortcuts, they may begin to alter their ethical standards in order to compete. Before you know it, you will have an entire office of people cutting corners to get ahead. Successful leaders in the mortgage industry will have a “the buck stops here” mentality. All “good results” will be funneled through a measurement of how those results are obtained.

For great leaders, ethics come first and results come second. Because, without ethical underpinnings, “results” aren’t really results … they’re scams.

The bottom line is this: Every day when you get up in the morning and get ready to go into work, you need to make up your mind as to what kind of leader you want to be. Do you want to

be a real leader … or just a perceived leader? Do you want to actually win … or do you just want to bask in the glory of the victory? The world is in dire need of genuine leaders. We need people who are willing to take the high road to success … and inspire others to do the same.

The mortgage industry needs such leaders perhaps more so than any other. The temptation is ever before us.

I’ll conclude with one last piece of advice from Mike, the gentleman whose story is the basis of this article. “We need to accept,” he says, “that there are opportunities for fraud in a lot of different places. For anyone to say that ‘it would never happen to me’ or ‘I would never do it,’ well, you’re either going to

get the money on escrow, or you’re not going to make payroll and you’re going to end your business. The temptation is there and we need to be aware of it.”

David Lykken is president of mortgage strategies and managing partner with Mortgage Banking Solutions. He has more than 35 years of industry experience and has garnered a national reputation, and has become a frequent guest on FOX Business News with Neil Cavuto, Stuart Varney, Liz Claman and Dave Asman with additional guest appearances on the CBS Evening News, Bloomberg TV and radio. He may be reached by phone at (512) 977-9900, ext. 10, or e-mail dlykken@mortgagebankingsolutions.com or dlykken@mbs-team.com.

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day of closing. It can be an infinite amount of well-intentioned oversights that can turn into fraud. It isn’t just the bad people; it can happen to anyone.

When Lance Armstrong finally came forward and admitted to using performance-enhancing drugs, he said, “I view this situation as one big lie.” It started small but, the more he had to cover his tracks, the bigger the lie became. As my interview with Mike on my radio program has revealed, that’s the same thing that happens in mortgage fraud. It starts with one mistake and every subsequent mistake is merely an attempt to cover up the damage of the first one.

So, as leaders in the mortgage industry, how do we get around this danger of falling into the fraud trap? Well, I can only see one way: never, ever, take the shortcut and listen to that inner voice our conscience. Great leaders stay true to the inner voice and are able to see a clear connection between high-grade integrity and strong work ethic. The only way to get ahead and come out a winner is by taking the high road. Great leaders never try to get around hardships; they plow through them. The only way to enjoy the spoils of victory is to earn them. It comes down to CHARACTER. (I recommend you go back and read a series of articles I published in this magazine last year and the year before titled “The 7-C’s of Leadership.”

Character was #1!)

Author Steven Pressfield, in his motivational book Do the Work, talks about what he calls “the resistance.”

According to Pressfield, there is an underlying force working against all of us to prevent us from getting meaningful work done. It causes us to stall and to make up excuses as to why we can’t just do the work. The same malignant force works within us to take the low road and find an easy way out of a hard situation. Almost always, that leads to poor ethical choices.

What is “Fraud?” Merriam-Webster defines it as, “the intentional perversion of truth in order to induce another to part with something of value or to surrender a legal right.” In laymen’s terms, it’s akin to the philosophy, “the end will justify the means.” It’s okay to lie, it’s okay to cheat, as long as I get what I want in the end. We may not outright say that this is what we are thinking but, when we take shortcuts to get what we want, that is undoubtedly what is going on subconsciously.

Great leaders in the mortgage industry must practice constant vigilance in the ethics of how business is being conducted in their organizations. Because of how easily and innocently fraudulent behavior can begin, leaders must catch it before it spirals out of control. If leaders don’t create a culture of high ethical standards, employees can fall into a culture of dangerous incentives. If one loan originator begins to cut corners and, in doing so, generates better results, leaders may reward that officer for the results. When other originators see how successful that originator is

nmp news flash NMLS

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NAPMW NAPMW membership gives gives you you exclusive exclusive access access to to timely educaeducation regarding affecting career regarding the regulations regulations aff ecting yyour our car eer such as a FREE TO TO MEMBERS monthly monthly webinar webinar on industry industry updates updates AND our 8 hour NMLS continuing education offering continuing educa tion class ss off ffe ering (NMLS Provider Provider # 1400309) 16

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Net work o kiing Networking NAP NAPMW MW is a ccommunity nearly across ommunity of near ly 2,000 professionals professionals acr oss the C Country ountry who engage in the mor mortgage banking industry. tgage / bank ing industr y. Men Men and w women omen fr from backgrounds have NAPMW om all backg rounds ha ve joined NAP MW because they want want tto oe excel xcel aatt wha whatt they do do.. Emplo Employers want yers who w ant eexcelxcellence lenc e from from their employees e employees engage eng with NAPMW N MW for NAP for up-to-date up-to-date education. educa tion. B Both oth professionals p professionals and emplo emp employers have there yers ha ve ffound ound ther e is place NAPMW. MW W. a plac e ffor or them in NAP

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To T o Join NAP NAPMW MW W visit: www.napmw.org w ww.napmw.o org or ccall: all: 1-800-827-3034 1 800 827-3034 1-800-8 827 8 3034 Have Ha ve Q Questions? uestion ns? Please ffeel eel free free to to e e-mail -m mail us a at: t: napmw1@aol.com napm w1@aol.c . om

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continued from page 12

FHA Commissioner Carol Galante announced a series of changes to be issued that will allow the agency to better manage risk and further strengthen the health of the MMI Fund.

“These are essential and appropriate measures to manage and protect FHA’s single-family insurance programs” said Galante. “In addition to protecting the MMI Fund, these changes will encourage the return of private capital to the housing market, and make sure FHA remains a vital source of affordable and sustainable mortgage financing for future generations of American homebuyers.”

As discussed in its “Annual Report to Congress,” FHA will consolidate its Standard Fixed-Rate Home Equity Conversion Mortgage (HECM) and Saver Fixed Rate HECM pricing options. This change will be effective for FHA case numbers assigned on or after April 1, 2013. The Fixed Rate Standard HECM pricing option currently represents a large majority of the loans insured through FHA’s HECM program and is responsible for placing significant stress on the MMI Fund. To help sustain the program as a viable financial resource for aging homeowners, the HECM Fixed Rate Saver will be the only pricing option available to borrowers who seek a fixed interest rate mortgage. Using the HECM Fixed Rate Saver for fixed rate mortgages will significantly lower the borrower’s upfront closing costs while permitting a smaller pay out than the HECM Fixed Rate Standard product, thereby reducing risks to the Mutual Mortgage Insurance Fund.

MBA Forecasts 11 Percent Rise in Commercial and Multifamily Originations In its second annual forecast of the commercial/multifamily real estate finance markets, the Mortgage Bankers Association (MBA) projects originations of commercial and multifamily mortgages will grow to $254 billion in 2013, an increase of 11 percent from 2012 volumes, and continue to rise to $289 billion in 2015. Originations of multifamily mortgages are forecast at $100 billion in 2013.

“2012 was a strong year for the commercial and multifamily mortgage markets, and 2013 is shaping up to continue the growth,” said Jamie Woodwell, MBA’s VP of commercial real estate research. “Despite a 21 percent decline in the volume of commercial and multifamily mortgages maturing this year, we expect origination volumes and the amount of mortgage debt outstanding will both increase. Our forecast anticipates Fannie Mae, Freddie Mac and FHA, as well as life insurance compa-

nies, will all continue to have strong appetites for making loans, and—coupled with growth in originations for CMBS—the total market will continue to expand.”

Commercial/multifamily mortgage debt outstanding is expected to grow in 2013, ending the year above $2.4 trillion, more than two percent higher than at the end of 2012. By the end of 2015, mortgage debt outstanding is forecast to exceed $2.5 trillion. MBA previewed its forecast of the commercial/multifamily real estate finance markets at its Commercial Real Estate/Multifamily Housing Convention in San Diego.

“MBA’s commercial real estate finance forecast is an outgrowth of our surveys and research on the commercial and multifamily real estate finance markets and complements our macroeconomic and single-family finance forecasts,” said Jay Brinkmann, MBA’s chief economist and senior vice president of Research and Education. “In only its second year, it’s already becoming a key tool MBA’s members rely on as part of their business planning.”

CFPB Guides Mortgage Servicers on Consumer Protection in Loan Transfers The Consumer Financial Protection Bureau (CFPB) has issued a bulletin advising mortgage companies about their legal obligations that protect consumers during loan transfers between mortgage servicers. When handing over the processing of loans, mortgage servicers should not lose paperwork, lose track of a homeowner’s loss mitigation plans, or hinder a consumer’s chances of saving their home from unnecessary foreclosure. The CFPB has a heightened concern about these practices given the large number and size of recent servicing transfers.

“Consumers should not be collateral damage in the mortgage servicing transfer process,” said CFPB Director Richard Cordray. “This guidance directs all mortgage servicers, both banks and non-banks, to follow the laws protecting borrowers from the risks of such transfers, and makes clear that we will be monitoring them for compliance.”

Servicing transfers can be positive for consumers, especially when investors require non-performing servicers to transfer rights to specialty companies that offer better service. But mortgage servicing transfers can also mean consumers must deal with new companies to pay their bills—often with differentlooking paperwork, different staff, and different addresses to send the paycontinued on page 38

IT’S 10 DA DAYS YS PRIOR TO CLOSING‌

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COMPETITION in the Mortgage Industry

“If companies document their business and technical requirements up front and write clear and transparent RFP (request for proposal) documents with specific granular requirements included, they will find that the sales folks will have to compete on a level playing field.”

By Matt Seu

During the last two years, Bank of America, Citi and Ally have all made business decisions to shutter their correspondent channels. The reasons are varied, but it can be boiled down to two main drivers. First and foremost, everyone is shivering at the thought of repurchase risk and rightfully so. There are lawsuits in process right now that have and could continue to force huge buybacks, and at a minimum will be a drain from litigation costs. Second is the constant and aggressive regulatory environment. Companies will now need to contend with the Consumer Financial Protection Bureau (CFPB), Dodd-Frank Act, and Basel III in addition to the Office of the Comptroller of the Currency (OCC) and others that have existed for years.

At the end of the day, I think that most of the companies got out of their correspondent channels because it was just too hard, too risky and too unclear.

Add it all up and it is nearly impossible to understand the types of returns that

would result in the future. Combine the risk/return uncertainty with the default crisis and it isn’t hard to understand that companies just don’t have enough talent and leadership to go around.

Focusing on retail and improving operational efficiency and controls makes sense for the big names. Wells Fargo is still running a successful correspondent channel, but frankly they have run their business smartly for a long time and took far fewer blows to the bow as compared to their competitors. They never even wanted their Troubled Asset Relief Program (TARP) money, and were not forced into any shotgun weddings.

But there are companies who are moving in to take the market share from the large aggregators also.

Companies are starting mortgage conduits and taking the correspondent business that the aggregators abandoned. And guess what? They are making money, and doing so with far fewer costs on a per unit basis. I liken the situation to what occurred in the U.S. automotive industry in the 1970s.

Honda, Toyota and Nissan (then Datsun) entered the market with small, inexpensive cars and trucks that the big players like General Motors, Ford and

Chrysler disregarded. The theory was that the big guys would dominate the high end market and would continue to maintain brand loyalty. Everyone knew that … or so they thought. Fast-forward 40 years later to the present day and the Asian car makers compete toe to toe and GM and Ford and Chrysler are afterthoughts. American’s own a lot of Lexus and Acura vehicles, fare more than own Cadillacs. The Asian companies did it with low cost production, process efficiencies and focus on the customer. I think they were on to something.

I’m certainly not predicting that someone will overtake Bank of America right now, but the little guys are going to make their money. So how are they doing it, and how can they come to market so quickly?

So what are the keys to success? Well, it really isn’t that hard if you have some key ingredients. You need some smart people who understand the market.

There are a lot of them out there.

Everyone who was geared up in the asset-backed securities heyday is still around, but maybe not doing the same job as before. We have watched groups that worked together in the past assemble the same cast of characters and go

to market quickly. They understand how to run a conduit and are capable of doing a lot of work manually when it starts up. The second thing you need is a solid set of correspondents. Well they’re not hard to find either. In fact, most of them had to scale back due to the limited outlet for their product.

Suffice it to say that this part is pretty easy. The final part of the puzzle is capital. Someone needs to fund the initial investment. Again, this isn’t that difficult either. Companies primarily in the servicing business have been looking to diversify and many have started up conduits. Others are simply starting from the ground up and either self funding or getting outside money from investors or warehouse lenders who scaled back during the housing crisis and are primed to expand.

The ingredients aren’t that hard to come by and in the short run companies can do a lot of volume, but many run into barriers that constrain their ability to grow. The challenges that we see on a regular basis are with regard to taking these conduits from start up mode to full production volume while continued on page 35

dict their mission. It’s the same performance, but a very different underlying commitment to the “culture.”

The issue of culture is more than just one of “service” versus “rate-based” advertising and sales. The issue affects every aspect of your company:

The development of minimum standards that are set for sales personnel

Developing a Company Culture

By Dave Hershman

Identifying your unique selling proposition or performing to certain standards are important. Integrating these aspects into the company culture is quite something else.

Just because a company underwrites and/or approves loans quickly does not mean it is part of the culture. For example, are each and every one of the loan officers featuring this turnaround time or are they selling rate and assuming that the quick approval is not something their clients want or need?

For a more in-depth example of this, let’s take a look at two different wholesale or correspondent lenders.

Both underwrite loans at a 48-hour turnaround time. For one their advertising lists quick turnaround as one of many features. The other actually guarantees this turnaround time with a penalty if they don’t hit it. Not only is the advertising different, but their reaction to a busy market will also differ. One might move to 96-hours when things get tough. Another will do whatever is possible to avoid this—including having overflow contract underwriting in place so they can avoid the penalty and not contra-

These minimum standards may be quality-, action- or production-based. An example of a quality standard would be the percentage of fall-out that is allowed.

An example of an action standard would be the requirement that a loan officer attend mandatory meetings. A production-based standard would require a certain number or volume of loans per month or quarter. Or perhaps it would require a certain number amount of revenue per month.

The development of a team atmosphere How well do the loan officers support the processors and vice-versa? When someone is sick do others pitch in? Are loan officers helping each other with their clients and helping to train new loan officers or are they trying to steal deals from each other? Everyone must know what groups they serve—including the manager. The manager is actually a servant of everyone in the office and if this is not part of the culture, the office will not function well as a team.

“Are loan officers helping each other with their clients and helping to train new loan officers or are they trying to steal deals from each other?”

The development of a professional atmosphere How is the staff dressed and how well do they communicate with themselves and their clients? How well do you treat vendors, including paying their bills and the development of loyalty? Are lenders used as hedges for larger profit? Are people screaming at one another in a crisis?

The development of an ethical reputation There is no doubt that the industry in the past has left much to be desired with regard to how well we serve clients and present cases. The issues of predatory lending and/or outright fraud such as exaggerating income on limited documentation programs have been well documented as contributors to the financial continued on page 32

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The President’s Corner: March 2013

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As we turn the corner on the first quarter of 2013, I am in the mood to tell all of the readers of this column of how proud I am of the entire board of directors and what NAMB has really done to help you, the member or non-member in the mortgage business today.

I will start with the Government Affairs Committee and John Hudson and Rick Bettencourt, CRMS. These two individuals have spent countless hours on making sure that they keep me, our Board of Directors and you, the NAMB member, up to date with everything that is going on in Washington, D.C. and with the CFPB. NAMB has spent countless hours talking with members of the House Financial Services Committee and the Senate Banking Committee to make sure that we understand what is on the horizon. And these members do this all on their own dime. They take their own time to call these people, to review information that comes from them and the CFPB and they work to help you and your employees to be on top of what is happening. I cannot stress enough the time and dedication that we have come to expect from these individuals and the respect that we get because of the way they approach their subjects and the people who are making those decisions.

This year, the NAMB Legislative & Regulatory Conference is an excellent example of the ultimate payoff of this time. This year’s conference will definitely prepare you to go on the Hill and meet your congressmen and senators informed and ready to talk about the issues.

The next NAMB Committee that is all about you is the NAMB Plus Committee.

This committee is led by Don Fader,

CRMS as the NAMB Plus President. The NAMB Plus Committee works with numerous Strategic Partners to improve programs that are available for you the member to improve your business. We have programs that will save you money on office products, overnight mailings, insurance, commercial loans and much, much more. They are working to help all of NAMB’s members reap some type of reward for doing what you do every day and other items that can help your bottom line.

We are also putting together some programs, like the compliance portion of the NAMB Legislative & Regulatory Conference that you can attend and get information for free that can help you each and every day. Right now, compliance is something that we all need and yet maybe you are confused about how to go about obtaining this vital info. The compliance portion of the NAMB Legislative Conference will help you with that, and it is free to attend for all members who register for the event.

Not that the Membership Committee is third, as I can tell you that Kay Cleland, CMC, CRMS, works at this each and every day and she has five directors from the board who serve as Regional Chairs and oversee each of these five regions: Dick Morin handles the Eastern Region; Olga Kucerak, CRMS handles the Midwest Region; Linda McCoy, CRMS, handles the Southeast Region; Rocke Andrews, CMC, CRMS handles the Southwest Region; and Andy W. Harris, CRMS handles the Western Region. These six people have worked hours upon hours to make this program one of the best and to help you the member reap benefits for just being a member. The Membership Committee has put together the following reasons that you should join:

you don’t get involved, you will not have a job 2. Legislative updates and activities 3. Best business insurance 4. Designations: The General Mortgage Associate (GMA), Certified Mortgage Consultant (CMC), Certified Residential Mortgage Specialist (CRMS) and the Lending Integrity Seal 5. Be recognized as a professional: Join your association just like doctors, real estate agents and builders do 6. Power in numbers 7. Members-only discounts 8. Credibility and notoriety 9. Education 10. Networking among your peers

These are all great reasons to join, but I personally think the reason you need to be a member of NAMB is that membership keeps you involved in your profession and helps you understand the complexities of the mortgage business. We keep you informed of things that are happening and we do it for the mere price of $50 per year for a Silver Member and $120 per year for a Platinum Member. The Silver Membership for $50 breaks down to this: $4.17 per month or less than $.14 cents per day, and the Platinum Membership for $120 is $10 per month or $.33 per day.

This is less than a cup of coffee every day.

And the ultimate reason is that when we go to Washington, D.C., our elected officials always ask about our membership numbers and how many potential members we could have. We currently have 5,100 members in NAMB, compared to the 113,000 originators who are registered with the Nationwide Mortgage Licensing System & Registry (NMLS). That is only 4.5 percent of that total. We need you to visit Web site, www.joinnamb.com, and become a member today.

I know that every committee is impor1. Take control and get involved … if tant to this association, but I wanted to

take the time and let you know what these three committees in particular are really doing. They work so hard behind the scenes every day. They do this not for recognition, but for the love of the industry, and I appreciate everything they do and I cannot thank them enough for making NAMB the association that believes we are making a difference.

I know that last month, I made a reference to our Mortgage Professional of the Year, Don Fader, CRMS from North Carolina. He is a true mortgage professional and he also works very hard to help the mortgage professional in his state. Don will be at the Legislative Conference so please take a minute to go up to him and thank him for his service to the association. He is also one of those volunteers who dedicates his life to tireless hours helping you, the member. This award is the highest honor that this association gives out and he is a very deserving individual.

In closing, I have been on this job for 16 months and we have made tremendous strides to get where we are today.

But I made a promise that we would increase membership while being your president. I have about seven months left and I really need you if you are not a member, to step up. NAMB does not pay me or any board member any money to do this job. Your membership money goes to help with Government Affairs, to represent you in Washington, and to put together programs that benefit you the member to use in your daily life. We are truly a non-profit organization. Please do your part and become a member today.

Sincerely,

Donald J. Frommeyer, CRMS, President NAMB—The Association of Mortgage Professionals

What Lies Ahead for the FHA?

By John Councilman, CMC, CRMS

Lots of people are certain that the Federal Housing Administration (FHA) is the next major taxpayer bailout. In Congress, FHA has become a political football. No one is ambivalent about FHA. It seems you either love the FHA or are determined it needs a total revamp or to be done away with. It’s hard to find an article that tries to be objective.

I will try to present that in this article.

First, let’s examine whether the FHA is going to need a bailout. You have probably heard that the FHA has a negative net worth and will not be able to pay claims. The real truth is that no one really knows if FHA will be able to pay all of its claims, not even FHA. Even if things do not improve in the housing market, right now and probably for quite a few years, there is little doubt that FHA will be able to pay all of its claims without a bailout. FHA had $30.4 billion dollars in its MMI fund at the end of FY 2012.

The U.S. Department of Housing & Urban Development (HUD) estimates downpayment assistance loans will cost the fund $15 billion over time and loans originated between 2007 and 2009 will cost them $70 billion. That is a lot to absorb, even over time. The year 2012 was a very bad year for FHA. Seller-paid downpayment assistance took a heavy toll on FHA. Even after revenues from increased premiums, FHA cost HUD $20.3 billion in 2012. That was $17.8 billion in increased costs due to losses with increased revenues of only $1 billion.

In 2011, FHA only lost $3.52 billion.

In 2010, the FHA gained $1.5 billion.

The 2012 figures reflect some recognition of losses that seem to have accumulated. HUD explained it as “There was a large increase in gross costs which was due to an increase in FHA’s upward subsidy re-estimate in both MMI and GI financing accounts.” Was that because FHA was waiting to report earlier losses or was 2012 just that bad? Actual negative cash flows were not that much different when comparing 2011 and 2012.

Last year was about a half-billion worse. Clearly, the 2012 loss to HUD

cannot continue or FHA will need a huge bailout. HUD tells us that they won’t. We are told FHA will take in $11 billion in additional revenue in FY 2013 which will narrow those losses. If losses are similar to 2011 or 2010, FHA could go back in the black.

According to the FHA’s annual report, at the end of fiscal year 2012, the MMI Fund capital reserve ratio had decreased to -1.44 percent. The capital reserve ratio is the amount of cash in the MMI fund versus the total amount of loans guaranteed. This is always supposed to be at least two percent. Of course all of the projected losses will not happen in a year or two, so the fund can still pay claims for quite a while before it runs dry.

To meet its projected obligations, the fund requires $46.7 billion, but only has capital of $30.4 billion. Thus, the fund is short by $16.3 billion. FHA’s 2011 report estimated the fund needed to be at $29.9 billion and was short $900 million. If HUD’s projections for 2013 are wrong and things look more like 2012, FHA will need a major bailout.. The president’s budget has already considered FHA may need a bailout. Everyone is waiting until September to see if things improve or if we have a repeat of 2012.

HUD is counting on quite a few things to help matters. As already mentioned, FHA premiums were increased in 2012.

The increase in the Upfront Mortgage Insurance Premium (UFMIP) was about 50 percent and the annual (monthly) was increased by about 25 percent.

Those took effect in April of 2012, so they were in effect for half of FY 2012. In 2013, there has been a slight increase in the MIP and FHA will no longer drop MIP, even if the loan-to-value (LTV) ratio

falls below 78 percent. That may take considerable time to have an impact.

HUD’s chart on how revenues are broken down allows one to see how premiums and other revenues are broken down. FHA’s chart shows that they endorsed 1.185 million loans in FY 2012 and 353,000 in the first three months of FY 2013. If that continues, they will endorse 1.4 million loans in 2013, a 20 percent increase. If the average FHA loan was $200,000 and they endorsed 1.185 million loans, which would result in approximately $3.5 billion in UFMIP total. Even with higher premiums, FHA only took in about $3 billion more in 2012 than it did in 2011. A billion of that was the huge mortgage servicing settlement with the nation’s top lenders. An independent actuary report projects that FHA will have an additional $11 billion in revenue in FY 2013. This will be due to income from more recent, higher-quality loans. I may be missing something, but I cannot see how FHA will take in the estimated $11 billion in additional revenue in 2013, despite the quality. Perhaps the actuary has adjusted projections where losses were already counted.

HUD has told us that it is now insuring the best book of business in its history. I don’t doubt that. With an average credit score in excess of 700, that is pretty impressive. I wouldn’t expect a high default rate for these loans. It is the loans 2009 and prior that worry me and that worry HUD. If the losses on those loans begin to lessen, FHA could do very well. If they are worse than projected, things will become very bad.

One of the worst problems is that HUD takes losses of about 63 percent on each foreclosure. If property values keep

increasing, more borrowers may choose not to default or may be able to sell.

Even if neither of those occurs, the losses should be less at auction or deed-in-lieu if property values continue to increase.

Some observers are worried that improving conditions may not help FHA because prime borrowers will finance out of FHA, leaving less worthy borrowers. So far, that has not happened because values haven’t seen the necessary increases and FHA borrowers are at very low rates. It would seem in HUD’s best interest to allow borrowers later than 2009 to refinances at lower rates without large UFMIP while retaining the old MIP percentage.

Since the MMI fund now includes HECM mortgages, this is another area of concern for HUD. People are living longer and property values are down FHA has taken steps to stem the most problematic Home Equity Conversion Mortgage (HECM) loans, but it is difficult to tell if losses on HECMs will weigh down the improving performance of forward mortgages.

If FHA needs a bailout, does that mean that the FHA has outlived its usefulness? There are few people anywhere that believe that. The question is whether the FHA should make further restrictions in guidelines and lower the LTV. Already, first-time homebuyer activity is slowing and the FHA is writing fewer of these loans. The risk could be that a fragile economy could go into a tailspin. No one is willing to risk that.

The Treasury is ready to give the bailout if it is necessary.

In hindsight, some say we should have cut FHA back in 2011 when it started to go negative. The flaw in that logic

is that FHA may have lost more money had that happened. If the FHA had not been active in the housing market, it is difficult to tell how far house prices would have plummeted. FHA allowed tens of billions of dollars to flow back into the housing market. Without it, taxpayer losses would have been enormous and Fannie Mae and Freddie Mac’s losses would most certainly have been greater. Who can tell what it would have done to the economy? Like FHA or not, it has played an incredibly important and necessary part in housing’s recovery and the nation’s economic health as well.

With private mortgage insurances still licking their wounds and in no mood to take risks, it doesn’t look like FHA is going to have a lot of competition any time soon in the low downpayment arena. Even if there is bailout, FHA has proven to be invaluable when the housing market stumbles. A few years ago many people thought FHA was unnecessary, a mere relic. That certainly has changed.

For many years, FHA paid money into the Treasury from surplus revenues. It seems only fair that the FHA could call on a return of some of that money in such difficult times. FHA has boldly continued to support the housing market when everyone else abandoned higher-risk loans. Its market share testifies to how important FHA is to the housing industry and the country’s economic health.

John Councilman, CMC, CRMS is NAMB vice president and FHA Committee Chair, and president of AMC Mortgage Corporation. He may be reached by phone at (239) 267-2400 or e-mail. jlc@amcmortgage.com.

complementary advertising campaign that is directed at other groups. Another example may involve use of racially-mixed models by a developer to advertise one development and not others. Similar care must be exercised in advertising in publications or other media directed at one particular sex or at persons without children. Such selective advertising may involve the use of human models of members of only one sex, or of adults only, in displays, photographs or drawings to indicate preferences for one sex or the other, or for adults to the exclusion of children.

v MARCH 2013

Valerie Saunders is NAMB Communications Committee Chair. She may be reached by phone at (904) 9920785 or e-mail valsaun@juno.com.

MORTGAGE PROFESSIONAL MAGAZINE

The Fair Housing Act has been in effect since 1968, however, its importance and purpose are still at the forefront of mortgage lending today.

As NAMB Communications Chair, I want to take this opportunity to focus on advertising and the requirements and restrictions under the Fair Housing Act. When creating an advertising campaign, regardless of the media (i.e., radio, print, e-mail), it’s important to remember that the selective use of advertising media or content when particular combinations are used exclusively with respect to various housing developments or sites can lead to discriminatory results and may indicate a

violation of the Fair Housing Act. For ing vehicles for reaching a particular example, the use of English language segment of the community; or disonly or the exclusive use of advertiseplays or announcements available ments which cater to the majority poponly in selected sales offices. ulation in an area may have a discriminatory impact. Similarly, the selective (b) Selective use of equal opportunity use of human models in advertisements slogan or logo. When placing advermay have a discriminatory impact. The tisements, such selective use may following are examples of the selective involve placing the equal housing use of advertisements which may be opportunity slogan or logo in adverdiscriminatory per the Fair Housing Act: tising reaching some geographic areas, but not others, or with (a) Selective geographic advertisements. respect to some properties but not Such selective use may involve the others. strategic placement of billboards; brochure advertisements distributed (c) Selective use of human models when within a limited geographic area by conducting an advertising campaign. hand or in the mail; advertising in Selective advertising may involve an particular geographic coverage ediadvertising campaign using human tions of major metropolitan newspamodels primarily in media that cater pers or in newspapers of limited cirto one racial or national origin segculation which are mainly advertisment of the population without a

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A Message From the NAMB Communications Committee

By Valerie Saunders

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A Message From the NAMB Nominating Committee

By Jim Pair

As a member of NAMB—The Association of Mortgage Professionals, you have the opportunity to nominate the future leadership of our association.

This is, without a doubt, one of the most important benefits that your membership offers you.

You may nominate someone you know or yourself. The person nominated must meet certain qualifications such as being a Platinum Member; hold their Certified Mortgage Consultant (CMC) or Certified Residential Mortgage

Specialist (CRMS) designation and has demonstrated leadership at the local, state and/or national level. Each nominee must be willing to serve at his or her expense and be willing to devote the time necessary to carry out the duties of the office for which the person is nominated. You must have the permission of the person you wish to nominate before his or her name is submitted to the Nominating Committee. Any nominee that does not hold a Platinum Membership or does not have either a CMC or CRMS designation will not be accepted by the Nomination Committee.

The call for nominations will go out the first part of March. Nominations will

be open for two weeks. Once the nomination period has expired, the Nominating Committee will vet the nominees and select one nominee for each vacant position. After the nominees are selected, a ballot will be sent to the voting membership for its approval.

There are vacancies on the board of directors and for the office of vice president, treasurer and secretary. The nominees for the office of vice president, treasurer and secretary must have served as a director of the association.

As mentioned above, this process is a very important benefit of your membership. You have the opportunity to nominate someone who has demon-

strated outstanding leadership abilities and will move the association forward to achieve the goals and objectives necessary to build a stronger and larger association that protects its members and the consumers we serve. Please do your part. Carefully consider members who meet these qualifications and nominate one for each of the open positions on the board of directors and one of the vacant officer’s positions.

Jim Pair is past president of NAMB and current chair of the NAMB Nominating Committee. He may be reached by phone at (361) 774-7314 or e-mail jlpair@aol.com.

Developing Strategic Partnerships

By Fred Arnold

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MORTGAGE PROFESSIONAL MAGAZINE

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Creating strategic partnerships is imperative to sustaining a successful business as a mortgage professional.

Whether you’re new to the business, or have decades of experience generating and funding loans; the importance of continually building strategic partnerships cannot be underscored. In a recent article for National Mortgage Professional Magazine, I recommended that all mortgage professionals make at least three phone calls every day to arrange a strategic partnering meeting every day for later in the week. Those new to the industry ought to increase their efforts and commit to at least two meetings with potential partners each day.

If you’re a little rusty at forging new relationships, or you’re just getting your start in the business, you may be wondering who to call, and most importantly what to say once you have that meeting.

Here is a step by step guide to setting the wheels in motion for building successful strategic partnerships.

1. Who to call?

Many mortgage professionals make the mistake of assuming that the only partnerships they need to focus on building are those real estate agents, financial planners and tax professionals. While those professionals are a good start with clients that need your help, they don’t account for the fact that people of all professions can introduce you to their families, friends and neighbors.

You can find terrific professionals to partner with through a variety of sources.

My involvement in my local chamber of commerce has spawned countless new strategic partnerships. Likewise, my membership in a networking association has repeatedly been the launching pad of many new strategic partnerships. I’ve also found strategic partners via my work with charitable organizations. All of these partnerships began with an exchange of business cards.

2. Making the call If you’re feeling intimidated by calling a potential partner and asking for a meeting, it’s likely because your goal of the meeting is to get a referral. If your objective is to try to sell yourself, and earn immediate business, you are bound to miss the mark.

However, if your motivation is to determine how you may help other professionals grow their business, there won’t be any fear about making the call.

For example, when I call someone to arrange to meet for coffee I typically say something like, “I wanted to meet with you to learn more about how your services (or product) can help my 1,000 client better their lives. Let’s connect for 30 minutes so I can learn more about your business so I can introduce you to my family, friends, neighbors and clients.” In making this call, I’m letting them know that I want to learn about them and help them. Strategic partners are more likely to agree to a meeting sooner, when the focus will be on them, rather than you.

3. Meeting time When you meet with your potential strategic partner, begin the meeting by reiterating your objective. I generally open the dialogue with something like this: “Some people think I’m in the mort-

gage business just to fund loans. I don’t see it that way. My number one goal is to help friends, family, neighbors and clients have the resources necessary to be successful in their businesses and lives.

With that said, please tell me more about what you do, so that I can use you as a resource for them.”

An opening such as this reaffirms that you’re not there to try to get their business. You are there to listen, and as such, for the next 20-30 minutes, you’d be smart to open your ears and close your mouth. Asking questions is the only exception to this, and questions should be designed to help you to learn more about your potential partner. Sample questions may include: n What led them to their profession? n What do they like most about it? n What marketing strategies do they employ? n What are their five year goals? n What do they do outside of work?

It is very important to take notes.

There is nothing wrong with jotting down some of their interests, hobbies, etc. After all, your goal is to help them grow their business. The more you know about them, the easier it will be for you to help them.

After they have given you a glimpse into their business, ask for the opportunity to tell them a little bit about your business. In less than five minutes, let them know how you keep in touch with your clients, and how you manage your business. Let them know that you welcome the opportunity to be introduced to their family, friends, neighbors and clients, but that your goal is to help them.

4. Meeting follow-up Following up after a meeting is critical to nurturing a budding strategic partnership. Within a day of your initial meeting, give your potential partner proof that you’re serious about helping them.

If you’re just starting out and have a limited budget, send an article (from the Internet) or brochure that relates to something your potential partner mentioned was of interest to them. If they told you that they are looking to get involved in charitable work, send them a flyer for an upcoming event that your charity is hosting. If your budget allows, why not send a book on a topic that has relevance for them? This will show that not only were you serious about helping them, but that you were paying attention when they were speaking as well.

The steps to developing strategic partnerships will always begin with an exchange of business cards; grow with a phone call, and blossom as a result of your willingness to help others. The introductions to their friends, families, neighbors and clients will flow as a natural result of your attempts to be helpful to them first.

Fred Arnold is a Certified Mortgage Consultant (CMC), past president of the California Association of Mortgage Brokers, current treasurer of NAMB, and mortgage professional at American Family Funding, a branch of American Pacific Mortgage in Southern California. Fred hosts the radio show, “SCV Chamber and Business Spotlight,” on AM 1220 KHTS, as well as the televised program “Out of The Rough” on SCVTV.com, Channel 20. He can be reached by phone at (661) 2841150, ext.

109 or e-mail fred@fredarnold.com.

NAMB Bylaws Committee Update

By Andy W. Harris, members and input from Delegate CRMS Council meetings and members across

As chair of the NAMB Bylaws Committee, I just wanted to briefly share about some of the work we’re doing.

With the help and selfless time donated of the committee

the nation, we are working together to simplify and improve our trade association by-laws. We are beginning with some proposals to revise and simplify definitions, while also making membership and state affiliations easier to understand and operate.

We welcome any feedback and

communication while we work up proposals to present to the board and we continue to work toward adapting and improving every area in our ever changing industry. Now is the time to get involved at a small or larger scale. If you are not called to volunteer your time, the least you can do would be to become a member if not already and support NAMB

who is supporting your career.

I wish everyone a great 2013!

Andy W. Harris, CRMS is president of Vantage Mortgage Group Inc. in Lake Oswego, Ore. and chairman of the NAMB Bylaws Committee. He may be reached by phone at (877) 496-0431 or e-mail aharris@vantagemortgagegroup.com or visit www.andywharris.com.

NAMB Membership Committee Update

By Linda McCoy, CRMS

they passed away, moved out of state or requested no longer receive any mail from me. I scrub my database continuously. Someone once told me that one happy customer could make me more than $300,000 worth of income over the next 20 years. I do not know if that is true or not, but keeping up with them has made my phone ring without having to go out and ask for a loan. I do that on occasion, when I need to get some fresh air.

Small postcards produced in my office are inexpensive, and you control the content.

I give them a recipe or something of interest (so they keep the card), remind them who I am and what I did for them. I remind them to tell friends and family about me.

A short story to prove the point …

Four or five couples are sitting at an Alabama football game in Tuscaloosa within hearing range. One couple began talking about buying their home and asked the couple they were sitting next to if they knew a good mortgage person. The couple mentioned my name and company. The couple behind them chimed in that they too had used us. Another couple a few rows down had used us as well and

stated that we always sent them a handwritten Christmas card. All of them were past customers and talked about the Christmas cards. We got a phone call from the Alabama Stadium that day and another Mr. Past Customer wanted to know why he did not get Christmas cards from us? It was hard to hear him over the noise, but I got the message after listening to his story. I spent time trying to figure out how I missed him, but that Christmas, he got a hand delivered card and an apology. Your past customers are the best referral source if you keep them happy. If you can be the topic of conversation at a football game, you are doing something right.

You only have to be faithful in executing this simple plan to make a very good living in the mortgage business.

Linda McCoy, CRMS of Mortgage Team 1 Inc. in Mobile, Ala. serves on the board of directors of NAMB—The Association of Mortgage Professionals and also serves NAMB as Southeast Regional Chair of the Membership Committee. She may be reached by phone at (251) 610-0494 or email linda@mortgageteam1.com.

NAMB Certification Committee Update everyone who has taken a NAMB certification exam this year has passed, so we are batting 1.000!

One thing that has certainly helped are the Nationwide Mortgage Licensing System & Registry (NMLS) exams people have taken. Those exams give loan officers familiarity with testing procedures and the NMLS national exam covers many topics that the certification exams address. We may begin to offer exam testing at NAMB conferences also.

Just as the housing industry is showing signs of recovery, loan officers across the country are again seeing the value that a

leave the industry if rates go up. With three NAMB designations available, I’m looking forward to more designees nationwide. There are people who didn’t know that NAMB designations have been around since 1999, but after hearing about all the benefits, they want to jump on the bandwagon.

To find out more about NAMB certifications, please visit www. NAMB.org.

John Stearns, CMC, CRMS of American Fidelity Mortgage in Mequon, Wis. is Certification Committee Chair of NAMB— The Association of Mortgage Professionals.

He may be reached by phone at (262) 8537364 or e-mail jstearns@afmsi.com.

v MARCH 2013

The NAMB Certification Committee continues making tremendous progress in 2013.

After seeing a 400 percent increase in the number of NAMB designations from 2011 to 2012, we continue to see interest in NAMB certifications from loan officers across the country. If all the people who are approved to take the General Mortgage Association (GMA), Certified Residential Mortgage Specialist (CRMS) or Certified Mortgage Consultant (CMC) exam

NAMB certification provides. In this highly competitive world of mortgage finance, it is more important than ever to build an image that will distinguish you from the competition.

With the slowdown in business over the past few years, do you expect a decrease in the number of people who want to get a designation? Actually, I expect the number of certified loan originators to increase this year and beyond.

Given the current business climate, originators are looking for a way to differentiate themselves in the marketplace. The people who have a CMC or CRMS are generally the type who are in the business for the long haul and not the type who will

MORTGAGE PROFESSIONAL MAGAZINE

By John Stearns, pass, then we’ll see a 200 percent increase CMC, CRMS from 2012 and it’s only March! In fact,

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Are you a member of NAMB—The Association of Mortgage Professionals? Are you a member of your local state association? No time like the present to get involved and support the industry that is supporting you.

There are lots of “mom and pop” mortgage professional offices across the United States. My office is one of them. I have owned my own business for over 10 years. I have been in the mortgage industry for nearly 20 years. I joined NAMB when I first started my own company. I was a loan officer and manager on the retail side of the industry before that. I wanted to meet other professionals who could give me some ideas on how to become more productive and make more money. I got involved with the state association first and worked my way up through the ranks and finally became president in 2010. I got involved in NAMB during those years because I could see

great value by keeping up with what was going on in Washington, D.C. and trying to learn more about our industry, meeting owners and finding out what was working for them. I listened to ideas from many originators from all over the country. I tried to implement as many as I could.

Now I am sharing one that has kept me in business all these years.

When I was studying for my Certified Residential Mortgage Specialist (CRMS) exam this past year, I came across a study guide that stated the least effective way to get business was via written material.

Well, maybe that is true for some written material, but whether you contact future customers through mail, text or online, the material is still written. Some people still like a piece of paper to hold and save, to be used in the future.

As an originator, I have closed more than 5,000 loans in my career. I saved each customer’s contact information. I work the database and send them something in the mail every eight weeks or so, rotating the database and mailing every Friday to a different group. When they would move, I would keep up with them only taking them out of my database if

Credit Report Accuracy Debate Renewed

by FTC Report and CBS 60 Minutes

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40 Million Mistakes

By Terry W. Clemans

T

he accuracy level of the U.S. c r e d i t reporting system is in the headlines and being debated nationally as the fifth edition of a congressionally mandated report on the subject was submitted from the Federal Trade Commission (FTC) on Feb. 11.

This FTC report covers years of research by the FTC as required by Congress as a condition of the Section 319 of the Fair Credit Reporting

Transactions Act of 2003 (FACTA). This report comes less than 24 hours after CBS’s 60 Minutes reporting their findings in a story titled “40 Million Mistakes: Is Your Credit Report Accurate?” to add the impact of the mass media to help ignite the emotions of the millions of Americans claimed to have accuracy issues with their credit report.

In the FTC study, the federal government explains in the 370-page report the methodology used to uncover credit reporting error rates on from five percent to 20 percent of consumer files, pending the severity of the error and its impact to the con-

sumers credit score. They found some errors have little to no noticeable impact on the consumers credit score, while others errors, or a series of errors on the same consumer, produced changes to the consumers score of more than 100 points.

To the readers of this publication, mortgage professionals who are regular users of credit reports who work with consumers as they address issues in pursuit of mortgage loans, I am sure these are not surprising findings.

If anything, some of the readers of this publication are likely thinking the FTC’s stats are a little conservative. I conducted a very simple survey

of mortgage professionals at an Indiana Mortgage Bankers educational breakfast on Jan. 17 when addressing the group about the Consumer Financial Protection Bureau, (CFPB).

I found that the majority of the Indiana mortgage professionals in attendance, 43 percent, by a show of hands, believed that between 10 percent and 25 percent of the credit reports they worked with contained errors that impacted a consumer’s loan. This falls into a similar range as the findings reported by the FTC to Congress. Surprisingly, the second continued on page 28

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“I joined America’s Choice Home loans because I felt like I was joining a family.

They just jumped through hoops to get me on board and opened.

They give me the tools needed to help me run and grow my business.”

“You know the old saying ‘your company is only as good as your employees’— the ACHL team has proven that statement to be true! It’s the right move!”

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v MARCH 2013

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MORTGAGE PROFESSIONAL MAGAZINE

Give Cory Fowler, National Sales Manager at America’s Choice Home Loans a call at

NationalMortgageProfessional.com v IDAHO

Dante Miller 13 years in business Corpus Christi, Texas

Banks Look to Mitig Through Informa

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By Jim McGann

O

ver the last few years, senior executives, legal teams and IT departments have been have been heavily tasked with protecting their companies from a multitude of evolving legal and compliance liabilities.

The Dodd-Frank Wall Street Reform and Consumer Protection Act, RESPA, TILA Regulation Z and more have changed the entire landscape of the mortgage industry and the way communications are handled. E-mails are full of disclosures, ambiguous regulations make it difficult to decide what ‘marketing communications’ must be archived and originators have lists of terms that should never be used.

But a growing number of banks are finding the greatest legal risk to the security and stability of any financial institution is not the communications going out today, but the ones that have been stored for the past five, 10 or more years.

Those stockpiles of legacy backup tapes, servers, e-mails, PSTs and other file types

are Big Data at its worst.

This ‘red flag’ content includes highly sensitive PST email archives created by the former CEO’s admin, unencrypted personally identifiable information (PII) sent from a client to an originator, aged emails from former employees, copies of business data such as contracts, network file shares and even decade-old backup tapes. As policies, laws and employees have changed, aged emails and files containing sensitive information and valuable intellectual property have not been located and managed according to policy and get buried, just waiting to be uncovered at the most inopportune time.

To mitigate these risks, avoid security breaches and manage legal hold requirements, more banks are proactively managing Big Data at an enterprise level through an information governance policy. An information governance policy dictates the use, disposition and management of corporate data in order to protect the firm’s assets and manage longterm risk.

Information governance for financial institutions Most financial institutions save too much

data. While some of this data is important business documents required for day-to-day operations or is mortgage documentation required to be held by law, much of what has been saved has no business value and some could become a liability over time. Saving everything is not a sound corporate policy. However, unless legal teams work hand in hand with IT and have corporate oversight, all of the company’s data will continue to be saved.

The “save everything policy” exposes a company to breaches and litigation.

Recent lawsuits about unencrypted customer PII being breached and ambiguous emails being interpreted as misconduct have muddied waters for the mortgage industry. Proper queries and data policies could have prevented both cases.

Information governance allows banks to control Big Data by determining the location and disposition of sensitive data, which protects both the consumer and the company. Once policy is defined, it can be overseen, audited and enforced.

An email, for example, that belongs to a former employee, sent to another employee that has not been accessed in seven years can be purged from the sys-

tem for having no business or legal value.

This prevents it from being taken out of context at a later date. Information governance also allows for proper records to be put on legal holds and search for unencrypted information that clogs originator inboxes. If a consumer sends an originator an email with bank account or social security numbers, it does not get deleted because the originator presses that button. A copy remains on backup data.

The legal and regulatory climate Over the past decade eDiscovery events have taught many industries a painful lesson, and the mortgage industry is no exception. Organizations have spent significant time and resources identifying sensitive user data and collecting it to support active litigation. It is not unusual for a single litigation event to cost hundreds of thousands or even millions of dollars.

Over the past 10 years, the successful use of the “inaccessibility” or “undue burden” argument when faced with the collection and production of sensitive user data has eroded. Ten years ago it

gate Big Data Risks ation Governance

Policies and data profiling

Data disposition Information governance strategies include such initiatives as eDiscovery, and also provides a platform for defensible deletion and compliance. Most financial institutions let data accumulate on the network and within archives because classifying what has value and purging what is no longer required has not been possible due to the scale of the data environment, therefore, data accumulates and is not managed according to policy.

Today’s information governance strategies include determining the disposition of the content, what records have value, what has no value and taking action on it. Common dispositions include moving essential content to an archive, preserving data for legal hold, removing duplicate content, encrypting sensitive data and purging what has no business value.

Disposition of data is the foundation of information governance strategies, preventing data from remaining on networks unmonitored and unmanaged. Using policy as the foundation, disposition can be executed and data can be leveraged and managed more effectively.

Red flag methodology Loan originators, underwriters and processors all deal with sensitive information and store it uniquely, this makes it is easy to determine where the most sensitive information exists.

munications. Profiling this server and analyzing the content will allow for immediate decisions that will manage the unknown risk and liability hidden within. n M&A consolidation: As financial institutions acquire or merge with others, or simply consolidate data centers, they must move large volumes of unknown user content.

Analyzing and determining disposition of the ‘new’ data before the consolidation or migration occurs can avoid exposing many skeletons down the road. n Aged data: Many banks have saved files that are decades old and have not been accessed in more than seven years. An analysis of this content will allow you to easily classify the data and determine how to manage it. Some of it may be data that has long outlived its business value and is nothing more than a liability.

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An information governance policy sets standards of where to look, what to look for and how to handle it. Red flag areas are typically the focal point of these policies.

Big Data managed Managing big data through an information governance policy allows financial institutions to understand, ensure and manage data’s inherent risks. Without an understanding of what exists and policy to manage content, enforcing policy is next to impossible and organizations put themselves in jeopardy of litigation.

Those banks where compliance, legal and IT are proactive in developing and supporting data policies manage their risks, control liability and harness corporate knowledge. The failure to act has already resulted in devastating financial and public perception ramifications.

Jim McGann is vice president of Index Engines, a leader in enterprise information management and archiving solutions. He may be reached by e-mail at jim.mcgann@indexengines.com.

v MARCH 2013

n User shares: Financial institutions typically set up network shares where users can store files and other content. These shares have grown to the point where managing the content has been impossible. Using queries, an analysis of the content can occur and an action plan defined. For example, find all data owned by exemployees that have not been accessed in more than five years.

This data may be easily moved off this environment or even purged if it has no business value.

n Departmental servers: Departments that work frequently with PII have the highest risk of security breaches associated with their servers. An enforced information governance policy would make sure all data is properly encrypted and secured. n Legacy backup tapes: Backup tapes contain a copy of all existing user files and e-mail over time. This content has in the past been considered burdensome to access, however, new technology makes the data on these legacy archives reasonably accessible and thus a corporate liability if not managed according to policy. Organizations are now cleaning up this content and preserving what has value from the remaining content. n E-mail server: Typical corporate email servers are overloaded with data from users that have saved large volumes of historical e-mail, email addresses that are no longer in use, but continually accumulate content and redundant mailboxes that contain duplicate e-mail com-

MORTGAGE PROFESSIONAL MAGAZINE

The corporate data policies are complex.

They are complex because for year’s compliance officers, legal and IT have just been trying to keep up with regulations without having any real knowledge of what data exists. The policies, in theory, address industry regulations, corporate compliance issues and legal hold requirements, but the frustration is that it is hard to enforce, apply and audit those policies.

Applying policy to data is simplified once the data is profiled and knowledge of what exists is gained. Data profiling is the process of examining data from all sources and collecting metadata-level information on the content to create a searchable and reportable repository of information about the user files and

email such as owner, age, types of files, location, last accessed or modified, duplicates and more.

Profiling user data provides the knowledge required in order to understand what data exists where, and to allow those who manage policy to take action on it.

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was fairly easy to claim that specific content was not easily found within the complex corporate infrastructure; today this argument is less successfully utilized. It is a high-risk proposition to enter a court without the requested data and take a chance that you won’t be admonished or even issued fines and sanctions.

Beyond eDiscovery, compliance and regulatory requirements have been increasing, resulting in renewed emphasis on records and information management strategies. These regulations, and those that are still to be written, are requiring significant updates to corporate policies, including retroactive communications and new strategies for data managers such as the requirement to encrypt sensitive records or archive specific classes of correspondence. The Consumer Financial Protection Bureau (CFPB) is out there monitoring this and has the authority to distribute harsh penalties.

The final straw in the legal challenge is the issue of data breaches. Sensitive information is commonly moved around corporate networks through email, external drives and other media such as backup tapes. Without the ability to understand what data is sensitive and where it is located it cannot be properly managed and secured.

Without appropriate management of this content it will work its way outside of your secure environment.

As a result of these legal and regulatory issues alone, financial institutions are taking a fresh look at their policies and implementing sound information governance strategies.

Make the Grass Greener on Your Side of the Fence

By Jean LeBlanc We all know the mortgage industry is a completely different world than it was just a few years ago. Market and regulatory changes have transformed the way we do business, including: n How we compensate sales staff, and to some degree, who we hire. n Our marketing messages … what we can no longer say. n How we select business partners, and how we are allowed to partner and promote with them. n How we generate new business, including the way we capture and nurture new leads.

Your seasoned staff may find the current atmosphere challenging as they work harder for the loans they close. They reminisce about the ease of doing business in the past—and, in fact, many loan officers are perennially in search of the good old days; always looking for greener grass on the other side of the fence.

As for newer originators, they just want to make a living, and it takes time to build a database of prospects and clients. Many grow impatient, and, like their more seasoned counterparts, begin to look over the fence for greener grass. As a branch or sales manager, mortgage office owner or exec, what can you do to combat this “greener grass” syndrome?

Bottom line, you need to give them solid tools and show them ways to generate business. Guaranteed has identified several tried-and-true strategies that work. Let’s begin with a few online tools for gathering new leads.

Your Web site 28

It boils down to this: The more pages you can get a prospect to view on your Web site, the more engaged they will be and the more sold on using YOU. That means every Web page you have or create must answer the question “WIIFM,” or, “What’s In It For Me.” Here’s what you need to do to optimize your site:

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n You need to be blogging or adding fresh content regularly that is valuable to homeowners and buyers. n You need a strong, visible call-to-action on every page. n You need to review your website analytics so you’ll know the search terms people use to find and visit your site, then you need to blog or add content using those specific keywords and phrases.

Lastly, you need to tie your follow-up e-mails back to your Web site. In your e-mails, mention tools found on your Web site that potential clients will need. Which leads us to:

Your e-mail nurturing campaigns Create a series of drip campaigns using the e-mail segment of your LMS (Lead Management System), or a third-party vendor such as MailChimp.com, which is free for a subscriber list of up to 2,000. For unqualified buyers/leads, send credit repair tips and down payment assistance ideas. For prequalified leads, send information such as pre-home purchase credit “do’s and don’ts,” what to expect from an appraisal, steps to buying a home, and down payment options. Refer them to your website in every e-mail via a link to new information they will find useful.

Coach your sales team to adopt a strategy of persistence: They may have to make contact with a single prospect 15 or 20 times before they’re convinced that loan officer is the one they should work with. Yet most sales people stop after two contacts, leaving 80 percent of the business on the table.

Nowadays, it seems that no matter how prospects find you, they want to check you out online. The more pages your prospects view on your website, the more they’re sold on YOU, so sales manager, it’s your job to make sure your sales team has these basic online tools.

Jean LeBlanc is director of marketing for Guaranteed Home Mortgage Company. For more marketing tips, download the eBook, 13 Ways to Juice Up Your Marketing in 2013, by going to joinghmc.com and clicking on the eBook offer midway down the page. She may be reached by phone at (914) 696-3400.

credit report accuracy

continued from page 24

largest response, 32 percent, believed that the error range was from 25 percent to 50 percent. No one in the group believed the error rate was more than 50 percent as claimed in several consumer advocacy studies over the years, or less than one percent, which is the error rate claimed in the May 2011 study conducted by the Policy & Economic Research Council (PERC). That study was designed and funded by the Consumer Data Industry Association (CDIA), the trade association dominated by the three national credit repositories. The only other study with findings similar to that was in another CDIA study in 1992 by the accounting firm Arthur Andersen.

I believe there are two critical features that need to be reviewed in the methodology of any credit reporting accuracy study that will provide an indication of the results to be reported; the source of the data for the study, and how is an error defined.

From a source perspective, direct-toconsumer credit report studies (like the PERC study) are going to contain far fewer errors from mixed credit files than studies conducted with the credit reports provided lenders. The data differenced are for the protection of consumers identities, as direct to consumer reports use tighter data matching criteria which filters borderline file matches to prevent data from getting into the wrong hands.

With regard to the definition of an error, this is a major point of contention as there are even different categories of errors debated within the industry. However, for this story let’s look at error definition based on how many points the error causes the credit score to move. The PERC study defined errors that were large enough

to change the consumers credit score by greater than 25 points. As mortgage professionals, I am sure you can quantify to the exact dollar per month consumers who have been impacted from an error on their credit report that made only a single point difference, if that single point was the one needed to hit the next risk based price tier for the loan. The FTC considered that and used the consumers score in relationship to pre-set pricing models to determine the impact to the consumer, which sometimes was that single point that kept someone from the next price tier (like the coveted 720 versus the dreaded 719) which also made some 20 point error to be recorded in their study as not being an error due to impact found on the consumers loan.

While research methodologies and study results will be great fodder for debate, there is no debate that the role credit report data can have a drastic effect on the lives of Americans in many ways outside traditional credit applications. Insurers have long used credit report data in underwriting policies, and credit report information is being analyzed for other uses involving all types of risk evaluation. This expanded use of credit data has increased the consumer awareness of their credit reports and credit scores at the same time that government interest from both the FTC and the CFPB seems to be at an all-time high.

This increased awareness combined with the CFPB’s audits of the credit reporting industries “larger participants” for the first time in history without a specific “for cause” reason is almost certain to bring future governmental oversight and regulations.

For more information, see the following resources:

FTC 2013 Accuracy Study n http://www.ftc.gov/opa/2013/02/creditreport.shtm n http://www.ftc.gov/os/2013/02/130211factareport.pdf

CBS 60 Minutes Report n http://www.cbsnews.com/8301-18560_162-57567957/40-million-mistakes-is-your-credit-report-accurate/

Experian Response to 60 Minutes n http://www.experian.com/blogs/news/2013/02/11/60-minutes/ n http://www.experian.com/blogs/news/2013/02/21/council-members/

Policy and Economic Research Council Report n http://perc.net/files/DQreport.pdf

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

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mortgageprofessional N M P

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T H E

M O N T H

Melinda Wilner

Wholesale Underwriting Manager

United Wholesale Mortgage

BY DAVID J. COSTER

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n this month’s issue of National Mortgage Professional Magazine, we had a chance to speak with Melinda Wilner, wholesale underwriting manager for United Wholesale Mortgage (UWM). Leading a team of 200 underwriters in support of thousands of mortgage brokers and originators takes a unique combination of knowledge, wisdom and empathy, along with a “whatever it takes” work ethic. We recently sat down with her to discuss the nature of underwriting in today’s mortgage industry, and how United Wholesale Mortgage has managed tremendous growth, while maintaining industry leading turn times.

Tell me about how you came to the mortgage industry.

A good friend of mine approached me at the end of 1999, suggesting that I pursue a career in the mortgage industry. After some research and a leap of faith I became a partner in a mortgage loan processing company. It really was a great fit with my background in economics and my technical and logical side. I felt like each loan was a puzzle with pieces building a quality loan file. This gave me good exposure to loan officers which allowed me to gain a clear understanding of the origination side of the business. Direct contact with borrowers gave me an even deeper understanding of the full process. I became very fluent with industry guidelines, knowing what worked, and what did not. Every day was different, every loan file was different and the industry and guidelines were changing rapidly, all of which kept me on my toes.

After the processing company, I was responsible for origination, compliance, processing, accounting, marketing and daily operations. It was not on the scale of what we are accomplishing at United Wholesale Mortgage, but it prepared me for my experiences here.

When did you join United Wholesale?

What drew you to the company?

I joined United Wholesale Mortgage

“UWM is unique in the fact that we connect our brokers directly to their own underwriting team.

We provide transparency into the loan process, and our direct communication with underwriting is appreciated and valued by our client base.”

in October of 2011. A good friend and colleague, Bob Fuller, had joined UWM. He reached out to me and said that I would be a perfect fit for UWM, which he described as an exceptional company with phenomenal growth. I look back and am so thankful that he made that call.

Everything he said was true and

without him I would not be here today. My initial attraction was that UWM was a family-owned business and they had a strong desire for growth, with high integrity and solid values. The office had so much positive energy! There was an extraordinary feeling of being able to have a voice and participating in change for

the better. To be part of something that was growing and expanding, a bright spot in our economically struggling state, was enticing. The idea of working as a team, making improvements, solving problems, and accomplishing lofty goals, that is what drew me to United Wholesale Mortgage.

What are your responsibilities? What is your management style?

I am the underwriting manager for the wholesale underwriting department which is comprised of over 200 underwriters. I am responsible for their productivity, their loan quality, and simultaneously maintaining our world-class client service and industry leading turn times. On my management style, I like to empower my team members and give them the tools, support and guidance to let them get the job done. My door is always open to them to offer help or advice but I don’t want to monitor their every move. We have a great team of people who are trusted to get the job done right. A big thing for me is that people feel appreciated and respected, are respectful of others and have a friendly demeanor. Each day I expect that everyone will come with a positive attitude and give their absolute best. Also, our incredible growth has forced us to be nimble and make needed changes quickly, which mirrors my management style.

The days of doing the same thing because that is how we have always done it are long gone. I’m never afraid to try something new to make it better and if it doesn’t work we go back to the drawing board and try again.

Wilner, is incredible–bright, attractive, efficient, hardworking and motivating. If you’re looking for a job in underwriting, this is the person you want to work for.”–Anonymous United Wholesale Mortgage Employee I’m overwhelmed by hearing that. As a manager, every day you hope that your people feel respected by you and that they enjoy working for you.

I’m touched. Those are things that I strive for–clearly not the bright and attractive part, but I’m tickled to hear that.

What else would you want folks to know about you or United Wholesale that we haven’t covered?

I feel really confident that my past experiences have given me a true understanding of what brokers and loan officers go through. At UWM, we realize that the mortgage file in our hands is the loan officer’s next paycheck. I want each broker to know that by sending loan files to UWM, you will receive exceptional client service and your loan file will receive the timeliest review in the industry. We strive to make lending easy, and truly deliver every step of the way.

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David J. Coster is senior editor of National Mortgage Professional Magazine. He may be reached by phone at (919) 559-2171 or e-mail davidc@nmpmediacorp.com.

Mortgage Professional Resource Registry

The Resource Registry is a directory of lenders (wholesaler or retail that are recruiting), affiliated services and resources that is seen by more than 191,181 active Professionals.

Call 516-409-5555, ext. 4 to register your company.

See the National Mortgage Professional Magazine’s Resource Registry on pages 52-55

v MARCH 2013

What are a couple of things that originators can do to make sure that the files that they’re providing are good ones to help meet those turn times?

We really stress the power of putting together a great and complete file.

Include as much documentation as possible upfront. By doing so, you’re going to eliminate surprises and delays later. Ask your borrower a lot of questions so that you have a clear understanding of their profile. Be I found a quote about you to which aware of red flags and get potential I’d love to get your response: “This problems uncovered and resolved if new underwriting manager, Melinda

What would you say to those who are encouraging easing of underwriting standards?

If I was going to encourage any underwriting changes, it would be focused on people who have stayed in their homes and honored their commitments. This group is paying higher rates than are available today and should be allowed to improve their rate or program. Maybe they were given a mortgage, which wasn’t sold to Fannie or Freddie, and they’re stuck paying more than everyone else, with no options. This is an area that I would like to see some ease in underwriting standards.

MORTGAGE PROFESSIONAL MAGAZINE

What would you say is your strongest characteristic that you feel inspires them to deliver the best for you?

I care deeply about them and enjoy So far what are your proudest accom- sharing in their successes and chalplishments in your career? lenges. I have their back and I know By far, my proudest accomplishment that without support they wouldn’t is this past year at UWM. We experi- be who they are. I understand where enced a phenomenal rate of growth they are coming from and what they in 2012. This was accomplished by are dealing with having spent considthe incredible efforts of our sales erable time in many roles in the team and dedicated underwriters mortgage process. These shared expewho worked hard to accomplish the riences make a huge difference. task. I am proud that we have made it through all the growing pains without How does your experience as a mortmissing a beat, a true testament to gage broker help you support them? our owners and management team. I Brokers are entrepreneurs who work am proud of being considered an hard running a business and investintegral part of this special company ing their money to generate loans. I and am thankful for the positive understand those pressures and the recognition from many throughout effort it takes to add new customers, the organization. to get referrals and to get quality loans closed. Our brokers and their What would you say in terms of major loans are the lifeblood of UWM’s busiinfluences on you and your career, ness and I deeply understand and whether it be people, books, man- appreciate their efforts. Also, when I agers, or anything outside of work? was a broker I always had resistance I definitely love books and read all to underwriters who believed that the time. I believe in continuous their way is the only way to meet a improvement and want to be better guideline. I think we do a really great at what I do. Reading allows me to be a better manager, leader, and motivator. My father stressed education and learning. As one of the hardest working people I have ever known, his greatest gift to me was his work ethic. I follow in my dad’s footsteps, putting in an intense effort each day, and being satisfied with my accomplishments when I go home. He always encouraged me to be independent and resourceful, which is a requirement in this industry. If you don’t know the underwriting guidelines and how to find what you are looking for, you’re in trouble. My husband is also a great influence; he is motivational, supportive and understanding. We have two wonderful children who remind us daily of what is really important in life. My daily influence is the management, my colleagues and my team here at UWM. I am surrounded with an extraordinary group of talented, committed individuals and I learn so much from them.

They have been the driving force in my success. They constantly challenge me and drive me to be better.

job at UWM when it comes to seeking real solutions to make loan files work.

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What allows you to continue to maintain better than average industry turn times?

The biggest thing that keeps us on schedule for consistently fast turn times is the willingness of our underwriting team and other departments to get the job done regardless of the loan volume. They are resilient and committed to going above and beyond, and are passionate about the values of the company. Our mantra is “Lending Made Easy” and our underwriting team delivers on that promise each and every day.

They understand how important it is that we get the loans out to our brokers in a timely manner, while seamlessly delivering exceptional client service throughout the process. And UWM is unique in the fact that we connect our brokers directly to their own underwriting team. We provide transparency into the loan process, and our direct communication with underwriting is appreciated and valued by our client base.

possible. Dig into the documentation and do your own “pre-underwriting.”

Double-check the documents that the borrower sent in, make sure all the pages are included, review your income calculations, and look for address discrepancies and inconsistencies within the file. Cover letters are always great—if there’s anything quirky about the file, let the underwriter know. There are so many great brokers out there that truly take pride in the files they submit, and you can tell. Certain files are just like a book that’s easy to read. You open it up, everything is there for you, you read it, are able to make a decision, and you’re done with it!

policy, procedures and examinations Management demonstrates a clear failure to prevent unlicensed activity, when an employee loan officer takes a loan application prior to the licensing date or during a period of time when the license was allowed to expire before renewal. The policy statement associated with licensing, therefore, must state the requirements and boundaries to the company’s licensing procedures.

If the mortgage broker is not involved in its first examination, previous examinations will provide indicia for the examiner to consider in the current review. The review does include an evaluation of the management, because it is management that is accountable for administering the institution’s risk.

Questions that examiners consider in determining management’s effectiveness include:

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n What is the knowledge level and commitment of the company and its personnel? n How does the broker respond to compliance deficiencies and potential violations? n Are the information and loan origination systems providing reliable and secure data? n Does management maintain and fully implement its own policies and procedures? n To what extent and how often are training programs offered to affected employees?

Where weaknesses exist, it is not unusual for an Examiner to use the exit interview as a means to highlight these defects and underscore the need for management to ensure compliance with consumer protection laws, regulations, or policy statements.

Examination findings It should be evident that a mortgage broker should never wait for a notice of a banking examination before ratifying a comprehensive set of policies and procedures. The exit interview is not the place to find out that a commitment for corrective actions is going to be required!

The examination report consists of several parts, more or less varying state to state, with each part contributing to a general outline of a licensee’s qualifications to continue being licensed.

Generally, the examination report includes: n Scope of Examination n Compliance Rating or Similar Description n Loan Sample Outline used for the Examination n Summary and Detail of Significant Violations (where applicable) n Evaluation and Management of the

continued from page 8

Compliance Program n Assessment of Policies and Procedures n Summary of the Exit Interview n Management Response to Findings and Corrective Actions (where applicable)

Policies and procedures The list of policies and procedures that I outlined in this article are part of an overall culture of compliance that an independent mortgage professional must adopt in order to run a safe and sound firm.

Look at it this way, using an automobile for an analogy: policies and procedures are the chassis, implementation is the superstructure, and training is the driver. All three must be intact and reliable for the car to be safe to drive; and all depend on one another for their very subsistence.

A policy statement must address the company’s business philosophy, goals, objectives, procedures, required actions, remedies, and, of course, the metrics with which to judge them. The policy and procedure does not have to be extensive in length, but it does have to be comprehensive in detail, based on the size, complexity, and risk profile of the company. Furthermore, I believe certain policy statements should be converted into Employee Manuals, such as an Advertising Manual, with attestation of receipt thereof by the affected employee.

Additionally, a policy and procedure must be updated when regulations change or the company changes its way of doing business with respect to legal and regulatory requirements.

This means that not only should citations and definitions be included, where needed, but also procedures should highlight forms, disclosures, and other documents inherent in carrying out mandated guidelines.

Finally, management should monitor all aspects of the loan flow process in order to mitigate, reduce, or eliminate risk. To a considerable extent, training plays an important role in risk management, but the monitoring must go beyond training employees. When exposure to risk is identified, management should document the event and immediately implement corrective actions.

For the most part, depending on the deficiency, a banking department may understand a mortgage broker’s affirmative action in endeavoring to prevent any further defects; however, the one thing that no banking department will tolerate is a deficiency that, once discovered, remains unresolved.

Jonathan Foxx is president and managing director of Lenders Compliance Group and Brokers Compliance Group,

mortgage risk management firms devoted to providing regulatory compliance advice and counsel to the mortgage industry. He may be contacted at (516) 442-3456, by e-mail at jfoxx@lenderscompliancegroup.com, or visit www.LendersComplianceGroup.com or www:BrokersComplianceGroup.com.

Footnotes 1—Foxx, Jonathan, Anti-Money Laundering Program: Preparation is Protection, National Mortgage Professional Magazine, August 2012, Volume 4, Issue 8, pp. 22-34.

for managers only

continued from page 19

crisis. Is this behavior tolerated, overlooked or completely banished within your organization?

How do you develop and/or change the culture of your organization?

It is more than deciding what you want to be known for. You will have to make tough decisions, including firing those who clash with the culture or refusing to hire those who could help with profitability but hurt your longterm direction. Likewise, it means turning away certain types of business—business that you know might be profitable but not help in the development of your desired culture.

You may have to change your advertising methods or even abrogate

the elite performer

2—Community Reinvestment Act (CRA), tie-in restrictions, insider lending, may apply if the mortgage broker is affiliated with a depository institution.

3—Ibid.

4—Portions of this table are adapted from Pannabecker, James H., Mortgage Lending Compliance (With Federal and State Guidance), Volume I, Second Edition, xv-xvi, A. S. Pratt, 2012.

5—The table is based on legal and regulatory compliance requirements as of February 28, 2013.

6—Purchase Money Mortgage and Refinances on 1-4 Units.

7—Many lenders now require quality control audits to be conducted by their third-party originators.

relationships with long-term referral sources. A culture is built from a foundation. A foundation is built one brick at a time. It does not exist because you say it is so. It is built with your reputation, actions and results.

Most importantly, everyone in the organization must know the culture and be a part of it. If they are not aware of your goals, they can’t be part of the solution. Your culture should help you make recruitment decisions, select candidates and orient new employees.

Dave Hershman is a top author in the mortgage industry with seven books published, including The Complete Mortgage Management Kit. Dave is also director of branch support for McLean Mortgage. He may be reached by e-mail at Dave@HershmanGroup.com or visit OriginationPro.com.

continued from page 4

Be informed of how our business is operating from inside-out and how regulations will affect you and the clients you serve. Being educated will allow you to better serve your clients.

Ideas to help paddle around the bad waves: n Don’t get caught up in old bad habits because you had a good year. Keep your personal and business balance sheet clean. Save money and spend less than you earn. Invest wisely and don’t let liabilities control behavior and instead control your liabilities now and in the future. Prepare for the worst and expect the best. n If things slow down, take control and speed them up by being actively prospecting and focusing on daily, monthly and annual

goals. The wheel only stops if you stop running. n Control your mind-set. Be positive and focused no matter what turbulent waters you face. The waves will pass and always make sure you have the best-built floating device. n Don’t get arrogant or overly-confident in assuming you know what you’re doing. Pay attention and always respect the paddles and life vest even when they are not needed.

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 or e-mail aharris@vantagemortgagegroup.com or visit AndyHarrisMortgage.com.

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Postal Service to Stop Delivering Mail on Saturdays: No Impact on Timing of Disclosures

By Melanie A. Feliciano Esq. To achieve an annual savings of $2 billion, the U.S. Postal Service announced on Feb. 6, 2013, a new six-day package delivery and five-day mail delivery schedule, effective the week of Aug. 5, 2013. Mail addressed to street addresses will be delivered Monday through Friday only. However, mail addressed to P.O. Boxes may be picked up at post offices that are open on Saturdays.

In response to this announcement, you may be wondering whether the timing requirements for purposes of the consumer’s rescission period under the Truth-in-Lending Act (TILA) and delivery of the disclosures under the Real Estate Settlement Procedures Act (RESPA) and Mortgage Disclosure Improvement Act (MDIA) would be affected. In other words, will Saturdays be excluded from the timing requirements once the Postal Service ceases to deliver mail on Saturdays?

The short answer to this question is “No changes … yet.” Unless the implementing regulations for TILA, RESPA and/or the MDIA are amended to exclude Saturdays, or additional guidance is provided by the Consumer Financial Protection Bureau (CFPB), Saturdays shall continue to be counted for determining the rescission period and the waiting periods for early disclosures and corrected disclosures. If a lender or broker is open to the public for carrying on substantially all of the entity's business function on Saturdays, then Saturdays will continue to be counted in the three-day delivery requirement for the GFE and initial TIL.

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Good Faith Estimate Regulation Z § 1026.19(a) and § 1024.7(a) each provide that the Goof Faith Estimate (GFE) must be delivered to the consumer or placed in the mail no later than the third business day after the creditor receives the consumer's written application. What does “business day” mean for purposes of the GFE? Regulation X § 1024.2(b) provides that: Business day means a day on which the offices of the business entity are open to the public for carrying on substantially all of the entity's business functions.

The Official Staff Interpretations for Section 1026.2(a)(6) clarifies what “carrying on substantially of the entity’s business functions” means by offering a “business function test”:

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Business function test: Activities that indicate that the creditor is open for substantially all of its business functions include the availability of personnel to make loan disbursements, to open new accounts, and to handle credit transaction inquiries.

Activities that indicate that the creditor is not open for substantially all of its business functions include a retailer's merely accepting credit cards for purchases or a bank's having its customer-service windows open only for limited purposes such as deposits and withdrawals, bill paying, and related services.

Accordingly, if a creditor is open to the public on Saturdays to carry on substantially all of its business functions, then Saturdays would be counted in the three-day rule for delivering the GFE. Otherwise, Saturday would not be counted.

More detail on the required timeframes associated with the rescission period and the disclosures will appear in a second part of this article.

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.

FHA Continues to Bail Itself Out on the Shoulders of New Borrowers The Federal Housing Administration (FHA) has raised the Annual Mortgage Insurance Premiums again. They’ve done this to help strengthen the program and to compensate for the poor performance of loans written in the days of seller-funded downpayment assistance. But who’s paying for this bailout? Unfortunately, it’s new FHA homebuyers and all those refinancing with an FHA loan who are paying for the bailout with higher premiums.

Below I have highlighted the changes to the Annual Mortgage Insurance Premiums, as well as the recent changes to credit guides that pertain to manual underwriting.

FHA Mortgage Insurance Premiums Changes Mortgagee Letter 2013-04 announces guideline changes for mortgage insurance premiums. Here are the things you need to know about these changes: 1. Effective for case numbers assigned on or after April 1, 2013 the chart below shows the new annual MIP for 30 year loans. n 130 bps for Loan amounts = $625,500 and = 95.00% LTV n 135 bps for Loan amounts = $625,500 and > 95.00% LTV n 150 bps for Loan amounts > $625,500 and = 95.00% LTV n 155 bps for Loan amounts > $625,500 and > 95.00% LTV 2. Effective for case numbers assigned on or after April 1, 2013 the chart below shows the new annual MIP for 15-year loans. n 45 bps for Loan amounts = $625,500 and 78.01% - 90.00% LTV n 70 bps for Loan amounts = $625,500 and > 90.00% LTV n 70 bps for Loan amounts > $625,500 and 78.01% - 90.00% LTV n 95 bps for Loan amounts > $625,500 and > 90.00% LTV 3. Annual MIP changes do not apply to streamline refinance transactions of existing FHA loans that were endorsed on or before May 31, 2009.

4. Effective for case numbers assigned on or after June 3, 2013, all loan amounts with = 78.00% LTV will have an annual MIP of 45 bps.

5. Effective for case numbers assigned on or after June 3, 2013: n The annual MIP for 30 year loans with < 90% LTV will remain for the 11 years. n The annual MIP for 30 year loans with > 90% LTV will remain for the term of the loan. n The annual MIP for 15 year loans with < 90% LTV will remain for 11 years. n The annual MIP for 15 year loans with > 90% LTV will remain for the term of the loan.

in effect in effect in effect in effect

FHA Changes to Manual Underwriting Guides Mortgagee Letter 2013-05 revises the guides for manually underwritten loans.

Here are the 4 things you need to know about this update: 1. These changes are effective for case numbers assigned on or after April 1, 2013.

2. Manual underwriting is required for loans with a credit score less than 620 AND a debt-to-income ratio greater than 43%.

3. Any compensating factor used to justify approval of a loan that

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continued on page 40

competition in the mortgage industry

an expert in technology and project management.

Going forward the smaller companies will be able to compete even more effectively as the industry becomes more standard. The Federal Housing Finance Agency (FHFA) is pushing the Uniform Mortgage Data Program (UMDP) and has rolled out standards related to collateral and loan delivery. These standards will branch out to include servicing as well. Combine the data standards with consolidated policies and it becomes

grow. The smart people that run the conduits will look smarter and their returns will be higher. The huge aggregators will still dominate, but you never know. Maybe one day a little guy will take down a Goliath just like the Asian car manufacturers.

Matt Seu serves as principal with Actualize Consulting, focusing on fixedincome and securitization operations.

Seu and is responsible for managing the firm’s accounts with a focus on the GSEs, large national mortgage companies, Wall Street broker dealers and software companies supporting the fixed-income and mortgage conduit arena. He may be reached by e-mail at mseu@actualizeconsulting.com.

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not having the technology, processes and controls in place. You can get by with smart folks, good supply of loans, and some investment money for a while, but sooner or later it catches up. The ones that ultimately make it and break through to larger volumes spend time and effort on the infrastructure. Again, this isn’t that difficult, but you need to pay attention to it.

The real long run success keys are based in having good technology, solid processes, and controls in place.

The business processes are fairly simple. You push price to the channel, watch for rate locks, hedge the pipeline, determine best execution, dispose of the assets, book the accounting, and take care of the unexpected or strategic pair offs. The controls are simply part of the process with some additional QA on top. Once you have your processes and controls in place, you should easily be able to figure out the technology, and again, it isn’t that difficult, but this is where folks make the most mistakes.

What we often see follows a basic pattern. Companies with very smart and experienced folks forget to plan ahead. If companies would spend as much time on planning their processes and technology as they do running the financials, they will find that they won’t have barriers to growth show up later. Many companies buy software and then wonder why it: (a) doesn’t work as advertised, (b) doesn’t integrate with other tools, and (c) cost more than advertised.

Every company should have a roadmap that goes out at least a year that illustrates what technologies are required, what processes and controls are necessary, and who will implement these portions. Once the roadmap is identified a robust vendor selection process should be leveraged. If companies document their business and technical requirements up front and write clear and transparent RFP (request for proposal) documents with specific granular requirements included, they will find that the sales folks will have to compete on a level playing field. Demanding that each vendor demo contains the requirements in the RFP keeps them honest. They won’t be able to sell promises. What you see is what you get. The company can then select based on functionality and price.

Companies should also leverage either a centralized change management or program office or outsource it to a third party. It’s very difficult to implement the processes and technologies and still do the day to day work, and the skill sets and expertise are different. It’s not often that a brilliant secondary marketing officer is

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much easier to participate with the GSEs and the Capital Markets. The jury is still out on the new Securitization Platform outlined in the 2012 FHFA white paper, but if it comes to pass in a form similar to what was published, the smaller players will be able to play on the same field as the big guys.

Proprietary standards, processes, and data will be replaced by a consistent infrastructure from rate lock to security containing standard work flow and data exchanges.

I wish that I could truly predict the future, but that’s not possible. What I can say categorically is that if the smaller conduits focus on their processes, controls and technology, they will be nimble and will be able to

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Titan Risk Management Adds New Service Provider Governance Offerings

AllRegs Launches Consumer-Focused Training Resources

Titan Risk Management Services (TRMS) plans on expanding its offerings to include development, management, monitoring, and support services for Service Provider Governance initiatives. TRMS offers four Service Provider Governance (SPG) support services to its bank and nonbank customers. These services were developed to support lenders in protecting both their customers and their enterprise. The SPG services offered include: n SPG Program Management: Comprehensive program development, management, monitoring, and support services; n Provider Reviews: Performing on and off-site annual oversight reviews and assessments of service providers; n Policy and Procedures: SPG policy and procedure development, emphasizing risk mitigation, due diligence, documentation, ongoing oversight and conducting annual reviews; and n Existing Program Assessment: A full review of a firm’s current SPG program.

All services are performed with an eye towards industry best practices, Federal Financial Institutions Examination Council (FFIEC) guidelines and consumer impact as viewed through the Compliance Management System lens of the Consumer Financial Protection Bureau (CFPB).

“If there were a single area of the ‘typical’ mortgage lending compliance management and governance model that could be, make that should be, targeted as deficient or lacking in expertise, service provider governance would be it,” said Titan president Mary Kladde. “Banks have had to grapple with this issue for years, but this is a relatively new concept for non-bank entities and a much more critical component of risk management than it has ever been. In an era of increased regulatory controls for consumer protection, service provider governance has emerged as one of the critical factors needing attention within both the bank and non-bank sectors.”

AllRegs has announced the launch of consumer training resources for the financial services industry. AllRegs has developed this online consumer training platform in conjunction with HomeFree-USA, one of the largest homeownership development and U.S. Department of Housing & Urban Development (HUD) intermediaries in the United States, and is made available through HomeCoach-USA. The online home training courses include homebuyer education, homeowner education and financial literacy curriculums, with the potential to reach more than four million Americans.

AllRegs and HomeFree-USA have developed this consumer training for new homebuyers, as well as existing homeowners. The education correlates to the six core areas outlined in the National Industry Standards for Homeownership Education and Counseling. Pre-Purchase course titles include: Are You Ready to Take the Plunge into Home Ownership?; Keys to Improving and Understanding your Credit; Essentials of the Real Estate Process; and Consumer Protection: Understanding your Rights. PostPurchase course titles include: Preventing Foreclosure: Exploring Your Options; Surviving Tough Economic Times; Creating and Living Within a Budget, and Navigating the Foreclosure Process. Other course titles are also included.

“Our goal has been to develop topnotch consumer training supporting the industry’s key focus of consumer education helping consumers understand and navigate their way to buying or maintaining a home,“ said Dan Thoms, EVP of AllRegs. “Not only are we providing the highest quality online home education to homeowners and homebuyers, we are providing the real estate finance industry with a way to easily provide this consumer training to their existing clients, or potential new clients. We are already seeing lenders want to utilize this program for everything from loss mitigation, to providing real tools for consumers to help with regulatory concerns, to increasing their purchase business through leads generated from the system.”

Consumer-focused training developed

under this program will be offered to lenders and other real estate professionals to provide as a resource to consumers nationally. Delivered through the powerful AllRegs Academy education platform, the program features self-study online courses, activities and assessments.

Features include: n A 24/7 training resource that keeps the lender’s name in front of thousands of consumers n A Community Reinvestment Act (CRA)relevant program that consists of a series of online courses that meet or exceed National Industry Standards n An opportunity to help reduce consumer complaints, supporting Consumer Financial Protection Bureau (CFPB) direction n A vehicle for leads of consumers improving their knowledge through consumer education n Certificates of completion for consumers that successfully complete courses n Three full eight-hour curriculums which may help a consumer meet various lender, state or national requirements n Some customizations to courses and the platform are available for lenderspecific consumer content “The key to success for lenders is to connect with their customers and build a relationship with them,” said Marcia Griffin, president and founder of HomeFree-USA. “We see this as an exciting opportunity for lenders to support their customers with the best consumer financial training in the industry, to empower them with resources and the information consumers need to know about their company.”

Secure Settlements Inc. Seeks to Combat Fraud at the Closing Table With Newest Release

Secure Settlements Inc. (SSI) has launched its “Know Your Agent” program which enhances the company’s closing agent vetting and risk management service for lenders. Under this program, SSI has been issuing full color ID cards to vetted closing professionals. The ID cards, which are intended to be worn as identification at mortgage closings nationwide, will fulfill several important fraud deterrent goals. The first is to clearly identify to all parties at the closing table, particularly consumers, the identity of the agent handling the mortgage proceeds and documents. The second is to confirm the agent’s independently vetted risk status.

The cards feature a full color photo, the agent’s name, company name, SSI registration number and vetted agent status expiration date. Each ID card is electronically imbedded with the agent’s name and registration number. This feature will allow the card to be used with SSI’s proprietary, at-closing Best Practices and Fraud Control Application for droid, iPad and iPhone technology.

“This is another step forward towards enhancing the integrity of mortgage originations with a focus on verifying best practices applicable at the closing table, a part of the process often overlooked when consumer protections are considered,” said E. Robert Levy Esq., former deputy commissioner of Banking in New Jersey, and an SSI Advisory Board member.

This first-ever App, which will be widely available sometime in April 2013, will verify Best Practices are being followed at closing and will capture critical data to assure lenders that the closing is being conducted in a professional and compliant manner. The data will be uploaded to the SSI database and available to Secure Settlements service subscribers.

“Our ‘Know Your Agent’ proprietary risk management and fraud deterrent tool is part of the continued effort of SSI to develop new programs and tools to help lenders fight closing table fraud while also protecting consumers,” said SSI President Andrew Liput. “We are excited about this new program and the response it has already received in the industry. Together with the SSI vetted professional seal, the agent ID card allows vetted agents to demonstrate their commitment to independent risk evaluation to their industry partners and clients, including consumers. The SSI app technology in development provides real time verification of best practice and quality control expectations, meeting regulatory concerns as well as industry needs for better management of standards and practices across the very diverse disciplines that comprise the closing profession. We refuse to stand still, but rather we are constantly working on program and technology enhancements to remain the industry leader in closing agent risk management.”

New Penn Financial Announces Changes to Its Jumbo Offering

New Penn Financial LLC has lowered pricing and expanded guidelines on its Jumbo Advantage mortgage program, a portfolio product that is available through brokers and mortgage bankers, and is also offered directly to consumers.

The enhanced jumbo loan, which is exclusive to New Penn, enables more customers seeking to purchase high-end homes or refinance an existing jumbo mortgage to qualify for financing and realize significant benefits.

Creditworthy borrowers who do not conform to conventional guidelines can take advantage of today’s real estate market with this loan that features lower rates, a minimum FICO score requirement of 680 and a broader debt-to-income (DTI) ratio requirement. The loan opens the door for larger purchases and refinances, too.

The Jumbo Advantage mortgage enables homeowners to purchase or refinance: n Up to 70 percent loan-to-value (LTV) for amounts up to $2 million on a primary residence

n Up to 75 percent LTV for amounts up to $1,500,000 on a primary residence n Up to 85 percent LTV for amounts up to $1,000,000 on a primary residence n Up to 75 percent LTV for condos “Even with the scarcity of jumbo products today, we sweetened the deal for our customers,” said Bob Johnson, SVP of capital markets. “As always, our focus is on the total customer experience of innovative products backed by hands-on service and quick turn around times.”

MGIC Launches New Streamlined Underwriting Program

Mortgage Guaranty Insurance Corporation (MGIC) has announced a new, streamlined underwriting program for loans with a Fannie Mae Desktop Underwriter Approve or Freddie Mac Loan Prospector Accept response. Under the new underwriting program, MGIC Go!, MI loans that receive DU Approve or LP Accept responses and meet minimal overlays are automatically eligible for MGIC MI. “MGIC Go! simplifies the process and fits into our customers’ daily operations,” Sal Miosi, MGIC VP of marketing said. “MGIC Go! allows our company to insure quality loans by exercising its own judgment and underwriting criteria, while allowing our customers to take advantage of their existing underwriting processes.”

The program, effective immediately, expands MGIC guidelines in certain areas with credit overlays and is available on all submissions options.

Brokers, and the National Center for Lesbian Rights.

“Having this first fair housing mobile application equips people everywhere with the information they need to combat housing discrimination,” said John Trasviña, HUD Assistant Secretary for Fair Housing and Equal Opportunity. “We are maximizing the latest technology to make the process for filing fair housing complaints faster and easier and arming our fair housing partners with the information they need to understand their fair housing rights and responsibilities.”

HUD’s new fair housing app was unveiled during the 3rd Annual MobileGov Summit in Washington, DC, a conference which brings government and industry IT leaders together to discuss the

latest trends and best practices for creating the next generation mobile government workforce.

“HUD needed an efficient and reliable solution to quickly extend existing capabilities to mobile computing devices,” said Marilyn Crouther, senior vice president and general manager, U.S. Public Sector, HP Enterprise Services. “The new HP application achieves operational goals of HUD—from concept to deployment—while more effectively addressing discrimination complaints. The mobile app simplifies and increases access to government services for people.”

In addition to facilitating real-time delivery of housing discrimination complaints to HUD, the app can be used by individuals researching their housing

rights after a natural disaster, when power outages make the iPhone/iPad one of the few ways to access the Internet.

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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HUD Releases New App Geared Toward Fair Housing

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The U.S. Department of Housing & Urban Development (HUD) has launched the first housing discrimination mobile application (app) for iPhone and iPad. Developed by HUD’s Office of Fair Housing and Equal Opportunity (FHEO) and HP, the app uses the latest technology to provide the public with a quick and easy way to learn about their housing rights and to file housing discrimination complaints, and inform the housing industry about its responsibilities under the Fair Housing Act. The app will also be an important tool to assist fair housing groups and other civil rights advocacy organizations in their efforts to help individuals pursue their housing rights and industry to educate their members on their responsibilities. Several groups indicated their intent to promote the app with their members and in communities where they work, including MomsRising, Illinois Department of Human Rights, Access Living, League of United Latin American Citizens, Asian Real Estate Association of America, National Association of Hispanic Real Estate Professionals, National Association of Real Estate

HECM to Undergo Major Changes Some things to keep in mind when the future is … UNKNOWN? Big changes to reverse mortgages this month. What will HUD impose?

Will they combine the Standard and Saver loans? If so, what will that mean? Are you waiting to see?

HECM, HUD, Congress, Senate Banking Committee, and big-named senators are being thrown around the water cooler the last few months. There are hundreds of questions being asked. People are gathering to talk about what they plan on doing when the changes hit. Are you prepared?

The truth is no one knows what changes are coming or if we will even be writing reverse mortgages much longer. During times like this a lot of people hold off on marketing not wanting to waste good money. Then there is always that select group of people that are closing a lot of loans while everyone else waits to see what happens.

These people choose to roll the dice and end up making a lot of money. This is for a variety of reasons. The biggest reason is that there is less marketing going out which increases response rates for everyone. So while some people wait, closing no new business, others spend extra money on marketing and get three or four times the return they normally would.

Here’s what we know about the reverse mortgage business: n n n n

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There are thousands of people that NEED help Reverse mortgages are often their only hope Marketing is working very well right now There are changes coming that may change the way reverse mortgages are written

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ments. If the transfer process is not handled properly, consumers may find that their servicer lost important loss mitigation documents or that the servicer did not credit their payments on time.

Through public feedback and its supervision activities, the CFPB has noted a significant number of servicing complications related to the large amount of servicing transfers that have occurred in the last year. In many cases, banks have transferred the servicing of troubled loans to more specialized nonbank servicers. Because the CFPB has supervisory authority over both banks and non-banks, it is reminding everyone in the mortgage servicing industry to minimize the risks that these servicing transfers can present to consumers.

In January, the CFPB announced new mortgage servicing rules that included rules obligating servicers to maintain certain policies and procedures when transferring loans. The new rules go into effect in January 2014 and specify, for example, that mortgage servicers must be able to transfer documents and information in a timely manner. This includes information about the current status of discussions with a borrower on loss mitigation options, such as choices the lender is giving the borrower to work out an alternative mortgage payment plan.

LPS Reaches NonProsecution Agreement With Justice Department on Robo-Signing Charges Lender Processing Services Inc. (LPS) has announced that it has entered into a Non-Prosecution Agreement with the U.S. Department of Justice (DOJ) that resolves inquiries made by the U.S. Attorney’s office for the Middle District of Florida. Under terms of the settlement, LPS has agreed to pay $35 million in criminal penalties and forfeiture to address its participation in a six-year scheme to prepare and file more than one million fraudulently signed and notarized mortgage-related documents with property recorders’ offices throughout the United States.

The settlement, which follows a felony guilty plea from the chief executive officer of wholly owned LPS subsidiary DocX LLC, was announced today by Assistant Attorney General Lanny A. Breuer of the Justice Department’s Criminal Division and U.S. Attorney for the Middle District of Florida Robert E. O’Neill.

The settlement agreement includes a payment by LPS of $20 million to the United States Marshals Service and $15 million to the United States Treasury. As part of this agreement, LPS confirmed its ongoing commitment to compliance and internal controls. On Feb. 7, 2013,

the company announced its fourth quarter 2012 financial results, including a legal reserve balance of $223 million covering this settlement and others announced previously.

“The conclusion of the Justice Department’s inquiry is another positive step for LPS,” said Hugh Harris, LPS president and CEO. “Coupled with recent settlements with multiple state attorneys general, as well as other litigation, LPS has effectively dealt with its legacy issues related to past business practices and is squarely focused on delivering leading technology-driven solutions to enable the mortgage industry to meet its new requirements.”

According to the statement of facts accompanying the agreement, before its wind-down, DocX was in the business of assisting residential mortgage servicers with creating and executing mortgage-related documents to be filed with property recorders’ offices throughout the United States.

Employees of DocX, at the direction of Brown and others, falsified signatures on the documents. Through this scheme and unbeknownst to the clients, Brown and subordinates at DocX directed authorized signers to allow other, unauthorized personnel to sign and to have documents notarized as if they were executed by authorized signers. These signing practices were used at DocX from at least March 2003 until late 2009, and were implemented to increase profits.

Ally Fulfills Nationwide Mortgage Settlement Requirement Joseph A. Smith Jr., Monitor of the National Mortgage Settlement, has filed a report with the Federal District Court for the District of Columbia that certifies that Residential Capital LLC, Ally Financial Inc. and GMAC Mortgage LLC (collectively known as “Ally”) have satisfied their consumer relief obligations and partially certifies completion of Ally’s mandatory solicitation requirements under the settlement.

Ally was required to provide $200 million of relief to consumers in the form of loan modifications, short sales, principal forgiveness and other forms of relief as part of the NMS. Ally has met and exceeded this obligation and the Monitor has certified its consumer relief credit under this part of the Settlement.

“After a thorough review, I have certified that Ally has satisfied its minimum consumer relief obligations under the Settlement,” said Smith. “I have confirmed that Ally has provided $257,411,785 in credited relief to borcontinued on page 50

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LenderLive Network Inc. has announced a partnership with Michigan-based Spartan Equities Capital Management to service the company’s mortgages. Spartan Equities focuses on distressed real estate portfolios, foreclosures, non-performing mortgages and notes. LenderLive began working with Spartan in late 2012 and provides end-to-end customized servicing with a solution specifically designed to support the fund’s distinct strategy and business requirements.

“We were looking for a trusted partner who understood the industry,” said Jay Bobel, CEO and managing partner of Spartan Equities. “A business acquaintance referred LenderLive to us and highly recommended the company’s services. We wanted a partner who was experienced in the default space and high-touch servicing arena.

LenderLive has exceeded expectations in a short period of time through its dedicated client management and 24/7 attention to our portfolio. Currently, we are only working with the servicing division, but our future goal is to expand the relationship and make LenderLive our primary mortgage services provider.”

Since working with LenderLive, Spartan Equities can now offer aggressive loan modifications and other workout options to help reduce a borrower’s principal loan balance, which was not an option with its previous servicer.

“Since partnering with Spartan Equities, our goal has been to make their entry into the market as seamless as possible,” said Chris Sabbe, senior vice president of LenderLive’s Loan Servicing division. “As a trusted partner, our team strives to provide loan-level attention to our clients’ portfolios— one borrower at a time. Providing these services allows Spartan to effectively manage its core business strategy while expanding the relationship into other LenderLive service offerings over time.”

Ernst Publishing Awarded Recording Fee and Tax Calculators Patent

Ernst Publishing Company has announced that the U.S. Patent & Trademark Office has awarded the company a new patent for its innovative recording fee and tax calculators, entitled “System and Method for Generating and Tracking Field Values of Mortgage Forms.”

“We’re very proud of our technology

and all of the intellectual property we have developed over our 24 years in this business,” said Gregory E. Teal, president and chief executive officer of Ernst Publishing. “We expect this patent will provide a high level of confidence to our clients, ensuring them that the technology they rely on for guaranteed accurate pricing is truly an Ernst innovation.”

The intellectual property is currently built into the firm’s Smart Query product suite and is used to provide guaranteed accurate closing cost figures for Blocks 4-8 of the Good Faith Estimate.

Ernst’s search tool and closing cost and fee database have been in use in the industry for nearly 24 years and have become the industry standard for compliant GFE and HUD-1 creation.

Teal said his firm is always working on new technologies and that any additional functionality will also be submitted for patent protection. He said Ernst Publishing will vigorously defend its intellectual property, but hopes to work with other firms in the industry to leverage it where appropriate.

Akcelerant and FirstClose Team Up for New Services Akcelerant has announced a partnership with FirstClose where mutual customers will have the ability to order real estate services from nationally recognized vendors directly from the Akcelerant Framework. The Akcelerant Framework’s industry leading collection solution supports integration with bestof-breed service providers to reduce delinquency and streamline processes like bankruptcy and foreclosure. The Akcelerant and FirstClose partnership will create a collection connector to enable service requests for Automated Valuation Models (AVMs), Broker Price Opinions (BPOs), Appraiser Price Opinions (APOs) Full Appraisals, Title Reports, Flood Certifications, and other services in an integrated fashion, at any time over the lifecycle of a loan, or many loans which may be delinquent or not.

“Establishing a partnership with Akcelerant provides end users with quick and convenient access to our extensive network of settlement service providers via our end-to-end vendor management system,” said Tim Smith, president of FirstClose. “The benefits of being able to connect to our system without ever having to leave Akcelerant’s Framework platform speeds up the ordering of services, eliminates the reentry of data, reduces errors and brings efficacy to the intricate default management process.

Akcelerant’s solution is robust and highly advanced; our mutual clients now have more choices and will realize immense value as a result of this inte-

Mortgage Professionals to Watch n United States Appraisals has announced that Richard Garrie has been named chief appraiser.

MortgageKeeper Partners With GreenPath Debt Solutions

MortgageKeeper Referral Services has announced an agreement with GreenPath Debt Solutions to connect their counselors to community services via MortgageKeeper’s MKDesktop 2.0 product. GreenPath counselors will connect online to MortgageKeeper’s nationwide database of 7,000 best-in-class nonprofit and government services.

Counselors will enter their client’s ZIP Code, and choose from more than 20 different service categories—like “job training,” “food assistance,” “utility payment assistance”, “and Hardest Hit Funds.”

With the latest version of MKDesktop, counselors can create customized local assistance summaries to help their clients to reduce their living expenses.

“GreenPath is a welcomed addition to the MK family of subscribers,” said Rochelle Nawrocki Gorey, president of MortgageKeeper. “They have a long history of success in helping people reduce

fha insider

GARRIE

LenderLive Network Forms Loan Mod Partnership With Spartan Equities

n New Penn Financial has announced the appointment of Lisa Schreiber as its new vice president of correspondent lending.

SCHREIBER

continued from page 10

their debts and find financial security.

MKDesktop will help their counselors to find new and unique solutions to their clients’ financial challenges.”

Current MK subscribers connect their consumers to 90,000 resources every month.

“MKDesktop will do much to give our counselors the local touch,” said Mark Munzenberger, Director of Organizational Quality and Education for GreenPath, Inc. “MK will allow our counselors to offer the local help needed to aid our clients as they break out of their debt cycle.”

n Faith Schwartz has been named senior vice president of government solutions for CoreLogic.

SCHWARTZ

heard on the street

gration. A partnership with Akcelerant was a natural fit.”

“Akcelerant is impressed with the suite of products and vendors that FirstClose brings to the Framework which our customers can choose from to fulfill their various service requests.

Integrating the Framework software and the services provided by FirstClose will simplify many business processes surrounding the tracking of real estate loans on an individual as well as a portfolio as part of their risk management strategy,” explains Eric Snyder, Akcelerant executive vice president of business development. “This connector is intended to provide real estate portfolio valuation information on all accounts, even those not in collections.

We found many of our customers need this capability but the current means to do so are limited and certainly not integrated to a single platform incorporating daily business activities.”

continued on page 50

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exceeds ratios must also be supported by documentation.

4. Energy Efficient Mortgages may still be approved with a debt-to-income ratio up to 45% without compensating factors.

The future of FHA Looks Bright Based on the FHA’s 2012 audit, it is expected that the Mutual Mortgage Insurance fund will become very strong in subsequent years. My hope is that once the desired stability is achieved, the mortgage insurance premiums—

both the Upfront and Annual MIP—will be decreased, as has been done in the past. But for now, current FHA borrowers will bear the burden of the bailout.

Go FHA! Jeff Mifsud is founder of Michigan-based Mortgage Seminars LLC, a former FHA underwriter with 15-plus years of experience originating FHA loans, an FHA expert for LoanToolbox.com and creator of The FHA Originator, a monthly FHA newsletter. Jeff may be reached by phone at (248) 403-8181 or visit www.MortgageSeminars.com.

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The Road to 2015: Recovery, Consolidation and Mortgage Production Forecasts

By Rick Roque

2013-2015: Economists are optimistic and realistic

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By now, the election is old news, the Consumer Financial Protection Bureau (CFPB) is here to stay, and while Bill Clinton said in his inaugural speech in 1996, that “the era of big government is over,” we can safely say that the era of big government is upon us. The indirect policies related to economic growth and federal regulations with the CFPB are the clouds that loom over an already struggling economic recovery.

Conservatives and bankers themselves, fail to provide what a non-CFPB and Dodd Frank world would look like to actually alleviate this malaise over the economy. Conservatives in Washington speak furiously about how the CFPB and Dodd-Frank would reformed (e.g. thus, here to stay), but little is actually stated by way of a vision, regarding how it would be reformed and what the impact would be. As a result, many of us in the housing markets have been left scratching our heads wanting to see a difference in vision, but as in all

things Washington, the more partisanship there is, the less differences there really are between parties.

But more uncertainty looms: And this is the good news …

First it was the Fiscal Cliff and now financial “crisis” among us is the sequestration. The sequestration is series of automatic, across-the-board cuts to government agencies, totaling $1.2 trillion over 10 years. The cuts would be split 5050 between defense and domestic discretionary spending. It’s all part of attempts to get a handle on the growth of the U.S. national debt, which exploded upward when the 2007 recession hit and now stands at more than $16 trillion. The sequester has been coming for more than a year, with Congress pushing it back to March 1 as part of the fiscal cliff deal at the end of the last session. By the printing of this issue, we will know if a deal is reached thus saving about 0.5 percent of GDP growth for 2013 or whether or not these automatic cuts have taken

likely until after 2015. place. The challenge is, Credit qualifying requireaccording to the ments for consumers Congressional Budget remain very challenging Office, GDP growth has and with a lagging econobeen previously forecasted my, it will take several for the United States at a years–into 2015 until we paltry two percent (versus experience meaningful China’s eight percent). growth. This is the opinion Therefore, the lack of fiscal of many economists– responsibility and partiKenneth Rosen of U.C. sanship in Washington Berkeley and Bill Witte of may cost us a 0.5 percent of our growth. This is “The indirect policies Indiana University’s Kelley School of Business to name meaningful because the related to economic just two, who are both housing market makes up growth and federal optimistic but offer only approximately 15 percent regulations with the of the U.S. GDP. How the CFPB are the clouds “lukewarm” optimism for 2013. Terms like ‘underhousing market goes, is that loom over an achieve,’ ‘unambitious’ how the economy goes. It already struggling and ‘unfortunate’ lace the is widely understood that economic recovery.” optimism for 2013. And the lack of growth in the housing market will remain a significant given what the housing market has gone drag on the economy. Without a robust through since 2009, this is good news. The housing market, the economy will lag market will continue to grow, albeit slowand the unemployment rate will remain ly, but it will continue to grow out of the between 7.5 percent to eight percent. So, recessionary malaise the market has been while politicians play economic roulette under given the excess inventory, price of we are trying to support consumers as oil, instability in Europe (and now the they attempt to refinance their home or Middle East) and not to mention the economy that continues to frustrate those move.

There are several positive indicators in looking for employment.

“What we expect is more of the same our industry. The 2013 real estate housin the coming year,” said panel member ing forecast for next year, remains cauBill Witte, associate professor emeritus of tiously optimistic however, a rapid expansion of this market segment isn’t economics. “(But) housing is a bright spot. And the second bright spot is the energy sector. We’ve got oil and gas production booming for shale areas. North Dakota has an unemployment rate of three percent.”

This should be a good economic Because we bond thousands of mortmodel as to the focus of our public poligage companies across the country cymakers: If we focus on growing the economy with strong private sector we use our buying power and growth, the housing market will quickly leveraged competition among grow right along with it. multiple surety companies to offer The recent budgetary challenges in underwriting parameters and Washington will continue to frustrate lower rates that other bond investor confidence in our economy. All agencies only wish they had. told, economists expect the fiscal cliff to Don’t wait for your bond’s drain approximately $600 billion from expiration. the economy. It is for this reason–the high unemployment rate and the chalTrade in your overpriced bond for lenges with qualifying credit standards a new bond – And start saving will keep the housing market, a renting money today! market for most Americans. As you can see below from the Census Bureau Housing Vacancy Survey (2013), renters dominate new household formation.

This is in part the inability for borrowers to be approved for a mortgage or, a lack of confidence that if approved,

We have them!

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given the lagging economy, their ability to keep paying their mortgage may be in question should they lose their job.

So, along with Washington, the American consumer is in a bit of a fiscal crisis as well. Until investors open up their credit appetite for borrowers with a 620-675 FICO, this will frustrate all of our production levels.

Some economists bullish on housing recovery

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n Continued contraction in refinances—approximately 25 percent in 2013 and another 10 percent to 15 percent in 2014. n Modest growth in new purchase production—expect this to fully rebound in 2017-2020 to 2006 levels. The main indicator here are new Companies who have a high net construction starts which is covered worth, the infrastructure, compliance below as well.

and the right senior leadership in the place, will be highly successful amidst this consolidation. Companies like Residential Financial Corporation out of Columbus, Ohio; Primary Residential Mortgage from Salt Lake City, Utah; Prime Lending from Dallas, Texas; etc., will all be big winners in this market due to their established infrastructure, net worth and leadership.

Builders highlight looking to 2013 and beyond As mentioned earlier, rising home prices spiked across the nation. The National Association of Home Builders (NAHB) naturally joins the chorus of a recovering, albeit slowly economy.

“We’re seeing a more robust housing sector than many other parts of the economy,” said NAHB Chief continued on page 44

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n Competition for production will become fierce. n Mortgage consolidation will continue–Another 30 percent of the existing approximately 3,000 mortgage banks will go out of business, be assimilated or be acquired by 2014.

Mortgage brokers will suffer given the Qualified Residential Mortgage (QRM) and the three-point rule on compensation beginning in January of 2014. This is expected to further contract brokers by another 30 percent-plus. These two efforts will drive the consolidation further, while the larger and better capitalized firms will grow significantly. n Non-depository mortgage banks, with a net worth of $15 million-plus will be the real winners in the forecast below.

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Supporting this optimism is a solid six percent overall construction increase, while pessimists yearn for the “good old days.” For those who have adjusted to the recessionary ‘new normal,’ 2013 will reflect a growing trend. Let’s be honest, however this growth trend is not the surge of the 1990s or the growth experienced in the early 2000 decade.

Many economists expect to be at 2005 levels of housing starts (1.3M) around 2016 or beyond. For many in the housing market whose average age is 56years-old (for mortgage bankers) this is a challenge. For those who are under 50 and with capital, the market will present itself as a strong opportunity to capture market share and grow your business. So if you are 56 or 57, it is time to get in touch with your inner 40year-old. If you are new to the market or perhaps just relatively young, it is time to think aggressively to take advantage of this opportunity.

New housing sales will take several years to reach peak levels to over one million units where it plunged in 2010 to a paltry 250,000 units. This devastating drop seemed both irreparable and traumatic, leaving many builders to either go out of business or to consolidate. With new housing starts at 400,000 units (in September) a rise of 5.7 percent from August, optimism spread across all housing market segments. With inventory of foreclosed properties drying up, there is light at the end of the 2015 tunnel–yes, 2015.

But what is a ‘recovery’ in this market?

The real question is, what is the ‘new normal?’

From the forecast to the right, issued

by Fannie Mae in January of 2013, we are looking at a production forecast that reflects the following, both for the Mortgage Industry and the Housing Market:

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Home prices will see steady increases through 2016 starting this year, according to a quarterly survey of more than 100 economists, real estate experts and investment strategists.

The survey, conducted by research and consulting firm Pulsenomics LLC on behalf of real estate search and valuation portal Zillow between Aug. 30-Sept.

14, 2012, asked 113 participants to project the path of the S&P/Case-Shiller U.S. National Home Price Index over the next five years.

The latest S&P/Case-Shiller Home Price Indices, which include data through June, show national home prices up 1.2 percent from a year ago during the second quarter. All of the markets in the S&P/CaseShiller 20-city composite posted annual gains for the second month in a row, and all but two—Charlotte and Dallas—posted better annual returns in June compared to May. The results were optimistic who anticipated further home price appreciation and a modest increase through 2016.

Economists now forecast home prices will rise 2.3 percent in 2012 from fourthquarter 2011, and see further cumulative rises of 4.7 percent in 2013, eight percent in 2014, 11.4 percent in 2015, and 15.2 percent in 2016.That’s an expected annual growth rate of 2.9 percent between 2012 and 2016, slightly under the 3.6 percent annual growth rate experienced in the pre-bubble years between 1987 and 1999. There was a meaningful spread across economists that ranged from 0.3 percent growth to an optimistic 4.4 percent per year.

“This spread in the opinions both reflects the uncertainty and how it isn’t evidenced in the data that a genuine recovery has taken root,” said Stan Humphries, Zillow’s chief economist. It is important to note the growing optimism amidst economists, however, not since 2010, have we seen this number of professionals bullish on our recovery and the housing numbers support this optimism.

Real estate and mortgage production by the numbers: 2015-2020 and the tunnel ahead

the road to 2015

continued from page 43

Economist David Crowe. “One of the reasons is we have finally begun to see on a national scale that house prices are picking up again.”

Crowe cited a number of other factors that are carrying the housing momentum forward. These include: n Pent-up household formations n Rising consumer confidence n Increasing builder confidence in all three legs of the industry: Remodeling, multifamily and singlefamily construction; n Growing rental demand n More than 100 metros currently on the NAHB/First American Improving Markets Index

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However, Crowe reiterated the cautionary factors weighing down the housing activity, to name a few: Builders are experiencing difficulties in obtaining production credit; qualified buyers who are unable to obtain mortgage loans, inaccurate appraisals, seriously delinquent mortgages that are at least 90 days late or in foreclosure, and a limited inventory of developed lots in certain markets.

The NAHB is forecasting a 21 percent increase in single-family starts this year to 528,000 units and a further 26 percent climb to 665,000 units in 2013. The housing market and the push for new construction, will assist in the overall employment makeup of the country looking toward 2015.

Mark Zandi, chief economist for Moody’s Analytics, forecasts that GDP growth will range in the two percent range this year and next and “double that growth closer to four percent in 2014 and 2015.” At the same time, he expects job growth to go from two million per year to closer to three million in 2014 and 2015.

“A big part of this optimism is the housing market,” said Zandi. “I expect 1.1 million total housing starts in 2013, 1.7 million to 1.8 million in 2014 and over 1.8 million in 2015.”

Fannie Mae agrees with this assessment with their housing forecast–in demand and housing starts (supply) in 2013: While this is the most opportunistic view shared by economists, it is driven

by the Federal Reserve’s role in keeping mortgages rates low through 2015 and a very optimistic assumption that banks will take advantage of near zero lending rates from the ‘window’ and turn this around to broadening qualifying requirements. Banks, however are still recovering from losses from the bust, that it is unlikely that this will occur. It is the opinion of this writer that this will diminish Zandi’s forecast marginally, however what it presents is a possible forecast should the right public policy be put in place. With the regulatory landscape changing as much as it is, it is unlikely banks will be interested in reducing margins any time soon in order to wait for more certain business conditions (as opposed to market conditions). Zandi’s root assumption follows that credit will improve as will private mortgage lending which will help improve the job market environment. Whatever happens, one thing for sure is, the housing recovery isn’t growing without a great deal of effort by policy makers, bankers and real estate agencies alike.

The kitchen sink and credit scores Just about everything has been thrown at the economy to get it moving. Through new regulations, HARP 1.0, 2.0, various rounds of the Fed policy to reduce interest rates (known as Quantitative Easing), rock-bottom mortgage rates (through 2015) and down payment assistance programs at the state and federal levels, the housing market is still 30 percent of what it was in 2006. This is heavily

influenced by 23 million potential workers being unemployed and a drop in household income, personal net worth and an uncertain future for those employed. This is at the heart of both the optimism and malaise to the housing markets. The good news is, the housing market is not a boom, but it is recovering. One area of improvement will be establishing more effective incentives, as previously mentioned to encourage a broader ‘credit net’ for borrowers who have good jobs, but have margin credit. The issue isn’t availability of loan programs, it is the availability of loans programs to those who can qualify for them. Restrictive credit criteria are suppressing home ownership and this could be fixed with a proper understanding of the mortgage/banking industries. Over-regulation or forcing banks to accommodate this is not going to yield the intended results. Forty percent of borrowers cannot get loans since the average consumer has a FICO of a 640 while the average FICO of the closed loan in October was 762. This is a significant disparity between what the market demands–because clearly homeownership is in the best interest of all consumers at proportionate levels of income, versus what the market will offer. The average FICO for FHA loans was approximately a 700 in this time period; still a significant disparity that could provide homeowners an opportunity to be more personally stable which would improve consumer confidence. Despite little hope for improved credit availability clearly this is an issue. If mortgage banks and depository institutions do not act in this direction, it will be yet another imposed upon requirement by state and federal governments.

“Credit is not going to get a lot looser. This administration is not prohomeownership. They are not homeowner advocates, they are renter advocates because their constituency is largely in urban areas, which typically have a high share of renters,” Kenneth Rosen said. This is a powerful and yet true assessment of where the political and economic landscapes collide. The FHA has done an effective job in providing broader opportunities however there are significant fiscal problems at FHA that will require a tax payer bailout to address a

$16.3billion deficit. This will require a federal bailout and rather than a private sector solution, the spiral will continue with further Federal oversight and involvement in an already heavily regulated industry.

The end of what we knew or a new beginning The U.S. economy has demonstrated numerous signs of improvement in property values, home building and a leveling off of unemployment–at ‘new normal levels,’ but at least it isn’t any worse than it is. Regardless of how terrible it is for this market researcher to say this, in just this way, we are recovering, with some stated challenges on the horizon that can only make economists excited at the increased importance in being the soothsayer of economic growth. The year 2013 could lead to relatively strong job creation in the private sector, auto sales will be strong, home sales will continue to climb back, corporate profits and cash balances will remain high and rates are assured to be low through the next two years–these all paint an optimistic picture. The fiscal cliff, uncertainty in the Middle East (oil), the possible economic collapse of the European Union and the consequences of inevitable tax increases in the future will hang over this optimism.

The challenge is economists, business owners and consumers alike just don’t know what 2013 will bring. A break down in the negotiations around the federal budget, could impact the Mortgage Debt Relief Act which will consider mortgage debt forgiven in a short sale, foreclosure or loan modification as taxable income.

This will cease the purchase of excess inventory and have a trickle-down effect on already struggling consumers. This will hurt the housing market as it will impact the amount of money consumers have in their pockets, how much it will hurt is uncertain; that is the ongoing theme: Uncertainty. So, is the economic glass half full or empty … we shall see in the coming months.

Rick Roque of Menlo Company may be reached by phone at (408) 914-5895 or email rick@menlocompany.com.

Quality Control Trends Positively Impacting the Market

By Tommy A. Duncan, CMT To understand the trends of today’s market, we must first need to understand what got us to where we currently are.

We need to ask ourselves how well did we do in mortgage loan quality control (QC) in 2011 and 2012? Overall, mortgage loan quality has improved very nicely by two percent from 88.34 percent in 2011 to 90.49 percent in 2012 for the collective portfolios from all mortgage loan types. This was a slight improvement with a decline mortgage repurchase potential and misrepresentation/fraud.

the mortgage portfolios.

Underwriting declined from 3.14 percent in 2011 to 10.26 percent in 2012. Underwriting in 2012 had a setback decline in underwriting of seven percent in one year.

“Overall, mortgage loan quality has improved very nicely by two percent from 88.34 percent in 2011 to 90.49 percent in 2012 for the collective portfolios from all mortgage loan types.”

Why are we doing better in mortgage loan quality than we did in the past?

Tommy A. Duncan, CMT, is president of Quality Mortgage Services LLC, a provider of mortgage quality assurance and mortgage compliance solutions.

He was instrumental in developing the firm’s QA/QC software currently in use by mortgage bankers/lenders.

Tommy may be reached by phone at (615) 591-2528, ext. 124 or e-mail taduncan@qcmortgage.com. You may also visit Quality Mortgage Services LLC on the Web at www.qualitymortgageservices.com.

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Many lenders started their own appraisal management function usually as its own profit center but directly influenced by internal personalities. Second, there is more technology and review techniques available to find things wrong with appraisals in the post-funding QC reviews that some appraisal management companies (AMCs) and lenders do not use because one depends on the other for appraisal QC resulting in appraisal defects not being corrected prior to closing. Thirdly, too many automated valuation model (AVM) tools have information inconsistencies between vendors and with some vendor’s inconsistent information between AVM products offerings. Fourth, the rapidly-changing housing market never leveling off creating disparities.

Fifth, there are fewer appraisers with larger volumes and with more complex valuations scenarios resulting in more mistakes. In many cases there was sloppy appraisals performed by appraisers.

umes decreasing as they move from a refinance market to a purchase market. Mortgage bankers will shift their priorities to production and begin to outsource more of the non-profit centric tasks for stream lining resources.

Why did we see a sharp decline in underwriting in 2012?

Real Estate Mortgage Network Inc, DBA Menlo Park Funding.

499 Thornall Street 2nd Floor, Edison, NJ 08837. NMLS# 6521

v MARCH 2013

There were too many gaps and inconsistencies between the many documents provided in the tightened documentation in underwriting. Because of the redundancy of full documentation of information, there were more

NationalMortgageProfessional.com v IDAHO

One reason is the mortgage industry was in a heavy refinance market because of the long life and historical low interest rates. Second, more lenders were forced into a more robust pre-funding quality assurance program with the government-sponsored enterprises (GSEs)—Fannie Mae and Freddie Mac—enhanced QC fulfillment requirements.

Thirdly, investors are adopting and enforcing similar type of requirements with respective channels. In addition, just fear. With the GSEs publicly announcing approximately 900,000 loans to be pushed back to lenders for repurchase in 2013, as well as the hundreds of billions of dollars in settlements and claims in 2011-2012 resulted in enhanced QC programs that directly affected the origination process.

Even though mortgage loan quality improved, that does not mean that the seriousness of loan defects improved.

Appraisal quality declined from 9.01 percent in 2011 to 15.34 percent in 2012. Appraisal quality declined by six percent in one year collectively across

Why did we see a sharp decline in appraisals?

opportunities to miss something or create informational gaps between documents to validate other documented information.

In 2013, we will continue to see an increase in appraisal defects because the appraisers do not have access to many of the collateral tools used by the lenders and with the culmination of foreclosures on the books against other housing markets, values increasing up seven percent in 2013 there will continue to be challenges in property valuations. As for underwriting, there will continue to see the same level of underwriting defects as the mortgage markets move to a purchase market and move away from the refinance market. Mortgage fraud will increase as brokers become challenge with mortgage production vol-

Leveraging Technology to Move Lenders Back to Core Business Profitability as the housing market improves

Do you also have a thoughtfully designed, custom compliance and risk advisory service? The answers to these questions should be yes.

By Lisa M. Weaver, CMB

Web-based solutions key for This year undoubtedly marks the beginning fact, Jeanne Capachin, a senior consultant small- and of a new era for the U.S. housing market as at Graber Associates, explained in the mid-sized lenders

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lenders turn their focus to increased originations. Despite indications the housing finance market is improving, the industry is still faced with numerous challenges related to high origination and servicing costs, low through-put in mortgage approvals, and longer application to funding cycle times. Regulatory compliance continues to be an increasing concern for the industry.

In fact, analysts expect compliance-related spending to be a major priority for financial institutions this year.

More than half of compliance rules related to the Dodd Frank Act have yet to be defined. Moving forward, industry hurdles will not only include maintaining current compliance requirements, but also operating in a tighter regulatory environment than ever before seen while maintaining profitability. The resulting impact will be on lenders’ core business–bringing loan applications through the door–as added resources will be necessary to remain compliant.

Large and small institutions need to be well equipped to handle added compliance guidelines. This is particularly the case for smaller institutions that do not have significant compliance resources on staff to navigate the changing landscape.

It is clear that lenders will face complex issues in managing efficient compliance management within their organizations, but hiring more staff is not always the answer, and certainly not always feasible owing to financial restraints.

The growing costs of regulatory compliance: Is there an end in sight?

As Dodd-Frank is further defined and compliance with other federal laws and statutes increase, compliance costs will certainly continue to grow. In fact, the number of U.S. financial institutions has declined by eight percent since 2010, due in part to higher operational costs. Moving forward, lenders will be faced with DoddFrank Qualified Mortgage (QM) rules and new appraisal rules, among others.

Industry experts and analysts concur. In

most recent “Bankers as Buyers” report by William Mills Agency, “Engineering regulatory compliance and transparency into corporate, trade and transaction, customer servicing, and reporting will be top priorities for North American banks and investment services firms.”

In the report, Capachin says that financial institutions will need to leverage compliance-aware data management strategies that incorporate the needs of risk, finance and legal/regulatory operating units at both line-of-business and oversight levels to try to manage compliance costs.

Regulatory compliance versus profitability: It doesn’t have to be an either-or scenario For community lending institutions, remaining complaint can be a challenge and costly. Additionally, we can expect it to be an even greater challenge in the coming months as the lending environment remains in flux.

But staying abreast of today’s regulatory requirements is challenging enough and often requires a dedicated staff.

Managing an efficient compliance management team internally is simply not practical for smaller institutions, however, as it typically requires a significant investment in resources and expertise, such as compliance management, sourcing resources and training.

To remain compliant and profitable, outsourcing is key. By partnering with an experienced team, small and mid-sized institutions can better focus on their core business of bringing in and closing loan applications, while a separate team focuses on their core competency–staying informed of regulatory changes.

Furthermore, when evaluating partners, lenders should look for providers that operate as a consultant. Questions lenders should ask include: Do you utilize contracted subject matter experts dedicated to end-to-end compliance? Are you able to provide guidance through risk evaluations and comprehensive loan data analyses?

tion software in-house or within the service provider’s hosting facility; therefore, institutions should look for solutions that provide for flexibility.

Cost savings: A start to profitability

By implementing Webbased technology and leverIn addition to partnering with industry experts, lever- “In fact, a November aging a dedicated, outsourced team of subject aging modern technology 2012 study by CEB and the right loan origina- TowerGroup revealed matter experts, small- and mid-sized lenders can not tion software is key. In that less than 25 only better maintain regudoing so, small- and midpercent of mortgage latory compliance today sized lenders have access to customers return to complete functionality the same lender when and in the future, but also benefit from significant cost from point-of-sale to closthey shop for their ing and delivery of loans to next mortgage due to savings–leading to greater success and profitability. the secondary market. dissatisfaction …”

For instance, the average Investing in software that is built with the latest web application tech- cost to originate a typical loan increased in nology, lenders can seamlessly process 2012 to $5,163, which includes the total loan production expenses, including commortgages anywhere, anytime.

Critical for smaller institutions, the ben- missions, compensation, occupancy and efits of a web-based loan origination sys- equipment, and other production expenses and corporate allocations. tem include: In evaluating several case studies, as an n Empowering your staff to be more industry, leveraging Web-based technology and partnering with an experienced comefficient; pliance team has the potential to save n Minimizing IT overhead and costs; n Streamlining system maintenance and nearly $905 million in production costs each year, based on 2012 home sales. support; and n Enhancing customer service.

In addition, institutions should implement technology that allows for customization, thus reducing efforts associated with implementation and ongoing maintenance. This is especially important as the government promises to make additional regulatory changes.

Multi-tier architecture is also critical for community institutions, as it allows lenders to scale origination operations and efficiently handle seasonal increases in loan volumes without adding temporary staff or–when that is not an option–negatively impacting customer satisfaction.

In fact, a November 2012 study by CEB TowerGroup revealed that less than 25 percent of mortgage customers return to the same lender when they shop for their next mortgage due to dissatisfaction; therefore, efficiently managing increases in volume to ensure excellent and consistent service is important to a lender’s competiveness and profitability.

Another consideration for lenders is whether to implement the loan origina-

Remaining focused on core competencies is key to success

Many lenders simply cannot afford the increased headcount, but are burdened with tighter regulatory requirements and challenged with being profitable as the housing market improves. In response, these institutions must think strategically about their operations. Lenders must determine what their core competencies are–bringing in loans–and outsource other business components like compliance. In doing so, lenders will be better equipped for success and profitability.

Lisa M. Weaver, CMB is senior vice president of mortgage solutions for ISGN. Lisa brings more than 25 years of industry experience to the ISGN team. As senior vice president of mortgage solutions, she is responsible for working with ISGN’s sales and solutions architecture on customer deals, as well as expanding the company’s product offerings.

She may be reached by phone at (860) 6567550 or e-mail lisa.weaver@isgn.com.

2013: How to Not Compromise Compliance With Adoptable Trends

By Leonard Ryan The Consumer Financial Protection Bureau (CFPB) finalized rules to simplify mortgage points, fees and ultimately bring greater transparency to the mortgage loan origination market in January 2013. Full adoption of these rules by lenders, servicers, originators and borrowers are expected by January 2014. By the time you are seeing this article, your compliance team has less than 10 months to read, understand, implement and place these new rules into flawless practice.

Panicking yet?

Instead of panic, lenders should embrace 2013 as the year not to compromise compliance. By taking the time to do it right– whether internally or with the help of a compliance provider–a lender can turn compliance trends into increased productivity, less stressful regulatory exams, more confident loan sales to the secondary market, along with a decrease in the chances for regulatory fines.

2013: Enter the Rules

Automated compliance

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The handling of a loan is a delicate, and often complicated, process. It travels through many channels and computer systems, and is seen by many people before it makes the final journey home to the closing table (and then to the investor). To ensure the loan isn’t processed through disparate systems, a lender should seek a vendor that can provide their company with various review and calculation systems.

A growing trend as a result of the ever more complex compliance demands is towards vendor consolidation. Where once

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The fine print of the CFPB’s outlined rules could leave lenders uncertain about which direction to take or how to adapt when faced with measures in which they–or their software–are not prepared.

The compliance process has evolved greatly since the days of auditors sampling random loans to ensure companies were adhering to investor and agency guidelines. Gone are the days where an error rate was built into the secondary pool purchase price. Today there is neither an examiner nor investor that will tolerate even a single loan being out compliance.

This is because automated compliance has become standard and can now be achieved through one single system that is seamlessly integrated with the company’s loan origination system (LOS). If you want to be as informed about violations on your loans as well as your investors and regulators are, you should probably be considering 2013 as the year to use automated compliance systems.

Whatever your compliance process may be, lenders should utilize the remainder of 2013 as the time to enhance internal systems and processes. Determining software updates, proper staffing, and having a thorough understanding of the CFPB’s process is the key to figuring out how compliance managers are going to automate and achieve optimal compliance moving forward.

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The CFPB’s rule announcement from January hopes to instill confidence for the consumer and strengthen the relationship between lender and borrower. The rules hold a great deal of potential for the changing mortgage lending landscape. Yet three of them, the Qualified Mortgage (QM), Ability-to-Repay and LO Comp Reform, have the most significant impact.

The hope of the QM rule is to reduce the number of foreclosures and provide the borrower with the ability to purchase and make payments on a loan they can afford.

Compliance is more important than ever for a company to certify, for both its customers and to the CFPB. The Bureau will not hesitate to fine companies if their compliance standards–and the company’s customer standards–are not met.

The redefining of the term “originator” hopes to halt wrongful steering and unlawful compensation of originators. The LO Comp Reform rule will regulate compensation practices within the industry to ease predatory lending and establish an open origination relationship. Now is the time for lenders to seek vendors that are proactive with pre-funding disclosures and cor-

rections to ensure adherence with the CFPB’s top rule announcements.

sees an opportunity to lower the overall cost of compliance, they should take full advantage of that opportunity. Utilizing third party vendor expertise will ensure compliance procedures and standards are met.

A 100 percent pre-funding guarantee, on every loan, every time, can reduce the buybacks a company experiSeamless, stream- “Whereas yesterday’s ences. Adhering to investor and regulatory guidelines lined integration goal was simple can be a successful step in An integrated compliance integration, today’s process that can instantly lenders need to team the servicing process if routine checks for compliance check for errors or excepwith vendors that tions within the Truth-in- think past the bits and errors are conducted before Lending Act (TILA), Home bytes—the ones who the loan closes. The buyback process is an expensive, time Ownership and Equity address workflow consuming ordeal that is Protection Act (HOEPA), efficiencies.” preventable through the Home Mortgage Disclosure Act (HMDA), Community Reinvestment Act simple adoption of pre-funding.

47 (CRA) and state-level consumer credit laws, among others, will merge the necessary Non-negotiable information enabling users to identify and compliance correct mistakes prior to funding the loan. The CFPB was conceived to protect the conWhereas yesterday’s goal was simple sumer and hold the mortgage industry integration, today’s lenders need to team accountable for its processes, actions and with vendors that think past the bits and failures to mitigate risks. Technology and bytes—the ones who address workflow instant automation has enabled both reguefficiencies. Lenders and servicers will lators and investors to check the status of increase their data integrity and improve every single loan while in process and business efficiency if their system stops the ensure the accuracy of these files.

Weighing the variances between borrowloan process when there are unaddressed errors. The loan’s data integrity will er risk and the possibility of a buy-back is become more efficient with the vendor’s often a difficult consideration. If a lender is in violation of consumer advocacy laws and improved accuracy of risk mitigation.

Vendor consolidation, working in tan- miscalculates a section of the loan, they dem with workflow integration, will reduce potentially could face the wrath of the govthe number of system of record issues in a ernment and the investor. Since investors document. This will also enable vendors do not tolerate mistakes, lenders should not and servicers to review files before submis- tolerate them either, whether they are intersion deadlines to examiners, while increas- nal, or from an outside vendor.

Protecting borrowers from predatory ing business profitability and meeting every lending and establishing a zero-tolerance regulatory demand in the process. compliance error guideline will improve the accuracy and sellable quality of a loan.

Pre-funding: Every loan, Loans must meet a plethora of party stanevery time Post-funding corrections are not possible or dards: lenders, vendors, servicers, investors advisable with today’s regulations. Pre-fund- and the borrower.

Although meeting these standards may ing corrections reduce time and expense, and can increase the quality of a loan port- seem like a daunting, inflexible task, comfolio. Doing anything post-closing is like pliance is now non-negotiable and should doing tax planning after the year ends. You never be compromised. may feel better, but it won’t benefit your Leonard Ryan is president of Laguna Hills, organization or reduce your liability.

Pre-funding data that is centralized will Calif.-based QuestSoft, a provider of autonot only ensure compliance before the loan mated compliance solutions and geocoding is funded, but will also reduce the stress services to the mortgage industry. He can be associated with an audit and reduce the risk reached by phone at (800) 575-4632 or eof a buyback from an investor. If a company mail leonard.ryan@questsoft.com. getting the lowest price or best product on each individual part of the operation was the original goal, many lenders are now using fewer vendors so that the data can be more easily consolidated. Look for vendors that can take on multiple compliance issues with single integrations.

New Trends and Challenges in Mortgage Qualification and Servicing

By Ron D’Vari, Ph.D., CFA In today’s increasingly regulated environment, rules seem to change all the time. Worse, borrowers are increasingly–and successfully–suing mortgage lenders. This article will explore what you need to know now in order to navigate these choppy waters.

The CFPB & Dodd-Frank

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Recently, the Consumer Financial Protection Bureau (CFPB) issued the highly anticipated rules to implement provisions of the Dodd-Frank Wall Street Reform and Consumer Protection Act. This requires mort-

gage loan lenders to make a reasonably good-faith determination that borrowers have the ability-to-repay their mortgage loans, known as the Ability-to-Repay (ATR Rule.) At first glance, the ATR Rule may appear easy to follow, yet there are many details that need to be adhered to and considered. Upon meeting these ATR Rule requirements (which become effective Jan. 10, 2014), the lenders will receive a safe harbor designation if they originate what is deemed to be a Qualified Mortgage (QM). This would then make it more difficult for

current mortgage origination is already conforming to the newly proposed QM guidelines.

One noteworthy exception is that many banks are originating and holding within their bank portfolios, a good deal of n The loan will be generinterest-only prime jumbo ally be a 30-year fully loans. Going forward, amortizing loan and once the guidelines come cannot contain any negative amortization “The systems should into effect, these will not options, balloon terms also help the servicer meet the QM requirements thereby will not or interest-only paydevelop reports to ment features; show and help them give the originators safe n The interest rate of compare and evaluate harbor treatment thereby giving lenders less incenthe loan cannot their relative tive to continue originatexceed 150 basis performance to fair ing them. points above the and objective thirdOn a separate note, Average Prime Offer party benchmarks.” associated to the ATR Rate (APOR) for firstRule and QM, there is a proposed rulelien loans; n The total fees and points that the making related to the Qualified lender can charge on originating Residential Mortgage (QRM) of which the loan cannot exceed three per- the definition has not been released cent of the loan size for loans yet. It is anticipated that the QRM requirements will set maximum loan$100,000 or greater; n The mortgage lender is generally to-value (LTV) and minimum FICO banned from charging the borrow- thresholds.

The ruling will determine which er any prepayment penalty fees; n The lender must obtain full docu- types of mortgages can be ultimately mentation of the borrower’s be securitized because under the QRM employment status, current and provisions, lenders will have to retain expected future income and risk on transactions backed by loans assets, other debt obligations, ineligible to be classified as QRMs. such as alimony and child support, This will have a tremendous impact their monthly payments on the on any potential resurgence in the prispecific loan along with monthly vate label securitization market.

The CFPB is also amending payments on any other simultaneous loans and other mortgage- Regulation X, which implements the related obligations such as proper- Real Estate Settlement Procedures Act (RESPA) and Regulation Z, which ty taxes, and their credit history; n The borrower must have a maxi- implements the Truth-in-Lending Act mum debt-to-income rate (DTI) of 43 (TILA) and provides a commentary percent, which will be calculated by that outlines an official interpretation considering the highest payment the to these regulations. The final regulaborrower will be expected to pay in tions will implement the Dodd-Frank Act sections that address mortgage the loan’s first five years. loan servicing requirements.

The final Regulation X rule impleIt remains to be seen how this ruling will impact the composition and ment the Dodd-Frank Act amendvolume of the future mortgage loan ments dealing with periodic mortgage issuance as the majority of the loans statements and disclosures for ARMs, currently being issued are already prompt crediting of mortgage loan being originated with much stricter payments, requests for mortgage loan underwriting standards after the payoff statements, to correct any 2008 credit crisis. Much of the alter- errors asserted by the borrowers, and native products prohibited in the new provide them with certain requested QM guidelines have already been information. The rules will also phased out or are being limited to address the servicer’s obligation to specialty lenders, hence the bulk of formulate a set of Policies and borrowers to sue the mortgage lenders. The requirements of the rule that would allow for a mortgage to be classified as a QM are outlined broadly below:

Procedures to ensure consistent and fair treatment of borrowers, address any regulatory areas of concern, reporting requirements, and records retention.

In order to comply with the increased regulation of the mortgage servicing operations, servicers would need to develop and adopt a best practices strategic plan that addresses all the requirements of the amended CFPBâ&#x20AC;&#x2122;s rulings of which the principal elements would be, the creation and implementation of a robust and consistent set of loss mitigation and loan administration policies and procedures that direct loan servicing and asset management activity, the implementation of a robust suite of oversight queries and reports that identify data inconsistencies and outliers, focus on high risk issues, and may include comparisons to objective thirdparty benchmark metrics (Macro Level Review), and loan level reviews of negative findings from Marco Level Review, plus random QC reviews of various servicing operations that seek to identify areas of potential non-compliance with the policies (Loan Level Review).

The Policies and Procedures should address, among other things, loss mitigation, foreclosure activity, third-party vendor oversight and loan administration. A codified set of Policies and Procedures can help ensure:

Based on our completing a number of comparative servicer performance analyses focusing on aspects such as timelines, severity and modification strategy a number implementation factors can significantly improve the outcome and efficiency, from both regulatory and economic standpoint.

These factors include: work-flow design based on highly experienced professionals, specialized predictive analytics, adaptive systems, and streamlined data infrastructure. Our team of seasoned industry professionals, combined with cutting edge analytics, has facilitated the work in this sector and has resulted in a deeper understanding of the post-crisis paradigm now facing our clients.

v MARCH 2013

n Aggregation and normalization of

n Performance-related servicer oversight n Compliance-related servicer oversight n Third-party oversight

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The Macro Level Review would implement robust oversight queries and reports to help the servicer identify any data inconsistencies that may exist and any potential outliers. A Macro Level Review system must be built on a cross-asset platform with the following capabilities:

These review systems would help the servicers uncover and highlight and quickly rectify any potential policy violations. The systems should also help the servicer develop reports to show and help them compare and evaluate their relative performance to fair and objective thirdparty benchmarks.

Loans flagged with negative findings in the Macro Level Review process or for random QC review should then be reviewed individually with the focus being on either confirming or absolving each loan with respect to its potential non-compliant servicing action.

The servicing industry is currently analyzing the impact and looking to find efficient and effective ways to addressing these requirements. Outside consultants are looking to provide independent services in the following areas:

ment, advisory, academics and management. He may be reached by phone at (212) 209-0855 or e-mail rdvari@newoak.com.

NationalMortgageProfessional.com v IDAHO

n Consistent and compliant treatment of borrowers from collections through modifications and foreclosure avoidance procedures; n Ease of implementing specific portfolio management strategies; n Specific guidance that allows asset managers to make timely and efficient decisions; n Compliance with regulatory requirements; n The fair and robust measurement of various strategies against one another or against benchmarks; and n The justification of servicing activities to external parties.

data from multiple sources (origi- Ron Dâ&#x20AC;&#x2122;Vari, Ph.D., CFA is co-founder and nation files, active services, other chief executive officer at NewOak, and has vendors); over 29 years of experience in asset managen Automated uploads from current loan servicing systems; and n Reports, queries and views that have been built at the aggregate portfolio level with the ability to drill down to loan level and designed to create an intelligent quality control process for monitoring compliance with the Policies and to uncover any loan level data inconsistencies and outliers.

heard on the street

continued from page 40

n Tamara Hambright and Paula Vardell have joined NexBank as senior vice presidents within the firm’s Mortgage Banking Division.

n

HAMBRIGHT

n

VARDELL

n

n

n Mortgage Contracting Services LLC (MCS) has promoted Paul Swindle to vice president of operations.

n

SWINDLE

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n Ellie Mae has announced that Jonathan Corr has been named president and chief operating officer where he will be responsible for managing the company’s day-to-day operations. n Gina Bell of Access Funding Inc. in Albuquerque, N.M. and Linda McCoy of Mortgage Team 1 in Mobile, Ala. have both received their Certified Residential Mortgage Specialist (CRMS) designation from NAMB— The Association of Mortgage Professionals. n Gold Star Mortgage Financial Group has appointed Brooke Hoag as its community commitment liaison. n Mortgage Guaranty Insurance Corporation (MGIC) has promoted Mary Elkins to vice president information services-systems develop-

ment, and Susan Friedrich to vice president information services-chief information security officer.

Stonegate Mortgage Corporation has announced the addition of Stephen M. Pawlyshyn as vice president of non-agency trading.

The National Association of Hispanic Real Estate Professionals (NAHREP) has announced the appointment Jason Madiedo, a mortgage banker and three-term director of NAHREP’s national board, as president-elect.

Lender Processing Services Inc. (LPS) has announced the appointment of Dan Carmichael to its board of directors.

Garth Graham has joined The STRATMOR Group as a partner. Lisa Springer has also been hired by STRATMOR in the new role of practice manager.

Class Appraisal Inc. has announced that John P. Hamameh Esq. has joined the company as in-house counsel and compliance attorney. loanDepot.com LLC has announced the addition of several mortgage veterans to its leadership team, as H. Lynn Ryan will serve as EVP and CIO; Candis Duke was named COO; and Jeff Walsh as executive vice president.

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

ar s Le

ne d

son Les

Florida ss: : Out of r Bo Schem e e d v u ra o F ag e erc s M o rtg Un d ast Texa Major E 203(k) Rehab Loan Program: Foreclosures Present Challenges, Opportunity NMLS an d St ate Testing fo r Mortgage Pr ofessionals

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continued from page 38

rowers across the nation. Ally, and any successor servicer that purchases Ally’s portfolio, remain subject to its continuing mandatory solicitation obligations and to the servicing standards, or reforms, outlined in the NMS.” Ally also has a mandatory solicitation requirement for certain borrowers and has satisfied some of this requirement, for which the Monitor has partially certified Ally’s compliance. Smith is also set to release his third progress report, which will include data on the consumer relief activity Ally, Bank of America, Citi, Chase and Wells Fargo, the five banks that are a part of the NMS, performed between March 1-Dec. 31, 2012, based on their reports to the states and the Monitor.

“I look forward to sharing more information about the process through which I made this determination with the public when I release my next progress report,” said Smith. “I will continue my work with Ally and its successors to ensure that they are following the servicing standards and appropriately working with their customers over the next two years. I hope that the consumer relief and the servicing standards the crafters of this bi-partisan, statefederal Settlement negotiated will continue to help homeowners across the nation.”

Plaza Home Mortgage Raises Nearly $100, 000 for Breast Cancer Awareness

Plaza Home Mortgage Inc. has raised $99,472.37 for Susan G. Komen for the Cure during its month-long campaign to support breast cancer prevention and cure. To recognize Breast Cancer Awareness Month, Plaza Home Mortgage Inc. pledged to make a donation to Komen for every loan closed from October production. As a result of the extraordinary efforts of Plaza associates and customers nationwide, Plaza Home Mortgage was able to raise $99,472.37.

“Plaza is proud to support Komen’s mission of finding the cure and ending breast cancer forever,” said Kevin Parra, CEO and co-founder of Plaza Home Mortgage. “So many people are touched by friends or loved ones fighting this disease, but I have to say we were overwhelmed by the impact this had on our associates; we heard an outpouring of personal stories when we announced our pledge.”

Plaza Home Mortgage’s gift will help fund the largest investment in breast cancer research in the world next to the U.S. government and the largest program of free breast cancer treatments and services

for America’s uninsured women and their families.

“The generosity of Plaza Home Mortgage’s executives and employees will provide women across the country with hope, caring and a chance to survive this deadly disease,” said Laura Farmer Sherman, executive director of Susan G. Komen for the Cure, San Diego.

Wells Fargo Named Top Commercial/Multifamily Servicer in 2012 The Mortgage Bankers Association (MBA) has released its year-end ranking of commercial and multifamily mortgage servicers as of the end of Dec. 31, 2012. At the top of the list of firms is Wells Fargo with $429.1 billion in U.S. master and primary servicing, followed by PNC Real Estate/Midland Loan Services with $337.6 billion, Berkadia Commercial Mortgage LLC with $197.3 billion, Bank of America Merrill Lynch with $112.5 billion, and KeyBank Real Estate Capital with $101.2 billion.

Wells Fargo, PNC/Midland, Berkadia, Bank of America Merrill Lynch and KeyBank are the largest master and primary servicers of commercial/multifamily loans in U.S. CMBS, CDO and other ABS issues; PNC/Midland, MetLife, Prudential Asset Resources, GEMSA Loan Services LP, and Northwestern Mutual are the largest servicers for life companies; PNC/Midland, Wells Fargo, Walker & Dunlop LLC., Berkeley Point Capital LLC, and Berkadia are the largest Fannie Mae/Freddie Mac servicers.

PNC/Midland ranks as the top master and primary servicer of commercial bank and savings institution loans; GEMSA the top credit company, pension funds, REITs, and investment funds servicer; PNC/Midland the top FHA and Ginnie Mae servicer; Wells Fargo the top for loans held in warehouse facilities; and Berkadia the top for other investor type loans.

A primary servicer is generally responsible for collecting loan payments from borrowers, performing property inspections and other property-related activities.

A master servicer is typically responsible for collecting cash and data from primary servicers and then providing that cash and data, through trustees, to investors. Unless otherwise noted, MBA tabulations that combine different roles do not doublecount loans for which a single servicer performs multiple roles.

HUD Issues Rule Formalizing Standard on Discriminatory Effects in Housing The U.S. Department of Housing & Urban Development (HUD) has announced that it is issuing a final rule to formalize the

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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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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:

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Sales of 17 Cents and a Dream: My Incredible Journey from the USSR to Living the American Dream by Daniel Milstein— founder, president and CEO of Gold Star Mortgage Financial Group—surged during its first week of availability last week ranking number one on the Amazon list of best-sellers.

The book is Milstein’s story about how his mother, father and brother escaped the oppressive government of the USSR and immigrated to the United States, ranking number one on Amazon’s list of the best-selling Kindle eBooks in the Business and Entrepreneurship catego-

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ry, number two in the Business and Investing category and in the top 30 in the Biography and Memoir category.

Born in Kiev, Ukraine, Milstein and his family experienced undue hardship, religious persecution and life-anddeath situations all in the shadows of the greatest nuclear accident that ever occurred; the Chernobyl nuclear meltdown which killed more than 100,000 people including his grandfather.

“Through pure determination, fortitude and attitude, Daniel pulled out of impossibly difficult situations,” said Mark Victor Hansen, best-selling author of Chicken Soup for the Soul. “His story is true, his story is a personal inspiration to me and I hope it will inspire you too to maximize your potential and go for the greatest of dreams.”

17 Cents and a Dream begins with a gripping account of the Milstein family’s tough life in Kiev, Ukraine under the oppressive government of the former Soviet Union. He recalls how he and his family were affected by the 1986 explosion of the Chernobyl nuclear power plant: Daniel was 10years-old at the time, and the disaster took place only 78 miles from their home, killing 100,000 people and spreading poisonous radiation throughout the environment.

A few years later the family, struggling against poverty, government oppression, and anti-Semitism, made a secret plan to flee to America. After a narrow escape, the family arrived in Ann Arbor, Mich. with no understanding of English and few belongings.

Young Daniel had only 17 cents in his pocket, given to him by a friend to cover the expense of a postage stamp so that Daniel could send him a letter.

In the ensuing years, Daniel endured extreme poverty, endless hunger, relentless bullying from his new classmates all while working long hours mopping floors and cleaning restrooms at a McDonald’s.

“None of this came easy ... in school after working my morning shift at McDonald’s, I was painfully aware that I smelled like a quarter pounder with cheese,” said Milstein. “I was always tired, but I was also proud that I was able to take care of my family and to make something of myself, to honor the wishes of my grandfather.”

national standard for determining whether a housing practice violates the Fair Housing Act as the result of discriminatory effect.

“Through the issuance of this Rule, HUD is reaffirming its commitment to enforcing the Fair Housing Act in a consistent and uniform manner,” said HUD Secretary Shaun Donovan. “This will ensure the continued strength of one of the most important tools for exposing and ending housing discrimination.”

HUD is statutorily charged with the authority and responsibility for interpreting and enforcing the Fair Housing Act and has long interpreted the Act to prohibit housing practices with an unjustified discriminatory effect, if those acts actually or predictably result in a disparate impact on a group of persons, or create, increase, reinforce, or perpetuate segregated housing patterns because of race, color, religion, sex, handicap, familial status, or national origin.

“HUD is maintaining well-established legal precedent and formalizing a nationally consistent, uniform burden-shifting test for determining whether a given housing practice has an unjustified discriminatory effect,” said John Trasviña, HUD’s Assistant Secretary for Fair Housing and Equal Opportunity.

The rule provides clarity and consistency for individuals, businesses, and government entities subject to the Fair Housing Act. HUD anticipates the rule also will make it easier for individuals and organizations covered by the law to understand their responsibilities and comply with the law.

The review process for the rule was expansive, transparent, and inclusive.

Since January 2012, the Department solicited, received, and incorporated input based on comments from individuals, fair housing and legal aid organizations, Attorneys General, state housing finance agencies, public housing agencies, public housing trade associations, insurance companies, financial institutions, and numerous other entities.

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Immediate investment in your business. We pay licensing, initial marketing, more. Next Day Payâ&#x201E;˘. Total support. Easy transition.

Full suite in-house products. Mortgage banker & top-level broker 28 states|20+ years|On Inc.500 list of fastest-growing companies

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Low Cost Monthly Membership Includes: â&#x20AC;˘ Free Weekly Hotline â&#x20AC;˘ Access to Subject Matter Experts â&#x20AC;˘ Policies and Procedures â&#x20AC;˘ Webinars

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

Direct Mail

TagQuest www.myharpleads.com TagQuest.com 888-717-8980 TagQuest is a full service marketing firm created specifically for the ever changing mortgage business. We have tested and proven campaigns for FHA -VA - HARP - CONVENTIONAL loan types.

TagQuest knows what it takes to generate quality leads whether through direct mail marketing, telemarketing, internet leads, data lists, tracking systems, or any combination thereof. TagQuest will brand your company, prepare targeted marketing campaigns that generate interest in your company, and most importantly, show you how to turn sales leads into repeat customers.

Document Preparation

Loan Origination Systems

Robertson | Anschutz 800-343-7160 sbertrand@radocs.com www.radocs.com/info.html

Calyx Software 800-362-2599 sales@calyxsoftware.com www.calyxsoftware.com

Mortgage Loan Closing Document Preparation & Compliance Services Fulfillment Services Including Pre-Funding Review & Post-Closing Interfaces with Leading Loan Origination Software Systems Foreclosure – Loss Mitigation Services

Document Preparation (SaaS)

Docs on Demand 800-343-7160 stephen.bertrand@docsondemand.net www.docsondemand.info Mortgage Loan Closing Document Preparation & Compliance Software Loan Documents and Compliance – Web-based/SaaS – Easy to Use Intuitive – Secure and Reliable – Integrates with Leading LOS Free Setup and Support – Extensive Compliance Audits

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

Calyx Software, the #1 provider of mortgage solutions is dedicated to offering reliable and affordable software that streamlines, integrates and optimizes the loan process. Find out how PointCentral can streamline your business and create compliant processes today.

Marketing Services

8520 Macon Rd. Ste 2 Cordova, TN 38018 info@mcmf.net | 615-477-7118 MCMF developed My Guide, a Premier Credit & Financial Education Magazine that you can customize with your LOGO and Ad Pages to feature your organization as well as provide your borrowers a go-to-guide for credit and financial resources, empowering them to make the most informed financial decisions.

This 16 page, full color, quarterly publication, provides financial literacy tools in a concise, unbiased, easy to understand format.

Employment Services

Titan List and Mailing Services, Inc. is a direct marketing agency that offers a complete range of advertising and design services.

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

My Guide is offered in traditional magazine print, as well as our newest electronic flipbook version, bringing “flipping through a magazine” experience right to your desktop Contact me today to learn more about this one of a kind opportunity!

Recruitment

If your ad was here, you would be seen by 191,181 Mortgage Professionals looking for resources to help them in their business.

The Resource Registry is a directory of lenders (wholesaler or retail that are recruiting), affiliated services and resources that is seen by more than 191,181 active Professionals.

Call 516-409-5555 ext. 4 to register your company.

Leads TagQuest ................................................................888-817-8980 CUSTOMIZE YOUR CAMPAIGNS! FHA - HARP - VA Leads, Loan Modification, Debt Consolidation, Direct Mail, Data List, Live Transfers, Internet Leads – tagquest.com

Valuation Services

Wholesale/FHA

Veros Real Estate Solutions 2333 North Broadway, Suite 350 • Santa Ana, CA 92706 (866) 458-3767 www.veros.com • @verosres (Twitter) Veros Real Estate Solutions is a premier technology leader in the mortgage industry and proven leader in enterprise risk management and collateral valuation services. Veros combines the power of predictive technology and data analytics for advanced automated solutions.

Wholesale/Correspondent Lenders

American Financial Resources, Inc. Jim Melchior, National Sales Director 502-882-0529 www.AFRWholesale.com American Financial Resources’ Wholesale Division is one of the country’s leading wholesale lenders. Recently ranked #2 in total sponsored FHA loans closed, AFR officers a wide variety of products including: • Conventional • Freddie Mac Open Access and Fannie Mae DU Refi Plus • USDA • Manufactured Housing • VA • One-Time Close Construction • FHA 203k full and streamline rehabilitation loans Since 1997 we have been expanding to better serve you and our hard work and investment have resulted in faster turn times, quality customer service, and one of the most robust product lines in the industry.

Icon Residential Lenders (888) 247-4207 www.iconwholesale.com Icon Residential, a wholly owned subsidiary of Grand Bank N.A., is one of the nation’s leading Conforming, FHA and VA wholesale lenders. Our strength, success and longevity is derived from delivering customers service that exceeds our valued business partners expectations. With deep industry knowledge, financial stability and innovative technology we provide the solutions for our business partners to fund loans while avoiding risk.

• • • • •

Direct Access to Underwriters Competitive Pricing Innovative Technology Paperless Solution Bank Funding

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

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

CBC National Bank 3010 Royal Boulevard South, Ste. 230 Alpharetta, GA 30022 888-486-4304 CBC National Bank is one of the nation’s fastest growing wholesale lenders offering Conventional, FHA, VA, and USDA. The most important aspect of being a leader in today’s market is the ability to build and maintain a meaningful relationship with each customer. We understand that these meaningful relationships coupled with competitive pricing and efficient technology are the pillars of today’s lending environment.

We are hiring Loan officers in the Southeast. GA, FL, AL, TN, NC,SC. Contact Gabe Santiago our Corporate Recruiter at gsantiago@cbcnationalbank.com for further details.

Big Enough to MATTER…Small Enough to CARE

REMN has FHA, USDA, 203k, VA and Conventional solutions to fit the needs of your customers. But, at REMN, our most valuable product is our people. The REMN Sales and Operations Teams give you - and your loans - the time and attention that you deserve. Even better, at REMN, same-day approvals are guaranteed.* You can rely on us to get the little, yet vital, things taken care of on time.

Interested in joining our Wholesale Division?

Send your resume to aerecruiting@remn.com

The Lykken on Lending RADIO PROGRAM

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

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HomeBridge is a national wholesale lender offering both conventional and government products. We are committed to providing the highest value to our clients through competitive pricing, unique product offerings, superior customer service, and state-of-the-art technology.

Currently expanding and hiring experienced Wholesale Account Executives nationwide.

Please send your resume to marketing@homebridge.com.

The Direct Path into the Reverse Mortgage Market.

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

Call 516-409-5555, ext 4, to register your company.

United Wholesale Mortgage 800-981-8898 www.uwm.com

Wholesale Lenders

Building bridges to success, one loan at a time.

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

Wholesale Lenders (Cont’d.)

NATIONAL MORTGAGE PROFESSIONAL

calendar OF EVENTS

To submit your entry for inclusion in the National Mortgage Professional contact information, to newsroom@nmpmediacorp.com.

Sunday-Thursday, March 10-14 2013 Regional Conference of Mortgage Bankers Associations 30th Anniversary Trump Taj Mahal Casino Resort 1000 Boardwalk Atlantic City, N.J. For more information, call (732) 596-1619 or visit www.mbanj.com.

Monday-Tuesday, April 8-9 Mortgage Bankers Association Document Custody Workshop Hyatt Regency Bethesda 1 Bethesda Metro Center Bethesda, Md. For more information, call (800) 793-6222 or visit www.mortgagebankers.org.

Wednesday, March 13 Florida Association of Mortgage Professionals Broward Chapter 2013 Annual Trade Show “It’s Mardi Gras Time” Broward County Convention Center 1950 Eisenhower Boulevard Fort Lauderdale, Fla. For more information, call (954) 205-0022 or visit www.browardfamp.org.

Wednesday, March 13 2013 Maryland Association of Mortgage Professionals Annual Conference Maritime Institute 692 Maritime Boulevard Linthicum Heights, Md. For more information, call (410) 752-6262 or visit www.mdmtgpros.org.

Monday-Wednesday, March 25-27 National Association of Hispanic Real Estate Professionals (NAHREP) 2013 Housing Policy & Hispanic Lending Conference Four Seasons Hotel 2800 Pennsylvania Avenue NW Washington, D.C. For more information, call (858) 622-9046 or visit www.nahrep.org/dc2013.

MAY 2013 Sunday-Wednesday, May 5-8 Mortgage Bankers Association (MBA) 2013 National Secondary Market Conference & Expo New York Marriott Marquis 1535 Broadway New York, N.Y. For more information, call (800) 793-6222 or visit www.mortgagebankers.org.

Sunday-Wednesday, April 14-17 2013 National Technology in Mortgage Banking Conference & Expo Westin Diplomat 3555 South Ocean Drive Hollywood, Fla. For more information, call (800) 793-6222 or visit www.mortgagebankers.org.

Thursday, May 9 Maryland Mortgage Bankers Association (MMBA) 2013 Annual Conference “Surviving & Thriving in Today’s Mortgage Industry” Doubletree by Hilton Hotel Columbia 5485 Twin Knolls Road Columbia, Md. For more information, call (443) 989-8534 or visit www.mdmba.org.

Sunday-Wednesday, April 14-17 Mortgage Bankers Association (MBA) 2013 National Fraud Issues Conference Westin Diplomat 3555 South Ocean Drive Hollywood, Fla. For more information, call (800) 793-6222 or visit www.mortgagebankers.org.

Sunday-Wednesday, May 19-22 Mortgage Bankers Association (MBA) 2013 Commercial/Multifamily Servicing & Technology Conference Arizona Biltmore 2400 East Missouri Avenue Phoenix, Ariz.

For more information, call (800) 793-6222 or visit www.mortgagebankers.org.

Thursday, April 18 Illinois Association of Mortgage Professionals (IAMP) 2013 Spring Conference & Trade Show Location to be determined For more information, call (630) 916-7720 or visit www.iamp.biz.

Sunday-Wednesday, May 19-22 Mortgage Bankers Association (MBA) 2013 Legal Issues/Regulatory Compliance Conference Boca Raton Hotel 501 East Camino Real Boca Raton, Fla. For more information, call (800) 793-6222 or visit www.mortgagebankers.org.

OCTOBER 2013 Sunday-Wednesday, October 27-30 Mortgage Bankers Association 100th Annual Convention & Expo Walter E. Washington Convention Center 801 Mt. Vernon Place NW Washington, D.C. For more information, call (800) 793-6222 or visit www.mortgagebankers.org.

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APRIL 2013 Thursday, April 4 22nd Annual Rocky Mountain Mortgage Lenders Expo Marriott Denver Tech Center 4900 South Syracuse Street Denver For more information, call (303) 773-9565 or visit www.cmla.com.

JULY 2013 Wednesday-Saturday, July 31-August 1 Florida Association of Mortgage Professionals 2013 Annual Convention “Here We Grow Again” Rosen’s Shingle Creek 9939 Universal Boulevard Orlando, Fla. For more information, e-mail convention@myfamp.org or visit www.famb.org.

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MARCH 2013 Sunday-Tuesday, March 10-12 2013 NAMB Legislative & Regulatory Conference Hilton Garden Inn-Capitol 1225 First Street NE Washington, D.C. For more information, call (972) 758-1151 or visit www.namb.org.

Wednesday-Thursday, April 24-25 Mortgage Bankers Association’s National Advocacy Conference Hyatt Regency Washington on Capitol Hill 400 New Jersey Ave NW Washington, D.C. For more information, call (800) 793-6222 or visit www.mortgagebankers.org.

NATIONAL

Calendar of Events, please e-mail the details of your event, along with

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