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

Idaho Association of Mortgage Professionals P.O. Box 7981  Boise, ID 83707 Phone #: (208) 321-9309  Fax #: (208) 321-4819 E-mail: Web Site:

Tyler Porter Vacant Alison Gillespie

IAMP BOARD MEMBERS OFFICERS Phone # E-mail President (208) 389-4709 Vice President ------------------Secretary/Treasurer (208) 378-1013

Chuck Anderson JJ Astorquia Tom Birch Travis M. Dyson Alison Gillespie Michelle Guth Tyler Porter Kathy Smith Shanna Wroten-Tucker

DIRECTORS (208) 449-1789 (208) 389-4709 (208) 343-4065, ext. 111 (208) 608-0059 (208) 287-2171 (208) 853-7878 (208) 389-4709 (208) 230-5284 (208) 388-0500

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November 2012




Volume 4, Number 11


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A Special Look at “Tomorrow’s Mortgage Technology”

America’s Choice Home Loans .......................... ............................................9

Mortgage Fraud: Wrestling With the Octopus … and Winning! By Greg Holmes ..............................................44

Calyx Software ................................................ ......................................20

A Call for Automation: The Key to Driving Quality and Efficiency in Lending By Scott A. Reed ........................45

Data Facts........................................................ ..............................................49

Amerisave Mortgage Corporation ...................... ........................................25 Brokers Compliance Group................................ ........................27

How Far Will You Go? By BJ Bounds ..................................46 Future of Lending: Data-Driven Lending By Rob Pommier Business Units: No Longer Islands By Sanjeev Dahiwadkar

47 48

Features The Cream of the Cream By Al Crisanty ..........................4

CBC National Bank .......................................... ............................................19

Document Systems, Inc./DocMagic .................... ....................................14 & 15 Equity Loans LLC .............................................. ..........................................41 .................................... ..........................22 & 24 First Guaranty Mortgage Corp. .......................... ......................................43 Flagstar Bank .................................................. ............................................28-29 Guaranteed Home Mortgage Company .............. ............................................39 HomeBridge .................................................... ..........................51

The Elite Performer: Overcome Being Overwhelmed By Andy W. Harris, CRMS..........................................................4

Hometown Lenders ..................................13

CFPB Extends Comment Period for Two Proposed Rules By Melanie A. Feliciano ..................................6

Maximum Acceleration Coaching ...................... ..........................21

Icon Residential Lenders, LLC ............................ ......................................17

Loan Originator Compensation: Past is Prologue (Part II) By Jonathan Foxx ......................................................8

Meadowbrook Financial Mortgage Bankers Corp. .. ..................................37

Bonded With NAMB: C’Mon … Step Right Up and Play the Shell Game By Mason Grashot, CPA ................10

NAMB NATIONAL.............................................. ........................12, 30 & 42

Still Standing: Lessons From a Survivor of the Mortgage Industry Meltdown By Paul Anastos ........12

NFM, Inc. ........................................................ ..........................................31

For Managers Only: Are Your Loan Officers CEOs? By Dave Hershman ................................................................18

REMN (Real Estate Mortgage Network)................ ......................................7

Scenes From the Mortgage Bankers Association’s 99th Annual Convention & Expo ....................................20

Streetlinks LLC ................................................ ....................Inside Front Cover

Menlo Park Funding ........................................ ................................19

NAPMW .......................................................... ..................................................16

PB Financial Group Corp. .................................. ......................................20

Ridgewood Savings Bank .................................. ....................................35

NAMB Perspective ..........................................................22

TagQuest ........................................................ ................................................5

Lykken on Lending: The Importance of Local Leadership By David Lykken ......................................24

The Bond Exchange .......................................... ................................18

NMP Mortgage Professional of the Month: David Wind By David J. Coster ..............................................26

United States Appraisals .................................. ..........................11

Mortgage Producer: Who Are You? By Eric Levin..............30 Marketing in 2012: Fall Tips to Maximize Your Marketing Dollars ..................................................32 Pursuing Excellence:Do You Know Your Competition? By Casey Cunningham ............................................................32 FHA MIP Program Creating Surplus of Trigger Leads for Mortgage Marketing By K. Justin Restaino ..........33 USA Cares Mortgage Heroes: Norman Zolkos of Menlo Park Funding By Jennifer Robinson ........................36 Not So Free Enterprise in the Mortgage Industry By Carey Hollander ................................................................42 Why I Love Being a Mortgage Broker and Will Never Jump Ship By Mike Anderson, CRMS ..........................56

Columns Heard on the Street ........................................................6 New to Market ................................................................34 NMP Mortgage Professional Resource Registry ..........52 NMP Calendar of Events ................................................56


NMP News Flash: November 2012 ................................16

United Wholesale Mortgage .............................. ........................................Back Cover


Buying Signals (Part II) By Kerry Johnson, MBA, Ph.D. ..........34

Titan List & Mailing Services, Inc. ...................... ........................Inside Back Cover  IDAHO

Fun, Photos and Featured Speakers at NAMB National By John Stevens ....................................30


Volume 4 • Number 11 1220 Wantagh Avenue • Wantagh, NY 11793-2202 Phone: (516) 409-5555 • Fax: (516) 409-4600 Web site: STAFF Eric C. Peck Editor-in-Chief (516) 409-5555, ext. 312 Joel M. Berman Publisher - CEO (516) 409-5555, ext. 310 David Coster Senior Editor Joey Arendt Art Director Jon Blake Advertising Coordinator (516) 409-5555, ext. 301 Beverly Koondel National Account Executive (516) 409-5555, ext. 316 Tara Cook Billing Coordinator (516) 409-5555, ext. 324

ADVERTISING To receive any information regarding advertising rates, deadlines and requirements, please contact National Account Executive Beverly Koondel at (516) 409-5555, ext. 316 or e-mail ARTICLE SUBMISSIONS/PRESS RELEASES To submit any material, including articles and press releases, please contact Editor-in-Chief Eric C. Peck at (516) 409-5555, ext. 312 or e-mail The deadline for submissions is the first of the month prior to the target issue. SUBSCRIPTIONS To receive subscription information, please call (516) 409-5555, ext. 301; e-mail or visit Any subscription changes may be made to the attention of “Circulation” via fax to (516) 409-4600. 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.

And as I personally have started on the path to rebuild my life after Hurricane Sandy, NAMB—The Association of Mortgage Professionals is set to help you take your business to the next level, Dec. 8-10 at the MGM Grand in Las Vegas at their 2012 NAMB National event. Booth space is nearly sold out and a full slate of speakers has been lined up, including Greg Frost, Spencer Rascoff from Zillow, Ted Tozer of Ginnie Mae, Lawrence Yun of the National Association of Realtors (NAR), and much much more. For more information, see this month’s NAMB Perspective column on page 22 or visit I hope to see you all in Vegas, as for me, NAMB National will be a celebration … one that shows me the industry is headed toward normalcy while the regulatory landscape shifts, but a celebration of life and just what really matters in this world. Community, family and the will to pick up the pieces and once again rise above adversity are what I will be celebrating both while at the dinner table on Nov. 22nd and in Las Vegas. I feel constricted by the confines of this column space to detail all that I have experiences, but I urge you to contact me at if you have a story to share about overcoming the odds and reinventing yourself. Happy holidays and may this holiday season bring out the best in you, RTGAGE PRO MO



Rebuild and regrowth …



This month, we will all give thanks as we sit down and share in the annual Thanksgiving meal with our families, segueing into the 2012 holiday season and welcoming the year 2013. For me personally, this holiday season will be one where I cherish these moments on a whole new level, step back and realize exactly what I have to be thankful for … family, friends, the ability to continue to do what I enjoy doing with a passion, and most importantly, the life which I have that gives me the ability to enjoy such things. My October began with a bang, the prospect of headed to Chicago to attend the Mortgage Bankers Association 99th Annual Convention and Expo. The pre-registration numbers were through the roof for this event, as nearly 3,500 were expected to attend, a huge statement in these times and to me, a huge return to normalcy in the mortgage industry. My time in the Windy City was a whirlwind experience, great meetings, new prospects, amazing speakers ranging from former President Bill Clinton and New York Mayor Rudy Giuliani, and a new wealth of useful information learned to take my business to the next level. But then, things took a turn for the worse as life intervened and business took a backseat to the will to survive the natural forces of Mother Nature ... I came back from Chicago, reached out to my contacts and the ball got rolling. New alliances were formed, partnerships were established and things looked like they were well on their way to returning to the pre-recession era mortgage industry we came to know and love. The weatherman said her name was Sandy … but he failed to also mention that Sandy would forever change life as I knew it. For nearly 20 hours from Oct.29-30, 80-90 mile per hour gusts of wind and eight foot storm surges battered my home area of Long Island, N.Y. In the aftermath, hundreds of thousands were left without power, as power lines were left underwater, trees littered the streets and tore lines from the poles, homes were washed away and flooded, and daily life was turned on its head. Some chose to heed the warnings of the authorities and remained with their properties, refusing to vacate what they have spent their entire lives building up. I was one who waited it out and faced four feet of water entering my home, heavily damaging the first floor, and taking out three cars in the process. Power outages spread as and electric sub-station blew up a half-mile away from my home, lighting the darkened skies. Transformers were knocked off poles and were left useless as they too were submerged in the waters brought ashore by Sandy. An Islandwide gas shortage then gripped the area as gas pumps were left without the power to pump gasoline, the same gas needed by utility crews to get into the most impacted areas and by homeowners who required this resource to power their generators to get them through the early winter chill. Fuel was scarce and hard to find as a simple trip to the gas station became a two to three hour ordeal. For some, the wait proved fruitless as stations often ran out of fuel and three hours spent lined up was all for nothing. Nearly two weeks after the storm, thousands still remain without power, but have hope. Entire communities, decimated by the storm and left with little resources, have banded together to lean upon one another in a time when solid answers from the government and power companies are few and far between. These communities have banded together and have begun the regrowth process, a process that begins by sadly tossing to the curb, lifelong memories that are water-damaged beyond recognition and repair. Amidst the doom and gloom and red tape I have personally have had to contend with in rebuilding my own life, my faith in mankind is being restored. Right under my own nose, the employees of NMP Media Corporation have banded together to still put out a quality product despite the many obstacles continually thrown in our path. We share the common motto of “the show must go one” and continue as a group while our team works on their own individual re-building projects. We have worked around the clock, from home, from cars, from powered coffee shops with WiFi connections, and using any means necessary to continue to bring you, our faithful readership, a quality product that will remain unscathed by even the destructive path of Mother Nature. I applaud my team for taking the time out of their own personal recovery missions to work toward this common goal of providing you with the latest industry news and knowledge geared toward enhancing your bottom line. As we go to print with this issue, my office and home are still without power for a solid two weeks. In order to get this issue completed, our office has been powered by three heavy-duty extension cords plugged into an adjacent gas station.




National Mortgage Professional Magazine is published monthly by NMP Media Corp. Copyright © 2012 NMP Media Corp.

Joel M. Berman, Publisher-CEO NMP Media Corp.




Both ends of the spectrum



From The Publisher’s Desk


November 2012





The Association of Mortgage Professionals

National Association of Professional Mortgage Women

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

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

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  Carmel, IN 46032 (317) 575-4355

President Candace M. Smith, CME (512) 306-6354

Vice President—Northwestern Region Debbie Tofte, GML (425) 483-3359

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

President-Elect Jill Kinsman (206) 344-7827

Vice President—Western Region Lyman King III, CMI, CME (916) 967-4653

Fred Arnold, CMC—Treasurer American Family Funding 24961 The Old Road, Suite #101  Stevenson Ranch, CA 91381 (661) 284-1150

Senior Vice President Christine Pollard (607) 226-1046

Secretary Sara Vasura (703) 255-7460

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

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

Treasurer Jeanne Evans, CME (918) 431-0155

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

Vice President—Eastern Region Katrica J. Driscoll, MML, CME, CMI (919) 877-5683

Parliamentarian Hulene Works (972) 494-2788

Rocke Andrews, CMC, CRMS—Director Lending Arizona LLC 1996 North Kolb  Tucson, AZ 85715 (520) 886-7283

National Credit Reporting Association Inc.

Rick Bettencourt—Director Mortgage Network 300 Rosewood Drive  Danvers, MA 01923 (978) 777-7500

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

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

Donald J. Unger President (303) 670-7993, ext. 222 Daphne Large Vice President & Treasurer (901) 259-5105 Tom Conwell Ex-Officio & Legislative Chair (800) 445-4922, ext. 1010 Nancy Fedich Director–Conference Chair (908) 813-8555, ext. 3010 Judy Ryan Director-Strategic Alliance Chair (800) 929-3400, ext. 201 Susan Cataldo Director–Education & Compliance Chair (404) 303-8656, ext. 204

William Bower Director–Tenant Screening Chair (800) 288-4757 Mike Brown Director–Technology Chair (800) 925-6691, ext. 4350 Maureen Devine Director–Education & Compliance Co-Chair (413) 736-4511 Renee Erickson Director–New Membership & Elections Chair (800) 311-1585, ext. 2101 Terry Clemans Executive Director (630) 539-1525 Jan Gerber Office Manager/Membership Services (630) 539-1525


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

2012 Board of Directors & Staff


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



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

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

The Cream of the Cream By Al Crisanty




The old expression “the cream always rises to the top” is popular because it’s a truism—in business, much like on a dairy farm, the most highly valued components rise up or stand out because of their inherent qualities. In the mortgage industry, we have always seen this truism in practice. The best and the brightest, whether in sales, operations or leadership, have always found their way to the top. The industry rewards achievement, and does so without delay. With the “Great Shakeout” that has taken place in the mortgage industry it can easily be argued that “only the cream remains.” However, even now we should seek to surround ourselves with the best of the best, or the “cream of the cream” if you will. Excellence is rewarded by customers, employees and vendors. One key to creating a culture of excellence is to first and foremost identify and hire only the best team members. This is one area that should never be compromised. Focus on identifying key soft skills, such as integrity of character, work ethic, team/collaborative spirit and, last but not least, passion! I have found these to be more significant factors in predicting individual success than anything else. You will also need to properly “incentivize” those with whom you work. For incentives to be truly effective, they must clearly drive the behavior that you are seeking. Let me illustrate with an example. Leading wholesale lenders seek to work with the top tier of brokers in the industry—the best of the best or the top 20 percent. Even as standards for quality loan submission have been raised well beyond where they were just a few years ago, the leading firms desire and strive for an even higher level of quality in the files being submitted. Where a typical loan file might require four or five “touches” or actions to be taken by staff, a best practice goal might be to reduce the number of touches to two or three per file. In order to achieve this goal it is necessary to align incentives for team members and brokers with this desired result. Wholesalers typically maintain a broker model or scorecard for each of their broker partners. The model represents the ideal performance characteristics they are seeking and measures the actual, historical performance of an individual broker against that ideal. The system keeps up-to-date metrics on the performance of all files received from that broker. Those brokers that score the highest often receive benefits that might include having their files routed straight to underwriting, and possibly designation for faster decisioning. This is a tremendous benefit to the brokers that receive it, but it is earned by their history of exceptional performance. In this manner incentives can be aligned with the outcomes being sought. Such a system drives excellence, accountability and loyalty, which are attributes that we believe are essential to success in the new mortgage industry. They are the proper counterpoints to mediocrity and risk which will lead a firm or an individual quickly out of business, or into a new line of work. We all must make choices in this industry about those with whom we work, and how we get the best out of those relationships. Our firm and many of our competitors have staked out a position that we desire to work with the highest caliber brokers in the industry. We have devised a system and process that expects a lot—but offers even greater returns. The end product for firms pursuing this approach, for their broker partners and consumers, is an unprecedented customer experience driven by a productive and efficient origination process. Al Crisanty is vice president of national wholesale production for 360 Mortgage Group and is responsible for overseeing regional sales managers as the company seeks to expand operations to all 50 states. Formerly the national wholesale director for Caliber Funding, Al was responsible for the development and expansion of Caliber’s wholesale production channel. Additionally, Al served as executive vice president of national production for American Home Mortgage, successfully transitioning the 500-member production team from Capital Commerce Mortgage Company. Al may be reached by phone at (916) 761-1624 or e-mail SPONSORED EDITORIAL

Overcome Being Overwhelmed t’s no surprise that many of us are feeling a little overwhelmed with the current state of the industry. Market share opportunities have never been better and interest rates have never been lower. While the volume and business is something to celebrate, the regulatory restraints and demands can become overwhelming. Everything takes longer and requires more education for those who were accustomed to old times. Having strategies and systems in place for pipeline management is vital, but there is no doubt that with new applications and existing approval management, things can become overwhelming at times. While it is easy to feel that there is not enough time during the day to get things done, it is important to step back, put things into perspective, and identify what is really essential. Putting things into perspective while also taking short breaks will allow you to think more clearly and organize workflow to maintain efficiency. Knowing what is absolutely essential can avoid burnout by focusing on these items and getting them done. A few simple ways to reduce the overwhelmed feeling:


 Designate time each day for a break  Modify environment (enjoyable, music, etc.)  Write down thoughts or goals for the day  Delegate what you can

“Life moves pretty fast. If you don’t stop and look once in awhile, you could miss it.” —Ferris Bueller  Have consistent and productive meetings with operations team  Communicate often  Work out and eat healthy  Don’t be naive about new regulations, stay informed and prepared Stay motivated and be thankful for opportunities. It is a great time to be a mortgage professional. The opportunities are endless, but adapting to a world that can be overwhelming at times is required. More changes can bring more stress, but adaptation and preparation are vital keys.

Tip of the month … We all need the reminder that family matters most. Get out of the office as much as possible and keep a healthy balance between your personal and professional life. Work to live and don’t live to work. 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 email or visit


calendar OF EVENTS

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CFPB Extends Comment Period for Two Proposed Rules By Melanie A. Feliciano Esq.

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




The Consumer Financial Protection Bureau (CFPB) recently extended the comment period for certain provisions of the proposed rule regarding the integrated disclosures under the Truth-in-Lending Act (TILA) and the Real Estate Settlement Procedures Act (RESPA) and certain provisions of the proposed rule regarding changes to the high-cost provisions of Regulation Z, implementing amendments to TILA made by the Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank Act). Regarding the integrated TILA and RESPA disclosures, comments were due for two aspects of the proposed rule on Sept. 7: the changes to the definition of the finance charge and the delay of the effective date for certain disclosures required by the Dodd-Frank Act, which would otherwise be effective on Jan. 21, 2013. Note that with respect solely to the proposed changes to the definition of the finance charge, the comment period has been extended to Nov. 6, 2012, as announced in the CFPB’s notice of extension of the comment period, dated Aug. 30, 2012. The comment period for certain Dodd-Frank disclosures ended on Sept. 7, 2012, as initially set by the CFPB. Regarding proposed changes to the high-cost provisions of Regulation Z, as well as homeownership counseling amendments to TILA and RESPA, comments were due for the entire proposed rule on Sept. 7, 2012. However, on Aug. 31, 2012, the CFPB announced an extension of the comment period until Nov. 6, 2012, for only that portion of the proposed rule that addresses the proposed changes to the Home Ownership and Equity Protection Act of 1994 (HOEPA), specifically regarding whether and how to account for the implications of a more inclusive finance charge on the scope of HOEPA coverage. Any final rule on the above two issues will certainly have an impact on certain high-cost tests, including Section 32, compliance audits and the APR calculation.

NAMB Forms Strategic Partnership With The Bond Exchange N A M B — T h e Association of Mortgage Professionals has announced that an agreement has been reached with Mason Grashot of The Bond Exchange to become a Strategic Partner in offering mortgage license bonds to all NAMB members and their companies. “NAMB Members have been requesting an exclusive provider with NAMB for bonds of all types, and I think that The Bond Exchange will be able to fill that void with their national focus on surety bonds with a specific expertise in state mortgage license bonds,” said Donald J. Frommeyer, president of NAMB. “In addition, they can facilitate commercial insurance coverages such as property, general liability, workers compensation, employment practices liability, and errors and omissions insurance.” Under the terms of the partnership, The Bond Exchange will provide bond underwriting in all 50 states and will be able to coordinate services between regulators, licensees and providers consistent with a national agency. The Bond Exchange has historically positioned themselves as an advocate for the licensees by negotiating bond pricing lower than or equal to other companies in the industry. “By concentrating on surety bonds, The Bond Exchange understands the mortgage business, respects the need for responsiveness and provides a superior level of service that NAMB members may not be accustomed to receiving elsewhere,” said Frommeyer. “The relationship that this agreement now affords our membership, as a benefit and value to the Association, shows how NAMB is constantly committed to improving and helping all of our members in every aspect of their current everyday business. We are excited about this great relationship and the value that it will provide to both the Association as well as its members.”

United Wholesale Mortgage Sees 62 Percent Quarterly Volume Jump

Sponsored Editorial

United Wholesale Mortgage (UWM) has announced that it grew its residential lending volume from $1.245 billion in the second quarter of 2012 to $2.019 billion in the third quarter, a 62 percent quarterly increase. “The immense growth that we are experiencing is a direct result of the second-to-

none service that is provided to our brokers, coupled with the innovative products and aggressive pricing we offer,” said Mat Ishbia, president of United Wholesale Mortgage (UWM). “Our companywide mantra is ‘Lending Made Easy,’ which is a steadfast commitment we make to our brokers in an effort to continually and consistently ensure that doing business with us is incredibly simple. At the rate we are growing, UWM is well on its way to becoming one of the top five wholesale lenders in the country.” Throughout 2012, UWM launched several new products, programs and tools that have been key in driving its growth, which include: the innovative ELITE program for conventional products; ‘The Big and Easy,’ a true jumbo loan product on up to $2.5 million; HARP 2.0; the implementation of HARP 2.0 with up to 175 percent LTV/Unlimited CLTV with DU; USDA products; and enhancements to its broker portal, EASE. In addition, UWM regularly holds educational Webinars for its brokers on industry trends, new products, effective sales and marketing strategies, and more. UWM also established and continues to build upon a superior, uniquely formed internal sales force model that engages in ongoing industry education and support for brokers. UWM doubled its employee head count and has plans to hire another 400 over the next 12 months. The company will be relocating to a larger corporate headquarters in Metro Detroit by end of year to accommodate growth.

ICON Residential Lenders Sold to Rushmore Loan Management Services Grand Bank NA has announced that it has signed an agreement with Rushmore Loan Management Services in which Rushmore will purchase the business of Grand Bank’s ICON Residential Lenders unit. Terms of the transaction were not disclosed. Irvine, Calif.-based ICON is a national wholesale mortgage originator and servicer which sources loans through a nationwide network of more than 1,400 mortgage brokers. The company is an approved Fannie Mae seller and servicer and Ginnie Mae issuer of mortgage-backed securities (MBS), and has a strong FHA and VA niche loan business. “This sale will allow Grand Bank to focus on building our core community banking business, which will benefit our existing shareholders and customers,” said Mark A.

Wolters, president and CEO of Grand Bank. The closing of the transaction is subject to regulatory approvals as well as other customary closing conditions, and is expected to close in the fourth quarter of 2012 or the first quarter of 2013. “We are excited to have this opportunity, as ICON’s business is a good complement to Rushmore’s existing mortgage business,” said Terry Smith, CEO of Rushmore. “We will be working closely with ICON’s management team to ensure a seamless transition for customers and employees.” Grand Bank also announced that it has appointed Andrew Pollock as CEO of ICON effective immediately, a position that was previously unfilled. Pollock was previously the president and chief administrative officer of First California Mortgage Company, responsible for the successful turnaround and expansion of the organization. He was also the president and CEO of First Franklin, a Merrill Lynch subsidiary. Pollock has extensive experience in mortgage banking, wholesale mortgage originations, mergers and acquisitions, and leading quick growth initiatives. “There is significant untapped potential at ICON, and I look forward to working closely with the existing management team to add value, expand the business, and close the transaction with the Rushmore management team,” said Pollock.

First Guaranty Mortgage Partners With Coester VMS on Appraisal Services First Guaranty Mortgage Corporation (FGMC) has announced that it will centralize its appraisal and valuation operations under the guidance of Rockville, Md.-based Coester Vendor Management Services (Coester VMS). FGMC is a national, full-service mortgage lending firm offering retail, wholesale, correspondent and capital markets mortgage solutions to clients of varying income and credit types. Under the agreement, FGMC will use the national appraisal management company to manage and operate its appraisal services in all of its channels. Coester VMS will work with FGMC

to establish uniform and efficient processes in those channels, and will coordinate by way of centralized software. The system also includes extensive quality control monitoring mechanisms. Coester VMS is licensed in all states requiring appraisal licensing, and has a presence in all 50 states. “Working with Coester VMS will allow us to improve the speed, efficiency and quality of our valuation services,” said FGMC Chief Executive Officer Andrew Peters. “More importantly, the software platform used by Coester will bolster our compliance efforts.” Coester VMS CEO Brian Coester praised FGMC for its willingness to invest in the centralization. “We’ve seen time and time again that a lender willing to put the invest-

ment into its appraisal system reaps an excellent return and sees significant improvement,” said Coester.

Ocwen to Acquire Mortgage Servicer Homeward Residential Holdings Ocwen Financial Corporation and WL Ross & Company LLC have entered into an agreement where Ocwen will acquire Homeward Residential Holdings Inc., including its various residential mortgage loan servicing and origination operating subsidiaries, for approximately $588 million in cash and $162 million in Ocwen continued on page 10

Secure Settlements Forms Strategic Alliance With Capital Markets Cooperative 7  IDAHO


Capital Markets Cooperative (CMC) has announced a strategic alliance with Secure Settlements Inc., an independent evaluation and risk management firm based in Northern New Jersey. Under the agreement, Secure Settlements will offer CMC members its third-party closing agent risk management program under special terms for them and their agents. “We’re excited to have Secure Settlements as a Cooperative partner,” said Tom Millon, president and CEO of Capital Markets Cooperative. “With the CFPB and other regulators expecting more proactive third party vendor management, partnering with Secure Settlements will give our members comfort knowing they will be relying on a trusted source for the complete data needed to make intelligent choices about closing agents—before a wire is sent.” “A mortgage transaction is typically the single largest financial endeavor an individual will ever undertake. Secure Settlements wants to limit the potential for fraud and negligence during these transactions by compiling information that enables lenders and consumers to make informed decisions regarding their partners at the closing table,” said Andrew Liput, president and CEO of Secure Settlements Inc. “CMC members will benefit from this partnership because Secure Settlements’ program allows them to outsource closing agent vetting and monitoring while gaining access to the company’s data base of cleared agents and its 45,000 person watch list, the most comprehensive in the industry.”

Loan Originator Compensation: Past is Prologue (Part II)

By Jonathan Foxx

“If you can see the light at the end of the tunnel, you are looking the wrong way.” —Barry Commoner





n the first part of this two-part series,1 I considered the recent proposal, issued by the Consumer Financial Protection Bureau (CFPB) on August 17, 2012, which contains certain proposed rules governing mortgage loan originations, especially relating to Mortgage Loan Originator (MLO) compensation guidelines in Regulation Z, the implementing regulation of the Truth-in-Lending Act (TILA). Comments for this proposal were due by Oct. 16, 2012.2 In that article, I discussed the Small Business Review Panel, which was impaneled to consider, among other things, the economic and regulatory impact of the proposal rules and obtain feedback from representatives of the small entities that would be subject to the rule.3 When preparing the proposed rule and an initial regulatory flexibility analysis, the CFPB is expected to consider this panel’s findings and also public comments, rendering its final rules by January 2013.4 In this second part of the series, I will explore the CFPB proposed rules (Proposals) in some depth, specifically the clarification of and expansion on existing regulations governing MLO compensation and qualifications.5 These Proposals clarify and expand existing regulations relating to loan originator compensation and qualifications. They also promulgate new laws. The Proposals are meant to implement provisions of the Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank) governing MLO compensation.6 There are certain salient regulatory compliance requirements implemented in the Proposals.7 The proposed rules concern and include:  Restrictions on Upfront Points and/or Fees  Restrictions on Loan Originator Compensation  Loan Originator Qualification Requirements I will discuss the above-mentioned categories included in and affected by the Proposals.8 Afterward, I will provide certain considerations regarding the potential, effectuating outcomes inherent in

their implementation. The entirety of the Proposals is quite extensive. In the context of this article, I can only hope to provide a broad sense of their implications. Please keep in mind that, as is the case with many aspects of legal and regulatory compliance, these Proposals contain many mandates that reach across an extensive regulatory framework. Recourse to a competent risk management professional is essential to obtain comprehensive guidance and reliable information.

Restriction on Upfront Points and/or Fees “Government is not reason; it is not eloquent; it is force. Like fire, it is a dangerous servant and a fearful master.” —George Washington The Proposals create a category, called the “zero-zero alternative” (Zero-Zero). It is a contrivance that must be tooled with prior to a lender or a mortgage broker being permitted to charge upfront points and/or fees.9 The Zero-Zero is an “alternative loan” with no upfront discount points, origination points, or fees that are retained by the lender, broker, or an affiliate of either.10 The Zero-Zero would not be required if the consumer is unlikely to qualify for the Zero-Zero in the first place. Using the Zero-Zero offers a safe harbor in the following scenarios:  Transactions involving a lender: A safe harbor is available if, any time prior to application for a loan containing upfront points and/or fees, the lender also provides a quote for a Zero-Zero.  Transactions involving a mortgage broker: A safe harbor is available under which lenders provide a mortgage broker with the pricing for that lender’s Zero-Zero products. In the mortgage broker scenario, consumers would be given quotes based on the Zero-Zero, as part of the available loan options. Offering the Zero-Zero “quote” prior to taking an application essentially makes this metric into a creature that the CFPB has named, somewhat enigmatically, an “informal quote.” The CFPB plans to issue a final rule using the following decision parameters:  Whether a bona fide requirement should be adopted “to ensure that consumers receive value” in return for paying upfront points and/or fees, and

different options for structuring such a requirement.11  Whether additional adjustments to the Proposals concerning affiliate fees would make it easier for consumers to compare offers between two or more lenders.  Whether to take a different approach concerning situations in which a consumer does not qualify for a ZeroZero.  Whether a Zero-Zero’s quotes, terms, and conditions should be disclosed in advertising and at the time that consumers are provided disclosures within three days after application.

Restrictions on Loan Originator Compensation “All I ask is the chance to prove that money can’t make me happy.” —Spike Milligan The position promulgated in the Proposals with respect to loan originator compensation may be bifurcated into outright Bans and Refinements, and Clarifications and Revisions. Let’s first take a look at the Bans and Refinements.

Bans and Refinements The CFPB would continue the general ban on paying or receiving commissions or other loan originator compensation based on the terms of the transaction (other than the loan amount).12 However, there are several revisions or “refinements,” as the CFPB coyly describes these adjustments. The refinement to the simmering controversy over “unanticipated increases” in closing costs from non-affiliated third parties is resolved by allowing reductions in loan originator compensation under certain circumstances. Additionally, the ban remains in place on loan originators being compensated by both consumers and other parties. Here, too, there are refinements. For instance, the Proposals allow mortgage brokerage firms that are paid by the consumer to now be able to pay their individual brokers a commission on the transaction, so long as the commission is not based on the terms of the transaction. A further refinement allows certain funds contributed toward closing costs by sellers, home builders, home-improvement contractors, or similar parties, when used to compensate a loan originator, to be considered payments made directly to the

loan originator by the consumer. There are revisions to permissible contractual agreements. The Proposals ban general agreements that require consumers to submit any disputes arising from a loan transaction to mandatory arbitration rather than filing suit in court. A remnant of a long debated concern is resolved with respect to financing of premiums for credit insurance. The Proposals would ban such financing arrangements.

Clarifications and Revisions Clarification is provided for “proxy” compensation, that is, when a factor used as a basis for compensation is prohibited as a “proxy” for a transaction term. The clarification was sought by the Small Entity Representatives (SERs) on the Small Business Review Panel, which urged the CFPB to use its rule-making authority to clarify when a factor used to determine compensation for a loan originator is a proxy for a loan term.13 Although the CFPB did not believe that any departure from the approach to proxies is necessitated by Dodd- Frank, it also “understands there has been considerable uncertainty on this issue” and its Proposals contain clarifications meant to enable lenders and loan originators to determine whether a factor on which compensation would be based is a proxy for a transaction’s terms. In the clarification, the CFPB states that a factor (that is not itself a term of a transaction originated by the loan originator) is a proxy for the transaction’s terms if: 1. The factor substantially correlates with a term or terms of the transaction, and 2. The loan originator can, directly or indirectly, add, drop, or change the factor when originating the transaction. Both aforementioned conditions must be satisfied for a factor to be considered a proxy for a transaction’s terms. If a factor does not “substantially” correlate with a term of a transaction originated by the loan originator, the factor is not a proxy for a transaction’s terms.14 If the factor substantially correlates with a term of a transaction (Step One), then the factor must be analyzed under the second condition, whether the loan originator can, directly or indirectly, add, drop, or change the factor when originating the transaction (Step Two). Thus, the 38 continued on page 31

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C’mon ... Step Right Up and Play the Shell Game By Mason Grashot, CPA

What does this General Indemnity Agreement do? Should I actually read all of this? The Indemnity Agreement is one of the cornerstones of what makes surety bonds different from other insurance policies. The Indemnity (hold harmless) Agreement allows the bond carrier to recover assets from the indemnitors if the carrier is damaged by having to pay a claim to the obligee because of the principal’s failure to meet the obligations of the bond. Each carrier has its own version of the indemnity agreement with its own terms and conditions. However, they are all constructed with the same purpose: To give the carrier direct, express permission to recover damages. Depending on the amount of the overall bond exposure, the agreement can be as short as one page or as long as a dozen.




I’ll sign on behalf of my company, but why do I have to sign personally? Why does my spouse have to sign? Why do the other owners have to sign? Why do my other business ventures have to sign? In short, because the surety has been there/done that … once bitten, twice shy. Instead of playing the legal game of trying to determine what “shell” the assets may be hidden under in the event of a bond claim, the surety industry simply will not play unless it’s according to its rules. Regardless of their choice of entity (LLP, LLC, S-Corp, C-Corp), most licensees are closely-held companies. This means that, while there may be a legitimate separation of business and personal finances, decisions, etc. during the normal (happy/healthy) times, at the end of the rainbow (when everyone’s got their hands in the pot of gold) those individuals in control of the company can creatively move cash and other assets out of the company and into the control of themselves personally, their spouses, or even other business entities in which they have an interest. Ultimately, the surety carriers would like the indemnity of anyone who has or could easily end up having the assets that are supporting their underwriting decision to go ahead and bond the principal.

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

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convertible preferred stock. Homeward services about 422,000 mortgage loans with an aggregate unpaid principal balance of over $77 billion. Its loan origination business includes correspondent and retail lending and is focused solely on high-quality Agency-conforming mortgages. “The acquisition of Homeward significantly advances Ocwen’s twin strategic growth initiatives to add high return servicing assets to its portfolio and expand origination capacity to provide for a sustainable source of future growth,” said Ocwen’s Executive Chairman William Erbey. “Homeward brings with it a global servicing platform as well as a growing origination business that is already operating at a $10 billion annual run-rate after launching in late 2011.” Homeward was organized by WL Ross in 2007 and is the result of several major platform combinations: American Home Mortgage Servicing, Option One Mortgage Company and a large servicing portfolio from Citi Residential Lending. After normalizing for certain transition related expenses, the acquisition of Homeward by Ocwen is expected to be immediately accretive to earnings per share. “Homeward has been profitable in each year of its existence and has also been a wonderful cash flow producer, distributing to us approximately $900 million of cash since the initial investment,” said Wilbur Ross, chief executive officer of WL Ross. “Mortgage banking is a business of scope and scale, and we believe that the combined company will fill the void created by the ongoing departures of many banks from the overall industry.” The definitive acquisition documents provide representations, warranties and covenants that are customary for a transaction of this nature, as well as loss sharing provisions relating to certain pre-closing liabilities. Subject to regulatory approvals, the transaction is anticipated to close by year end. Ocwen will not need to raise any additional equity capital to close the transaction. “Homeward has a well-deserved reputation for excellence in the mortgage industry,” Ron Faris, CEO of Ocwen said. “We are excited about the synergistic combination of the attractive servicing portfolio and platform, as well as the origination platform which will provide organic growth and will further Ocwen’s ability to work with existing borrowers on refinancing opportunities.”

Mortgage Professionals to Watch  ICON Residential Lenders has named RJ Arnett as executive vice president of wholesale lending and Sean Finn area sales manager of the Midwest region for the wholesale department.  The Mortgage Bankers Association (MBA) has announced the election of Deborah W. Still, CMB of Pulte Mortgage LLC as its 2012-2013 chairman, EJ Burke of KeyBank Real Estate Capital as executive vice president, and Bill Cosgrove of Union National Mortgage Company

as vice chairman.  John Marler has joined Bay Equity Home Loans as director of marketing and communications.  Platinum Data has named Nima Oreizy chief technology officer.  Bruce Mullen has joined the Lake Oswego, Ore. branch of Pacific Residential Mortgage as a mortgage banker.  Real Estate Mortgage Network Inc. (REMN) has announced the additions of Bob Filiberto as managing director of loan administration and Cindy Cook as vice president of loan administration.  DocMagic Inc. has named Tim Anderson head of its new eServices Division.  Mortgage Success Source has announced the addition of Rob Chrisman as an advisor and content provider.  David K. Stein, senior vice president, general counsel and co-founder of Residential Finance Corporation (RFC), has joined the advisory board of Lenders One Mortgage Corporation.  Brian Simon has been named chief operating officer for New Penn Financial LLC.  WCS Lending LLC has named Lisa Taylor as its president and chief operating officer, Sharon Bitz as a non-executive advisor, Brent Chapman as director of lending operations, and Kim Elsass as director of production operations.  GSF Mortgage has named Tricia Crissey and Zach Meier as loan officers in the firm’s Brookfield, Wis. office.  United Shore Financial Services LLC, parent company of United Wholesale Mortgage (UWM), has named Tim Forrester as chief financial officer and Kristin Hammond as executive VP of capital markets.  ISGN Corporation has named Amit Kothiyal as chief operating officer, Paul Y. Imura as chief marketing officer and Badri Narrayen as chief human resources officer.  Tom Aarons has joined Open Mortgage LLC as director of secondary marketing.  Mark Fowler has been named chief revenue officer, vice president of production for Residential Finance Corporation (RFC).

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




Still Standing: Lessons From a Survivor of the Mortgage Industry Meltdown By Paul Anastos

As we celebrate our 25th year in business at Mortgage Master, we are proud to say that we have not only survived but thrived during the unprecedented changes and turbulence our industry has experienced during the last several years. While many lenders continue to strug-




gle or shut their doors, we expect this year to rank as our most successful to date. Not only are originations expected to increase to more than $7 billion in 2012, a record for our company, but we are experiencing growth in every area of our business. We have added more than 120 employees in the last 12 months; just recently opened an operations center in Maitland, Fla.; are expanding our corporate headquarters space to accommodate personnel growth; and

continue to strategically expand our footprint. As I reflect back at where we have been and look forward to where we are going, I can clearly identify several critical lessons we learned along the way. Each of these lessons contributed to helping us withstand one of the most difficult periods in our industry’s history and come out of it positioned for tremendous growth and closer to our goal of becoming a business that is

among the premier financial service providers in the country.

Build the very best senior management team you can There is no question our exceptional senior management team has helped us effectively navigate through the obstacles and challenges of recent years. They are the nucleus of our business and have helped ensure our company’s success from day one. When our founder, Leif Thomsen, started the company in 1988, he developed a clear vision that has been adhered to ever since. Our invaluable Chief Operating Officer and Head of Operations Patty Raymo joined the team in 1991. Early on, she understood the importance of responsible lending and helped us mitigate risk throughout the years, masterfully steering us clear of sub-prime loans even when it was the trend with so many other lenders. Part of this foundation includes many individuals who have dedicated their careers to Mortgage Master for well over a decade. To name a few, Marie Gill who successfully manages our closing department, constantly exceeds our customers, loan officers and expectations of our closing attorneys. Our Chief Financial Officer David Harrington has a wealth of financial services experience and has brought us to a whole new level from a reporting and financial perspective. In addition, Shane Stanton has been with the company for several years and has helped add to the continued growth and success of our company. His main contribution is through recruiting activities and management coaching. To build upon this strong foundation, we have added industry veteran Don Henig as managing director of national sales this year. Don’s experience in building superior sales organizations that empower producers to deliver the best possible service is crucial to our growth going forward. I don’t hesitate to say our team is the best in the business. They are outstanding leaders that brought their own expertise and ideas to the organization. However they are able to collectively work toward one vision and truly believe in always doing what is right for the company, what is right for our employees and what is right for our customers.

Never lose sight of your business model We have never wavered from our disciplined, conservative approach, and have lived by the same simple philosophy for the last 25 years. We believe in offering our customers the best products at the best price with the best service. We simply do not bite off more than we can chew in any aspect of our business. During the recent industry meltdown, we adhered to this same approach. We remained transparent, both internally and with our customers. We kept our overhead low allowing us continued on page 21




NMLS NOVEMBER 2012 MBA Residential Originations in 2013 to Break $1.3 Trillion Mark

Why W hy NAPMW? NAPMW? M Three T hree Simple Reaso Reasons ons Education E duc d cation Organized for Organized for the purpose purpose of providing providing education education to to professionproffession e als in all phases off the mortgage mortgage industry, industry, N NAPMW NAPMW offers offers educaeducamanyy vvenues workshops held ar around tion via man enues – seminars and w orkshops k ound the on-line,, and National Conference ccountry, ountry, on-line a at at its Na tional EEducation ducation C onference held each h May. May. NAPMW NAP MW membership membersship gives gives you you exclusive exclusive access a cess to ac to timely educaeducaaffecting career tion regarding regarding the e regulations regulations aff ecting yyour o car our eer such as a webinar FREE TO TO MEMBERSS monthly monthly w ebinar on industry ind dustry updates updates AND education class offering our 8 hour NMLS continuing continuing educa tion cla ss off ffe ering (NMLS Provider P rovider # 1400309) 140030 09) 16

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To T o Join NAP NAPMW MW W visit: 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: napm w1@aol.c . om

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The Mortgage Bankers Association (MBA) expects to see $1.3 trillion in mortgage originations during 2013, largely driven by a spillover of refinances into the first half of the year. MBA also upwardly revised its estimate of originations for 2012 to $1.7 trillion. MBA expects to see purchase originations climb to $585 billion in 2013, up from a revised estimate of $503 billion for 2012. In contrast, refinances are expected to fall to $785 billion in 2013, down from a revised estimate of $1.2 trillion in 2012. “We expected 2012 originations to be front-loaded in the first half of the year, with refis falling off with rate increases. Instead we saw the refinance market grow during the year due to a combination of low rates, thanks to QE3 and slowing global growth because of continuing problems in Europe, and adjustments in the HARP and FHA refinance programs,” said Jay Brinkmann, MBA’s chief economist. “We expect 2013 refinance originations to play out like our original expectations for 2012, with a long tail of refis extending through the first half of the year followed by a rapid drop-off in the second half.” Brinkmann continued, “In contrast, we expect a 16 percent increase in purchase originations in 2013 over 2012, with every quarter in 2013 exceeding the same quarter of 2012. The increase in purchase volumes will be driven by continued modest growth in the economy, an increase in owner-occupied sales financed with mortgages as opposed to cash purchases by investors, an increase in new home sales and a small increase in average home prices. This assumes that changes in the regulatory environment during 2013 are not unduly disruptive in terms of their constraints on available credit, and FHA and/or Fannie Mae/Freddie Mac do not notably tighten their credit policies. FHA and other government programs accounted for 43 percent of purchase originations in 2011 and have been averaging 38 percent of purchase applications in 2012.” “Mortgage rates are likely to stay below four percent through the middle of 2013, principally due to the announced ongoing purchases of mortgage-backed securities by the Federal Reserve under its QE3 program. The Fed has committed to buying $40 billion of agency MBS per month until the labor market shows significant signs of improvement. Based on MBA’s originations estimate, the Fed will be buying 36 percent

of all mortgages originated in 2013, and a much higher percentage of those swapped into agency MBS. Given our expectation that originations will be front-loaded in the first half of 2013, the Fed’s purchases during the second half of 2013 could approach 50 percent of all mortgages originated in the last six months of the year, obviously with the effect of holding down rates, although there is a possibility that the Fed could shift into Treasury securities before the end of 2013.” “The originations forecast is based on expectations of very modest increases in economic growth in 2013 relative to 2012, but growth nonetheless. We expect gross domestic product to rise 2.0 percent in 2013 versus only 1.6 percent in 2012, about equal to the growth rate in 2011 but well below the 3.1 percent growth rate we saw in 2010. The growth will be driven by a combination of the biggest annual increase in residential fixed investment we have seen since 1992, as well as small increases in consumer spending and business investment.” “We expect the unemployment rate to remain around eight percent until the middle of 2013, before falling to 7.8 percent by the end of 2013. The broader measures of unemployment that are most predictive of the demand for housing are likely to remain stubbornly high. Private sector job growth is likely to remain in the 125,000 to 150,000 per month range, and while this would result in an additional 1.5 to 1.8 million private sector jobs created during 2013, that growth is well below what we need for a robust market in home sales, construction, and purchase originations.” “Clearly the economy faces a number of threats and while none of these threats is fully reflected in our forecast, the forecast is negatively impacted by the dead weight of uncertainty over how these threats may eventually be resolved. The most immediate threat is the so-called ‘fiscal cliff’ when a series of large tax increases and spending cuts are scheduled to go into effect automatically on Jan. 1, 2013 unless Congress and White House reach an agreement. The tax increases in particular would be devastating to economic growth. We believe that the entire package of tax increases and spending cuts, if left unaltered, would cut 3.5 to four percentage points from our growth forecast.” “While the fiscal cliff is the most immediate threat, it is at least one we can control. The others are primarily international continued on page 19

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Are Your Loan Officers— CEOs? By Dave Hershman




Yes, this is a management column. But, as we have pointed out time and time again, you cannot be a great manager unless you hire the right people. Or, to put it another way … if you hire the wrong people, you will never become a great manager. We all know what to look for in a loan officer hire—a hard worker who is an ethical, team player, and is professional, etc. Today, I would like to add a critical one that many managers overlook. Why do they overlook this issue? Because they see loan officers as salespeople. Actually, I see them as CEOs. When we counsel managers, we counsel them to hire candidates that understand that they are not applying for a position but to start a business. The manager must make these candidates understand what investment must be made for each individ-

ual. In effect, instead of advertising in the help wanted section of the newspaper, perhaps they should be advertising in the “Business Opportunities” section. I brought up this topic with Nathan Burch, president of McLean Mortgage Corporation in Virginia, and Nathan agreed with this view. “We invest a lot in each loan officer we hire, from technology to licensing to training and marketing support,” said Nathan. “Yet our most successful loan officers, by far, are those who add to that investment significantly. There almost seems to be a multiplication effect.” Before you hire a loan officer, ask them about how they have invested in their business. And remember that investments do not include only money. They include time, money and energy. Ask them to read the segment below and then relate how it describes them. Do you view yourself as a salesperson? Or, do you view yourself as the

CEO of your own business? If you really want to lead the industry, you must view your business as your company. That also means you must invest significant amounts of your money, time and energy in your business. And you must make this investment up front, not some time in the future. For example, we cannot ell you how many originators say, “I know I need this_____, but I need to close a few transactions first.” Then they go months or years without whatever they need. They are running businesses that are always going to struggle. And most of them will eventually fail because companies that are underfunded do not do well. If you have worked for such a company, you know what we mean in this regard. Those who are on “pay as you go” status never seem to reach the top. So here is the basic question: Are you investing what you need to in your business? Imagine if you were opening a retail store or restaurant. You would invest many thousands of dollars and hours before you rang up the first sale. This would include hundreds of hours of research and setting up the location. You would purchase equipment and inventory. You may pay a multi-thousand dollar franchise fee. And when it was opened, the hours needed to run the business would increase substantially. In the end, you would still be in a situation that poses a major risk because start-up businesses tend to have a high rate of failure in the first few years. Sales personnel do not necessarily

have to invest as many hours or as many dollars as one might starting a restaurant. But the concept is much the same. What do you need to invest in? Marketing, education, technology and more. Perhaps it is a laptop. Or it is the time to learn how to use a software program you have purchased for your laptop. Have you ever purchased a software program and not learned how to use it? In this case you have invested the money but not the time. You must make an investment of all available resources. Imagine running a store without the technology you need. Imagine running a doctor’s office without the knowledge you need! The investment needed would vary for each person and each company. For example, an insurance veteran of eight years moving into the mortgage industry would not need to learn about available insurance coverage. On the other hand, someone moving from government should spend the time to learn this aspect of the industry. After all, if you are serving homeowners and prospective homeowners, you will need to become an expert in all aspects of the real estate and financing processes so that you can deliver maximum value to your clientele. Some will need a home office. Others will need a marketing or processing assistant. It is this needs analysis that is an all-important research step. For example, within the education category some may need to learn how to better utilize a computer. Others may need help learning how to communicate verbally or in writing. Still others may need public speaking training. Those who wait for their employers to give them all the resources to be successful will typically have a long wait—forever. Success comes from within. And the key to this success is finding the right elements of investment that are needed for each individual. These elements include time, money and energy. You cannot make it with just two out of three. Our question is … have you made the investment that is necessary to sustain and grow your business as the reigning CEO? There certainly is a big difference between an employee and a CEO!

“Those who wait for their employers to give them all the resources to be successful will typically have a long wait— forever.”

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nmp news flash

continued from page 16

and pose longer-term headwinds for the U.S. economy. These include the ongoing economic slowdown in the European economies and how the fiscal problems in southern Europe will be resolved; the slowdown in growth in China and the cascading impacts on Japan, Taiwan, Australia, New Zealand and the countries of southeast Asia; and the prospects of a war involving Iran and Israel and the response of the other countries in the Middle East and the impact on world oil prices.”

FHFA Maps Out Four-Year Plan

continued on page 50


As a new anti-money laundering (AML) law went into effect in the United States on Aug. 13, Comergence has taken the lead in helping lenders manage their mortgage lender’s compliance. The company has created a proprietary AML certification process for their existing lender clients, along with reporting and analytics to track

LendingQB has revealed the results from its Enterprise Process Assessment (EPA), engagements with clients and prospects, which is a workflow evaluation model designed that helps lenders make objective decisions on their technology initiatives. LendingQB developed the Enterprise Process Assessment (EPA) as a tool to help lenders fully understand the drivers that motivate technology improvement efforts.


Comergence: Less Than 10 Percent of MLOs in Compliance With AML Regulations

LendingQB Study Finds 65 Percent of Mortgage Tech Implementations Result in Failure


The Federal Housing Finance Agency (FHFA) has released an updated strategic plan for FHFA for fiscal years 2013-2017 subtitled, “Preparing a Foundation for a More Efficient and Effective Housing Finance System.” The four strategic goals included in the new FHFA plan are:  Safe and sound housing governmentsponsored enterprises (GSEs)—Fannie Mae, Freddie Mac and Federal Home Loan Banks;  Stability, liquidity, and access in housing finance;  Preserve and conserve Enterprise (Fannie Mae and Freddie Mac) assets; and  Prepare for the future of housing finance in the United States. “The initiatives and strategies set forward in this plan will serve to improve current mortgage processes, inspire greater confidence among prospective market participants, and set the stage for recovery and an improved future system of housing finance,” said Acting Director Edward J. DeMarco. “Working with the Congress, the Administration and FHFA’s stakeholders, I am confident that FHFA will meet the challenge of building the foundation for a safer, more efficient, and effective system of housing finance.” The agency requested public comment on the strategic plan in May in accordance with the Government Performance and Results Modernization Act of 2010. Preparing a Foundation for a More Efficient and Effective Housing Finance System also incorporates key components of FHFA’s Strategic Plan for Enterprise Conservatorships released in February.

which of their RMLOs have complied with the law. For the first time, the global Financial Crimes Enforcement Network (FinCEN) will require non-bank mortgage lenders and originators to implement an AML program and file Suspicious Activity Reports (SARs) for certain loan transactions. FinCEN established this AML program in accordance with the Bank Secrecy Act (BSA). The guidelines relating to the AML requirement became effective on April 16, 2012, and the AML Program’s effective compliance date was Aug. 13, 2012. “We estimate that only 7.4 percent of the country’s mortgage originators are currently in compliance,” said Greg Schroeder, president of Comergence. Note that more than 90 percent of all licensed mortgage originators are registered on the Comergence system, and as of Sept. 26, only 7.4 percent of them have certified that they are in compliance with the AML Program. “What’s alarming is that approximately half of the phone calls we receive from originators regarding this new requirement is that they don’t even know what the AML law is. We are working closely with all parties to bring them up to speed quickly, and provide them with a solution that’s comprehensive, easy to use, and easy to manage.” Until the Comergence software platform was created, lenders only had faxes, email, spreadsheets and paper files to manually manage compliance with RMLOs. There had been no centrally managed platform available to manage a database of third-party originators. The Comergence system provides an electronic overview and tracking of who is in compliance with this regulation, in addition to a host of other features. “The penalties for failing to comply with the AML regulations are severe, which include a lender’s responsibility to monitor its clients,” said Eddie Rodriguez, chief compliance officer at First Mortgage Corporation. “First Mortgage Corporation appreciates and welcomes Comergence’s proactive effort to monitor each of our clients by ensuring that they’ve complied with the new laws.”

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Scenes From the Mortgage Bankers Association’s 99th Annual Convention & Expo

Got an opinion? Want to share your thoughts on the industry?

October 21-24 at the Hyatt Regency in Chicago

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Mike Allen, Steve D. Grant and Cary Harding of Credit Plus Inc. were on hand to discuss their credit reporting technologies in the Windy City

It's free and easy. Just head on over to, register and follow the link in the upper right hand side of the page to become a blogger on our site today!

Michael Miller and Marc Hopkins from Veros Real Estate Solutions were on hand to discuss their collateral valuation management and decision analytics with attendees of the 99th Annual MBA Expo 800-326-2599

e-mail:: visit: visit t: www




Thomas Meyer and Jeff Davis of Calyx Software on the exhibit hall floor

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Michael McDermott and Caitlin Hogan of StreetLinks Lenders Solutions were on hand to discuss their valuation solutions

stil standing

a part of our team, they want to help us achieve our goals and they want to help each other succeed.

continued from page 12

to keep money in the business. We never grew too rapidly or panicked when change needed to be implemented quickly. Most importantly, we stood by our founding principles, not focusing on quick profits but understanding and abiding by our fundamentals and long-term growth plans. These core components of our model remain in place today and will continue to remain in place as we move forward.

Always remember responsible lending is mandatory for success Without a doubt, many lenders failed in recent years because they were originating loans that just did not make any sense. We always steered clear of exotic and “liar loans” and never entered the sub-prime business at all. These were not always easy or popular choices. As a company, we experienced what it was like to lose good loan originators, as we were not following the product trends at the time. This led some originators to make the choice to work elsewhere. It was frustrating at the time, but refreshing later on to see some of those same people came back and sought us out. They came to understand our strong belief and commitment to responsible lending. They came to respect and appreciate that we were not going to let our originators, and our business, get into trouble. In fact, to this day, we are extremely proud of the fact we have never had to buy back a loan. We made a strategic decision to responsibly build and grow our company, and regardless of industry ups and downs, that will never change.

Over the last few years, we have consistently heard about lenders struggling with what may happen when rates start to increase or as regulations continue to change. If you prepare yourself as a company for the changes that are ahead of you then those changes will not prevent you from getting where you want to go. Rates will eventually rise, and we know the regulatory environment will continue to change. Successfully leading and managing

continued on page 50

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The dictionary defines dynamic as “vigorous and purposeful, full of energy, enthusiasm and a sense of purpose, able both to get things going and get things done.” That is the type of culture we have built at Mortgage Master. Having the best and brightest working for you clearly makes a difference, and we have always remained committed to making our company an attractive place to work. That is why we compensate our originators above and beyond industry standards. Additionally, if we hold back any revenue from the loans, we tell them. We want them to understand and experience our transparency. If they join us, our goal is to have them extend that same level of transparency to their customers. It represents who we are, and supports our commitment to responsible lending. We also make ourselves accessible at all levels, addressing concerns or problems immediately. We have open lines of communication and do our very best to assist with the needs of our employees.

Embrace change … do not fear it or let it dictate your course  IDAHO

A dynamic company culture can be the difference between success and failure

Our culture has not only helped us attract some of the best but it has also helped us retain them, even during tumultuous times. We currently employ more than 250 loan officers and are proud of the fact many have been with us for at least seven years. Twenty of our loan officers were also named among the top 200 originators, by dollar volume, in 2011 according to an industry listing of the top 200 originators. We value our employees and know they genuinely enjoy working for us and with each other. Our people want to be

through these types of change requires you to always maintain a certain level of preparedness. We have kept our operating costs low and over the last five years and have gained purchase market share every single year. Our purchase volume is currently 30-35 percent and we continue to grow those numbers. The same preparedness needs to be applied when considering regulatory changes. It is impossible to determine exactly what may come down next, but we know the rules will continue to change over time. While there have been some good decisions, as well as some really bad ones, we do not let

The President’s Corner: November 2012


y the time that you are reading this, I will have been president of NAMB—The Association of Mortgage Professionals for a year. A lot has happened in with NAMB over the last 12 months, and I am happy to say that we are in so much better shape today than back in November 2011. The Board of Directors and all of the Committee Chairs have really helped in getting us back on track and providing support to all of the mortgage professionals both members and non-members. As we look to the NAMB National Conference, we are starting to pull all of the final arrangements together and the conference is already a big success. I cannot wait to see it all in line and the actual conference taking place and everyone walking around, talking about how great they think the event is. At this time, we have more than 1,200 registered for the event. My thanks goes




to John Stevens and his NAMB National Committee, and Vince Valvo, executive director, for the outstanding job that they have done to make this conference very successful. As this is our last year at the MGM Grand, we will need your input as to where next year’s NAMB National should be held. If you have an opinion, e-mail me at or John Stevens at and let us know. We are starting to work on 2013’s event immediately following the conclusion of this year’s event. We have seen an increase in membership over the last 90 days from all of our state affiliates. Now is the time to start thinking about 2013 memberships if you are about to expire this year. If you are a member, I need you to go to all of your friends and loan originators in your office and get them to join. When you stop to think about what you get for the price of membership, how can you not join and help out. We use this membership money to work for you directly with the people in Washington, D.C. who control our destiny. We have, over the past 12 months,

developed a great rapport with the Consumer Financial Protection Bureau (CFPB) and the House Financial Services Committee, the VA, FHA and Congressmen and Senators all trying to work together to make a difference. This Delegate Council at the NAMB National Conference is one of the most important events of the year. We will elect those delegates who will oversee nominations, awards and the by-laws of the association. Only those who have been past delegates, past state board members, and current delegates are eligible for these positions on these committees. So, make sure you and your state Boards are coming to NAMB National so we can get these committees filled and start to complete their jobs. I need to take a minute and let all of you know that one of the main objectives that I wanted to accomplish was to re-establish our NAMB for profit entity. NAMB PLUS was established in June to help with membership benefits and help NAMB. We already had some companies involved, including Liberty Mutual, Majestic Security, SPRINT, Lowes, and now, The Bond Exchange. Don Fader is the president of the NAMB Plus board and has done an excellent job with his group of people. A special thank you to George Burkley from Indiana, Kelly Hamilton from Colorado, Nathan Pierce from Utah, and Joel Berman from New York for all of their time and dedication to this program. These members, along with John Councilman and Jim Pair complete this board and they are looking aggressively for more companies that NAMB can benefit from and the members also. As I write this article, a special GET WELL to Don Fader who has under gone a medical procedure that will keep him down for about six to eight weeks. Don … please get well soon! If you have any ideas, please e-mail Don at or any NAMB Plus board member with your suggestions. We want to make our benefits better for all members, whether you are a Platinum or Silver Member. I have had a few inquiries from the states about our two categories of membership. Just so you know, everyone can become a Platinum Member or Silver Member, as long as you are one of the following people in the NMLS system: These are open to any individual in the residential mortgage field dealing directly or indirectly with consumers, licensed as, registered as or exempt from licensing by their state. As far as I know, that includes everyone from account executives for lenders

to processors, appraisers, title company employees, loan originators, owners, and everyone in between. There should be no reason for anyone not to be able to join. That is why we are “The Association of Mortgage Professionals.” Ask your friends, your appraisers, your title companies and especially your co-workers about joining. It is the best way to show people that you care about your career and your profession. Log on to and become a member today! As we look to the New Year, I would like to take this time to wish all of you a Happy Holidays. I know that this is the time of year when we get together and share time with friends and relatives. This is also the time that we reflect on what the past year has brought and we look to renew our vigor and expectations for the coming year. By now, we all know what the election has brought us and what direction that the country is starting to move towards. I know that no matter who won the election, it is still a choice and challenge for all people to work together to make our profession one that is respected and again adorned by all customers. It is the time to get involved and make a difference. We are a society of people motivated by what we do and how we are looked upon. Many changes will be coming our way over the next few months and we must be prepared to work as a team and together to make all of the planets line up and be in sync. So, make sure you become active and don’t sit on the sidelines. Be a positive influence for all of your friends and coworkers and remember, we are all in the mortgage family of life. Do your part! Years ago, I was having a conversation with my father, who was really involved with his trade association. He was president of the Ohio Pharmaceutical Association. I was talking about all of the time he spent helping and fighting for things for the association and he left me with this comment: “Those who can, do! Those who can do more … volunteer!” So, if you find yourself with 10 free minutes, give one of our Committee Chairs a call and volunteer. It will be the best thing for your industry and it will give you a little more purpose. Happy holidays,

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

NAMB National 2012 Saturday-Monday, December 8-10 MGM Grand • Las Vegas For more information, visit

Preliminary Agenda (Subject to change)

Saturday, December 8

1:45 p.m. ..................Exhibit Hall Opens

9:00 a.m. ....................Registration Opens

2:30 p.m.-3:15 p.m. ....Concurrent Hands-On Sessions  Mortgage Success Track: Social Media Workshop … Walk Out Linked In  The Next Great Thing Track: How to Build Your Correspondent Business  Compliance Track: Reverse Mortgage Borrower and Lender Safeguards, Presented by Anthony Lopes of Cambridge Credit Counseling Services and Ralph Rosynek of Reverse Mortgage Solutions  Maximum Growth Track: The Three Secrets of Solution-Based Planning, Presented by Brad Korn and Erik Janeczko of Maximum Acceleration with Greg Frost

9:30 a.m. ....................Welcoming Remarks–NAMB Outlook, Presented by Don Frommeyer, President, NAMB —The Association of Mortgage Professionals 9:45 a.m.-11:00 a.m.....“Steal This Idea” Roundtable Workshops 11:15 a.m.-Noon ..........10 Tips on How to Run Effective Volunteer Boards Noon-1:00 p.m. ..........Lunch on Own 1:00 p.m.-1:30 p.m. ....Leadership Development: How to Put Members on the Path to Leadership Excellence 1:30 p.m.-4:30 p.m. ....NAMB Delegate Council Meeting 4:30 p.m.-6:00 p.m. ....Opening Reception & PAC Auction

3:30 p.m.-4:15 p.m. ....Concurrent Hands-On Sessions  Mortgage Success Track: Social Media Workshop … Walk Out Linked In  The Next Great Thing Track: Making the Move From Originator to Broker  Compliance Track: Don’t Get Washed Out … Money Laundering and You, Presented by Chip Langley of Quality Mortgage Services  Maximum Growth Track: The Three Keys to Accelerated Performance ... ProAction, Progress Focus, And Persistent Learning, Presented by Erik Janeczko, Greg Frost and the Maximum Acceleration Team


4:15 p.m.-6:15 p.m. ....Cocktail Reception in Exhibit Hall

Sunday, December 9

6:30 p.m. ....................Apex Awards Dinner

9:00 a.m. ....................Registration Opens & Exhibitor Setup Begins 10:00 a.m.-10:50 a.m. Opening Keynote Presentation: “Build Your Sales to a Billion Dollars!” Presented by Greg Frost

Monday, December 10 9:30 a.m. ....................Attendee Registration Opens

11:15 a.m.-Noon ..........Keynote Speaker Series: Spencer Rascoff, CEO of Noon-1:00 p.m. ..........Lunch Available for All Attendees in the Exhibit Hall 1:00 p.m.-1:45 p.m. ....Keynote Speaker Series: Theodore Tozer, President of Ginnie Mae 1:45 p.m.-2:30 p.m. ....Break in the Exhibit Hall and Grand Prize Drawings 2:30 p.m.-3:30 p.m. ....Keynote Speaker Series: Lawrence Yun, Chief Economist of the National Association of Realtors 3:30 p.m.-3:45 p.m. ....NAMB National Conclusion 4:00 p.m. ....................NAMB Board of Directors Meeting

For more information, visit


1:00 p.m.-1:45 p.m. ....Concurrent Hands-On Sessions  Mortgage Success Track: Mortgage Marketing 2.0, Presented by Rocky Foroutan of  The Next Great Thing Track: How to Use Credit Counseling to Propel More Closings, Presented by Doc Compton of Omega Credit Repair and Counseling Services  Compliance Track: The Top 10 Problems With Loans, Presented by Tommy Duncan, CMT of Quality Mortgage Services  Maximum Growth Track: Clearing Obstacles and Seizing Opportunities, Presented by Maximum Acceleration Team with Lead Coach Stephanie York and Ginger Bell

10:15 a.m.-11:00 a.m. ..Keynote Speaker Series: William Matthews, President of Nationwide Mortgage Licensing System


Noon-1:00 p.m. ..........Lunch on Your Own

9:30 a.m. ....................Exhibit Hall Opens & Breakfast in Exhibit Hall  IDAHO

11:15 a.m.-Noon ..........Concurrent Hands-On Sessions  Mortgage Success Track: Five New Trends Rocking Your Mortgage World, Presented by Rick Sharga of Carrington Mortgage Services  The Next Great Thing Track: Growing in Reverse, Presented by Ralph Rosynek of Reverse Mortgage Solutions  Compliance Track: Making Your Appraisal Management Relationship Work, Presented by John Culbertson of  Maximum Growth Track: Creating a Vision for Maximum Growth, Presented by Erik Janeczko, Rene Rodriguez Brad Korn and Stephanie York of Maximum Acceleration

By David Lykken

The Importance of Local Leadership





nother election has come and gone. Barack Obama has remained as the 44th President of the United States of America. On a national level, there is much work to be done. Our society is a tug-of-war between opposing and evolving values. Our economy hangs in the balance between progress and utter disaster. The development of our society

and economy over the next four years will determine the true caliber of leadership that exists in our most recently elected president. On a national level, though, the direction of our country over the next four years—for the most part—is now out of our hands … the die has been cast. The decision has been made. We

now can only wait to see what happens. It’s time to shift our focus back to the foundation of leadership. Let’s step back from thinking about our nation’s leader and home in on the leaders of our states and communities. We’ve heard enough about the “trickle-down” effects that national policy has on communities and individuals. Let’s talk about the bottom-up effects that individuals and communities can have on the nation. It is now time for a discussion on local leadership. The more local the political leader, the greater and more diverse the impact he or she is likely going to have on our businesses and organizations. Most of us pay more attention to the issues that are directly in front of us— the ones that influence us on a day-today basis. The more local the influencer, then, the more likely he or she is to affect issues that we value. From the perspective of the mortgage industry, there are specific issues at both the state and city level that leaders coming into office need to be prepared to resolve in order to ensure a more productive economy and more prosperous society. Let us begin with the state. An issue that has existed for some time and has significantly impacted the mortgage industry is centered around foreclosures. Some states require judicial foreclosures while others permit nonjudicial foreclosures. While there are other elements involved, the significant distinction between the two types of foreclosures is that judicial foreclosures require court approval whereas non-judicial foreclosures do not. Many people mistakenly assume that judicial foreclosures favor borrowers while non-judicial foreclosures favor lenders. When we look at the unintended consequences, however, judicial foreclosures harm both lenders and

“... the direction of our country over the next four years—for the most part— is now out of your hands ... the die has been cast.”

borrowers. Yes, they make it harder for lenders to reclaim properties from borrowers who can no longer pay for them, but the increased risk for these lenders makes it harder for other borrowers to afford mortgages. Lenders in states that require judicial foreclosures must account for the slow turnaround time embedded in the possibility of foreclosure from their borrowers. In Texas, a state that permits non-judicial foreclosures, both the minimum amount of time for a foreclosure to be completed and the expected amount of time for a foreclosure to be completed is two months. In Illinois, a state requiring judicial foreclosures, the minimum amount of time for a foreclosure to be completed is seven months and the expected amount of time for a foreclosure to be completed is 10 months. What do these numbers mean? A foreclosed house in Illinois is expected to take five times as long to get back on the market as a foreclosed house in Texas. Lenders are less likely to lend when they know that potential foreclosures will be tied up in the courts for months on end. Political leaders in states that enact judicial foreclosure policies slow down the economies of those states. They are pandering to constituents in order to save a small segment of their states’ populations while at the same time making investment decisions harder for everyone else. This position is a clear example



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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.c om or

When you partner with us, mortgage lending doesn’t seem so


took action. They didn’t merely sit back and complain. They hopped on a plane and flew to San Bernardino to meet with decision-makers and participate in the discussion. That proactive move is a gesture in positive leadership. You can do the same thing. There are opportunities to participate on both a state and a city level. Chances are, the very same issues discussed in this article are impacting your business in some way. What are you going to do about it? Are you voting people into office that will eliminate barriers for the industry and boost your local economy? Are you meeting with members of your town council to discuss issues related to mortgage banking, lending, and borrowing? If not, what’s stopping you? It isn’t enough to watch the story unfold. You must participate in it. It isn’t enough to cheer on good leaders and berate bad ones. You must decide what kind of leader you are going to be. Don’t just look for good leadership in the activities of others; exemplify it in your own. The most local leadership that exists is the leadership you have as an individual. How are you setting an example for your industry? How are you setting an example for your employees? How are you setting an example for your family? Are you doing what’s popular for the few or are you doing what’s right for the many? This is your time. If you don’t stand up and speak out, you aren’t just going to ruin the economy for yourself and your business; you are going to do irreparable damage for the entire industry. Inaction is often the greatest offense. Your community needs you. Your state needs you. Even your country needs you. The ripples you make in your community will echo throughout the entire country. We are at a pivotal point in the history of the mortgage banking industry. Now, more than ever, we need good leaders. It’s time for you to be that leader. It’s time for you to pave the way for progress. In the end, the most significant election is not who you’ve elected at a national, state, or local level. The most important electoral decision you will make is whether or not you elect yourself. Vote yourself. Be the leader. We’re all waiting on the example you will set for us.  IDAHO

of bad leadership at the state level. Let’s go a little bit further, now, and talk about leadership at the city level. Another key issue has been adversely affecting the mortgage industry since the onset of the housing crisis...and that issue has to do with eminent domain. Eminent domain is the right of governments to seize private property for the purpose of creating some sort of public good. Traditionally, it has typically been used to extend highways and set up power lines. Private landowners are paid what is deemed a reasonable sum for their properties and the public benefits from what is done with the land. Recently, the right of eminent domain has been used wrongly to prevent foreclosures. Certain cities, such as Sacramento, Calif., are buying up “underwater” mortgages under the flag of eminent domain. This activity is another prime example of pandering to small segments of the population at the expense of the whole. There is no public benefit derived from the taxpayer money being used to buy up these private mortgages. Money is simply being wasted. The bigger problem with using the right of eminent domain to buy up foreclosures is the unintended consequence it will have on the future. Governors and other city officials implementing these policies need to understand that this trend is going to dramatically reduce home ownership in the coming years. If foreclosures continue to be prevented, lenders are simply going to stop lending. It’s basic math. If they don’t believe that borrowers are going to be able to fully repay their mortgages, they simply aren‘t going to lend. If they do lend, the rates will dramatically increase and fewer borrowers will be able to afford homes. The story of homeowners losing their homes is a Hollywood favorite. It is a story often dramatized across all media and it’s easy to get people to fall for it. The story people often don’t see—the true story—is the one about borrowers who can’t get loans because lenders can no longer afford to give them. Bad local leaders are simply destroying the market. They are making it more difficult for reputable lenders to lend and more difficult for reputable borrowers to borrow. If local leaders continue to cater to the few at the expense of the many, this story is going to become more and more prevalent … and our communities are going to become more and more destitute. Now let’s shift the discussion from what we look for in local leaders to what we aspire to be as local leaders. Those of us in the mortgage banking industry have both an opportunity and responsibility to use our voices to sway the legislative decisions being made in our states and communities. Recently, a group of industry executives flew to San Bernardino to have a discussion with the town council. A proposal had been placed to use eminent domain to fight the mortgage crisis in San Bernardino and these executives

David Wind, Founder, CEO and Chairman of the Board Guaranteed Home Mortgage Company BY DAVID J. COSTER





ational Mortgage Professional Magazine has taken the opportunity in the November 2012 issue to focus on one of the industry’s top players in its “Mortgage Professional of the Month” feature. This month, we had a chance to speak with David Wind, Founder, CEO and Chairman of the Board for Guaranteed Home Mortgage Company, an expanding mortgage banker based in White Plains, N.Y. As an attorney, former clerk in the New York State Attorney General’s Real Estate Finance Bureau and a former mortgagebacked securities analyst with CitiCorp, David has one of the most intriguing resumes in the industry today. He recently took time to speak with us about his career and provide his perspective on the industry today. Tell me how you came to choose the mortgage industry as a career, since you began as an attorney? My interest in the mortgage business was a serendipitous one, when I attended a closing representing the purchaser of a home as their attorney. At the closing table, having spent a good six or eight hours working with the buyers and ensuring that everything was nailed down–a check was slid across the table to me for my services in the amount of $500 for what I considered to be a pain-staking and herculean job; and another check for $8,700 was slid across the table to a mortgage broker, who, in my opinion at the time, just earned slightly over an exponential of what I had earned, and I had just got out of law school. I thought to myself, “Maybe I should take a look at this mortgage business.” This was in 1994. How has your experience as a lawyer helped you in the mortgage business? The place it has benefited me most is when I spent time at the attorney general’s office ... experiencing what the folks do who are responsible for regulating the industry. I recognized and respected the folks within those agencies for what it is they had to do with sometimes unclear objectives. We’ve all been dealing with unclear objectives since I’ve been in the mortgage

perspective as to how the old School House Rock “I’m Just a Bill” song works in the mortgage industry.

“I am proud of our ability, as an organization, to be able to change the way we operate as the environment requires, but that our foundational principles have not changed.”

industry, but reasonableness typically prevails. My experience both as a lawyer and as a regulator taught me that, in the end, reasonableness prevails because the people who administer those loans are themselves mostly good, and that I’m capable of communicating with them effectively. You mention regulation. What are your thoughts on the current regulatory environment in the mortgage industry? Is the industry over-regulated? I’m not going to take a position as to whether we’re over or under regulated because I believe this is–in many circumstances–the largest financial transaction that a consumer will enter into in their lives. There needs to be a tremendous amount of focus by both the legislators and the regulators on how that is conducted. But what we desperately need as an industry is some clarity as to how those regulations apply. We’d really appreciate

some instruction as to how to make sure that we’re acting compliantly. That is sorely missing. You also spent time early in your career as a bond trader. How has that experience helped you in the mortgage industry? I’ve always been cognizant because of my experience at Citicorp on their trading floor of the vicarious nature of a transaction. It’s given me tremendous perspective to know that the “Miller” loan for $100,000 will make its way down a chain, number one, where everyone will have to take a bite in order to earn a living; and number two, that everyone deserves a degree of responsibility as to the quality of that particular asset and all the other assets that are bundled together. It’s that chain that broke down, and, of course, was one of the precipitating events that caused the meltdown that we all experienced. So it has given me some unique

With your experience in the secondary market what are your thoughts regarding the potential for private alternatives developing to the GSEs? I think, once again, we dovetail back to clarity and regulation. There are a tremendous number of fairly sophisticated and well-funded entities and individuals out there that are capable of putting together a viable alternative to the agencies. What they’re frightened about–at least the cacophony that I hear at the various functions that I attend–is that they are all waiting to find what a “qualified mortgage” truly is, and whether their portfolio has any liquidity. They are not going to dedicate significant human resources and capital, only to find out that what they’ve done in the past is no longer viable and not liquid. The smoke signals are that the Federal Housing Finance Agency (FHFA) is going to begin to limit–again, it’s only smoke signals–the amount that any given institution can deliver to Fannie and Freddie based on some type of networth analysis. So, the example would be that a company that has $7 million in net worth would be able to deliver “X” during a given period of time, and a company with $14 million in net worth could deliver “2X” in a given period of time. This is likely going to drive the community mortgage bankers into the aggregators, which are the large institutions. We’re seeing the results in some of those smoke signals now as these larger correspondent purchasers are unable to keep up with the volume that’s being delivered to them and will only become more exasperated as things go on. Are you involved directly with the regulators in trying to clarify rules? Guaranteed participates in a fairly aggressive group that was lobbying on the Hill. This group is comprised of 40some private and community-based lenders across the country. Together, working with both the Fed and working

with members of the Consumer Financial Protection Bureau (CFPB) and the various conference boards of state examiners, we created a comp plan which enables a firm’s–it enables member firms to fully defend the requirements within the LO comp regulations, and also provides a fair amount of flexibility to the sales team. What are you most proud of in your career? I am proud of our ability, as an organization, to be able to change the way we operate as the environment requires, but that our foundational principles have not changed. We are presently in the process of creating an institution that is more bank-like, depository bank-like, than ever before. We are a mortgage banking firm that is taking seriously the requirements that have been placed upon us in regard to items such as the Financial Privacy Act and the anti-money laundering law. And we are requiring that all our staff complete these training programs and get certificates. Four to five years ago, we never would have considered requiring the entire staff–including sales and support team members–to do things like this. But we recognize the new environment that we’re in, and we also understand there’s a price to pay for being a leader in these things because many of my colleagues–I don’t call them competitors anymore because there are so few of us left–have not focused on this issue yet.

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



Are there particular books or people that have had a big impact on your life? I have done a substantial amount of reading in my life, and I continue to be a voracious reader. I’ve also been

What else would you like your colleagues in the industry to know? I am strongly encouraging my colleagues at every level in this industry to become more actively engaged in the advocacy of our careers. There are too many of us who take for granted that what we do for a living will remain “as is” without any effort. This is a call to arms of mortgage professionals to reach out to their legislators and make their point heard, whatever their point is. I’d like to see more of that.


What issues keep you up at night regarding the mortgage industry? My major concern right now is basically the plaintiff’s bar–that we, as an industry, have yet to see the consumer-based class actions against the mortgage banking industry. The remaining players, who should be congratulated for running credible honorable firms, will pay the price for so many of those institutions, the smaller folks, especially those who are no longer in the game.

How is Guaranteed Home Mortgage Company different from its competitors? I would say that we have created an

environment here where we are looking for like-minded professionals to join, but we are no longer a place where loan officers and other professionals can come and go at their leisure. We are taking the position that we are doing something special here, and we are looking to the right candidates–not any and all candidates. We are different than many of my other colleagues–the community lenders–in that we have a “large law firm,” a more institutional environment. I think that it makes us unique that we can regularly invest with our loan officers and our managers, and we have the capability to determine whether a particular investment made sense or didn’t.  IDAHO

What might you have done differently in your career if you could do it over again? What I would have done differently is I would have built a firm, and then I would have taken some of the offers we had and cashed out. Then, I would have built it again, and then, I would have cashed out. Fortunately, I live a fairly conservative lifestyle, and I have the necessary resources to carry this firm through the ups and downs. But when I look across the spectrum at many of my colleagues who use that formula– where they built firms during the big times and then stepped out and then waited for the trough and began again– they seem to be a little bit more –let’s just say that they have full heads of hair, and I use a razor.

exposed to some great folks–entrepreneurs and stalwart, conservative investors. But the biggest impact anyone has ever had on me is my father. My father is a successful businessman in his own right. He is a classic accountantCPA. What he taught me as a child, and what he continues to counsel me today, is that you meet every obligation. You can do things by a handshake. You must be extraordinarily selective with whom you do business. If you do all those things, everything will be fine. So that is the practice that I conduct.







Member FDIC

Mortgage Producer: Who Are You? By Eric Levin

Fun, Photos and Featured Speakers At NAMB NATIONAL

Sunday-Monday, December 9-10, 2012 MGM Grand • Las Vegas, Nevada By John Stevens




We’re creating a whole new, exciting NAMB National conference, coming on Dec. 9-10 at the fabulous MGM Grand in Las Vegas. But don’t just take my word for it. Go to to see what’s in store for you. When you’re in Las Vegas, you’re in for fun. Action is in the air, and the bright lights dazzle. But you don’t have to be on the Strip to see that. We’re putting a dazzling photo studio right in the center of the NAMB National exhibition hall. Every attendee who comes can get a free professional headshot taken, to use on your website, on your social media pages, in your advertising and on your business cards. That’s a $200 value, brought to you FREE as part of your NAMB National registration. And you’ll have plenty of places to use that professional photo, after all you’ll learn at NAMB National. We’ve got an amazing day of hands-on training ready for you on Sunday, Dec. 9. Don’t just think about social media – we’re going to build your sites for you! Want to know how to handle the growing demand for reverse mortgages? We’ve got you covered. And on Monday, Dec. 10, get ready for a day of some of the top mortgage leaders in the nation. Don’t miss our Featured Speaker series, including Bill Matthews, president of the NMLS, as he talks about licensing issues and concerns that affect us all. Meanwhile, Theodore Tozer will be with us. He’s the man who oversees Ginnie Mae, the agency that makes the market for FHA and VA loans, and which is fast becoming the second largest secondary market for mortgages in the country. If you’re looking for new wholesale or correspondent relationships, our Exhibit Hall is the place to be. And you’ll also find opportunities for new mortgage origination software, lead retrieval, and closing services that get your buyers in their homes faster – which also means faster commissions for you. There is no other national event for the loan origination community that is working so hard on your behalf. Whether you’re looking for compliance guidance, for ways to find and close more deals, for new products to offer your customers and prospects, you’ll find it when you join us in Las Vegas on Dec. 9-10. It’s NAMB National. We’re bigger and bolder than ever before. We’re mortgage professionals. And we’re roaring back! John Stevens is chairman of the NAMB NATIONAL conference. He is a member of the board of NAMB – The National Association of Mortgage Professionals, and is branch manager for ENG Lending in Utah.

All individuals or groups that support the strategic growth of the production side of the mortgage banking industry must make an effort, daily, to put themselves in the shoes of the individuals where it all starts in this business—the originator. Sure, we can all point to facets of the business that exist prior to the originator’s effort—and by no means am I diminishing that value, but volume drives the bottom line and the originator drives the volume. In the Hammerhouse LLC 2012 Core Mortgage Lending Components Survey, we received responses that inform how an originator or leader of originators feels about six key topics that we refer to as “The Six Core Components” (Leadership, Culture, Business, Operations, Technology and Geography) in our industry. A snapshot of the results included:

Key positive responses to survey questions  89 percent believe that compensation at their firm is “fair and compliant”  89 percent believe their firm’s pricing is “consistent” and “competitive”  88 percent believe their firm consistently closes loans “on time”  88 percent believe the relationship is “excellent” or “acceptable” between originators, managers and leaders  85 percent believe that the reputation of their firm is “outstanding” or “good”

Key responses indicating room for improvement  32 percent of professionals surveyed believe that their firm’s technology “needs an upgrade,” is “inadequate” or “hurts my business”  28 percent of professionals surveyed believe that internal communications are “inconsistent,” “muddled,” “left open for individual interpretation” or essentially non-existent  24 percent believe their firm leader’s vision is “unclear,”“illogical,” “disconnected” or essentially non-existent  24 percent believe that originators have “insignificant,” “very little” or “no” impact on operations at their firms. The questions and subsequent answers related in the survey are vitally important to any self-evaluation. However, when an originator is serious about evaluating their goals and is committed to an active role in their personal success there is one vital question missing: Who Are You? Think about this for a moment. When was the last time you really looked beyond some of the obvious questions related to the business and considered the real foundation for any possible success … YOU? On a recent consulting call, I was told by an originator that although he had a real desire to grow his business and had specific goals (more like outcomes … vol-

ume related, not strategy), he felt most companies were pretty homogenous today. He said he felt that there was really nothing special that could be added to his tools and resources that would create value for him or his referral partners. As he committed to additional time consulting we uncovered—that although his current employer’s business model was really geared towards Agent referral partners, he had been unsuccessful breaking into that referral base. Moreover he admitted openly that he really didn’t “enjoy knocking on agent’s doors.” When we dug into WHY, the originator said the reason he got into the business was due to a family friend that happened to be a builder and introduced him to the industry. He enjoyed working with builders, had builder contacts, and felt comfortable rubbing elbows with the builder community. He LIKED it … this motivated him. All that said, he had settled for a business model whose Core Components did not match WHO he is. As an advocate for the business and for those “on the street” two things come to mind as we consider this level of evaluation.  If you are a recruiter (external or Internal) of producers or a manager recruiting producers in this business, you owe it to the originators you are recruiting to think beyond the stats. Without the dedication and accountability that comes with truly getting to know WHO your “candidates” are, you will never be able to truly IMPACT their goals, their business, and their lives.  If you are an originator, ask yourself if you have a trusted partner that knows WHO you are and can objectively consult with you on key topics that support your overall goals. This could be a professional coach or recruiter that is willing to invest the time necessary in a process of discovery with you and not simply a transactional conversation resulting in the “possibility” of an employment changing event. Evolution is a constant is this industry. Markets change, regulations change and technology changes. However, through it all, most mortgage companies and/or banks (depositories) will want you to be part of their team simply because of your production numbers. That which defines you—that makes up the core of WHO YOU ARE is most likely a secondary consideration. Armed with a clear understanding of WHO YOU ARE, and a trusted consulting partner that is committed to adding value to your business, you can create consistency and predictability in an ever evolving business climate. Eric Levin is a managing partner at Hammerhouse LLC, an expanding national recruiting and strategic growth firm for the financial services industry with mortgage sales and leadership placement at its core. He may be reached by phone at (828) 3580053 or e-mail

loan originator compensation conclusion reached by the CFPB clearly is that where a loan originator has no or minimal ability directly or indirectly to add, drop, or change a factor, that factor cannot be a proxy for the transaction’s terms, because such a factor cannot be the basis for incentives to steer consumers inappropriately. The CFPB takes the position that a credit score proxy may or may not be a proxy for a transaction’s terms, depending on the facts and circumstances. In other words, it is not automatically a proxy, as many lenders and loan originators have maintained. Further, the Proposals clarify that the rule does not prohibit compensating loan originators differently on different transactions, provided such differences in compensation are not based on a transaction’s terms or a proxy for a transaction’s terms. The Proposals also address restrictions on pooled compensation, profit-sharing, and bonus plans for loan originators, depending on the potential incentives to steer consumers to different transaction terms, as follows:

“Data is not information, information is not knowledge, knowledge is not understanding, understanding is not wisdom.� —Clifford Stoll

“There ain’t no answer. There ain’t gonna be any answer. There never has been an answer. That’s the answer.� —Gertrude Stein Let’s now take into consideration several, specific details of the Proposals. These are some, but certainly not all, of the issues and concerns that have become pronounced since the loan originator compensation rule became effective in April 2011. It is important, therefore, to consider how the CFPB is endeavoring to go

Point Banks The CFPB has determined that there are no circumstances under which point banks are permissible, and they therefore continue to be prohibited. If you are not familiar with how point banks work, this is a generic description: 1. Each time a loan originator closes a transaction, the lender contributes some agreed upon, small percentage of that transaction’s principal amount (for example, 0.15 percent, or 15 “basis continued on page 33


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Dodd-Frank contains a provision requiring both individual loan originators and their employers to be “qualified� and to include their license or registration numbers on certain specified loan documents. Consequently, the Proposals set forth specific mandates regarding loan origination qualifications.

We already know that the Secure and Fair Enforcement for Mortgage Licensing Act (SAFE) requires licensing and registration of loan originators. Under the Proposals, the loan originator’s employer must ensure that the loan originator meets character, fitness, and criminal background check standards that are equivalent to the SAFE requirements as well as receive training “commensurate with the loan originator’s duties.� Employers and individual loan originators, if primarily responsible for a particular transaction, would be required to list

Issues and Controversies


Loan Originator Qualification Requirements

continued from page 8

about resolving them. My remarks will be limited to the Proposals themselves and not the controversies involved in each instance.  IDAHO

 Employers would be permitted to make contributions from general profits derived from mortgage activity to 401(k) plans, employee stock plans, and other “qualified plansâ€? under tax and employment law.  The Proposals permit employers to pay bonuses or make contributions to non-qualified profit-sharing or retirement plans from general profits derived from mortgage activity if: • Either: the loan originator affected has originated five or fewer mortgage transactions during the last 12 months; • Or: the company’s mortgage business revenues are limited (the CFPB proposes two alternatives for applicable tests: A 25 percent or 50 percent of total revenues).  The amounts of contributions and bonuses, though such contributions and bonuses could be funded from general mortgage profits, may not be based on the terms of the transactions.

their license or registration numbers on certain key loan documents.

Marketing in 2012: Fall Tips to Maximize Your Marketing Dollars Follow the Trends The names in the business are HARP 2.0 – FHA Streamline – VA IRRRL. Spending your marketing dollars on what is working is always a safe bet. The public is well aware of all the changes in the mortgage industry, and is keeping up on buzz words like STREAMLINE and HARP. Try to find a marketing campaign that works for you and your budget and go to work. Even if it means you have buy leads. Just do something. Business is still picking up nationwide and those that aren’t moving with it are being left behind.

Maximize your return Go for the low hanging fruit, the easiest loans that close the fastest. These days that’s Refinance Business. Get to the people that can refinance today. Once you’ve got that angle covered, then go after purchase. Purchase business is great, but it’s time consuming. Keeping a mix of both purchase and refi is a safe plan to keep up with the competition.

Don’t Reinvent the Wheel Your competitors aren’t going to tell you what’s working for them so try calling a national marketing firm that can tell you what’s working in your area and for your specific loan types. One that follows the trends so you can follow them yourself. The market will always show you how to best offer your products.

Test, Measure, Test again


Don’t think your first campaign is going to be the best one. In fact, in most cases, the first campaign is only the beginning. Campaign 3-4 is where they really start paying off. Many people start a marketing campaign with a new company and think that they should be setting records right away. This couldn’t be further from the truth.



Fall tips for closing out 2012 strong Direct mail responses are up. If you haven’t done direct mail in a while, it might be time to give it a try again. Yes it’s expensive but it works. If your nervous about losing money on direct mail, Google “Guaranteed Direct Mail” and you’ll find some safe options. Live transfers are a thing of the past unless you incorporate direct mail. With as much as 90% of the population on the DNC, telemarketing just isn’t what it used to be. But, since direct mail is working, you can find success putting the two together. VERY QUALIFIED CALLS. New data files are available specifically for the mortgage industry specific for HARP – FHA – VA and REVERSE. Data is the number one most important aspect of your campaign, make sure your working with someone who understands your needs and knows how to effectively target your demographic. Mail houses typically won’t be the most knowledgeable but good marketing firms will. FHA, HARP, VA, and Reverse are all responding very well to marketing right now. November and December are always BIG refi months. People LOVE extra cash around the holidays and skipping a mortgage payment can help out a lot so plan on spending some money on marketing and finishing the year strong. Last, but not least, RIDE THE HARP 2.0 WAVE! This has been the biggest thing to hit the mortgage industry since 2009! Medford, Ore.-based TagQuest is a full-service marketing firm created specifically for the ever-changing business world. TagQuest assists companies with their direct marketing, advertising and branding needs, and knows what it takes to generate quality customers and, most importantly, how to retain those customers for years to come. TagQuest brings forth a unique opportunity to utilize our experience and expertise in varying consumer sales and marketing environments. For more information, call (888) 717-8980 or visit

Sponsored Editorial

Do You Know Your Competition? By Casey Cunningham

We talk a lot about generating business. It’s the name of the game. We want more and strategize for more. We think of everything from what are the right tactics, how many do we need, how do we implement them, who are the right referral sources, where do you find them, when you find them, how do you get them to actually want to meet you, how do you develop a relationship that actually generates referrals. We talk, we train, we plan and we prospect, but we may have left out one really, really important component … who is our competition? You can be the best of the best, but unless you know your competition, you have no idea what you are up against and tactically speaking, that puts you at a huge disadvantage. As of the moment, the playing field is pretty level. I mean seriously, we’re down to Freddie Mac, Fannie Mae, the Govies (FHA and VA) and a few other select scattered programs. It certainly is not the smorgasbord from years prior. So, with that being the case, it’s easy to see, the draw for customers is not the company and what they can offer, the draw is you. You and umpteen hundred other loan officers are vying for the same business. And the playing field we just discussed not only refers to mortgages, but also to loan officers. We certainly have reduced the ranks over the last several years and weeded out those who were riding the coattails of our industry to make a healthy living. Those of us who stayed the course are thriving in a refinance market and trying to focus on the purchases yet to come. We market, prospect, call, e-mail and use every tactic we’ve relied on over the years to generate business. We do the same thing; we play on the same field … but that’s about to change. The title of this article asks if you know your competition for a very specific reason. You may know who it is today, but I want to give you some insight into who your competition is going to be and what they are going to do, so you can prepare yourself now.

Prepare yourself to get ahead and hopefully stay there. As lenders strive to replenish the ranks and plan for the future, they will, out of necessity, draw from the Gen Y’ers. This generation will be your direct competition and you need to know a few things about them, and in learning about them, you may learn a few things from them. This generation uses technology like it was a natural appendage. They’ve grown up with it. Facebook, Twitter, YouTube, Mobile apps, Pinterest … you name it, they know it and know how to use it. In a report by Patricia Martin titled “Tipping the Culture: How Engaging Millennials Will Change Things,” her research shows this generation is more networked than any other and will thereby wield influence and power sufficient to determine the future success of an organization. If they can do that, they can certainly influence customers significantly. With that as a glimpse of your competition, the question becomes, are you ready to compete with them? Step into the ring, fight the fight and emerge the victor for the elusive prize of market share. To do so, you must be prepared to compete on their turf. Are you? Training to win is about knowing the tactics your opponent will use. We encourage loan officers to be masters of their profession, but we discuss little of being master marketers. Mortgage veterans may scoff at the social media frenzy saying this will always be a relationship-based business, and on that point, they are absolutely correct. Yet, the Gen Y’ers are brilliant at creating relationships at the stroke of a keyboard. If you are not absolutely comfortable, confident and skilled in this media, you have some work to do. Consider the following:  LinkedIn is fairly easy to use and is a great professional site to display your expertise. You can connect with business professionals from related industries to orthodontia. It is imperative you create a professional profile and learn to ask for connections and referrals on this site.  Facebook is more casual, but if

you’re of the mindset to woo real estate agents, you will find them on this site more than LinkedIn. You will also learn a lot of personal trivia to aide you in personalizing your marketing to them. Remember though, you are using this for business, so keep your comments and pictures appropriate.  Pinterest is fairly new to most of us, although it launched over two years ago. Since then, it has taken the social media world by storm. Conduct a Google search on Pinterest and the stats are evenly reported among many sources that Pinterest drives more referral traffic than Google+, YouTube and LinkedIn. Take note, almost every real estate agent has every listing “Pinned.” You cannot afford to ignore this site.  Twitter is used every day by millions of people who want to share ideas or get information from others. It’s easier than it seems and for only minutes a day, you can connect, get feedback, market and brand yourself.

Loan officers live (or should live) in the land of prospecting. Over the years, my research and experience has shown that to keep your business thriving, you must prospect a minimum of 10 hours a week. Consider a 50 hour work week and realize that 20 percent of the time will generate 80 percent of your business. That may seem like an enormous task with the current state of affairs in our industry. Get away from your desk and the mounds of files, and get to the keyboard of social media and the car for face-to-face prospecting. While I am still a strong advocate of face-to-face and being seen in public, I also believe you need to be seen virtually. Be purposeful … learn social media tactics, devote valuable sales time to online prospecting and watch your business evolve with the next generation. It’s the way to go, it’s the way of the future, and it’s what your competition will be doing. Casey Cunningham is president of XINNIX, a provider of mortgage sales and leadership development programs. She may be reached by phone at (678) 3253501 or e-mail

loan originator compensation

The Proposals contain revisions to the actual staff commentary addressing loan originator pricing concessions. In the existing comment, a lender and loan originator may not agree to set the originator’s compensation at a certain level and then subsequently lower it in selective cases (such as where the consumer is offered a reduced rate to meet a quote from another creditor). The compensation is not subject to change (increase or decrease) based on whether different loan terms are negotiated. Under the Proposals, the CFPB asserts that, while the creditor may change loan

The FHA MIP program produced a surge in the number of borrowers seeking to refinance their loans that have been stuck in high interest rates. This created a favorable condition for mortgage marketing professionals who have been getting high response rates with direct mail using trigger leads generated from the vast numbers of refinance applicants having their credit pulled. A trigger lead is created when someone has their credit pulled. Mortgage professionals can purchase lists of trigger leads for use in either direct mail or telemarketing campaigns. Triggers are a valuable resource since these people are actively seeking to refinance. However, factors such as timeliness to contact these candidates and a strong sales ability, are necessary to be successful. Trigger leads can be purchased as daily or weekly lists. These are candidates that are in the market now, so it is extremely important to contact them before they sign with their original mortgage shop lender. For this reason, daily and weekly trigger leads tend to be more valuable, carrying a higher premium. Most people are open to shopping around for the best deal, so a mortgage shop with a strong sales force can often have a very high success rate using trigger leads paired with a direct mail marketing campaign. An average conversion rate for a mortgage shop with a strong sales force can be greater than 20 percent of the inbound calls. Direct mail marketing using trigger leads can be a viable option for a mortgage shop to generate a consistent flow of new customers if done on a regular basis. Sending consistent advertisements also helps to strengthen the brand identity, and put the company in the forefront of potential customers – not everyone will call after seeing an ad once. Phone lists can also be used in conjunction with a direct mail marketing campaign to follow up after the mailing. With timeliness being such a huge factor in the success of a direct mail campaign using trigger leads, a mortgage shop needs to find a mortgage marketing company that is not only able to respond quickly to trigger candidates, but also has solid experience in advertising for the mortgage industry. A mortgage marketing firm should be able to handle the entire campaign in-house. Outsourcing pieces of the campaign such as purchasing the trigger leads, designing the advertisement, or printing and mailing, not only adds more overhead costs, but also takes more time to get the finished advertisement to the hands of the candidate–which may be too late. Using a mortgage marketing firm with a solid reputation and experience in the industry can be the difference between the success or failure of your campaign, and your company’s reputation. With compliance being such a huge factor in today’s environment, it is important to find a company that not only has your best interests in mind, but also has a stellar reputation and no blemishes. K. Justin Restaino is vice president of Titan List & Mailing Services Inc. For more than 13 years, he has led Titan’s Mortgage Division, helping lenders of all capacities grow their businesses utilizing targeted direct mail. With a specialized focus in refinance and purchase markets, Restaino has the insight for proper data and mail application for success. He may be reached by phone at (800) 544-8060, ext. 204 or e-mail

Sponsored Editorial continued on page 35



To the extent such payments are based on the transaction’s terms or a factor that operates as a proxy for the transaction’s terms, they are a direct violation of DoddFrank.16 Even if the contribution to a loan originator’s point bank for a given transaction is not based on the transaction’s terms (or a proxy), the CFPB holds that a loan originator’s subsequent spending of amounts from the point bank on other transactions is an impermissible pricing concession.17

Pricing Concessions

The FHA MIP program has generated a strong demand for refinances by borrowers stuck in high interest rate loans, thus creating a surplus of trigger leads available for mortgage marketing


The CFPB maintains that payments to point banks serve as a form of loan originator compensation “because they enable additional transactions to be consummated and loan originators to receive compensation on these transactions.” Accordingly, they are a “financial incentive” to the loan originator and, therefore, point banks are compensation.15

Furthermore, the CFPB closes out even the so-called “pricing concessions” use of reserved funds in a point bank. The view is that a point bank whose funds could be reserved for use in the unique circumstances where pricing concessions would be permitted–even this application of funds cannot be legitimate because the criteria set forth in the pricing concessions provision limit such concessions to unusual and infrequent cases of unforeseen increases in closing costs and, by definition, a point bank contemplates “routine use,” which is contrary to TILA’s intent. I should point out here, as mentioned in Part I of this series, that the CFPB’s decision not to propose to allow point banks was also influenced by the negative consensus view of SERs participating in the Small Business Review Panel process and the negative views expressed by many other stakeholders.18

By K. Justin Restaino  IDAHO

points”) into the loan originator’s point bank account. (The point bank account is not actually a deposit account with the creditor or any depository institution but is only a continuously maintained accounting balance of basis points credited for originations and amounts debited when “spent” by the loan originator.) 2. The loan originator may spend any amount up to the current balance in the point bank to obtain pricing concessions from the creditor on the consumer’s behalf for any transaction. (For example, the loan originator may pay discount points to the creditor from the loan originator’s point bank to obtain a lower rate for the consumer.)

continued from page 31

FHA MIP Program Creating Surplus of Trigger Leads for Mortgage Marketing

Buying Signals (Part II) By Dr. Kerry Johnson, MBA

United States Appraisals Launches New Proprietary Technology Platform




United States Appraisals has announced the launch of its new proprietary operating system, the culmination of months of design and development with input from both appraisers and mortgage industry professionals. The new technology platform drives redundancies and non-value added activities out of the business process, eliminates wasted time, inefficiency and cost and positions United States Appraisals at the forefront of mortgage industry technology. United States Appraisals is currently rolling out the platform to existing clients. New clients will have immediate access to the new technology. “Our rapid growth exposed several weaknesses in our previous system,” stated Aaron Fowler, president of United States Appraisals. “This new proprietary platform provides a foundation for our continued expansion while enhancing service to our existing clients. We continually push for faster service and better quality. This technology allows us to deliver on both fronts.” The new operating system provides a myriad of enhancements for United States Appraisals’ staff, clients and appraisers. Elimination of redundancies in processes will reduce the chance of errors while increasing speed and efficiency. Clients will notice a streamlined order entry and delivery portal as well as enhanced online communication. The new platform will also allow United States Appraisals to easily add new products and integrate with loan origination systems as it continues to add new clients. “Basically, we re-engineered the entire business process and provided tools to allow all parties to operate faster and more efficiently,” said Dan Wieschhaus, chief technology officer. “Among the improvements are enhanced proximity and quality qualifiers to speed and perfect appraiser assignment, the ability for appraisers to review and accept orders from their mobile phones and streamlined pipeline views to allow better management of the increasing number of appraisal orders.”

Calyx Paves the Way for Mobility With Release of Point 8.0 Calyx Software has announced the launch

of Point and PointCentral 8.0. This latest release paves the way for Calyx Mobile to bring much needed mobility to loan originators for productivity on the run. Point and PointCentral 8.0 not only enhance the user experience for the upcoming mobile apps, but they offer additional features for even greater convenience to users of Point and WebCaster. With Point and PointCentral 8.0, several modifications have been made to prepare users for mobile productivity. The software, along with the account management system, MyCalyx, has been optimized for the mobile applications functionality. Sophisticated technology securely shares data across applications for more effective workflow and streamlined processes. Users have been enthusiastic to learn about Point’s new Pipeline View screen which offers a centralized location to view and manage loans grouped by status, data folder or user. Users can choose to see automatic group settings or create manual views so they can see specific loans regardless of status. This screen can be set up as the default screen for Point for each user depending on need or preference and will be shared automatically with the Calyx Mobile Apps available in November. “We are excited that this release drives our clients toward the mobile technology so many of them have been asking for. Getting our users ready for the upcoming mobile apps is paramount with 8.0,” said Jody Collup, director of marketing at Calyx Software. “We’re pleased that 8.0 provides such a springboard to help our clients increase their productivity and get the most out of the software that is so important to their business.” This release also offers a new feature for WebCaster and Point users that enables new application notification and downloads directly from within Point. Users can customize the feature to determine the type and scheduling of notifications as well as other helpful parameters. Direct import of new applications into Point saves valuable time in getting new files set up and in process to improve service levels to borrowers. In addition to updates to several screens and forms needed for compliance, Point and PointCentral 8.0 include 11 extra options for the “advanced search” button featured prominently on the left side navigation panel. These new options allow users to search for loans based on criteria such as investor, borrower Social Security, loan amount, or type of loan. continued on page 38

Buying signals are a lot like moving through a submarine. You close the water-tight doors and then progress to the front of the boat. As your prospect displays buying signals, they are letting you know the watertight doors can close and you can move ahead. Rarely is a buying signal a sign that someone wants to sign the contract then and there. But it is a cue they want you to move ahead faster. Here are some of the verbal and nonverbal cues that will indicate when you have said enough:

The Whistling Teapot Having watched hundreds of hours of videotape on prospect behavior, I have noticed they will invariably lean forward in their chair or toward you while standing when they are ready to buy. The Whistling Teapot is an indication that your prospect wants you to pull out the contract. If you see them suddenly move forward, they are indicating a change in behavior. That change is your buying signal cue. I recently spoke at a Canadian sales conference in Edmonton. I made the mistake of admitting that I was the guest to the Canadian immigration officials. Unfortunately, the officials detained me for over four hours claiming I was taking jobs away from Canadians. Ironically, if I was a terrorist asking for asylum, they would have released me immediately. They were only waiting for the next flight back to the U.S. to deport me. One official said my client could have found another speaker besides me in Edmonton, although he did not know anyone off-hand. About an hour earlier, these Gestapo officials allowed me to go out past immigration, to tell my host, who had been waiting to pick me up, he could come in to see me. After two hours of negotiations, I finally was able to convince the inspector that a speaker on sales psychology, who was a past pro tennis player and the author of seven books, would be hard to replace at midnight for a program the next morning in front of 600 attendees. As I said this, the immigration official leaned into the Whistling Teapot buying signal. I stopped talking and said, “What do you think?” The official immediately broke down and mentioned that there was one area of the regulation that allowed a foreign speaker to perform for less than an hour over lunch, as long as it was a free speech. I jokingly said, “That’s me.” He smiled back. The problem was that my host meeting planner, who had been sitting quietly with me up to that point, decided that he had taken enough crap from these immigration thugs. The timing could not have been any

worse. The meeting planner missed not only the buying signal, but also the even more obvious verbal cues as well. The official then leaned back into his chair, crossed his arms and legs, and told me again that he was going to deport me. It took me another two hours to get the official back on my side.

The Sitting Tremor Like The Whistling Teapot, the Sitting Tremor is also displayed by moving forward in their chair or leaning in toward you. Your prospect is signaling, “Stop talking already, let me buy!” There is a difference. If your prospect sits forward in his chair the whole time, his back may just be sore. But if you suddenly see them move forward in their chair, you have got a commission check coming as long as you know enough to close at the right time.

Verbal Cues Verbal buying signals are more obvious. You have heard them over the telephone or in person without even knowing it. These buying signals are:  How much does this cost?  Can I get this in blue?  How quickly can I get delivery?  What kind of guarantee does this come with? All of these are obvious signals that your prospect has heard enough and wants to start thinking about exchanging money for what he has listened to. Like non-verbal cues, you should trial close when you hear a verbal buying signal. I watched one salesperson spot a buying signal and then trial close. The prospect said, “Great, let’s do it.” She then startled me by saying to the prospect, “Are you sure?” He then said, “I don’t know, shouldn’t be?” And she was off to the races trying to recover a sale. Sales is all about probing for needs, providing solutions that work, and then getting your client to implement your recommendations. Most of the time, your clients will show and tell you when they are ready to buy. If you miss those cues, you may miss the sale. Good luck and pay attention! Kerry Johnson, MBA, Ph.D. is a best-selling author and frequent speaker at mortgage origination meetings around the world. Peak Performance Coaching (his one-on-one coaching program) promises to increase your business by 80 percent in eight weeks. To see if you are a candidate for this fast track system, click on and take a free evaluation test. He may be reached by phone at (800) 883-8787 or email

loan originator compensation terms or pricing – for instance, in order to match a competitor, avoid triggering high-cost loan provisions, or for other reasons–the loan originator’s compensation on that transaction may not be changed. Thus, the revised comment of the Proposals clarifies that a loan originator may not agree to reduce its compensation or provide a credit to the consumer to pay a portion of the consumer’s closing costs.19 The CFPB also intends to delete an existing comment that pertains to transactions in which any loan originator receives compensation directly from the consumer (i.e., “consumer-paid transactions�). The Proposals now also include a new comment addressing a discrete issue related to pricing concessions. This proposed comment provides that loan originators are not prohibited from decreasing their compensation to cover unanticipated increases in non-affiliated thirdparty closing costs which result in the actual amounts of such closing costs exceeding limits imposed by applicable law (i.e., tolerance violations under Regulation X, the implementing regulation of the Real Estate Settlement Procedures Act [RESPA]). Note: this interpretation does not apply if the creditor or the loan originator knows or should reasonably be expected to know the amount of any third-party closing costs

continued from page 33

in advance. To unpack this language for you, this means that a loan originator is reasonably expected to know the amount of the third-party closing costs in advance if the loan originator allows the consumer to choose from among only three preapproved third-party service providers. It is interesting to recognize that the CFPB seems to believe here that such pricing concessions, when made in response to unforeseen events outside the loan originator’s control to comply with otherwise applicable legal requirements, do not raise concerns about the potential for steering consumers to different loan terms. That is, as the CFPB clearly states, “if the excess closing cost is truly unanticipated and results in the loan originator having to take less compensation to cure the violation of applicable law, no steering issues are present because the loan originator’s compensation is being decreased after- the-fact.�20 Thus, the CFPB is concluding that, in the absence of the aforementioned clarification, lenders and loan originators might incorrectly surmise that such pricing concessions being borne by a loan originator would violate those provisions, or they could face unnecessary uncertainty with regard to compliance with these provisions and other laws, such as Regulation X’s tolerance requirements. Again, another loophole is closed in

the Proposals, because under the proposed comment, a loan originator cannot make a pricing concession where the loan originator knows or reasonably is expected to know the amount of the third-party closing costs in advance. If a loan originator makes repeated pricing concessions for the same categories of closing costs across multiple transactions, based on a series of purportedly unanticipated expenses, the CFPB believes the loan originator is reasonably expected to know the closing costs across multiple transactions. In order to prevent that gambit, such pricing concessions would raise concerns about impermissible pricing concessions due to the fact that that loan originators could knowingly overestimate the closing costs and then selectively reduce the closing costs as a concession.

Alternative Loan Dilemma As I discussed above, under the proposal, a lender is not required to make available a comparable, alternative loan if the consumer is unlikely to qualify for that loan. The Proposal solicits comment on whether consumers should be informed that they were not given information about a comparable, alternative loan because they were unlikely to qualify for that loan. On the one hand, in transactions that do not involve a loan originator entity (i.e., a mortgage broker), should lenders be required either to make the comparable, alternative loan available to the consumer if the consumer likely qualifies for that loan or to inform consumers that the

lender is not making the comparable, alternative loan available because the consumer is unlikely to qualify for that loan? On the other hand, in transactions that involve a loan originator entity, should a loan originator entity using the abovementioned safe harbor21 be required to disclose to a consumer that the loan originator entity did not present a loan that does not include discount points and origination points or fees because the consumer was unlikely to qualify for that loan from the creditors with whom the loan originator organization regularly does business? So, the ponderable question becomes: would it be useful to consumers to be informed that they were unlikely to qualify for the comparable, alternative loan? A loophole may exist: if lenders who do not wish to make loans that do not include discount points and origination points, or fees available to particular consumers, could possibly manipulate their underwriting standards so that those consumers do not qualify for such a loan. This is why the CFPB is seeking to avoid such a practice by prohibiting lenders from changing their qualification standards, such as loan-tovalue ratios and credit score requirements, solely for the purpose of disqualifying consumers from receiving loans that do not include discount points and origination points or fees. The Proposals suggest that an alternative would make clear that lenders must continued on page 36


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USA Cares Mortgage Heroes Norman n Zolkos o Park k Funding off Menlo By Jennifer Robinson




Menlo Park, N.J. is a good source of inspiration. It’s the home of inventor Thomas Edison’s Laboratory and is where he invented the light bulb. With hard work, innovation and dedication, Edison made lives easier. Menlo Park Funding uses the same philosophy, to make homeowner’s lives “easier” financially and that includes homeowners who happen to be a part of the U.S. Armed Forces. It’s also the belief followed by this month’s mortgage hero Norman Zolkos of Menlo Park Funding. He recently completed the USA Cares’ “Certified Military Housing Specialist Course” and is using his new training to make the lives of our veterans a little easier. Norman has literally given hundreds of hours of his time to helping military borrowers get lower-rate VA mortgages and eliminate PMI, this saving a borrower hundreds of dollars. This year, Norman assisted more than 40 veterans, helping each of them to save an average of $240 a month. That savings is meaningful to veterans and their families. “Originating a VA mortgage may mean more paperwork, more training and spending more time than loan originators are accustomed to,” said Norman. “However, knowing we are giving a service to our nation’s military is a personal reward. I encourage all originators to become a “Military Housing Specialist” through USA Cares so they can give back something to the military that defend our freedom on a daily basis.” Norman Zolkos One veteran who inspired Norman was a recentlywounded warrior of the war in Iraq. Norman helped to close his mortgage in nine days by galvanizing the Department of Veterans Affairs and his team at Menlo Park Funding. “He had sustained multiple injuries while serving in Afghanistan, and had endured several surgeries,” said Norman. “I was amazed and inspired by his great spirits, even though he suffered a horrific injury and will have pain for the rest of his life.” If you want to connect with Norman about how you can make the lives of our worthy veterans a little easier, please e-mail him at USA Cares salutes Norman Zolkos for giving our military, “A Hand Up!” Be a Mortgage Hero! This recognition is free to Certified Military Housing Specialists. Take the FREE Certified Military Housing Specialist course offered online by USA Cares and tell us how you are “Helping those who defend our homes, preserve their own.” Jennifer Yopp Robinson is the vice president of programs and services at USA Cares, where she has worked since 2007. She may be reached by phone at (800) 773-0387, ext. 115 or e-mail

loan originator compensation make available the loan that does not include discount points and origination points or fees unless, as a result of the increased monthly payment resulting from the higher interest rate on the loan that does not include discount points and origination points or fees, the consumer cannot satisfy the lender’s underwriting rules. The CFPB hopes to determine whether there is a risk that, absent such a requirement, some lenders “might manipulate their underwriting standards and whether the Bureau should adopt a rule against doing so.”22 Nevertheless, the CFPB believes that even if underwriting standards could not be manipulated, lenders who do not want to make loans that do not include discount points and origination points or fees could set the interest rates high for certain consumers, which would thereby increase the monthly payment on those loans to be high so that those consumers cannot satisfy the creditor’s underwriting rules. Therefore, an alternative is under consideration, whereby a creditor would be able to make available a loan that includes discount points and origination points or fees only when the consumer also qualifies for a comparable, alternative loan that does not include discount points and origination points or fees. On the one hand, a potential advantage of this alternative is that it would effectively limit lenders’ opportunity to manipulate their underwriting standards or charge above-market interest rates to prevent particular consumers from qualifying for a loan that does not include discount points and origination points or fees. On the other hand, the CFPB is concerned that adoption of such an alternative may impact consumers’ access to credit. One more thing: the Proposal recognizes that there are some lenders who will not make a loan where the debt-toincome ratio exceeds a certain level, and that there may be some consumers for whom the difference between the interest rate on a loan that includes and does not include discount points and origination points or fees will determine whether the consumer can satisfy the creditor’s debt-to-income standard. In such a scenario, consumers who do not qualify for specific loans that do not include discount points and origination points or fees would also not be able to receive from the lender the same type of loans that include discount points and origination points or fees. This could harm those consumers who might prefer to obtain from a lender a specific type of loan that includes discount points and origination points or fees, rather than not be able to obtain that type of loan at all from the lender.

Facilitating Consumer Shopping The Proposals also seek to facilitate con-

continued from page 35

sumer shopping “by enhancing the ability of consumers to make comparisons using loans that do not include discount points and origination points or fees made available by different creditors as a basis for comparison.”23 As discussed above, for retail transactions, a creditor will be deemed to be making the loan available if, at any time the creditor provides a quote specific to the consumer for a loan that includes discount points and origination points or fees, the creditor also provides a quote for a comparable, alternative loan that does not include discount points and origination points or fees (unless the consumer is unlikely to qualify for the loan). Nonetheless, the CFPB is concerned that by the time consumers receive a quote from a particular lender for a loan that does not include discount points and origination points or fees, they may have already completed their shopping in comparing loans from different lenders. Thus, the Proposals include a solicitation for comments on whether the existing advertising rules24 should be revised to enable consumers to make comparisons using loans that do not include discount points and origination points or fees made available by different creditors as a basis for comparison. Currently, if an advertisement includes a “trigger term,” the advertisement must contain certain additional information (i.e., amount or percentage of any down payment, the number of payments or periods of repayment, and so forth). The CFPB now is contemplating whether an advertisement that contains the interest rate for a loan that includes discount points and origination points or fees also must contain the following information for the comparable, alternative loan that does not include discount points and origination points or fees: (1) The interest rate, (2) the amount or percentage of the down payment, (3) the terms of repayment, which reflect the repayment obligations over the full terms of the loan, including any balloon payment, and (4) the “annual percentage rate,” using that term, and, if the rate may be increased after consummation, that fact. The scope here is obviously expanded to require that a lender that must provide in an advertisement the interest rate for a loan that includes discount points and origination points or fees also to include in such advertisement certain information for a comparable, alternative loan that does not include discount points and origination points or fees. So, the CFPB is determining whether this information about the loan that does not include discount points and origination points or fees must be contained in origination points or fees. The goal is to make it easier for consumers to compare the loan pricing on loans that do not include discount points and origination points or fees available continued on page 38

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Quandis Releases Skip Trace App for Distressed Borrowers




loan originator compensation

continued from page 34

Quandis Inc. has announced the release of a Web-based skip trace application to locate individuals who are in default via a centralized platform. The solution can be utilized by mortgage companies to quickly locate, contact and personally engage with borrowers who are in distressed financial situations. Quandis’ skip trace solution is designed for use by servicers, lenders, banks, default attorneys, loss mitigation centers, third-party collection agencies and essentially any entity that needs to locate individuals. The new skip trace application is utilized to quickly and efficiently contact virtually anyone that is in default, and also for call campaigns to proactively reach out to borrowers and offer them loan modifications, workout options, various government programs, etc. Organizations utilizing Quandis skip trace are able to save time, eliminate errors, reduce costs and offer tools that help comply with state-level telephone contact rules. “In many instances, organizations resort to using manual processes to contact borrowers for debt collection or other outreach purposes,” said Scott Stoddard, CEO of Quandis Inc. “The sheer number of defaults our industry is challenged to manage is the driver behind our developing this application. Handling call campaigns manually or with an antiquated system is cumbersome, time consuming, impedes file completions and can potentially result in the violation of do not call compliance rules. Our skip trace application provides an end-to-end solution that effectively manages the collections and/or call campaign process.” Quandis says that manually locating borrowers typically involves users having to use multiple services such as Lexis Nexis, Pacer bankruptcy searching, TransUnion, 411, 555-1212, Quandis’ automated SCRA military searches and others. This forces employees to constantly jump to different Web sites to locate people, which wastes time and is terribly inefficient. Quandis’ skip trace application integrates with and centralizes each search service into a single application, streamlining searches with the click of a button that instantly returns the results. For users, Quandis’ skip trace solution includes interview-style call scripting and direction, workflow management, task assignments, call prioritization and various tools that enable them to quickly and efficiently complete files. For managers, the application provides them with dashboard-level views and reporting, complete visibility into the entire process and KPIs (key performance indicators) that to help them optimize employee performance, time management and effectiveness.

CoreLogic Debuts New TPO Portal CoreLogic has announced the release of its ThirdParty Originator (TPO) portal, developed by CoreLogic Dorado. Using this online loan processing system, correspondent clients and wholesale brokers can upload and lock multiple loans in a bulk transmission to an enterprise lending system (ELS) and then monitor those loans for conditions and approvals. TPO portal was designed as an interactive module to be used with the existing ChannelMaster Enterprise Lending System (ELS). The enhanced technology also adapts to any existing ELS. The TPO portal also allows clients to add information including documents needed to validate loan program eligibility and pricing, view a loan’s pricing history and refresh loan data. Once loans are submitted, TPO Portal helps users manage the loan pipeline and resolve open conditions. Checklists can be created to verify loans and to generate conditions when a loan shows a failed checklist item. The technology delivers integrated validation and compliance controls, and allows full visibility to expedite loans through the system before locks expire. “TPO Portal is all about speed,” said Rob Carpenter, vice president of technology for CoreLogic Dorado. “While it’s not possible to fully automate third-party lending, this is a new technology providing an unprecedented level of efficiency and convenience. TPO Portal’s intuitive and simplified communication tools provide a top-down view of traffic, down to the loan-detail level. By increasing oversight and control, more loans can quickly move through the system.” ChannelMaster ELS, first introduced in 2005, streamlines the way correspondent lenders manage loans as they travel through the pipeline from lead to funding. By organizing loans in a central hub, ChannelMaster ELS allows loan agents, processors, underwriters, closers, funders and others involved in the mortgage origination process to work on multiple loan files at the same time. The system also features intuitive origination lifecycle recognition ability, ensuring the processor completes required actions first and prevents noncritical actions from causing a loan to stall. This extends the reach of the workflow to streamline delivery for third parties.

Axacore Launches New Electronic Document Management Platform Axacore Inc. has announced the release of its latest Electronic Document Management (EDM) platform. Highlights of the new EDM include: Innovative user interface features allowing greater control and efficiency when working with documents; new document compare feature continued on page 50

from different creditors because most of the cost of the loans would be incorporated into the interest rate. A consumer could compare the interest rates on such loans available from different creditors, without having to consider a variety of different discount points and origination points or fees that might be charged on each loan.

All Things Considered “Hell, there are no rules here—we’re trying to accomplish something.” —Thomas A. Edison The CFPB published its Proposals in order to implement statutory changes made by Dodd-Frank to Regulation Z’s current loan originator compensation provisions. As I have indicated above, and as elaborated in Part I of this series, the Proposals include a new, additional restriction on the imposition of any upfront discount points, origination points, or fees on consumers under certain circumstances. In addition, the proposal implements additional requirements imposed by DoddFrank concerning proper qualification and registration or licensing of loan originators. The Proposals also implement Dodd-Frank restrictions on mandatory arbitration and the financing of certain credit insurance premiums. Finally, they provide additional guidance and clarification under the existing regulation’s provisions restricting loan originator compensation practices, including guidance on the application of those provisions to certain profit- sharing plans and the appropriate analysis of payments to loan originators based on factors that are not terms but that may act as proxies for a transaction’s terms. In this article I have offered some insight into several of these categories. There have been significant reviews and comments offered by many firms, individuals, and associations. Let us now bring back into discussion the topics covered and view them from the viewpoint of their potential impact on consumers, lenders, and loan originators. The positions of the Mortgage Bankers Association (MBA), as stated in its comment letter on the Proposals, are consistent with the views of many industry participants.25 For this reason, I intend to follow some of its insights in construing a range of possible eventualities.

Restrictions on Upfront Points and/or Fees The idea of restricting upfront points and/or fees, while also requiring ZeroZero alternatives can cause adverse consequences for consumers and mortgage industry participants. If they both are implemented, the outcome could lead to consumers having less choice, not more choice. For one reason, lenders might reasonably be expected to withdraw from

continued from page 36

allowing compensation to loan originators based on commissions, which inevitably means increased rates, a burdensome outcome for the consumer. This is because lenders might need to retreat to a salary-based compensation plan in order to compensate for the incremental costs involved in implementation. Commission-based income is the backbone of the market, and depriving the market of that dynamic, financial incentive would surely lead to depressed outcomes. Consider the economic construct: if lenders do not have the opportunity to receive points or fees from consumers, they will simply increase the rate to the consumers in order to compensate; and, importantly, if consumers do not have the opportunity to buy down the rate through discount points, they will not be able to lower their rates and their monthly payments will be higher than they would be otherwise.

Zero-Zero Alternative Perhaps one of the most controversial of the Proposals is the Zero-Zero. As I mentioned herein above, the restriction against points and fees is lifted on commission-based compensation if the ZeroZero is offered to the consumer. And, even in the event of the exemption, points and fees must result in a bona-fide reduction in the rate. For various reasons this poses a substantial stress to risk management strategies. Notwithstanding the fact that most lenders do not actually offer Zero-Zero pricing, the cost of funds to lenders, and secondary market limits to rate expansion, may negate the possibility of a ZeroZero option.26 This begs the question of how lenders are supposed to cover their costs in order to offer such an alternative loan, if the market structure itself militates against such regulatory demands. Loan size and state mortgage programs would be adversely impacted, because the former often originates through premium pricing, which may not cover the Zero-Zero costs, and in many cases the latter do not permit fee variation by charging points. Indeed, lenders would need to cover costs through a premium interest rate that is likely to push many of them to add prepayment requirements or limit the loans that are made available, because a Zero-Zero would have higher interest payments and a greater risk of prepayment. But how would prepayment fees be imposed if Dodd-Frank imposes limitations on prepayment fees?27 The effect of this regulatory clash would be to drive some lenders out of the market, or, absent prepayment fees, at least make such loans economically impossible. These limits may force lenders to forego prepayment fees, making some of these transactions infeasible, or in some cases, leave the market entirely. If all origination costs must be factored into the rate, additional loans would not

be made, because the increment would lead to originating a high-cost or a higher-priced loan. What about the Zero-Zero’s effect on the prospective Qualified Mortgage (QM) requirements? The MBA offers this sobering scenario: “Should the Bureau include a minimum debt-to-income ratio (“DTI”) in the Qualified Mortgage (QM) requirements, then offering a zero-zero alternative (with a higher interest rate and greater monthly payments) will significantly raise the potential that for some borrowers the increased DTI will exceed QM standards (thereby making the loan unavailable.) We cannot be certain of the shape or content of these other rules since they are not yet finalized, but there is a very real possibility that the operation of other laws may make many zero-zero alternatives unavailable.”28

nate Community Reinvestment Act loans. (While MBA noted that “the Commentary indicates that the ‘geography’ is not a proxy and thus should permit differing compensation for CRA loans, it would be helpful if the rule were explicit on this point.”) 4. Differences in compensation to encourage the offering of good sustainable products to meet public purposes such as state agency or other government program loans. (“Even if steering to these products was possible, the products are beneficial to consumers. Moreover, some of these programs restrict the amount of compensation to loan originators.”) In my view, at this time the definition

of a proxy, the method for identifying a proxy, and the examples of a proxy are inadequate and require further elaboration.

Pricing Concessions I discussed briefly in the Bans and Refinements subsection that the Proposals state that a loan originator may reduce compensation where there is an unanticipated increase in the closing costs attributable to non-affiliated third parties. To qualify for the exception, two conditions must be met: (1) the “unanticipated increase” must result in the actual amount of closing costs exceeding legal limits or tolerances for such costs; and, (2) the lender or loan originator must not have known or could not be reasonably

expected to have known the amount of the closing costs in advance. As in many regulatory matters, it is not what is included, but what is excluded that is of pivotal importance. For instance, it is hard to comprehend why “costs attributable to non-affiliated third parties” may be included, but costs attributed to affiliates are excluded. If a charge is truly “unexpected,” what difference does it make if the charge arises from a third party that is or is not an affiliate? An ongoing problem that has caused considerable concerns for my firm’s clients is that compensation is not permitted to be reduced in order to rectify an erroneous charge on the Good Faith continued on page 40

Risk management may be adversely affected by the Zero-Zero in that this alternative loan product would materially alter the risk by rate increase, concomitant mortgage payment increase, which could lead to defaults. The relationship between points and fees and risk would become distorted, since the market pricing parameters that account for risk are skewed.

Defining Proxies


1. Differences in compensation based on quantifiable revenue differences to the company because of market factors. (“A loan that is brokered out of a lender company—simply because the lender does not offer the product— and that brings in less revenue to the company should be a basis for less compensation than a ‘funded’ loan.”) 2. Differences in compensation based on quantifiable differences in the work it takes for a loan officer to originate a loan should be explicitly permitted. (“Board staff indicated informally that this was permissible. Written clarification would be useful.”) 3. Differences in compensation to origi-


In the Clarifications and Revisions subsection above, I provided the two steps to defining a proxy for permissible and impermissible differences in loan originator compensation, pursuant to the Proposals. Congress did not include a proxy concept in the Dodd-Frank loan originator provisions. It is clear, therefore, that Congress appears to have addressed steering concerns through provisions that expressly address steering. These steps are more of a litmus test than actual examples encountered since April 2011, when the loan originator compensation rules went into effect. This way of defining an ‘unknown’ by extrapolating it into a ‘known’ variable is fraught with legal and regulatory compliance risk. The Mortgage Bankers Association (MBA) offers some observations of examples that should be included in the final rule,29 in order to expand the understanding of how better to discern proxies for compensation, specifically requesting that the Proposals permit:

loan originator compensation Estimate (GFE). The lenders are forced to absorb the cost of the error, rather than being able to reduce the compensation to account for the error. Many theories have been pronounced as to why this aspect of the regulation is needed, most of which seem unconvincing to me. Errors are not abstractly invented by lenders to circumvent the Truth-in-Lending Act. The threat of TILA violations is a strong preventive measure. The many reasons for removing this prohibition are trumped even more by the need to maintain an orderly market. Pricing competition is not an amorphous economic concept. It is a dynamic mechanism that actually informs all market participants of financial advantages and disadvantages. The loan originator who is able to make pricing concessions is in the position to respond promptly and assertively to market conditions, and such adjustments tend to inure to the benefit of consumers. When the consumer benefits the market improves its stability.

Defining the Loan Originator “If one does not know to which port one is sailing, no wind is favorable.” —Lucius Annaeus Seneca




Although lenders and brokers have become familiar with the definition of the loan originator, as described in TILA, various governmental issuances and staff commentary, the Proposals seek to revise the definition itself, as follows:  Existing definition: “a person who for compensation or other monetary gain, or in the expectation of compensation or other monetary gain, arranges, negotiates or otherwise obtains an extension of credit for another person.”  New definition: “a person who takes an application, arranges, offers, negotiates, or otherwise obtains an extension of consumer credit for another person in the expectation of compensation or other monetary gain or for compensation or other monetary gain.” The Commentary contains this interpretation of the new definition: “… a person who assists a consumer in obtaining or applying for consumer credit by advising on credit terms (including rates, fees, and other costs), preparing application packages (such as credit or pre-approval application or supporting documentation), or collecting application and supporting information on behalf of the consumer to submit to a loan originator or creditor. A loan originator includes a person who in expectation or compensation or other gain advertises or communicates to the public

continued from page 39

that such person can or will provide any of these services or activities.” In addition, the Commentary would be expanded to include “clerical” staff: “Managers, administrative and clerical staff, and similar individuals who are employed by a creditor or loan originator but do not arrange, negotiate, or otherwise obtain an extension of credit for a consumer, or whose compensation is not based on whether any particular loan is originated, are not loan originators.” (Emphasis added.) Firstly, the word “offers” is problematic. It makes an individual who is virtually unrelated to the loan origination process, mutatis mutandi, a part of a loan origination transaction. Would a bank teller at a retail branch be an involved party if a referral is made to a loan officer within the branch? Why would a person who has no actual involvement in the loan origination process be considered a loan originator? Secondly, the Proposals should invoke an opportunity to clarify that loan approval functions are not deemed to be originating activities, when such loan approval functions are conducted by “managers and administrative staff” and “similar individuals.” As it now stands, the Commentary states that managers, administrative staff, and similar individuals who are employed by a lender or loan originator but do not arrange, negotiate, or otherwise obtain an extension of credit for a consumer, or whose compensation is not based on whether any particular loan is originated, are not loan originators. The term “arranges” is also problematic. It is much too broad, as witness the CFPB’s own statement that it “believes that it includes any part of the process of originating a credit transaction, including advertising or communicating to the public that one can perform loan origination services and referrals of a consumer to another person who participates in the process of originating a transaction.”30 There is no reason not to differentiate clearly and unambiguously the functions of loan approval and originating. Although managers may approve certain transactions, or have certain ‘override’ privileges, such approval functions do not intrinsically need to be considered core originating functions. Thirdly, and finally, the term “clerical” is unfortunate, and it takes the definition into a much broader context than is pragmatically in accordance with the loan origination process. Processors prepare application packages, collect supporting documentation, and then submit the results to the lender. Essentially, then, processors should be excluded from this definition; indeed, any individual should be excluded who is an employee of a lender or loan originator and performs such processing tasks only as an employee for his or her employer.

A Word o the Wise “Beware of false knowledge; it is more dangerous than ignorance.” —George Bernard Shaw In this second part of the two part series on the Proposals, I have discussed many issues. But the topics mentioned were selected by me to provide a composite understanding. The actual Proposals are extraordinarily nuanced, complicated, deeply described and referenced, and contain many features that interact with other mortgage acts and practices. The CFPB will issue a Final Rule that will leverage these features and likely add other non-negligible, regulatory compliance requirements. Therefore, I should like to re-affirm my opening remarks and urge you to seek a competent, risk management professional in order to obtain reliable and comprehensive guidance toward implementing the forthcoming Final Rule. Jonathan Foxx, former chief compliance officer for two of the country’s top publicly-traded residential mortgage loan originators, is the president and managing director of Lenders Compliance Group, a mortgage risk management firm devoted to providing regulatory compliance advice and counsel to the mortgage industry. He may be contacted at (516) 442-3456 or by e-mail at

Footnotes 1-Foxx, Jonathan, Loan Originator Compensation: Past is Prologue – Part I, National Mortgage Professional Magazine, October 2012, Volume 4, Issue 10, pp 31-49. 2-12 CFR Part 1026, Bureau of Consumer Financial Protection, Truth in Lending Act (Regulation Z), Loan Originator Compensation, Proposed Rule with Request for Public Comment, Federal Register, Volume 77, Number 174, Sept. 7, 2012 3-See Section 609(b) of the RFA, as amended by the Small Business Regulatory Enforcement Fairness Act of 1996 (SBREFA) and the Dodd-Frank Wall Street Reform and Consumer Protection Act. 4-Final Report of the Small Business Review Panel on CFPB’s Proposals Under Consideration for Residential Mortgage Loan Origination Standards Rule-making, July 11, 2012. 5-I have discussed loan originator compensation and qualifications rather extensively. For instance, see Foxx, Jonathan, “Landmark Financial Legislation: New Rules for Mortgage Originators– Part I: Reformation and Regulations,” National Mortgage Professional Magazine, August 2010, Volume 2, Issue 8, pp 28-42; Foxx, Jonathan, A “New Era of Mortgage Reform–Part II: Legislation– Reactive or Proactive,” National Mortgage Professional Magazine, September 2010, Volume 2, Issue 9, pp 22-28; Foxx, Jonathan, “A New Era of Mortgage Reform–Part III: Consumer Financial Protection–Bureau and Bureaucracy,” October 2010, Volume 2, Issue 10, pp 22-40; Foxx, Jonathan, “The Birth of an Agency,” in National Mortgage Professional Magazine, September 2009, Volume 1, Issue 5, pp 24-27; and, Foxx, Jonathan, “The CFPA Controversy: Asking the Tough Questions,” in National Mortgage Professional Magazine, October 2009, Volume 1, Issue 6, pp 22-25. All Newsletters and Articles through 2011 are available at: Also: Op. cit. 1. 6-Dodd-Frank, Section 1403, includes a directive for the Federal Reserve Board to adopt regulations to

implement various prohibitions against steering and related conduct. The CFPB has not yet proposed rules to implement the prohibitions; however, such prohibitions will obviously affect loan originator compensation. 7-In developing a narrative regarding the rules, I will draw on the issuance in the Federal Register (Idem 2) as well as the CFPB’s own Summary of Proposed Loan Originator Rules, issued in accordance with the aforementioned Federal Register notice. 8-In this article I will refer to creditors as “lenders.” 9-This rule would apply to closed-end mortgage transactions. 10-The Zero-Zero requirement would not be “triggered” by charges that are passed on to independent third parties that are not affiliated with the lender or mortgage broker. 11-Discount points and origination fees are payable at or before consummation by the consumer to a creditor or a loan originator organization, except for: (1) Interest, including per-diem interest; (2) any bona-fide and reasonable third-party charges not retained by the creditor or loan originator organization; and (3) seller’s points and premiums for property insurance that are excluded from the finance charge under § 1026.4(c)(5), and (d)(2), respectively. 12-On Aug. 26, 2009, the Federal Reserve Board published a Proposed Rule in the Federal Register pertaining to closed-end credit. As part of that proposal, the FRB sought to prohibit certain compensation payments to loan originators and steering consumers to loans not in their interest because it would result in greater compensation for the loan originator. On July 21, 2010, the Dodd-Frank Wall Street Reform and Consumer Protection Act (DoddFrank) was enacted into law. Among other provisions, Title XIV of Dodd-Frank amended the Truthin-Lending Act (TILA) to establish certain mortgage loan origination standards. And on July 21, 2011, pursuant to Title X of the Dodd-Frank, the Consumer Financial Protection Bureau received its exclusive rule-making and examination authority from the Federal Reserve Board over Truth in Lending Act and its implementing regulation, Regulation Z. Due to litigation, the April 1, 2011 implementation date was temporarily stayed. The stay was dissolved. The effective compliance implementation date of the Final Rule was April 6, 2011. 13-There were 17 SERs selected for the SBREFA process. The CFPB convened the Panel on May 9, 2012. The CFPB provided the SERs with an opportunity to submit written feedback or comments. The original due date was June 4, 2012, but at the request of several SERs, and in light of the additional calls, the deadline was extended to June 11, 2012. The CFPB received written comments from 11 of the SERs and shared these comments with the other members of the Panel. SERs were from commercial banks, credit unions, mortgage companies, mortgage brokers, and non-profit housing organizations. 14-By “substantially,” the CFPB’s Proposal leaves open a precise definition, though it requests comment on whether this term is sufficiently clear and, if not, what other terms should be considered. 15-§ 1026.36(a)(3). 16-§ 1026.36(d)(1). 17-§ 1026.36(d)(1)–5. 18-Op. Cit. 1. 19-§ 1026.36(d)(1)–7. 20-Op.cit. 2, p 55295. 21-Safe harbor is available under § 1026.36(e). 22-Op.cit. 2, p 55313. 23-Op.cit. 2, p 55315. 24-§ 1026.24(d). 25-MBA Files Comment Letter on Loan Officer Compensation and Qualification, issued to members of MBA on 10/16/12 via e-mail from David H. Stevens, president and CEO of the Mortgage Bankers Association. The e-mail includes an Appendix, drafted by Buckley Sandler LLP, addressed to the Mortgage Bankers Association and the American Bankers Association, entitled “CFPB’s Authority to Exclude Certain Statutory Requirements From its Loan Originator Rules.” 26-Op. Cit. 1. 27-Dodd-Frank establishes a new HOEPA trigger for loans with prepayment fees applicable for more than 36 months. 28-Op. Cit. 25. 29-Ibid. 30-TILA § 103(cc)(2)(C), as enacted in Section 1401 Dodd-Frank.



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Not So Free Enterprise in the Mortgage Industry By Carey Hollander

Is our government “anti-American” when it comes to regulating the mortgage industry? While many throw this term around in an irresponsible manner, one thing is certain: government regulations designed to prevent another mortgage meltdown have hurt the

industry and the real estate recovery. These new regulations clearly demonstrate a disconnect between Congress and the way the mortgage industry really works. Take this example: The Appraiser Independence Requirements (AIR), effective as of Oct. 15, 2010, were developed by Fannie Mae, the Federal Housing Finance Agency (FHFA), Freddie Mac and key industry participants to replace the Home Valuation Code of

Conduct (HVCC). Basically, this legislation prohibits banks from ordering appraisals directly from an appraisal company and prevents loan production staff or any other person who is compensated on a commission basis from engaging in communications with the appraiser. AIR was intended to prevent any party from coercing or influencing appraisers in any way to produce a desired value for a residential property. Its true effect has created many unintended consequences.

appraisal and mortgage industries, and ultimately hurt the consumer. The procedure seems very simple and straightforward: Appraisals on Fannie Mae and Freddie Mac loans must be ordered through an appraisal management company (AMC) that then places the order directly with an appraiser. The AMC picks the appraiser indiscriminately, then subsequently forwards the appraisal to the lender after it has been reviewed and scrutinized. This procedure, however, creates several problems. First of all, it adds an additional layer between mortgage proThe effects of AIR on fessionals and their customers, resulting in inevitable delays at best and potenloan processing The effects of AIR include many ineffi- tial misunderstandings in a process ciencies and damage to both the already beset by complexity and intricate requirements. Responsible lenders lose control over the process and are unable to select professional appraisers with local real estate knowledge, experience and expertise at their jobs. This, in turn, leads to increased appraisal challenges and disputes caused by inexperience or unfamiliarity with the area. In the end, AIR causes more work for loan processors and underwriters with few discernible advantages.

The impact of AIR on free enterprise




Even if we submit, for argument’s sake, say that AIR prevents “bad actors” from taking advantage of consumers, this is not the tried and true remedy in our economic system. AIR removes the freedom of choice by lenders to select appraisers who market their business and services in a competitive manner and compromises the recovery of both the mortgage and real estate industries. AIR has severely damaged the appraisal industry by negating the ability of appraisers who have built up a good reputation and improved their business honestly. Instead of reaping the rewards of their hard work, they must now rely on “taking their turn” from the AMCs. Unable to freely market their services to lenders, many good professionals have left the industry. AIR artificially categorizes all appraisal companies as equals. What would happen if our government forced us to choose our doctors in the same way, just because a few quacks, a small fraction of the total, took advantage of their patients? Or for a mortgage industry analogy, what if we made buyers select their dwellings in an artificial manner instead of letting them hunt and find their dream home? As mortgage professionals, we deserve the same rights within our own industry as are afforded everywhere else. Carey Hollander is a retail sales manager for Guaranteed Home Mortgage Company, a licensed mortgage investment and banking firm comprised of more than 300 mortgage professionals lending in 28 states. For more information, e-mail

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Mortgage Fraud: Wrestling With the Octopus ... and Winning! By Greg Holmes




Mortgage fraud definitely has not disappeared since a foreclosure crisis helped bring the American economy to its knees. In fact, fraud is occurring more often and in a wider variety of forms. Industry professionals are finding that protecting yourself against this new generation of mortgage fraudsters is like wrestling an octopus; as soon as you triumph over one potential source of shady dealing, seven others are standing behind it to continue the struggle. Current crime statistics prove that the battle is definitely ongoing. The U.S. Treasury Department’s Financial Crimes Enforcement Network (FinCEN) reports a 31 percent increase in reports of suspicious mortgage activity between 2010 and 2011. There were more than 96,000 instances of suspicious activity in 2011, and 2012 shows no indication of a meaningful reverse in the trend. A recent FBI report on financial crimes pinpoints a key cause of new concern. It notes that fraud cases are diversifying as well as increasing. “For the first time in recent history,” the Bureau stated in its latest Financial Crimes Report to the Public, “distressed homeowner fraud has displaced loan origination fraud as the number one mortgage fraud threat in many offices.” Though the FBI considers loan origination infractions more egregious because of the larger dollar amounts involved, the Bureau “has now adapted its focus to include other new and emerging schemes.”

Beware of new tentacles Traditionally, mortgage professionals could focus their efforts only on spotting financial misrepresentations by applicants seeking mortgages they can’t afford. It is now necessary to broaden the focus to encompass a whole host of scams.  Social Security Number (SSN) fraud and identity theft: Use of a social security number or a government identification card that belongs to

someone other than the applicant, either to obtain a mortgage or to perpetrate a “fraud for profit” scheme.  Income fraud: Overstating income to qualify for a larger mortgage, or understating income to gain a hardship discount or become eligible for a government subsidy.  Liability fraud: Failing to list significant personal debts in an application, preventing lenders from accurately assessing borrowers’ ability to repay.

Arming against the octopus When you consider the variety of ways mortgage lenders can be victimized by scammers and fraudsters, it is easy to see why traditional forms of fraud protection are proving inadequate for today’s tasks. Fighting this particular octopus means battling with all its various tentacles at once, thus allowing mortgage professionals who administer the process to recognize the signs of a swindle in the making. Fortunately, technology has come to the rescue of an overburdened mortgage industry. Today’s professionals can draw on an unprecedented wealth of computerized customer data. Powerful software can mine this treasure trove to uncover more subtle trends in borrowers’ habits and backgrounds than ever before, revealing facts that previously wouldn’t have shown up on lenders’ radar screens. One of the most important data tools at a fraud fighter’s disposal is quality control technology such as Undisclosed Debt Monitoring, a technology pioneered by Equifax. This service monitors a borrower’s credit activity during the “quiet period” from the moment the original credit file is pulled to the day a mortgage loan is closed. The popularity of this service has been spurred in part by Fannie Mae, which recommends that undisclosed debts be verified as part

including self-employof its Loan Quality ment income and nonInitiative (LQI) guidereimbursed business lines. Freddie Mac makes expenses. As a time-savthe same recommendaing bonus, it also allows tion as part of its the underwriter to comResponsible Lending plete a cash flow analyGuidelines. sis using reliable, IRS Quality control techvalidated data. In addinology automatically tion to verifying a boralerts a lender of any rower’s income, Tax potentially risky activity Return Verification conor misrepresentation firms a borrower’s Social during the loan’s quiet “Quality control Security number by period. Credit inquiries, technology tradelines or secondary automatically alerts a comparing it to the correct SSN on the original reissues are immediately lender of any tax forms. If the two noted, and the lender is potentially risky numbers don’t match, notified in a user-friendactivity or it’s time to start asking ly report that makes misrepresentation quick, easy work of during the loan’s quiet questions. investigating any disperiod.”  Identity Validation: crepancies. The quality Addresses the 60 percent of mortcontrol technology is also a discreet gage fraud that involves identificaand effective way of determining tion discrepancies. It provides a which of your customers are “shopvalidation score, specific warning ping around” with other mortgage messages, household income estiloan providers. Salespeople can use mates, and checks of watch lists. an alert as a sign that the borrower needs more personalized attention and added reassurance that your  Social Security Number (SSN) Verification: Establishes the legiticompany’s offer is worth accepting. macy of the applicant’s SSN and Borrowers can benefit from quality name combination, along with control technology as much as lenders confirmation that the SSN and can. A borrower in the mortgage origname are not on the Social ination process may unwittingly get a Security Association death master new piece of furniture or take out an list. This tool meets Fannie Mae additional credit card, changing their LQI requirements. debt-to-income ratio and jeopardizing the loan closing. The borrower’s loan officer is immediately notified of the  Mortgage Participant Report: Applicants are automatically checked change, affording them plenty of time against industry watch lists (OFACto work with the borrower to clear up SDN, GSA-EPLS, HUD-LDP, and credit issues and close the mortgage appraiser license data.) loan on schedule. Quality control technology is only one of the many technologies avail- Taming the beast with able to make the mortgage loan origi- red flags nation process smoother and more While the availability of such powerfree from fraud. A few of the other ful tools is heartening, it can also be a valuable mortgage fraud prevention challenge. Mortgage professionals are already overburdened with the tasks tools include: of seeking new clients and managing  Tax Return Verifications: A variety the flurry of loan paperwork necesof service providers have devel- sary in today’s transactions. It’s tough oped ways to improve the other- to juggle all the elements of the norwise cumbersome and slow mal origination process while simulprocess of comparing the tax taneously implementing a matrix of returns a borrower submits with independent fraud tests, then cobthe actual data on file at the IRS. bling together the results into a Tax Return Verification technology coherent picture of a client’s credit instantly highlights any items a worthiness. This already murky picborrower has failed to disclose, ture is being further clouded by the

identity fraud detection mandates of the Federal Trade Commission (FTC) under its Red Flags Rule, instituted in 2011. The Rule requires financial institutions and creditors to implement a written program to detect the warning signs of identity theft, and requires lenders to systematically incorporate the elements of the prevention program into their daily operations. Clearly, this mandate presents a challenge to mortgage industry professionals. Sensing an opportunity, the credit reporting industry has responded with a new generation of products that package a set of Red Flag identity theft instruments into a form that makes implementation easier. If you ask any successful mortgage

professional about industry trends, you will get an earful about a loan origination process that is already too complicated and growing more unwieldy every day. Lenders need to welcome a new set of solutions. This set of solutions should ideally prevent them from getting wrapped up in the tentacles of a fraud detection regimen that drowns them with paperwork, while also having a monstrously significant impact on their customer relationships and their company’s profitability. Greg Holmes is national director of sales and marketing at Salisbury, Md.-based Credit Plus Inc., a provider of credit and mortgage information services since 1928. He can be reached by e-mail at

A Call for Automation: The Key to Driving Quality and Efficiency in Lending By Scott A. Reed

Resetting the bar So, how can automation further

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The rise of mortgage technology came with the introduction of loan origination platforms, which are still used within the industry by banks, credit unions, mortgage bankers and brokers alike for loan marketing, prequalification, origination and processing. While incorporating such software makes a dent in streamlining the loan process, it also dictates a reliance on small desktop applications, essentially



In the beginning …

acting as a single, non-networked database program with limited functionality. Storing data in one place puts a burden on staff members to move and manage files from one stage to the next throughout the lending process and requires each individual working with the data to have significant knowledge of the originations process and current compliance requirements. The potential result is an obvious compromise in data integrity, a lack of coordinated compliance checks, ineffective delivery to the secondary market and a generally inefficient process. While loan origination software has its place in the market, most organizations utilizing these platforms have slowly started to layer in various additional automation solutions to protect themselves and their customers. Single-point solutions have given way to networked data and cloud-based systems. Still, the system today largely remains manual in nature and expertise-driven. Cumbersome workflow processes and designs with limited compliance checks and rules-based

enhance the industry’s productivity, integrity and deliverability? Where exactly do we go from here? From my perspective, we start by taking a hard look at quality control measures and evaluate opportunities to make A challenge to them more foolproof. There is definitely room push forward “Technology vendors for improvement! In an Mortgage technology has ideal scenario, checks need to diligently come a long way in focus on finding inno- and verifications should recent years. A number seamlessly run behind vative ways to inteof viable tools are grate automation into the scenes in real-time already available, with a throughout the loan the entire process, new breed of solutions including all business process as opposed to at no doubt waiting in the rules and work flows.” one or two stages. wings to further enhance Everything starts and the way we do business. Still, there ends with that idea in mind. remains a great deal of work to be The following are a few of the done in tightening up the lending “must have” items on the roadmap process. Technology vendors need to toward improving quality control and diligently focus on finding innovative efficiency through automation. ways to integrate automation into the  Income verification: From the entire process, including all business onset of the application process, a rules and work flows. borrower’s tax and income verificaIf lending institutions, mortgage tion must be completed correctly technology providers, and regulators so that any possible red flags can partner more closely on identifying the be raised in a timely fashion. gaps and potential areas for enhanceIncorporating a process flow where ment, we can speed momentum toward 4506-T requests are automatically the next level of automation—a level completed would assure income is where improved compliance and risk verified before any additional promitigation become achievable, the poscessing can occur. Data validation sibility for human error is reduced, and and integrity rules enforce accurastaff members can turn their focus cy and a tight integration with toward more intelligence-based tasks external vendors ensures a seamrather than being relegated to pushing less interaction. Checks such as this paper. Incorporating event-based should be repeatedly evaluated processes would allow the user to effecthroughout processing and funding so tively focus on execution with minimum that appropriate actions can be taken disruptions or manual interventions. as necessary. New, robust tools are required to help lending organizations adapt to the con-  Background checks: Currently, stantly changing legislative environment requests for background checks on while maintaining a low tolerance for the individuals associated with a default. For most organizations, maxitransaction are handled manually. mizing value and delivering quality This requires a substantial amount of loans is the expectation rather than the time and diligence, especially considgoal, the main objectives for infusing ering the number of individual parties automation enhancements into the associated with a single transaction, lending process would be to reduce origwhich can include appraisers, closing ination cost, minimize origination time agents, escrow agents, brokers, title and maximize product quality, while agents, loan officers, and a number of enabling an enhanced experience for other professionals. Additionally, it the loan officer, broker and borrower. has become increasingly important to validate the borrower’s relationship  IDAHO

One of today’s undisputed facts is that technology can improve pretty much anything in business. Across multiple industries, the ability to automate processes via innovative solutions has created a level of efficiency that our culture has come to rely on. The mortgage lending industry, in particular, places a significant emphasis on technology—with automation being the cornerstone—to streamline its processes and ultimately, produce quality loans. The better mortgage technology gets, the more we ask of it to further enhance our business processes.

decisioning widen the margin for error where there should be none. Pricing and eligibility for loan programs aren’t nearly as tightly tied to investor guidelines for post-closing delivery as they should be.

a call for automation




continued from page 45

with all of the parties involved in a transaction to ensure that the transaction is being conducted at arm’s length. This process alone has the potential to slow down the delivery of a loan and invites opportunity for human error to occur, thus affecting loan quality. Automated verification that all people involved in the real estate transaction are properly licensed, checked against exclusionary lists and cleared via third-party background checks would also benefit the process, as this would remove uncertainty concerning the legitimacy of any party’s individual role in the process. Appropriate databases to run these checks against would include investor/government-sponsored enterprise (GSE), warehouse facilities, the U.S. Department of Housing & Urban Development (HUD) and the Office of Foreign Assets Control (OFAC). In an ideal scenario, these checks would automatically be conducted in real-time, stage-to-stage, from application through closing, just in case something was to pop up in the middle of the transaction that could affect a loan’s legitimacy.

Loan pricing and eligibility To eliminate unwanted and unnecessary surprises at closing, qualification checks concerning loan price and eligibility should be routinely conducted and repeated throughout the lending process, as opposed to at the very beginning and the end. Any changes to loan programs, debt-to-income ratios, loan amounts or credit profiles should be noted in real time and automatically trigger adjustments or notifications when they cause the loan to fall outside of its set parameters. Automation is essential here, since constantly repeating these checks throughout the process manually is time consuming and allows for human error.

Automated underwriting An analytical comparison of real-time findings between an organization’s automated underwriting system and its current data is needed. Conducting

an automatic and ongoing audit of initial underwriting findings and loan documentation while the transaction is in process is crucial to detecting critical errors that might either prevent a good loan from being approved or push through a loan that may no longer meet eligibility. Whenever a loan’s qualifications change or extend beyond the parameters of the automated underwriting system’s findings, this would trigger the necessary notification and resolution.

How Far Will You Go? Taking your business on the road By BJ Bounds

When it is your own business, you and exchange information and docuhave to own it. Those of you who have ments throughout the loan process. succeeded in your businesses and Once your site and your LOS start those on the road to success know talking, there is no stopping them— exactly what I am talking about. There and that is what you need to make is no eight-hour work day with a one- your loan process efficient and convenient for you and hour lunch and then you your clients. go home. You work when When your Web site work comes, and that visitors decide to start could be any time of the the application process, day or night. And, it folLoan delivery you want them to be If it became possible to automatically lows you everywhere … able to do it right then. detect critical issues concerning loan wherever you are, it is The time it takes for documents during the post-closing important that you can them to call you or process and prior to delivery, the stay on top of your download and print a appropriate modifications could be pipeline and constantly paper application is bring in additional busimade before delivery of the final loan time during which any package, thus eliminating any need ness. Just how far will number of distractions for corrections after the fact. The you go with your busi“Instead of using can take place and the result would be a more streamlined ness? How far can you your site to bring spell can be broken. delivery of the loan to the investment go? With technology in people in, you can Don’t take that chance! community and reduced expense to your back pocket, you actually use it to Make sure you have can decide for yourself. lenders. communicate and online application funcWe have all heard At funding/closing, the system exchange information tionality! Then, make about the importance of would ideally compare loan docuand documents sure those applications ments to corresponding data, check having a Web presence throughout the loan drop into your LOS so signatures for accuracy and flag any that works for you 24 process.” you do not have to reblank boxes when documents are hours a day, bringing returned seemingly completed. The you business and giving your poten- key important data. Now that you have the application result would be a more efficient, tial clients a glimpse into who you are and why they should want to work in the system and your applicant is cleaner delivery of the loan. As we move into 2013, there are a with you instead of your competitors. now a “borrower,” staying on top of number of solutions in development Your personalized Web site is not only the loan while in process is highly in the industry intended to bring us a tailored for your business, but it is significant for compliance purposes few steps closer to meeting these also tailored for the clients you seek. and customer satisfaction. Knowing needs. Automating the origination, Design and messaging gives your visi- what is coming and going keeps you compliance and loan delivery process tors the information they need to on top of your files at all times. To is crucial to realizing what is desper- determine if you are the business they achieve that type of autonomy, you ately needed in the industry—improv- want to work with. And then they can need to be able to see your files ing the customer experience, reducing begin the process of applying right without being tethered to your desk the time of the origination process there on your Web site. That is a at the office and the knowledgeable tremendous step for them, but for communication you will be able to and improving quality. today’s tech-savvy buyers, the conven- offer your clients helps build lasting Scott A. Reed is senior vice president of ience and real-time experience should relationships and will make the entire process more pleasant for administration for Carrington Mortgage not end there. Your Web site can and should be so everyone. Your options here can give Services LLC’s Mortgage Lending Division, where he is responsible for compliance, much more than just a marketing and you the freedom and mobility you process improvement, vendor manage- application platform. Integrating your want with the productivity you need ment, training and the implementation of Web site with your loan origination in the office or anywhere else. The most “mobile” option you have policies and procedures. Scott holds a software (LOS) can give you so much for mobile productivity is the LOS California broker’s license, and has a bach- more than you would expect from elor of science degree in finance from such a technology blend. Instead of mobile application. A mobile app Arizona State University. He may be using your site to bring people in, you synched to your LOS is an excellent can actually use it to communicate tool for on-the-go prospecting and reached by phone at (949) 517-7000.

By Rob Pommier The old document-centered mortgage and closing one by one, which prevents process of the last two decades is chang- other staff members from working on ing. Lenders must leave the time-inten- the loan simultaneously. The total process still takes anywhere sive, paper-intensive loan cycle and between 17 and 150 days to focus their resources on a complete and results in a data-centered process. total cost ranging from The transition to a data$1,000-$2,500. Utilizing a centric workflow will betfactory-style work process ter equip lenders as a was reasonable when loan whole and revolutionize files were still paper docuthe mortgage industry we ments, but the style is know today. obsolete. Not only does Although the benefits of this approach to processmigrating away from a ing require more time and document-centered mortmoney, but it does not gage cycle are impressive, provide the desired level of there is often some hesitation within the industry. “Lenders must leave transparency, often preventing investors from While resistance to change the time-intensive, is not an uncommon phepaper-intensive loan evaluating their loan until nomenon, the crash of cycle and focus their after closing. 2008, resulting in stagnaresources on a Data-driven loan tion of the housing mardata-centered cycle saves time ket, have made lenders process.” and money gun shy to invest in new technologies. In all actuality, the contin- The differences between document-driued use of today’s loan origination sys- ven and data-driven workflow may look tems will only further repress the recov- subtle form the outside, but the result ery of the mortgage industry as lenders is dramatic. The key is a mortgage techremain heavily restricted by a tedious, nology platform that feeds the standardized loan data to all pieces of the inefficient method of loan generation. The effectiveness of data-driven loan cycle in real-time, eliminating the technology will be multiplied by “factory line” of today’s systems. By embracing process services. Business relying on data over documents, Process as a Service (BPaaS) leverages lenders have the freedom to work on the data from tomorrow’s mortgage pieces of the loan they want without operating systems and provides the having to wait on their partners to finservices needed to reduce costs and cut ish, thus reducing cycle time. By building the workflow around a even more time out of the loan cycle. central datacenter, the lender enables multiple departments to work on the The problem with docloan at the same time. In conjunction driven loan origination Document-driven processing is no with this technology, automated decilonger the best option for mortgage sioning capabilities provide for a more lenders to work with. The outdated streamlined process, virtually eliminatprocess wastes valuable time and ing the need for manual evaluation and money, does not scale well and lacks quality checks with each step of the the level of transparency investor’s loan cycle. The automated decisioning desire. Even some current solutions that function can also immediately evaluate market themselves as eMortgages con- data within specific criteria to provide a tinue to rely on document-driven pro- final assessment. Data-focused origination also processing, which results in little to no vides clearer transparency and more change in the amount of time spent working through the loan lifecycle. The accurate risk analysis. As origination loan document still has to pass through continued on page 48 origination, processing, underwriting



BJ Bounds is senior marketing communications specialist for Calyx Software. In addition to media relations and copywriting, BJ is a contributing author to the Calyx Software blog, CalyxCorner. She has more than 10 years of experience in sales and corporate marketing with a focus on technology that spans several industries. She may be reached by phone at (800) 362-2599 or visit

Future of Lending: Data-Driven Lending


LOS. Third-party vendors are lined up to take your business straight from your borrower files. You never have to re-type or re-key information to order credit, closing docs, appraisals, or any other of your typical documents and services. They are all right there to save you vast amounts of time and energy during each step of the process. Your LOS platform should also be configurable with easy-to-implement business rules that give you the peace of mind that even though you are not in the office, your compliance procedures are in place and enforced. With business rules, you can apply hard or soft stops to fields or screens to prevent legislative requirements from slipping through the cracks of your loan pipeline. Instant access to customizable reports also serves to help you stay on top of your workflow and compliance. Technology has made remarkable strides over the past few years. Now that we have cloud-based technology, we have much less hardware to maintain. When we combine our related cloud technologies into systems that work the way we do, we increase our accuracy and production effectiveness. That is why first integrating your Web site and LOS can provide a significant boost to your efficiency. Then, introduce your business to the forward technology that you use for everything else in your life, your mobile phone. Taking your business on the road is more important than ever as our lives demanding greater chunks of our time and energy. Keeping up with compliance in the mortgage industry is a full-time job in itself if you do not let your technology work for you when you need it most. Integrating your business tools for on-the-go productivity is a significant part of driving success in today’s market.  IDAHO

oversight. No matter where you are, you can capture basic information on your smartphone that drops into a new borrower file in your system. Simply connecting to your LOS via cloud technology allows you to start or edit loan files on your phone that are then synchronized as part of your bustling pipeline. Mobile apps also make starting initial borrower or third-party files from your phone’s contact list fast and easy. The convenience of mobile apps for business on the road is tremendous. Depending on your smartphone and service provider, you can check the status of a loan file for a borrower while you are on the phone with them! So, even though you might not want to do excessive data entry on your phone on a regular basis, you have the ability to calculate loan amounts, monthly payments, terms, etc. when it counts for customer service. Mobile apps give you real-time access and information on everything going on in your business. Using your smartphone as an extension of your business resources gives you time and freedom. To get the maximum use out of your in-office business tools, you should ensure your LOS platform is as flexible as you are. By implementing a server-based system, you can access and work your files anywhere you have a secure Internet connection. Such a system would allow a secure workflow and instant oversight into every file in process. You would also have access to your built-in contact database without ever having to worry about losing sensitive data because nothing is stored on a local drive. The integration between your Web site on the front end and your LOS on the back end enables communication between you and your client as the loan progresses throughout the process. From your LOS, you can upload documents for signature or simply send requests for documents to your borrower. The borrower can access the documents or requests from a secure log-in on your Web site, then return the documents by scanning and uploading. Once you get them, they drop directly into the file’s document management system. Flexibility and efficiency also comes from integration within your

future of lending

continued from page 47

staff and underwriters finalize the loan for closing, investors and secondary marketers can access the loan file at any step. This provides them the ability and flexibility to evaluate risk, set pricing and arrange mortgage-backed security (MBS) packages in parallel with the loan working its way to closing. When a datacentric loan platform is combined with process orchestration, the average lender can cut up to 30 percent of more off the time and cost needed to complete a loan.

Introducing the MOS




As technology in outside industries, such as mobile, continues to change and advance, mortgage technology is heavily influenced by the success of these industries various operating systems which results in the implementation of similar offerings tailored to mortgage and lending. For example, since the introduction of Apple’s iPhone in 2007, companies have scrambled to develop applications (apps) iPhone users can download directly to their device based on what they are interested in. This philosophy can be transferred to the mortgage industry in that no lender has the exact same technology needs as another. The latest advancements in mortgage technology now allow lenders to add apps to their mortgage operating system or “MOS” to meet their specific needs. If the lender no longer sees a need for an app, it can be removed without impacting the functionality of the MOS and its remaining apps. Just as iPhone users vary in the way they use their phones, lenders vary in the way they prefer to conduct business. Datadriven systems grant lenders the ability to select the apps they want in order to tailor their loan system as they see fit. By allowing for multiple apps to be added to the MOS, lenders now have the power to expand the clientele they serve due to the variation of services available through the apps.

Add on BPaaS to maximize efficiency While data-driven automation services are one of the fastest growing areas of technology growth, lenders can also benefit by moving business process services to the cloud. Traditionally, lenders who wanted to utilize a third-

party service for processes, such as settlement services would have to sign extensive monthly contracts and pay for a certain amount of bandwidth, regardless of whether it was used or not. BPaaS builds on the benefits of cloud-based software by providing processes and expertise through a pay-per-use model. Much like data-focused software removes the barrier of expensive installations, BPaaS does not require a heavy upfront investment in new infrastructure, which enables fast entry into new markets and smooth setup of operations in new geographies. For example, a lender can work with a BPaaS service to provide support for mortgage origination, enabling interaction between the many players and parties involved in the transaction. They could enhance that support with document management to streamline communications—and all of it is available on demand, in real-time. Ultimately, BPaaS enables lenders to have greater end-to-end flexibility and effectiveness in their operations and provides options that can dramatically improve processes without requiring a massive influx of capital. BPaaS can be as extensive or as minimal as necessary to meet the lender’s needs. BPaaS solutions can enhance individual parts of the process or re-tool the entire workflow into an effective end-toend workflow. BPaaS is also a real consideration for lenders facing major changes, such as acquisitions or entering new states. The ability to apply the same technology standards easily across the entire enterprise makes a combination of data-driven technology and BPaaS a lower cost, lower risk option. Based on the current capabilities of data-driven systems, the reign of document-driven technology seems to be coming to an end. By embracing new technologies that allow for customized programs and improved functionality, lenders can better manage their employees and improve client satisfaction. Rob Pommier is vice president of business development for Genpact Mortgage Services and is responsible for the development, sales and marketing of the company’s Quantum Mortgage Technology platform. He may be reached by e-mail at

Business Units: No Longer Islands By Sanjeev Dahiwadkar Change can be good; however, it impossible to locate missing docudepends on your perspective. These ments. Those days are now long gone. Historically, it was not important to days, you might be hard-pressed to find many mortgage-related companies a servicer who originated the loans and conversely originators excited about the changes did not think about what brought about during the happened after the loan last five years. In fact, closed. Why? Because some mortgage profesthere was little if any sionals said change was loan review. For example, inevitable due to some of when a servicer received the industry’s flawed busia loan, they were not ness practices. Whether concerned with who veriyou see change as good or fied employment for the bad, one of the unintenborrower and could not tional side effects of the tell who had done so. new regulations such as Now, with regulatory and those under Dodd-Frank “Reducing the audit requirements, serand those proposed by the vicers must retain all Consumer Finance Protec- organization’s use of the sub-par system origination documentation Bureau (CFPB) is that will prevent deeper tion to properly service mortgage lenders and serentrenchment of the the loan. Additionally, vicers are forced to reevalutechnology and allow the call for a single point ate the cost of doing busifor smoother of contact (SPOC) requires ness. Technology is one of transition to a new this individual to possess those costs, and it is becomsystem.” detailed information and ing a larger piece of their in depth knowledge businesses as more technolabout the loan and the borrower, ogy innovations are made. In order to stay in business and rather than having expertise in a single evolve, companies will need to look at specific area. The growing need for transparency their different business units (originations through servicing through loan at every step of the loan process—from disposition) as a whole instead of indi- originations to disposition or default— vidual components or silos. This per- makes it imperative for technology to spective will enable them to better fit within all lines of business, create determine how to use technology col- efficiencies and at the same time allow laboratively across those units. In fact, the lender/servicer to remain complifuture technology will need to remove ant. Along with transparency, systems the barriers between these business need to collect and archive loan inforunits and eliminate the siloed mentali- mation not only for servicing and disty for the company to survive the bur- position purposes, but for quality control and auditing as well. geoning regulatory climate. Companies should use the following Until recently, most companies approached the different silos of their process to ensure its technology drives businesses with different technology the company toward success in tomorsolutions. Origination, servicing (or row’s business climate: default) and loan disposition all operated separately with their own technolo-  Assess: Companies must evaluate their current systems and determine gy. Experts in each area, such as default the viability of their business in the specialists, servicing specialists and disnew regulatory environment. position specialists, used technology to Companies may have to realize they enhance their individual capability cannot keep antiquated systems as without considering the ramifications their system of record, as they will on the whole process. Unfortunately, not prove efficient or effective in the when using disparate systems created a current or future business climate. data integrity challenge that made it

In other words, a company should not expect a pig to fly (work with changing regulatory requirements) just because the pig could jump (worked previously). These closedend systems that try to monopolize a specific area in the process will be a company’s downfall.  Determine: An honest look at what they need to meet the regulatory requirements while still creating process efficiencies is paramount. Selecting technology that not only positions a company for future efforts, but can operate effectively in today’s market is critical.  Contain: If a company determines it needs to implement new technology, it should begin using the current system only minimally in an effort to phase it out. Reducing the organization’s use of the sub-par system will prevent deeper entrenchment of the technology and allow for smoother

transition to a new system.  Reduce: After isolating and limiting the use of old technology to a specific department, companies can then slowly start to do reduce its use and transition.  Migrate: This will not happen over night, but once the company begins making the change, migrating will be the step that allows new efficiencies and the ability to remain relevant and compliant in an everchanging market. Companies may find that some systems may need to be replaced while others work just fine. Using a gradual approach is necessary and can be executed with the use of a technology platform that can compliment the existing systems as well as operate with the new ones. This system will give users the ability to make an orderly transition between systems as necessary while

providing the transparency and control they need. This method allows companies to avoid disrupting day-to-day processes and does not entail down time while making the transition. Future technology also needs to accommodate mobile users who want to easy system access from anywhere and at any time using one of the popular tablet devices. Convenient technology that allows this to take place will be the leaders in the mortgage industry. The use of mobile technology will require additional mental adjustments on the part of the mortgage industry and will move the industry forward, if allowed to do so. There is not a silver bullet technology that will solve all the needs and requirements of a mortgage company. A group of technologies that work together, have open architecture, create transparency and fill the gaps between business units seamlessly is

what the industry demands. Now, regulatory entities such as the CFPB require audits that not only capture what was done regarding a loan but also who did it, when they did it and why, and technology helps organizations retain this information in one place. Instead of having several disparate systems with different pieces of information, more collaborative systems will rise and companies that want to be successful will leverage them instead of holding on to their old systems. Ultimately, you should not wait for the pig to fly just because you saw it jump. Sanjeev Dahiwadkar is president and CEO of IndiSoft LLC, a Columbia, Md.based software development company for the default servicing industry. He manages the company’s overall strategic planning and direction as well as oversees its business operations. He may be reached by phone at (410) 730-0667.



stil standing

continued from page 21

those changes stop us in our tracks. We abide by all regulations and do not have a problem with accepting and implementing them into our business model. We take the time to understand them so we can clearly determine how we can and cannot proceed with building our business. The key is to be the best at executing within the regulatory framework that exists at a given point in time.

Set a clear vision for the future As we look to the future, we know where we want to go and how we plan to get there. We are currently licensed in 22 states and the District of Columbia, and have our heaviest presence in the Northeast, where we have done well during the last few years despite the financial crisis. The Southeast has been a little more challenging, but we are confident we will begin to see growth in that region as well. We will continue to bring on the very best talent in our

new to market




industry and teach them the high quality standards that we have set for our organization. We will continue to put quality before quantity, and focus on the core fundamentals that have gotten us to this point, despite a perfect storm these past few years. I am proud of our accomplishments and am thankful for the lessons we have learned. Our industry faced what were insurmountable challenges for many, but we stayed our course and it has allowed us to become who we are today. Mortgage Master is an exceptional team of great leaders and innovators, focused on the fundamentals necessary to becoming one of the best financial service companies in the country. Paul Anastos is president of Walpole, Mass.-based Mortgage Master, a superregional mortgage banker and one of the country’s largest privately-owned mortgage companies. He may be reached by phone at (508) 850-4100.

production, which helps mitigate loan repurchase risk. Fully automated, Spectrum rapidly delivers loan-level verifications by combining unique data assets with integrated workflow processes to reduce fraud, improve overall loan quality and cycle times, avoid capacity issues, and reduce costs. Spectrum also provides real-time access with intuitive ordering and tracking screens to efficiently deliver the most current and accurate data. Verification services currently offered through Spectrum include: employment and payroll income via The Work Number—Equifax’s proprietary database of 210 million-plus employerdirect payroll records, IRS tax transcripts (4056-T), identity and social security number authentication, verification of deposits, and verification of hazard insurance coverage. Spectrum enables the lender to order a full array of verification reports through a single, intuitive Web interface, or through direct system integration. A system-driven workflow assembles the verifications using both database content and information collected and audited manually by trained verification specialists. For several clients, Spectrum has demonstrated clear effi-

ciency gains and cost savings over inhouse processing. Additionally, Spectrum features Undisclosed Debt Monitoring (UDM), which is the mortgage industry’s only service that continuously monitors and distributes daily alerts of new loan applicant activity initiated during the pre-funding stage of a loan. UDM reduces risk and protects lenders from repurchase demands and unsalable loans related to inaccurately reported debt-to-income ratios.

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

continued from page 38

that enables side by side comparison of documents in the same window with drag and drop functionality; enhanced controls to manage document stacking; and significant upgrades and flexibility to the bundling and delivery engine. “As always, the enhancements and features included in this release hinge on delivering what lenders need to maximize efficiency in today’s market”, said Steve DeBlasio, national sales manager for Axacore Inc. In addition to the new features, Axacore has made significant changes and updates to its underlying technologies that build on the existing high performance, scalability and reliability that the Axacore platform is known for. “We understand that mortgage lenders all operate differently, however the common denominator always includes reducing expenses, time and

nmp news flash

staying in compliance,” said DeBlasio. “Our goal was to deliver the enhancecontinued from page 19 ments that our customers need while maintaining the sought after flexibility of our platform. This allows Lenders to “Research shows that upwards of 65  Stakeholder input is typically gathered conduct business their way and our goal percent of complex software implementatop-down versus bottom-up. has definitely been reached with this tions result in failure,” said David Colwell,  Vendor evaluations focus primarily on version. vice president of corporate strategy at system functionality and give less LendingQB. “Even for implementations weight to system utilization. New Equifax Product that do succeed, more than a third of these The EPA provides lenders with a balTakes Aim at Loan projects go over budget. The goal of the anced and objective perspective on a venQuality Production EPA is to help lenders avoid being one of dor’s complete technology stack and Equifax has these statistics and achieve an optimal ROI uncovers issues that are not readily apparannounced that effectively addresses the technology ent to management. the availability of its Spectrum goals they have in mind.” “Even large organizations that can proVerification Services Platform, which LendingQB unveiled their EPA model duce detailed RFPs are not immune to strengthens lender confidence by earlier this year, and conducted a series of what I term ‘feature enamored syndrome,’ streamlining the verification processes Webinars over the summer to help lenders or poor weighting of technology through underwriting, quality assur- objectively evaluate mortgage technologies. demands,” said Colwell. “We designed the ance and closing. Equifax developed The EPA model engages lenders through in- EPA to be as an aid to existing evaluation Spectrum to help lenders gain efficien- depth interviews with lending executives methods. As a company that has successcies and improve overall loan quality and management, and is followed by fully implemented systems for hundreds of detailed mapping of a lender’s unique financial institutions, our value to lenders workflow, which then provides a framework is more than the systems we build. We for LendingQB to construct a custom survey want to contribute to a lender’s success, that gathers productivity assessments from whether they use our technology or not.” the lender’s staff. A statistical analysis is then applied to identify key improvements and Your turn correlate data along with recommended National Mortgage Professional Magazine technology objectives and a clear path for- invites you to submit any information on ward roadmap. regulatory changes, legislative updates, EPA findings show that: human interest stories or any other news Lenders tend to focus on surface-level worthy items pertaining to the mortgage features instead of addressing solutions industry to the attention of: to underlying problems.  There are typically five major producNMP News Flash column tivity bottlenecks that lenders try to Phone #: (516) 409-5555 address with new technology. E-mail:  Prioritization of features is determined using subjective methods instead of Note: Submissions sent via e-mail are prerelying on objective or empirical data ferred. The deadline for submissions is the such as productivity improvement. 1st of the month prior to the target issue.


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

committed to promoting a standard of excellence, responsible lending, and acknowledging there is a borrower at the end of each transaction. Our professional sales and operations staff is dedicated to providing its clients with exceptional levels of service and customer support. To learn more about the HomeBridge advantage, please contact us at 855-729-2885.


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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Continuing Education (Cont.)

Compliance Consultants

BROKERS COMPLIANCE GROUP 167 West Hudson Street – Suite 200 Long Beach | NY | 11561 Division of Lenders Compliance Group, BCG is the first and only mortgage risk management firm in the U.S. devoted to supporting the unique compliance needs of residential mortgage brokers. Leveling the Playing Field for Mortgage Brokers Low Cost Monthly Membership Includes: • Free Weekly Hotline • Access to Subject Matter Experts • Policies and Procedures • Webinars *Special Pricing* • Quality Control • Exam Readiness • Licensing • Legal Reviews

Direct Mail (Cont’d)

Mortgage Seminars 248-403-8181 Jeff Mifsud, a former FHA Direct Endorsed Underwriter trained by HUD and an FHA Originator for over 15 years, is publisher of The FHA Originator, a monthly marketing newsletter which gives you… • • • •

FHA guideline news to keep you updated FHA Marketing tips and downloads that are easily customized Personal development tips to help you develop your character Full access to all previous FHA marketing downloads!

No contracts so sign up today and give yourself the tools to brand yourself as The FHA Expert in your marketplace. Cost: Only $19.95 per month per physical office location. Watch for our 8 Hour NMLS Continuing Education Course

Credit Reporting

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

Document Preparation 53

LENDERS COMPLIANCE GROUP 167 West Hudson Street - Suite 200 Long Beach | NY | 11561 | (516) 442-3456 The first full-service, mortgage risk management firm in the country, specializing exclusively in mortgage compliance. Pioneers in outsourcing solutions for mortgage compliance. Our Compliance Team Will:

Robertson | Anschutz 800-343-7160

Credit reports • Rapid rescore • Reissue • Supplements IRS & Social verification • VOE / VOI • Title • Flood Appraisals / BPO / AVM • Fraud alerts • Red Flag • LQI MOST AGGRESSIVE PRICING!

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

Direct Mail

Document Preparation (SaaS)

Abacus Mortgage Training and Education PO Box 780 Summerfield, NC 27358 888-341-7767 • NMLS approved 20 hour Prelicensing Education NMLS approved Continuing Education Live Classroom Instruction, Web Delivery and Private Events The SAFE-Smart ExamCram, Powerfully Innovative Test Prep

TagQuest 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.

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

Bookmark this! Access these listings online at


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

Docs on Demand 800-343-7160


Continuing Education 

Leverage your existing employees. Improve your productivity. Collaborate on projects. Make the most of your current technology. Bring innovation to your company. Be a strong cultural fit. Free you to focus on your core competencies. Give you access to world-class expertise. Lower your total operational costs.

“A Full Service Lending Information Company” A/E: Jeremy “Judge” Honor 877-MFI- DATA

Employment Services

Marketing Services

8520 Macon Rd. Ste 2 Cordova, TN 38018 | 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.

Valuation Services

Veros Real Estate Solutions 2333 North Broadway, Suite 350 • Santa Ana, CA 92706 (866) 458-3767 • @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.

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


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!


HomeBridge 5 Park Plaza, 10th Floor Irvine, CA 92614


54 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.

TagQuest ................................................................888-817-8980 CUSTOMIZE YOUR CAMPAIGNS! FHA - HARP - VA Leads, Loan Modification, Debt Consolidation, Direct Mail, Data List, Live Transfers, Internet Leads –



Loan Origination Systems

Calyx Software 800-362-2599


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.

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.

Icon Residential Lenders (888) 247-4207 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

Wholesale Lenders

Wholesale Lenders (Cont’d.)

CBC National Bank 3010 Royal Boulevard South, Ste. 230 Alpharetta, GA 30022 888-486-4304

Real Estate Mortgage Network, Inc. 866-933-6342 REMN has FHA, USDA, 203k, VA and Conventional solutions to fit the needs of your customers. But, at REMN, our most valuable product is our people. The REMN Sales and Operations Teams give you - and your loans - the time and attention that you deserve. Even better, at REMN, same-day approvals are guaranteed.* You can rely on us to get the little, yet vital, things taken care of on time. Interested in joining our Wholesale Division? Send your resume to


United Wholesale Mortgage 800-981-8898 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!

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 for further details. Big Enough to MATTER…Small Enough to CARE




calendar OF EVENTS

To submit your entry for inclusion in the National Mortgage Professional Calendar of Events, please e-mail the details of your event, along with contact information, to DECEMBER 2012 Friday-Monday, December 7-10 NAMB National 2012 MGM Grand 799 South Las Vegas Boulevard Las Vegas, Nev. For more information, call (972) 758-1151 or visit




FEBRUARY 2013 Sunday-Wednesday, February 3-6 2013 CREF/Multifamily Housing Convention & Expo Manchester Grand Hyatt San Diego 1 Market Place San Diego, Calif. For more information, call (800) 793-6222 or visit Tuesday-Friday, February 19-22 Mortgage Bankers Association (MBA) 2013 National Mortgage Servicing Conference & Expo Gaylord Texan Hotel & Convention Center 1501 Gaylord Trail Grapevine, Texas For more information, call (800) 793-6222 or visit Thursday-Saturday, February 21-23 Mortgage Bankers Association (MBA) National Short Sale and REO Summit 2013 Gaylord Texan Hotel & Convention Center 1501 Gaylord Trail Grapevine, Texas For more information, call (800) 793-6222 or visit MARCH 2013 Wednesday-Saturday, March 6-9 Mortgage Bankers Association (MBA) 2013 Mid-Winter Housing Finance Conference The Ritz-Carlton Bachelor Gulch 130 Daybreak Ridge Avon, Colo. For more information, call (800) 793-6222 or visit

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 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 APRIL 2013 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 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 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

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) 7936222 or visit

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) 7936222 or visit

Why I Love Being a Mortgage Broker and Will Never Jump Ship By Mike Anderson, CRMS

As one of the past leaders at NAMB—The Association of Mortgage Professionals who initiated the lawsuit against the Federal Reserve Board on loan originator (LO) compensation, it is hard to believe that I am actually saying that “I Love Being a Mortgage Broker!” The year 2012 turned out to be one of the best years in my company’s 14-year history, with more than 85 percent of our total production being purchase-based business. FHA accounted for nearly 45 percent of the total volume and there is no doubt whatsoever that the reason for our success was due to the fact that we are a Mortgage Broker. I know this is hard to believe but, the secret to our success this year is attributed to the LO comp rule. So far this year, we have issued more than $600,000 in lender credits toward borrower closing costs and pre-paids where our direct lender competitors are not issuing the credits. Our real estate agent partners are selling this to their clients on the benefits of using a mortgage broker. We have actually received loans from a listing agent after a direct lender has asked the seller to pay $5,000 to $7,000 in buyer’s closing costs and after getting a quote from our company, we end up saving the seller if not all, but a large portion of the amount requested resulting in a lower price for the home. We have also set our compensation level at one that allows us to issue large lender credits to our borrowers. We are making more money now than we have in many years by sheer word of mouth. We get calls from friends, family members and co-workers of our customers asking about the credits. If you are a mortgage broker, be proud of what you have to offer and get the word out on lender credits, especially on government-backed loans. One cannot help but notice that the big banks are boasting record profits this year from loan originations and it’s no wonder when you see a 3.5 percent FHA loan paying 105.500. So get the word out and let every real estate agent, builder, title company, escrow company and the social media know what you have to offer. One tip is to set your compensation level at a price that is not to greedy and one that allows for you to offer credits in the first place. Mike Anderson, CRMS, is president of Louisiana-based Essential Mortgage, A Latter & Blum Realtors Company. He may be reached by phone at (225) 2977704 or e-mail

Does your Direct Mail & Data vendor have both a clean track record, and experience spanning over a decade? This could mean the difference between your company’s success and failure.

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