Illinois Mortgage Professional Magazine July 2014

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n Illinois Mortgage Professional Magazine n JULY 2014

THE

CHANGE AGENT OF THE MORTGAGE INDUSTRY.

Celebrating 25 yearss of exceptional e residential lending services.

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MORTGAGE MOR TGAGE BANKERS ASSOCIATION ASSOCIA AT TION

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FFirst irst G Guaranty uaranty Mortgage Mortgage Corporation Corporation isis an an FHA FHA Approved Approved Lending Lending Institution, Institution, a and nd iiss nnot ot a acting cting oonn b behalf ehalf ooff oorr a att tthe he d direction irection of of HUD/FHA HUD/FHA or or the the federal federal g government. overnment. First First Guaranty Guaranty Mortgage Mortgage Corporation Corporation Headquarters Headquarters isis located located at at 1900 1900 Gallows Gallows Road, Road, Suite Suite 800, 800, Tysons Tysons Corner, Corner, VA VA 22182 22182 (800) (800) 296-2275.

296-2275.

Company Company NMLS# NMLS# 2917.

2917.

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

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ILLINOIS EDITION

Illinois Association of Mortgage Professionals 14540 John Humphrey Drive, Unit 1 v Orland Park, IL 60462 Phone: (630) 916-7720 v Fax: (630) 396-3503 IAMP Web site: www.iamp.biz

2014 IAMP BOARD OF DIRECTORS

Officers

Larry Bettag Michael Brinkman Ronald J. Drabeck Carol Crowley Jeff Fishman Brent Terry Carol Gardner

President President-Elect/Treasurer Immediate Past President First Vice President Secretary MEF Liaison Government Affairs Chair

Phone # (630) 524-9677 (847) 349-5450 (708) 349-3040 (773) 858-0132 (847) 208-4990 (630) 877-7113 (708) 827-5362

E-mail lbettag@ccmclending.com michael.brinkman@impacmail.com rondrabeck@comcast.net carol.c.crowley@gmail.com fish@perlmortgage.com bwterry@live.com cgardner@lendingnetwork.net

Directors Debra Allgood Colleen Coleman Charlie Eck Todd Fisher Jeri Lynn Fox Tuck Marshall Dennis Papiernik Don Starks Robert Perry Larry Gold Roger Wooten

(630) 904-6600 (855) 663-5100 (773) 348-8444 (847) 837-5300 (630) 333-1800 (815) 469-5200 (630) 873-6342 (309) 664-9100 Executive Director Legal Counsel Accountant

deb@itsallgoodmortgage.com colleen.coleman@Stonegatemtg.com ceeck@lincolnmtg.com toddfisher97@yahoo.com jeri@usamortgagecorp.com tmarshall@jcmarshall.com dpapiernik@addvalueinc.com dstarks@misloans.biz

(630) 916-7720 (312) 332-6194, ext. 27 (630) 272-1019

bperry@iamp.biz lgold@gsgolaw.com rwootencpa@gmail.com

Mortgage Education Foundation Officers Brent Terry Larry Bettag Carol Crowley Jeff Fishman Tuck Marshall

MEF Chairperson MEF Co-Chair MEF Director MEF Director MEF Director

(630) 877-7113 (630) 524-9677 (773) 858-0132 (847) 208-4990 (815) 469-5200

bwterry@live.com lbettag@ccmclending.com carol.c.crowley@gmail.com fish@perlmortgage.com tmarshall@jcmarshall.com

IAMP

calendar of events AUGUST 2014 Tuesday, August 12 IAMP Board of Directors Meeting 10:30 a.m.

SEPTEMBER 2014 Tuesday, September 16 IAMP Board of Directors Meeting 10:30 a.m.

OCTOBER 2014 Tuesday, July 15 IAMP Board of Directors Meeting 10:30 a.m.

NOVEMBER 2014 Tuesday, November 18 IAMP Board of Directors Meeting 10:30 a.m.

Twitter.com/ntlmortgagepro

facebook.com/mortgageprofessional

LinkedIn.com (search National Mortgage Professional Magazine)

IAMP Moves to New Offices After two decades, the Illinois Association of Mortgage Professionals (IAMP) is relocating its offices. The owner of the current office in Lombard, Ill. has lost the building. The facilities have fallen into a state of disrepair, resulting in multiple citings from the Village of Lombard.

IAMP is closing its offices on July 24-25 in order to move.

The new office suite was donated by one of IAMP’s members, and beginning Monday, July 28, will be located at 14540 John Humphrey Drive, Unit 1 in Orland Park, Ill. All telephone and fax numbers will remain the same.

For more information, call IAMP Executive Director Bob Perry at (630) 2568416 or visit www.iamp.biz.

n Illinois Mortgage Professional Magazine n JULY 2014

IAMP Members in good standing may attend the IAMP Board of Directors Meetings by pre-registering with Bob Perry in advance by calling (630) 256-8416. Pre-registration Required. For information on all IAMP events, call the IAMB State Office at (630) 916-7720 or visit www.iamp.biz.

NationalMortgageProfessional.com

DECEMBER 2014 Tuesday, December 16 IAMP Annual Board of Directors Meeting & Board of Directors Election 10:30 a.m.

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Illinois AG Madigan Recovers $84 Million in Citigroup Settlement

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Illinois Attorney General Lisa Madigan has announced an $84 million settlement with Citigroup as a result of the bank’s misconduct in its marketing and sale of risky residential mortgage-backed securities (RMBS) leading up to the 2008 economic collapse. The agreement is part of a national settlement forged by the U.S. Department of Justice (DOJ) and also joined by attorneys general from California, Delaware, Massachusetts and New York.

The settlement includes $44 million in relief to fully recover for losses incurred by Illinois’ pension systems and $40 million in consumer relief.

An investigation by Madigan’s office revealed that between 2006 and 2007 Citigroup failed to disclose the true risk of RMBS investments to Illinois’ pension systems and therefore misled the systems when they invested in the RMBS market.

“This relief will fully restore the losses Illinois’ pension systems incurred as a result of Citigroup’s fraudulent schemes in the mortgage-backed securities market, and it will provide much-needed aid to Illinois homeowners who are still paying for Wall Street’s reckless actions,” Madigan said. “This settlement is the latest in my ongoing commitment to recover critical funds not only for homeowners but also for the state as we continue to address Illinois’ financial crisis.”

The settlement requires Citigroup to pay a total of $44 million to the Illinois Teachers Retirement System, the State Universities Retirement System, and the Illinois State Board of Investment, which oversees the State Employees’ Retirement System, General Assembly Retirement System and Judges’ Retirement System.

Citigroup also will provide at least $40 million in consumer relief, including assistance for homeowners and renters as well as funding for blight reduction. An independent monitor will be appointed to oversee the relief distribution.

The settlement is the second agreement Madigan has secured as part of her work on the Residential Mortgage-Backed Securities Working Group under President Obama’s Financial Fraud Enforcement Task Force. In 2013, Madigan announced that Illinois’ pension systems would receive over $100 million from JPMorgan Chase & Company to settle similar allegations about its marketing of risky securities investments.

Long before the settlement announcement, Attorney General Madigan has led the country in taking legal action against banks, lenders and other financial institutions for unlawful financial misconduct that contributed to the country’s economic collapse.

Madigan was a lead negotiator in the $25 billion national mortgage settlement with the country’s largest mortgage servicers–Bank of America, JPMorgan Chase, Wells Fargo, Citibank and Ally Bank, formerly GMAC–that addressed allegations of widespread “robo-signing” of foreclosure documents and other fraudulent practices banks employed while servicing mortgages of struggling homeowners. As a result of Madigan’s leadership, Illinois borrowers have received over $2.4 billion in direct relief.

Madigan also was the first attorney general in the nation to sue a national bank for fair lending violations. Madigan and DOJ secured a $175 million national settlement to resolve allegations that Wells Fargo illegally targeted African-American and Latino borrowers for sales of the lender’s poorest quality and most expensive mortgages during the height of the sub-prime mortgage lending spree. Madigan and DOJ also reached a $335 million national settlement with Countrywide, once the nation’s largest mortgage lender, to resolve similar allegations of fair lending violations. The settlement has provided restitution to harmed Illinois borrowers and is the largest settlement of a fair lending lawsuit ever obtained by a state attorney general.

Madigan also reached a landmark $8.7 billion national settlement in 2008 against Countrywide for deceptively placing thousands of Illinois homeowners into ultra-risky and unaffordable sub-prime mortgages. The settlement with Countrywide’s new owner, Bank of America, established the nation’s first mandatory loan modification program.

Currently, Madigan is litigating against the national credit rating agency Standard & Poor’s, alleging that the company compromised its independence as a rating agency by doling out high ratings to unworthy, risky investments as a corporate strategy to increase its revenue and market share.

Illinois Home Sales See Slight Uptick in June Illinois home sales reversed course in June with statewide home sales experiencing a slight year-over-year gain for the first time this year. Home prices continued to climb and marked the 22nd consecutive month of annual increases, according to the Illinois Association of Realtors (IAR).

Statewide home sales (including single-family homes and condominiums) in June 2014 totaled 15,661 homes sold, up 0.1 percent from 15,640 in June 2013.

The statewide median price in June was $179,900, up 5.8 percent from June 2013 when the median price was $170,000. The median is a typical market price where half the homes sold for more and half sold for less.

“After several months of declining annual sales, it’s great to see home sales come roaring back,” said Phil Chiles, ABR, CRS, GRI, SRES, president of IAR and broker-associate with The Real Estate Group in Springfield. “Increasing prices and sales point to an improving economic situation and a strengthening real estate market.”

Fewer homes on the market this year has translated into faster sales times.

According to the data, it took 68 days on average to sell a home in the state, down 10.5 percent from 76 days last year. The average time to sell a home in the Chicago area was 53 days in June, and 44 days in Chicago.

The monthly average commitment rate for a 30-year, fixed-rate mortgage for the North Central region was 4.17 percent in June 2014, down from 4.18 percent in May, according to the Federal Home Loan Mortgage Corp. In June 2013 it averaged 4.09 percent.

In the nine-county Chicago Primary Metropolitan Statistical Area (PMSA), home sales (single-family and condominiums) in June 2014 totaled 11,241 homes sold, down 1.2 percent from June 2013 sales of 11,374 homes.

The median price in June 2014 was $220,000 in the Chicago PMSA, up 7.3 percent from $205,000 in June 2013.

“The volume of sales over the next three months (July, August and September) is forecast to match those recorded in 2013. In addition, median

prices are continuing to climb while the REAL Housing Price Index suggests a slightly more optimistic growth rate when housing characteristics are taken into account,” noted Geoffrey J.D. Hewings, director of the Regional Economics Applications Laboratory of the University of Illinois. “Further good news may be found in the Chicago foreclosure inventory; the average inventory change rates were -24.2 percent in the past 6 months, -14.3 percent in the last 12 months and -8.2 percent in the last 24 months. Given these rates of change, the foreclosure inventory would return to the pre-bubble levels by Oct 2014, Dec 2014 and May 2015 respectively.”

While Illinois’ foreclosure picture is brightening, foreclosures can negatively impact a neighborhood and a new research study by REAL puts a dollar figure on the potential impact to Chicago property values. For example, having one or two foreclosed properties within a tenth of mile to a home can reduce its price by $6,535, based on a $150,000 home.

Forty-three (43) of 102 counties in Illinois showed annual home sales increases in June 2014. Fifty-five (55) counties showed year-over-year median price increases including LaSalle, up 18.8 percent to $101,000; Kane up, 10.8 percent to $205,000; Cook, up 6.7 percent to $224,000; and Sangamon, up 6.3 percent to $146,750.

The city of Chicago saw a 1.2 percent year-over-year increase in home sales in June 2014 with 2,761 sales, up from 2,729 in June 2013. The median price rose to $275,000 versus $252,500 in June 2013, an annual increase of 8.9 percent.

“Home sales traditionally pick up in the summer months, and June was no exception. Chicago buyers helped reverse a year-over-year sales trend by buying more homes than last June,” said Matt Farrell, president of the Chicago Association of Realtors and managing partner of Urban Real Estate.

“Demand continues to outpace home supply, and buyers are finding the home they want in a shorter amount of time. This continued to push median prices higher, putting sellers in a strong position.”

• Daily updated mortgage • Find loan programs industry news • Discover local and • Industry blogs national events • Write your own blog • Get access to video

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n Illinois Mortgage Professional Magazine n JULY 2014

You're going to need a bigger pipeline!

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Close with MORE loans FASTER our wholesale division!

1

30 Top Mortgage Executives Sound Off on the State of the Industry

By Tom LaMalfa

J U L Y

42 First They Came for the Payday Lenders

By Jonathan Foxx

table o N A T I O N A L

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M O R T

V O L U

A SPECIAL FOCUS ON “SOCIAL MEDIA”

Social Media in Today’s Mortgage Marketing Space

By Brent Emler ....................................................................................58 A Hunger for Authenticity in the World of Social Media

By Cal Haupt ......................................................................................60 Social Media and Regulatory Compliance: How Mortgage Lenders Can Make Room for Both By George Gallinger, CIA, CFE & Roberta Janel, CMB ........................................................................62 Social Media Recruiting: Are You Linked in to Talent?

By Chad Jampedro ............................................................................64 Anti-Social Media By Eric Weinstein ................................................65 Blogging for Apps: 10 Tips for a Successful Blog

By Ricardo Cobos ..............................................................................66

25 2014

52 The 25 Most Connected Mortgage Professionals of 2014

Social Media: Compliance Risks of the Emoticon?

By Thomas Morgan ............................................................................68 How Do You Video? By Adam P. Smith............................................69 How to Engage Customers and Earn Business Via Social Media

By Moses Keshishian ..........................................................................70 Five Must-Know Tips to Finding Customers on LinkedIn

By Marc Wayshak ..............................................................................72 What You Need to Know About Social Media Etiquette

By Margaret Page ..............................................................................73

MOST CONNECTED MORTGAGE PROFESSIONALS

FEATURES Regional Compliance Updates By Laurie Spira ................................8

56 NMP Mortgage Professional of the Month: Paul Rozo, CEO of PRMG

By Phil Hall

77 David vs. Goliath in the World of Reverse Mortgages

By Phil Hall

The Elite Performer: Can I Leave Now?

By Andy W. Harris, CRMS ....................................................................8 So You Want Your Own App? By Phil Hall ......................................10 Tightly Guarded Secret to keep Your Past Clients Released ......16

V I S I T Company

Web Site

O U R

A Page

AllRegs.............................................................. www.allregs.com ..........................................................67 American Financial Resources ............................ www.afrwholesale.com/wd ......................Inside Back Cover American Pacific Mortgage ................................ www.growwithapm.com ................................................29 BetterLoanOfficers.com ...................................... www.betterloanofficers.com ..........................................11 Brokers Compliance Group.................................. www.brokerscompliancegroup.com ..................................55 CallFurst.com ...................................................... www.callfurst.com ............................................................61 Calyx Software .................................................. www.calyxsoftware.com ................................................35 Carrington Mortgage Services, LLC ...................... www.carringtonwholesale.com ..............................25 & 68 Continental Home Loans, Inc. ............................ www.continentalhomeloans.com ......................................5 Document Systems, Inc./DocMagic ...................... www.docmagic.com ................................................7 & 49 Easy Mortgage Apps............................................ www.easymortgageapps.com ..........................................48 FAMP ................................................................ www.myfamp.org ..........................................................47 Fast Forward Stories .......................................... www.fastforwardstories.com ..........................................23 First Guaranty Mortgage Corp. ............................ www.fgmc.com ..............................Inside Front Cover & 70 Flagstar Bank .................................................... www.flagstar.com/ae ....................................................13 GraceChurch Intermediaries................................ www.gracechurchintermediaries.com ..............................39 Lykken On Lending ............................................ www.lykkenonlending.com ............................................71 Matchbox, LLC .................................................. www.matchboxllc.com ..................................................47

f contents

T G A G E

M E

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

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N U M B E R

Helping Y You oou G Get et Plugged oour Busi ness Into Into Y Your Business

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Thinking Outside the Box Can Help Grow Your Referral Base

By K. Justin Restaino ..........................................................................18

NAMB Perspective ............................................................................20 Lykken on Leadership: Leaders … Who Do You Have in Your Inner Circle By David Lykken ......................................................................26 Data Privacy is a Lender’s Nightmare and a Consumer’s Biggest Fear By Andrew Liput ..........................................................28 NMP’s Economic Commentary: The Mid-Year Employment Update By Dave Hershman ................................................................32 Tales From the Closing Table By Andrew Liput ..............................34 Renting or Buying? By Phil Hall ........................................................36 Mortgage Visuals: Its’ About Time By Matthew Dunn Ph.D. ..........38 Online Reputation & Influence: The Eight Biggest Mistakes Salespeople Make By Rene Rodriguez ............................44 Stop Selling Reverse Mortgages: The Need to Become a True Consultant By Mike Suits ......................................................46 The Payoffs of Being Proactive By Cheryl Marquez........................50 3

The Long & Short: The Business of Short Sales By Pam Marron....50 HECM Loans: The New Retirement Planning Component

By Ralph Rosynek ..............................................................................76 MBA’s Mortgage Action Alliance By Amy Swaney ........................76 What Will the Second Half of 2014 Bring? By Phil Hall ..................78

Company

Web Site

Page

Maverick Funding Corp....................................... www.maverickfunding.com ............................................19 Mortgage Bankers Association ............................ www.mbaeducation.org/qm ..........................................37 NAPMW ............................................................ www.napmw.org ............................................................3 NAWRB ............................................................ www.nawrb.com ............................................................51 Paramount Residential Mortgage Group, Inc. ...... www.prmg.net ................................................17, 31 & 43 Path2Buy .......................................................... www.path2buy.com ......................................................66 PB Financial Group Corp..................................... www.pbfinancialgrp.com ..............................................48 Radian Guaranty ................................................ www.radian.biz ............................................................59 REMN (Real Estate Mortgage Network) ................ www.remnwholesale.com ......................................40 & 41 Reverse Mortgage Solutions, Inc. ........................ www.rmsnav.com ..........................................................65 Secure Settlements Inc. ...................................... www.securesettlements.com ..........................................15 Simple Nexus .................................................... www.simplenexus.com ..................................................27 Streetlinks LLC .................................................. www.streetlinks.com ......................................................33 TagQuest .......................................................... www.tagquest.com ........................................................45 The Bond Exchange............................................ www.thebondexchange.com ..........................................32 Titan List & Mailing Services, Inc. ........................ www.titanlists.com ..........................................................9 United Northern Mortgage Bankers, Ltd. ............ www.unitednorthern.com ........................................1 & 80 United Wholesale Mortgage ................................ www.uwm.com ........................................60 & Back Cover

membership ggives ives you you exclusive exclusive NAPMW membership access to ti mely education the education regarding regarding the access timely regulations affecting affecting your your career careerr such s regulations as O ME MBERS webinars webinars on on industry industry FREE T TO MEMBERS updates. updates.

Too Jo T Join in NAP NAPMW MW vvisit. isit. www.napmw.org www.napmw.org or or call 11.800.824.3034 .800.824.3034

n Illinois Mortgage Professional Magazine n JULY 2014

D V E R T I S E R S

mmunity ooff m ortgage and NAPMW is a co community mortgage banking iindustry ndustry professionals professionals across across the banking the Country; men men an dw omen from from all Country; and women backgrounds have have joined joined NAPMW NAPMW backgrounds W because because want to ex cel at what what they do. do. they want excel

NationalMortgageProfessional.com

COLUMNS New to Market..............................................................................12 News Flash: July 2014 ................................................................14 Heard on the Street ....................................................................24 NMP Resource Registry..............................................................74 NMP Calendar of Events ............................................................79

If yo u believe in helping helping tto o eleva te the the you elevate educa tional standards standards of of this industry, industry y, oorr educational aassisting ssisting in developing developing the the most most competent competent indus try work work k fforce, orce, tthen hen NAPMW is for for industry YOU! YOU!

JULY 2014 Volume 6 • Number 7

FROM THE

Social media: Friend or foe?

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

This month, our focus is on the continued growth and evolution of social media. Social networks have taken hold and have transformed so much of what we are involved with on a day-to-day basis. Social media has reshaped how human beings initiate and/or maintain virtually every type of social bond or role at every level, from company to consumer, employer to employee, co-worker to co-worker, friend to friend, all down the line.

The complex web of interactions between social networking service users and their online and offline communities, social network developers, corporations, governments and other institutions will continue to require rigorous analysis and regulatory oversight for decades to come.

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

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

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

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

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

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

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

Robert Peter Ottone Executive Editor (516) 409-5555, ext. 314 robertpo@nmpmediacorp.com

The power of social media The power of social media can be both positive and negative. The social media landscape is ripe to promote your message to consumers, but you need to be prepared to deal with the negative side of social media that you have absolutely no control over occurring. Today, someone, somewhere, is using social media to talk about your brand. And in a single moment, that one customer or one employee, can have a significant negative impact. The public plays an active role, as well, and now customers, prospects, and even competitors, can use any one of the numerous social media outlets to build, maintain, protect–or ruin–your brand. Does that mean we should just give up? Of course, not. But, it does mean you need a strategy.

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

Start small

ADVERTISING

Secure the support of compliance and regulatory partners, and set internal controls, a solid framework, training and guidelines before you launch. Infuse your brand promise into the entire strategy so you avoid the maverick posts and you can checkpoint the message or ads with how the market will perceive it. Proceed with caution and arm yourself with a policy designed for when things “don’t go exactly as planned.” Prepare yourself and have the process and plan ready for when the ride gets bumpy–as it inevitably will in this dynamic environment. The compliance accountability for social media extends throughout every level of your organization, and you are ultimately responsible for the compliance of your team members when it comes to their use of social media.

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

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

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

4

publisher’s desk

Don’t let negative examples discourage you

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

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

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

Social media is here to stay, and it is a facet of life and business that we need to embrace and harness its enormous potential. How a brand chooses to respond to criticism can make or break their public image in today’s social media-driven world. These new channels are valuable tools. Use them to shape conversations and share your story. If you don’t, your competition will, and in due time, you will become as extinct as a dot matrix printer!

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

JULY 2014 n Illinois Mortgage Professional Magazine n

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

NATIONAL MORTGAGE PROFESSIONAL MAGAZINE’S

EDITORIAL CONTRIBUTORS Featured Editorial Contributors Jonathan Foxx

Andrew Liput

Brent Emler

Cheryl Marquez

Rene Rodriguez

David Lykken

George Gallinger, CIA, CFE

Thomas Morgan

Ralph Rosynek

Pam Marron

Cal Haupt

Margaret Page

Marc Wayshak

Amy Swaney

Chad Jampedro

Adam P. Smith

Eric Weinstein

Roberta Janel, CMB

Laurie Spira

Erik Wind

Moses Keshishian

K. Justin Restaino

Donald J. Frommeyer, CRMS

Phil Hall

Andy W. Harris, CRMS

Dave Hershman

Tom LaMalfa

Editorial Contributors Ricardo Cobos

Matthew Dunn Ph.D.

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n Illinois Mortgage Professional Magazine n JULY 2014

NAMB The Association of Mortgage Professionals

National Association of Professional Mortgage Women

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

2014-2015 NAPMW National Board of Directors

NAMB 2013-2014 Board of Directors OFFICERS Donald J. Frommeyer, CRMS (t/e 2014)—President MSI, III 200 Medical Drive, Suite D l Carmel, IN 46032 Phone: (317) 575-4355 l Fax: (317) 575-4360 E-mail: dfrommeyer@amtrust.net John Councilman, CMC, CRMS (t/e 2014) President-Elect AMC Mortgage Corporation 10136 Avalon Lake Circle l Fort Myers, FL 33913 Phone: (239) 267-2400 l E-mail: jlc@amcmortgage.com Rocke Andrews, CMC, CRMS (t/e 2014)—Vice President Lending Arizona LLC 1996 North Kolb l Tucson, AZ 85715 Phone: (520) 886-7283 l Fax: (520) 731-3388 E-mail: randrews@lendingarizona.net Kay A. Cleland, CMC, CRMS (t/e 2014)—Secretary KC Mortgage LLC 2041 North Highway 83, Unit C l P.O. Box 783 Franktown, CO 80116 Phone: (720) 670-0124 l Cell: (720) 670-0124 E-mail: kay@kcmortgagecolorado.com Andy W. Harris, CRMS (t/e 2014)—Treasurer Vantage Mortgage Group Inc 15962 SW Boones Ferry Road, Suite 100 l Lake Oswego, OR 97035 Direct: (503) 496-0431, ext. 302 l Cell: (503) 880-2427 E-mail: aharris@vantagemortgagegroup.com

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

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DIRECTORS Fred Kreger, CMC (t/e2016) American Family Funding 28368 Constellation Road, Ste. 398 l Santa Clarita, CA 91350 Phone: (661) 505-4311 l E-mail: fred.kreger@affloans.com Linda McCoy, CRMS (t/e 2016) Mortgage Team 1 Inc. 6336 Piccadilly Square Drive l Mobile, AL 36609 Phone: (251) 650-0805 l Fax: (251) 650-0808 E-mail: linda@mortgageteam1.com John Stevens, CRMS (t/e 2014) ENG Lending 11650 South State Street, Suite 350 l Draper, UT 84020 Phone: (801) 477-7111 l Fax: (866) 442-9937 E-mail: jstevens@englending.com Valerie Saunders (t/e 2015) RE Financial Services 13033 West Lindburgh Avenue l Tampa, FL 33626 Phone: (866) 992-0785 l Fax: (866) 992-1024 E-mail: valsaun@gmail.com Rick Bettencourt, CRMS (t/e 2014) Mortgage Network 300 Rosewood Drive l Danvers, MA 01923 Phone: (978) 777-7500 l Fax: (855) 447-4350 E-mail: rbettencourt@mortgagenetwork.com Olga Kucerak, CRMS (t/e 2016) Crown Lending 328 West Mistletoe l San Antonio, TX 78212 Phone: (210) 828-3384 l Fax: (210) 828-3332 E-mail: olga@crownlending.com

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

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

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

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

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

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

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

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

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

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

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

2013-2014 Board of Directors & Staff Maureen Devine President (413) 736-4511 mdevine@strategicinfo.com

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

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

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

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

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

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

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

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

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

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

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

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

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

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Regional Compliance Updates

By Laurie Spira An Update to the Maryland Housing Counseling Notice The recent implementation of the Dodd-Frank Act homeownership counseling notice requirements has prompted the Maryland Department of Housing and Community Development to review its requirement for providing a state-specific notice regarding homeownership counseling. Maryland Commercial Law §121303 requires lenders to provide an Important Notice Regarding Housing Counseling on all first lien, closed-end loans secured by owner-occupied property in Maryland. Additionally, Maryland Commercial Law 12409.1(d)(2) requires that a homeownership counseling notice be provided on all Secondary Mortgage Loans that are Maryland Covered Loans.

After review, the Department advised that a lender who satisfies the notice requirements of the federal Real Estate Settlement Procedures Act (RESPA) and its implementing regulations (12 CFR §1026.20) is also in compliance with Maryland Commercial Law §12-1303 and its related regulations (COMAR 05.19.01), as long as the RESPA notice includes or is accompanied by a statement in substantially the same form as the following: “When applying for a mortgage loan or line of credit, we recommend you receive homebuyer education or housing counseling.”

Because the Maryland model notice is no longer required, lenders may discontinue its use. However, keep in mind that the disclosure referenced above would have to be provided to the borrower.

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Late Fees and Prepayment Penalty Threshold Update Effective July 1, 2014, loans made under the consumer credit codes in Indiana, Minnesota, Oklahoma and South Carolina will be subject to an increase in their respective late fee dollar amount.

Please note the following changes: l The Indiana late fee dollar amount is currently $18 and will change to $18.50; l The Oklahoma late fee dollar amount is currently $24 and will change to $24.50; and l For South Carolina, the maximum late fee dollar amount is currently $17.50 and will change to $18, and the minimum late fee dollar amount is currently $7 and will change to $7.20. l The Minnesota late fee dollar amount, which is currently at $7.80, will not increase, according to the Consumer Credit Code Adjustments Web page of the Minnesota Department of Commerce, Banking & Finance Division.

In addition to changes to its minimum and maximum late fee dollar amounts, note that South Carolina’s prepayment penalty prohibition for first-lien loans is increasing from “$240,000 or less” to “$255,000 or less.”

Finally, Indiana’s “High-Cost Home Loan” dollar amount threshold will remain the same at $44,000.

Laurie Spira is chief compliance officer with Torrance, Calif.-based DocMagic Inc. She may be reached by phone at (800) 649-1362, ext. 6446 or e-mail laurie@docmagic.com.

THE

elite performer Can I Leave Now?

By Andy W. Harris, CRMS

“Isn’t it amazing how much stuff we get done the day before vacation?”

Vacation … this word is Greek to most selfemployed entrepreneurs.

Why? Because no matter where you go —Zig Ziglar or what you do, it is nearly impossible for those of us that rely on converting new business to disconnect from work. I find myself typing this article while getting ready to leave town for a week with the family, but could not seem to avoid the stress in preparation to leave the office for several days. We are called to rest and relax and I know how important it is to take a break, but it always seems so hard to leave. If you’re planning on taking longer vacations with the family this summer, hopefully these few references can help.

There will never be a “good” time Waiting for the right time to take a vacation will never happen and you could wait forever. You just need to plan and commit to it. Things will always be busy and it’s important to delegate, communicate with customers, plan, and make time to take a break.

Unplug, but know you can plug in With today’s technology, we are fortunate to have access to remotely log-in and handle items that require attention and be available easily for fast communication. This can be a blessing and a curse. When on vacation, take advantage of the vacation and enjoy yourself. Knowing that you can access in case of an emergency should help you relax. Try to unplug and only login or answer your phone in the case of an emergency or immediate customer need.

Plan for fun and then don’t plan at all Having fun on vacation is a requirement of course, but make time for absolutely nothing. Relaxing can be the best part of your vacation and leave the schedule at work.

Everything will be fine Things will continue to move along while you’re gone and the world will not end.

When you come back, your desk will still be there and likely your keyboard and phone will be untouched. No need to panic.

When you return from your vacation, have a plan and to-do list as well Don’t get overwhelmed and just organize the most important tasks to the least important, and pretty soon you’ll be able to dial in the best way to plan and prepare vacations in the future to eliminate stress.

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

SPONSORED EDITORIAL

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App?

So You Want Your Own

By Phil Hall Nowadays, it seems like there is an app for every possible activity and interest—which makes sense, considering the obsessive nature that many people devote to their mobile devices.

“Take a look around you next time you are at the airport, in line at a coffee shop or out to dinner with the family,” said Michael Kelleher, co-founder and executive vice president of Swampscott, Mass.-based EasyMortgageApps. “Tell me, how many people you see using their mobile devices? Simply put, our world is in the midst of paradigm shift.

For the first time, more people are accessing the Internet via their mobile device than their desktop.”

But creating mobile apps for the sake of creating mobile apps makes little sense, especially in the mortgage space. When Mat Ishbia, president and CEO of Troy, Mich.-based United Shore Financial Services (USFS), wanted to offer an app for the brokers working

with his company’s United Wholesale Mortgage (UWM) subsidiary, he insisted that it serve a practical purpose.

“We wanted to make sure had the benefits and usefulness for them,” said Ishbia. “We are not marketing it as ‘Hey, we have an app!’”

And that is the primary challenge for today’s mortgage industry-related apps: Creating a user-friendly high-tech solution that serves an important business role.

However, it is important to stress that apps are not a replacement for other communications channels.

“Clients want to be communicated with by the medium that speaks most clearly to them,” said Jeff Miller, director of systems integration at Directors Mortgage, headquartered in Lake Oswego, Ore. “Some would prefer a phone call, while others prefer a package of papers in the mail, and others want badge alerts and text messages. A good mortgage company will never try to communicate via only one channel, but make them all excellent and allow the client to choose what works best for them.”

Planet of the apps The evolution of the app-related technology is relatively recent. Eric Robichaud, CEO of 401 Consulting, a Woonsocket, R.I.-based developer of apps and Web sites, noted that the past four to five years have seen a dramatic improvement in this area.

“In 2010, an iPhone with 3G data connection was abysmally slow,” Robichaud said. “But fast-forward to 2014, where 90 percent of your connectivity is over WiFi at blazingly fast speeds, and the other 10 percent is over high-speed LTE networks, and speed is less of an issue. In 2009, there were things you just couldn’t do over the Web on a smartphone. But today, nearly all of that has vanished because of a wealth of great new technologies— between HTML5 and advanced jquery and Javascript code libraries, there’s very little you can’t do over the Web.” Within the mortgage space, app development is aimed at the distinctive communications needs of real estate professionals. When UWM launched its app for brokers in February, it queried

its clients to determine what functions would be necessary for the app to be widely used. As a result of these conversations, UWM’s mobile app can allow brokers to access rates, manage pipelines, view borrower and loan details, check the real-time status of transactions, receive alerts, manage conditions and lock loans.

“No other wholesale leaders can do that,” said Ishbia. “We wanted to make our app interactive.”

When Columbia, Md.-based IndiSoft LLC was planning the creation of its apps, it also queried potential users on which functions would be desired and which would be impractical.

“For an app to be good, we need to know what practicality the app will have in the users’ hands,” said Sanjeev Dahiwadkar, president and CEO of IndiSoft. “If there is no benefit, it won’t be used. There was no way that a person would use a smartphone and look at compliance papers. For the mobile platform on our valuation module, however, users are able to capture photos of property, make notes and obser-

vations, and enter data while in field.

This helps speed up the process of doing work.”

“A superior app offers connectivity and loan transparency complimented by a technology which offers an automated solution to integrate directly with either a company’s loan origination or CRM software,” said Kelleher.

“The resulting superior app offers realtime updates in a mobile format complete with automated push notifications updating all relevant parties when there is a change to loan status. Our loan ecosystem is truly unique engaging the borrower, real estate broker, loan officer and title agent.”

Before you get started

Kasperksy Lab warned that U.S. consumers faced the threat of a new malware called Svpeng that targeted mobile banking apps and then locked the mobile device—the malware will not unlock the device unless the user forks over a ransom.

“To boost adoption and set the stage for more ambitious applications, companies will likely have to take tangible steps to reassure consumers about the security of their mobile financial transactions,” said Jim Eckenrode, executive director of the Deloitte Center for Financial Services.”

Finally, there is another option when it comes to app development: Consider a Web-based app instead of a native app.

“A good, solid, responsive Web site or Web-based app will fill the need perfectly,” said Robichaud. “A Web-based app will scale to any resolution and work across all smartphone devices.

This approach bypasses all the devicedependency issues entirely—it is as easy as hitting a Web site and does not require traversing any hurdles akin to downloading and installing a software app. And security is relegated to the server side, where admins already are experienced, and already have things locked-down.”

Phil Hall is managing editor of National Mortgage Professional Magazine. He may be reached by e-mail at philh@nmpmediacorp.com.

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For mortgage companies that want their own app, a thorny question involves whether to create the app inhouse or to outsource the project. For Directors Mortgage’s Miller, the answer depends on a variety of circumstances.

“The advantages of developing an app in-house allows you to make what you want and how you want it,” Miller said. “Control of design and functionality is within your realm and not handed over to an out-of-the-box product that just has your logo and colors. You will not stand out from the crowd with an app that looks like everyone else’s.”

But on the other hand, Miller continued, was the question of whether the company has the right team in place to create this type of a product.

“The trouble with in-house design and build-out is you need the expertise to do it,” he Miller. “And to staff for this kind of skill is expensive. So, the reality is most mortgage shops cannot afford to do this well. The best third-party to work with is one who has proven experience and can deliver the product, can make changes easily and customize the software and app to meet the needs of individual customers, yet at the same time support it moving forward.”

Robichaud pointed out that this type of project is not for companies that prefer to accomplish endeavors quickly and cheaply.

“There are significant costs to developing native apps,” Robichaud said.

“First, most people don’t realize that each smartphone platform—iPhone, Windows Phone, Android, Blackberry— uses a different set of technologies, programming languages and development tools. Developing native apps often means re-coding the same app multiple times from scratch for each distinct platform. Making updates is neither fast nor trivial.”

Robichaud added that app development will also require a marketing push to raise awareness of the app’s existence.

“Above and beyond all of this, consider too that an app must be downloaded and installed,” Robichaud said. “So mortgage companies have the added hurdle of getting customers and prospects to proactively go and download an app, which in turn assumes they’re setup already and able to do so.”

But despite the omnipresence of mobile devices, it appears that many are intentionally avoiding mobile-based activities relating to the financial services world. Earlier this year, a survey conducted on behalf of the Deloitte Center for Financial Services found that 61 percent of consumers that do not regularly use mobile devices for the financial needs cited security reasons as the main reason for doing business offline. One out of five survey respondents claimed that the risk of identity theft was greater when conducting mobile transactions, while more than one-third expressed no faith the security of WiFi and mobile networks.

And this fear may not be without reason. In June, the Russian-based

Credit Plus Integrates The Work Number Database Into Tech Platform

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Credit Plus has announced that it has integrated direct access to The Work Number database into its technology platform. The Work Number is a solution offered through Equifax Workforce Solutions, a business unit of Equifax Inc., and is the largest collection of payroll records contributed directly from employers.

“We are pleased to be leading the industry in offering this time-saving connection. With a simple click of the button, lenders will find it easier to verify employment and income so they can feel confident in their lending decisions,” stated Greg Holmes, national director of Sales and Marketing at Credit Plus.

Credit Plus became a certified reseller of The Work Number in 2013 and its direct connection went live in May of 2014. The Work Number database houses more than 57 million current employment records contributed from more than 3,400 employers nationwide. Only an applicant’s full name and Social Security number are required to access information through the Credit Plus direct connection to The Work Number.

If an applicant is not included in The Work Number database, a manual verification can be ordered through the system as well.

“Employment and income verification plays a critical role in originating quality loans. It is also essential that proper documentation be validated and revealed quickly and accurately,” said Equifax Senior Vice President Michael Kuentz. “Integrating Credit Plus technology with The Work Number database delivers maximum efficiency across the entire lending industry.”

Landmark Network’s Appraisal Services Added to ReverseVision’s LOS

ReverseVision Inc. has announced the addition of Landmark Network’s appraisal services to ReverseVision’s

Reverse Loan Origination System (RLOS) platform, RV Exchange (RVX).

RVX offers a library of tightly integrated services that help streamline the lending process. The addition of Landmark Network’s appraisal service enables ReverseVision users to order an appraisal with the click of a button.

“Being able to order an appraisal from us, and then have the status and results automatically feedback into ReverseVision is a powerful tool for our clients,” said Erik Richard, chief executive officer of Landmark Network. “Users will be able to spend more time focusing on core tasks and less time tracking their appraisal submissions.”

The integrated appraisal service also stores both the final appraisal and the appraisal invoice within RVX (attached directly to the loan).

“Landmark is one of the most widely used appraisal services in the reverse mortgage space, and our clients will really benefit from this one-click integration,” said President and CEO of ReverseVision John Button. “Faster workflow with fewer errors—an excellent benefit to our customers.”

Quandis Announces New Servicemember Search for the Prevention of Foreclosure

Quandis Inc. has announced that it has rolled out a new feature within its existing military search service that identifies multiple name variations of borrowers which could have active duty status in the U.S. military. If in default but on active duty, certain rules prohibit foreclosure. This comprehensive search reduces the risk of missing a name and potentially failing to comply with the Servicemembers Civil Relief Act (SCRA) of 2003.

In order to comply with the SCRA, organizations must take various measures before beginning foreclosure proceedings on active duty military personnel. Noncompliance with the SCRA can result in

steep fines, lawsuits and the potential to rescind foreclosure transactions.

“There is a serious need to identify and search name permutations that reside in the Department of Defense’s database,” stated Greg Kent, VP of data services at Quandis. “Often, the person searching for active military members must guess name variations, which significantly increases the chance to miss names. Our comprehensive search capability eliminates using this manual process, thus saving time, reducing costs, and mitigating compliance risk.”

Quandis’ military search service is currently in use by foreclosure attorneys, servicers, lenders, banks and third party outsource providers. Once initiated, the search service delivers an official military status report from the Department of Defense within 24 hours.

Quandis’ military search service can integrate with servicing platforms, attorney case management systems (CMS) and third party applications. In addition, client workflows can be custom configured for their unique processes and procedures using business rules.

Comergence’s Realm Platform Now Featuring Document Library

Comergence has enhanced its Realm platform to include a Document Library, designed to enable a document to be filed once but be used by any lender a third-party originator, TPO, designates. Comergence maintains a Document Library with more than one million documents. On average, a lender requires 30 documents, of which 50 percent are redundant among all lenders—and that means TPOs spend hours uploading the same documents.

Realm is the standard in the mortgage industry for third-party-originator solutions, providing advanced, automated compliance monitoring and surveillance solutions.

“Third-party originators upload their

documents one time to the library and all the lenders with whom they do business will have access to them,” said Greg Schroeder, president of Comergence.

“We reduced the amount of time required to gather and submit documents and this upgrade does a great job of eliminating redundant work that TPOs found painful.”

The aim was to eliminate having to upload the same documents to every lender a TPO does business with and this upgrade achieves that objective. “We focus attention on anything we can do to reduce the time our users spend using the system, because that ensures they have more time to work with borrowers—to answer questions and make the lending experience easier for them,” said Schroeder. “We spend a great amount of time listening to lenders and to TPOs and they both expressed an interest in this upgrade, so as a result, we built it.”

ClosingCorp Launches New Estimated Closing Cost Tool

ClosingCorp has launched a pilot for its new Seller Net Sheet, a tool leveraging ClosingCorp’s proprietary database designed to inform sellers of their estimated closing proceeds. With a few input fields, the Seller Net Sheet instantly calculates a seller’s net proceeds for any property in the nation. The solution is available for title companies and other Internet content providers to help their real estate clients confidently explain the potential closing proceeds to the seller.

The ClosingCorp Seller Net Sheet is unique to the industry as it uses actual rates, not averages, and gives users the ability to create and compare up to three different transaction scenarios and view them side by side. Aggregate fees and costs are then used to calculate the net amount a seller can expect to receive at the end of the transaction.

“Consumers who are selling their property want a better way to under-

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EWSFLASH l JULY 2014 l NMP NEWSFLASH l JULY 2014 l NMP NEWSFLASH l J MBA: Originators Lose a Reported $194 on Each Loan in Q1

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Independent mortgage banks and mortgage subsidiaries of chartered banks reported a net loss of $194 on each loan they originated in the first quarter of 2014, down from a reported $150 in profit per loan in the fourth quarter of 2013, the Mortgage Bankers Association (MBA) reported in its Quarterly Mortgage Bankers Performance Report.

“The significant overall production volume decline in the first quarter hurt mortgage bankers,” said Marina Walsh, MBA’s vice president of Industry Analysis. “Purchase volume did not pickup, while refinancing volume dropped and costs continued to rise. Given these conditions, companies that managed to break even in the first quarter should consider that a reasonable outcome.”

Other key findings of MBA’s Quarterly Mortgage Bankers Performance Report are: l In basis points, the average production loss was 8.31 basis points in the first quarter of 2014, compared to an average net production profit of 8.72 basis points in the fourth quarter of 2013. This marks the sixth consecutive quarter that production income has decreased. l Average production volume was $274 million per company in the first quarter of 2014, down from $367 million per company in the fourth quarter of 2013. The volume by count per company averaged 1,238 loans in the first quarter, down from 1,641 in the fourth quarter of 2013. l The purchase share of total originations, by dollar volume, was relatively flat at 68 percent in the first quarter of 2014. For the mortgage industry as a whole, MBA estimates the purchase share at 51 percent in the first quarter of 2014, from 47 percent in the fourth quarter of 2013. l Secondary marketing income increased to 277 basis points in the first quarter, compared to 248 basis points in the fourth quarter of 2013.

l Total loan production expenses–commissions, compensation, occupancy, equipment, and other production expenses and corporate allocations– increased to $8,025 per loan in the first quarter, up from $6,959 in the fourth quarter of 2013. First quarter 2014 production expenses were the highest recorded in any quarter since the Performance Report was created in the third quarter of 2008. l Personnel expenses averaged $5,048 per loan in the first quarter, up from $4,385 per loan in the fourth quarter of 2013. l The “net cost to originate” was $6,253 per loan in the first quarter, up from $5,171 per loan in the fourth quarter of 2013. The “net cost to originate” includes all production operating expenses and commissions, minus all fee income, but excluding secondary marketing gains, capitalized servicing, servicing released premiums, and warehouse interest spread. l Productivity was 1.7 loans originated per production employee per month in the first quarter, down from 2 loans in the fourth quarter of 2013. l Including all business lines, 54 percent of the firms in the study posted pre-tax net financial profits in the first quarter of 2014, down from 58 percent in fourth quarter of 2013, and 94 percent in the first quarter of 2013.

Q1 Cash Home Purchases Down Year-Over-Year The portion of home purchases made with all cash fell in the first quarter compared to a year ago in a majority of metro areas nationwide, as investor-driven activity fades and more traditional buyers reenter the market, according to a Zillow analysis. Homes priced in the lowestthird of all homes available are most attractive to cash buyers.

The share of cash buyers fell year-

over-year in 102 of the 126 total metro areas analyzed by Zillow. Among the top 30 largest metros, the share of cash buyers was highest in the first quarter in Miami (64.9 percent), Tampa (57.1 percent) and Cleveland (54.2 percent). Large metros with the lowest share of all-cash sales in the first quarter were Virginia Beach (17.4 percent), Denver (22.4 percent) and Portland (22.9 percent).

Zillow also examined the share of cash sales made in the bottom, middle and top one-third of home values, and the portion of sales made by individual buyers and business buyers in each market. In 27 of the top 30 metros, more than one third of all sales of the lowestpriced homes were made with cash. In three of the top 30 metros—Tampa, Detroit and Miami—more than 80 percent of all sales in the lowest price bracket were cash deals.

“Even as the share of all-cash sales falls in many areas, it’s pretty clear that cash is still king, especially at the lower end of the market,” said Zillow Chief Economist Dr. Stan Humphries. “It can be difficult for more traditional buyers to compete with cash offers, especially in a tight inventory environment and among cash-strapped first-time buyers most likely to seek lower-priced properties. Housing is much more than an investment for most buyers, and it’s heartening to see more buyers armed with traditional financing begin to enter the market. This is a critical step on the way back to a more normal, balanced housing market.”

Individual, non-business buyers were more likely to buy bottom-tier homes with cash in the first quarter— in 20 out of the top 30 metros, the portion of sales that were all cash in the bottom tier was more than double that in top-tier homes. Business buyers, on average, were more likely to pay all cash in home purchases than individual buyers. In 11 of the top 30 metros, more than 90 percent of homes purchased by business buyers in the bottom price tier were all cash.

HUD and FHA Channeling Resources to Preservation of the American Dream

Federal Housing Administration (FHA) Commissioner Carol Galante and U.S. Department of Treasury Secretary Jacob J. Lew announced the Obama Administration’s efforts to continue helping struggling homeowners avoid foreclosure, increase access to affordable rental options and expand access to credit for borrowers.

In remarks at the Making Home Affordable (MHA) Fifth Anniversary Summit, Secretary Jacob Lew specifically unveiled a new financing partnership between the Treasury Department and HUD aimed at supporting FHA’s multifamily mortgage risk-sharing program. In addition, Secretary Lew announced an extension of the MHA program for at least one year and a new effort to help jumpstart the Private Label Securities (PLS) market. Before speaking at the Summit, Secretary Lew met with homeowners and housing counselors at the Greater Washington Urban League, a non-profit organization that provides direct services and advocacy to more than 65,000 individuals each year.

With the new HUD-Treasury partnership, the Federal Financing Bank (FFB) will use its authority to finance FHAinsured mortgages that support the construction and preservation of rental housing. The first partnership with the New York City Housing Development Corporation will help restore affordable rental housing damaged by Superstorm Sandy in Far Rockaway, Queens.

“Families have been especially hard hit during the rental housing crisis.

Demand is soaring and prices are climbing,” said Galante, Federal Housing Administration Commissioner and Assistant Secretary for Housing, U.S. Department of Housing and Urban Development. “To help the many hard working families who cannot find affordable rental housing, we are partnering with the Treasury Department, to broaden our efforts to create and preserve safe,

decent and affordable rental housing by allowing more Housing Finance Agencies access to the capital they need to build or maintain affordable multifamily apartment buildings.”

In addition to the new HUD-Treasury partnership, Secretary Lew announced that the Administration would be extending MHA at least until Dec. 31, 2016, to allow the Administration to continue assisting homeowners facing foreclosure and those whose homes are underwater. To date, the MHA program has provided relief to homeowners across the country, including more than 1.3 million homeowners who have permanently modified their mortgages, saving a median of $540 a month in mortgage payments.

The Treasury Department’s housing assistance programs have also become a model for the broader housing sector, setting a new standard for the mortgage industry on how to restructure loans and help homeowners. More than five million homeowners have been helped by private lenders who have, in many cases, used a similar framework to the one created by MHA’s Home Affordable Modification Program.

MBA’s Home Loan Learning Center from the Operation HOPE Web site.

“Operation HOPE is a leading name in economic empowerment and financial literacy among the working poor, the underserved and the struggling middle class,” said MBA’s President and CEO David H. Stevens. “MBA and its members are excited to work with HOPE to promote responsible, sustainable homeownership to communities across the country.”

OCC Reports Q1 Improvement in Mortgage Performance The performance of first-lien mortgages serviced by large national and federal savings

banks improved in the first quarter of 2014, according to a report released by the Office of the Comptroller of the Currency (OCC).

The OCC Mortgage Metrics Report, First Quarter 2014 showed 93.1 percent of mortgages were current and performing at the end of the quarter, compared with 91.8 percent at the end of the previous quarter and 90.2 percent a year earlier.

The percentage of mortgages that were 30 to 59 days past due decreased 19.8 percent from a year earlier to 2.1 percent of the portfolio, the lowest level since the OCC began reporting mortgage performance in 2008. Seriously delinquent mortgages—60 or more days past due or held by bankrupt borrowers whose payments are 30 days or more past due—decreased

to 3.1 percent compared with four percent a year earlier. The percentage of mortgages that were seriously delinquent decreased 22.4 percent from a year earlier and is the lowest level since June 2008.

At the end of the first quarter of 2014, the number of mortgages in the process of foreclosure fell to 432,832, a decrease of 52.3 percent from a year earlier. The percentage of mortgages that were in the process of foreclosure at the end of the first quarter of 2014 was 1.8 percent, the lowest level since September 2008.

Servicers initiated 90,852 new foreclosures during the quarter, a decrease of 49.1 percent from a year earlier. The continued on page 16

MBA and Operation HOPE Enter Into Strategic Alliance

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The Mortgage Bankers Association (MBA) and Operation HOPE (HOPE) announced that they have entered into a strategic alliance designed to foster open communication and mutual understanding of issues related to sustainable residential mortgage lending. The announcement was made at MBA’s Strategic Markets and Diversity Summit in Washington, D.C., where HOPE’s Chairman and Chief Executive Officer John Hope Bryant delivered special remarks.

“This strategic partnership with the Mortgage Bankers Association enhances the reach, capability, and credibility of our national plan to become the nation’s first private banker to the poor and struggling middle class. Together, we can help more renters become homeowners, and struggling homeowners keep their homes during this economic recovery,” said Chairman Bryant.

Under the terms of the agreement, MBA will provide HOPE opportunities to engage with MBA members through a variety of means, including by providing speaking opportunities at MBA events.

MBA will facilitate synergies between HOPE and EverFi, an MBA partner that provides online financial literacy training to both adults and students and will also provide support to Operation HOPE’s Project 5117.

In turn, Operation HOPE will seek opportunities for MBA’s president and CEO to speak with HOPE’s Founder and CEO to advance the two organizations’ common interest in promoting sustainable homeownership, provide literature and information on HOPE’s projects at MBA conferences and events and link to

Tightly Guarded Secret to Keep Your Past Clients Released

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Your clients are only ready for your services every five to seven years.

That’s a long time to stay in touch with them. Making sure you are at the top of their minds when the time comes for another purchase or a refinance can be difficult. There’s a new highly-guarded way of finding out exactly when they are in the market. It’s available to every licensed mortgage professional nationwide. Keeping your clients where they belong … with you!

We all spend a lot of time and money staying in front of past clients by sending birthday cards, holiday cards and calling them throughout the year. There’s nothing worse than finding out they recently purchased a new home, refinanced their mortgage or consolidated their debt into their mortgage with someone else. The truth is, if your last contact wasn’t within a few weeks of their buying decision, they might go with someone else. There are a lot of people out there fighting for the referrals and some of them are willing to go to great lengths to acquire the client.

There’s a new solution that will make sure this doesn’t happen to you.

You can now be notified when your past clients are currently out shopping for a mortgage. The credit agencies have offered this program for a little more than a year to the larger banks, but it hasn’t been available to brokers or small mortgage lenders, but now has been released to all mortgage brokers and lenders nationwide. This means you won’t have to pay those hefty contract fees with the credit bureaus. You can literally get an e-mail notification every time one of your past clients is in the market. You’ll spend less money and have a much higher retention rate.

Lenders that combine this program with their online lead tracking systems now have an automated system for getting in touch with their past clients when they are in the market! Buying time frames change, but now when you know your clients are shopping, you will always be there to help. After all, as a past client of yours, isn’t it your job to make sure they always get the best terms available regardless of their situation?

JULY 2014 n Illinois Mortgage Professional Magazine n

NationalMortgageProfessional.com

TagQuest Customer Spotlight Each month, we like to talk with our clients and see how their campaigns are going. Here’s what we heard recently from Jason L, one of our mortgage professionals in Utah: l l l l l

Program: Mortgage Insights One-thousand past clients being monitored Ten matched clients per month Three to five applications upfront One to two more applications over the next two months

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“We are spending a lot less money and less time following up and still maintaining relationships and keeping the business.”

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SPONSORED EDITORIAL

nmp news flash continued from page 15

number of completed foreclosures also decreased 33.9 percent to 56,185, compared to a year ago. Factors contributing to the decline in foreclosure activity include improved economic conditions, foreclosure prevention assistance, and transfer of loans to servicers not included in this report.

Servicers implemented 237,133 home retention actions (modifications, trialperiod plans, and shorter-term payment plans) in the quarter compared with 71,678 home forfeiture actions (completed foreclosures, short sales, and deed-inlieu-of-foreclosure actions). The number of home retention actions implemented by servicers decreased 32.1 percent from a year earlier. Almost 91 percent of modifications in the first quarter of 2014 reduced monthly principal and interest payments, and 58.6 percent of modifications reduced payments by 20 percent or more. Modifications reduced payments by $292 per month on average, while modifications made under the Home Affordable Modification Program reduced monthly payments by an average of $312.

Servicers implemented 3,460,476 modifications from Jan. 1, 2008, through Dec. 31, 2013. Of these modifications, 60 percent were active at the end of the first quarter of 2014 and 40 percent had exited the portfolios of the reporting institutions, through payment in full, involuntary liquidation—completed foreclosure, short sale or deed-in-lieu of foreclosures—or transfer to a non-reporting servicer. Of the 2,071,078 modifications that were active at the end of the first quarter of 2014, 69.9 percent were current and performing at quarter end, 23.9 percent were delinquent, and 6.1 percent were in the process of foreclosure.

GSEs Complete Nearly 3.2 Million Foreclosure Prevention Actions Through Q1 Fannie Mae and Freddie Mac have completed nearly 3.2 million foreclosure prevention actions since the start of the conservatorships in 2008, with approximately 88,800 actions occurring in the first quarter.

These measures have helped more than 2.6 million borrowers stay in their homes, including 1.6 million who received permanent loan modifications.

These actions are detailed in the Federal Housing Finance Agency’s quarterly Foreclosure Prevention Report, which details activities by state in an online, interactive Borrower Assistance Map for Fannie Mae and Freddie Mac mortgages.

Also noted in the report: l Forty-two percent of all permanent loan modifications helped to reduce homeowners’ monthly payments by more than 30 percent in the first quarter.

l Approximately 27 percent of borrowers who received permanent loan modifications in the first quarter had portions of their mortgage balance forborne. l Approximately 14,900 short sales and deeds-in-lieu were completed in the first quarter, bringing the total to more than 566,800 since the start of the conservatorships. l Third-party sales and foreclosure sales fell slightly to 47,300 while foreclosure starts decreased 25 percent in the first quarter. l While the total number of troubled borrowers continued to decline, 31 percent of these borrowers remained deeply delinquent at the end of the first quarter. Florida, New York and New Jersey have the highest number of deeply delinquent loans (365-plus days).

Loan Production Down Among Indie Mortgage Bankers Richey May has released its first quarter 2014 Trend Report for Independent Mortgage Bankers, which found that loan production among independent mortgage bankers continued to decline in the first quarter of 2014, falling 18 percent since the fourth quarter of 2013.

Purchase volume decreased for the third consecutive quarter, dropping 13.7 percent. Margins increased by 28 basis points—the result of an 11-basis point decrease in origination fees, and a 39basis point increase in secondary gains.

“Independent mortgage bankers are taking less in origination fees, but are making more from gains on sale into the secondary market,” said Kenneth Richey, managing partner of Richey May. Each quarter, Richey May uses Richey May Select, benchmarking technology specifically for independent mortgage bankers used to analyze data submitted by independent mortgage bankers across the U.S., and compile a report of the quarter’s outstanding trends. The report highlights key performance indicators, such as overall volume and volume by transaction type, margins, operating costs, labor output, and more. The data used in the report includes much of the same information that its confidential lender participants provide to the GSEs each quarter via the Mortgage Bankers’ Financial Reporting Form (MBFRF).

“This suggests that lenders are responding to the QM fee cap,” Richey explained, speaking of the Qualified Mortgage rules that impose a three percent limit on the amount a lender can charge in origination fees. “Rather than earning on the front end, they’re increascontinued on page 25

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Thinking Outside the Box Can Help Grow Your Referral Base

By K. Justin Restaino

JULY 2014 n Illinois Mortgage Professional Magazine n

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A referral base is mandatory in order to survive the mortgage business cycle. Most loan originators think of networking with real estate agents, financial advisors and their community when building a referral network. While they are great ways to acquire new referrals, direct mail may be the most effective way of quickly building a referral base on a grand scale.

Typically, you build a good rapport with the borrower, and due to the trust and confidence they place in you, they will refer their friends when they express a need for your services. Now think of direct mail leads as “pre-qualified referrals.” With a targeted direct mail campaign, you not only build a pipeline of deals, you also open the door for every lead that responds to become an ambassador for your business.

Take, for example, a direct mail campaign of 5,000 pieces that generates 50 inbound leads. While most will close at least 10 loans, what happens with the other 40 that didn’t convert? Are they worthless? These consumers expressed an interest in your company, so this is your chance to make a lasting impression that could double your inbound leads. By simply incorporating a request to refer two friends, those 40 inquiries could easily double to 80 new prospects. Consumers typically keep company of the same demographic, so if you’re using pre-screened data on your mailing campaigns, the likelihood of the new referrals being similar to the original borrower is considerably high. Think of the possibilities with more direct mail pieces in circulation. The numbers are exponential.

It’s common for originators to forget about the borrower once their loan has closed. As time goes on and the loan is sold off to other servicers, many borrowers forget about their original loan officer when their need to refinance or the opportunity for a purchase occurs. This holds true when it comes to referral business. If the borrower doesn’t remember you, who are they going to recommend their friends to? Instead, they turn to the current company that sends their monthly mortgage statement. To offset this potential loss of business, mailing your customers at a minimum of a bi-monthly cycle will keep you fresh in their minds. Simple letters of new company advancements, milestones or events will keep you in the forefront of their minds so that when their needs arise, or that of their friends, they immediately think of you.

To maximize the effort, request referrals and offer incentives for referring friends in each newsletter. Remember … closed loans require asset management. These borrowers can be as valuable to you after they have closed their loan as they were the day you first spoke.

Relying on a real estate agent to refer your business shouldn’t be your only option to generate more referral business. Setting a plan in place now with some simple strategies will build momentum and create a thriving referral business.

With this ever-changing industry, having multiple options to build your business is a necessity and will keep you ahead of your competition.

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

SPONSORED EDITORIAL

new to market continued from page 12

stand potential proceeds, and real estate professionals across the nation face the challenge of accurately answering this question on a daily basis,” said Brian Benson, CEO of ClosingCorp. “We wanted to give title companies a powerful way to forge a deeper relationship with real estate agents who typically turn to them for help generating these accurate estimates.”

The User Profile Management tool of the Seller Net Sheet enables users to set specific default settings that appear on all client-provided net sheets, such as contact information and commission values. Through this tool, users also can define and set costs for any real estate service category, such as home inspection, pest inspection, natural hazard disclosures, home warranty or any customer category chosen.

LenderLive Announces New Suite of Home Equity Services

LenderLive Network Inc. has announced that it has developed a suite of services and product offerings for banks and credit unions that are re-entering or expanding their home equity lending.

LenderLive expects that the demand for home equity products will continue to increase as home prices strengthen and low first mortgage rates make refinancing less attractive for millions of home owners. But at the same time, the rules for home equity lending have become more complex and the process for underwriting these loans has gotten more expensive, the company said.

The new LenderLive suite of home equity options includes: l Private-label origination of both closed-end and home equity lines of credit. l Compliance and document management services through LenderLive’s GuardianDoc’s unit, which has historically been the industry leader in second mortgage documents. l Private-label servicing of closed-end second liens. l Nationwide settlement services and third-party vendor single point-ofcontact (SPOC) oversight and product management with an integrated pricing calculator for all third-party vendor costs.

“Current demographics and economic trends all favor the return of home equity lending,” said Rick Seehausen, chief executive officer of LenderLive. “More than 20 million homeowners now have first mortgage rates below 4.5 percent, according to CoreLogic. When these homeowners need more space for growing families or want to tap the equity in their homes, home improvement may be more attractive than buying bigger

homes at higher interest rates, and home equity loans may be more advantageous than refinancing. These customers will expect a quick decision on their applications and a no-cost transaction which will create challenges for lenders.”

Mortgage Returns Adds Post-Closing Survey to TRUE CRM Solution

Mortgage Returns has introduced a postclose survey product as a part of its TRUE CRM solution. The automated survey function allows lenders to track service levels for customers and real estate agents. Once delivered after the close of loan, the surveys measure the satisfaction of users and agents, while identifying key areas for growth. The surveys are deployed through a six-step email marketing campaign, and the results are accessed through the Mortgage Returns CRM system.

Mortgage Returns has designed this post-close survey as a product to provide loan officers with the ability to track and improve their service for both users and real estate agents. The new addition to TRUE CRM will allow loan officers to gain significant insight and feedback about their performance and customer service, while providing a benchmark result to compare with competitors.

“The post-close surveys will allow lenders to gain insight into the service levels they provide and will help improve the relationships between loan officers, borrowers and agents,” said Jim Blatt, CEO of Mortgage Returns. “As with the one-to-one marketing strategies provided in our TRUE CRM system, the surveys will provide relevant feedback to loan officers to improve performance and create loyal users in the long term.”

FICS Implements QuestSoft’s Compliance EAGLE Financial Industry Computer Systems Inc. (FICS) has announced its latest interface implementation to Laguna Hills, Calif.-based QuestSoft’s Compliance EAGLE. With Compliance EAGLE’s proactive loan compliance tools and capabilities, the interface will allow FICS’ Loan Producer customers to further enhance business practices and compliance efficiency.

Compliance EAGLE is a review solution designed to automate the mortgage lending compliance process through a single platform, providing lenders that utilize Loan Producer with increased continued on page 47

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NAMB PERSPECTIVE The President’s Corner: July 2014 Now as we turn the spring into hot July, we need to start looking ahead for our business outlook over the next six months. I hope some of you are making plans for how you will be getting business in the door until next spring. Planning these months have to be a large part of your thinking each day and you must have the vision to make sure you are cashing loans and providing for your family’s needs in these coming months.

I think you need to start looking for conferences in your states and see what training classes are being offered. As you know, half of my life is spent traveling around to NAMB state affiliates, attending these seminars and seeing all of you, but I also sit through the presentations each day, both before I speak and after.

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Do We Still Need State chapters?

NationalMortgageProfessional.com

By John Councilman, CMC, CRMS

JULY 2014 n Illinois Mortgage Professional Magazine n

I really learn from what these loan originators are doing to make their production better. So get out there and find out what your peers are doing to improve and enhance their production and attend these conferences.

I was in New Orleans in the beginning of July at the Ultimate Mortgage Expo and had a chance to talk with some of the originators on hand at the event. They were all very appreciative of what I have done as president of NAMB and thanked me for coming out to their states. I must tell you that it is truly my honor to be out there representing you, the membership of NAMB, everywhere I go. This has really been a journey of love, and I cannot express to you the thrill it gives me to know that you care about our association. I would love to do this job forever. It is such a joy to meet all of you and hear about your tri-

I have heard some NAMB members say that since most of the legislation and regulation has been on the federal side in the past few years, that we no longer need state affiliates. It is true that we have faced a time of unparalleled amounts of new regulation, from the Dodd-Frank Act, the Consumer Financial Protection Bureau (CFPB) and other federal agencies.

Fortunately, we can still make a living thanks to NAMB and several other trade associations. Even many of the largest banks and their top management did not make it through the crisis.

The good news is, if you are reading this, you are still in the business. You have survived. It is time to think about how we can improve some of these regulations and make our services better and easier for both us and our consumers. This is why we need strong state chapters.

You may be thinking, “That is why we need a strong NAMB … not state chapters.” Yes, we do need a strong NAMB, but that only exists if we have strong state chapters across the nation. Unlike many trade associations, NAMB is a “bottom-up,” association, rather than a “topdown” organization. That means that everything at the top of NAMB comes from its support system of state chapters.

All of NAMB’s board and top leadership is selected by states through the Nominating Committee. NAMB’s bylaws are controlled by the states through the Bylaws Committee. Individual members then vote on all leaders and changes to the association’s bylaws. If you want to change something about NAMB, your state leadership can propose the change.

How do these changes come about? Who selects the Nominating and Bylaws Committee members? State affiliate members do just that at our Delegate Council Meetings.

Due to constriction in the industry, many state chapters have been unable to participate in Delegate Council as fully as they would like to. NAMB responded to that need by proposing four Delegate Council Meetings, two of which will be held by teleconference, and the other two as live meetings at NAMB’s national conferences in Las Vegas and Washington, D.C. Delegates should be able to attend all teleconferences and at least one, if not both, of the in-person meetings. So far, the teleconference concept has been incredibly well-received. Every active state has registered for the first NAMB Delegate Council Teleconference on July 18.

There are many more reasons why we need strong state associations. The leaders of NAMB all come from state chapter leadership. State delegates get to know current NAMB leadership and other delegates. As these state leaders

als and tribulations of being in the mortgage business. The only thing that I ask is that you go out and ask others to be members and get this membership in the 15,000-member range. When I took over, we had a little over 2,000 members. My goal was to get it to over 15,000. I still do not understand why you would not want to be involved in your trade association and be kept upto-date on what is going on in the industry. For a very, very modest $50, you get insight into your job, your industry and what is going on in the world. So a big thank you to all of our paying members. And to those who are not a member of NAMB, I have to ask you a really tough question: Why aren’t you a member?

In a recent NAMB Monday Morning Messenger, I mentioned a new program for NAMB members that you really need to get involved in called www.BetterLoanOfficers.com. I really think that this will be another great program for originators to get behind due to the number of reviews that peo-

ple are looking for when they search the Web looking for a mortgage. Now, they can go and search for a very competent originator at the same time. Visit www.BetterLoanOfficers.com to see what it is all about.

As we move towards September and NAMB National in Las Vegas, don’t waste any time to register and get your room.

Rooms are definitely filling up fast. Last year, we had over 1,500 on hand in Vegas for NAMB National. The rooms this year at our host hotel, the Luxor, are $115 on Friday and Saturday, and $50 on Sunday and Monday. We have not had rates this low in a number of years, so book your rooms and book your flight to come out to the 40th anniversary party of NAMB, Sept. 13-15 in Las Vegas.

You won’t want to be left out.

Sincerely,

become involved in Delegate Council and become active on NAMB’s committees, they are identified by others as qualified to be national leaders. To be a national leader, it takes more than just speaking ability. Leaders are chosen by how well they have managed their states, their ability to understand issues and their industry knowledge and experience, which is demonstrated by holding a Certified Residential Mortgage Specialist (CRMS) or Certified Mortgage Consultant (CMC) designation.

State regulators are still the primary regulators of non-bank mortgage companies and originators. You are statelicensed if you do not work for a bank.

Your audits will generally be from state regulators. Don’t think they have gone to sleep. Rather, we are finding they are becoming much tougher, enforcing new federal laws, as well as some new state laws. State regulators are armed with new tools and computerized data that can cause an unprepared business a great deal of trouble. Without a good state association that shares its experiences, you will go into these audits blind.

State associations offer training, legal advisors and experienced individuals who can help you through the complex world of mortgage lending. Many states have lobbyists who promote good legislation at the state level and often prevent bad legislation and regulations. I remember the days when my home state had no state association. We had some really bad legislation passed that still haunts that state today. I learned how to deal with legislators and regulators through involvement in with my state association.

I learned how a board operates and how to run a committee.

Here is the sad part … nearly onethird of the states have no association now. Those states have no representation at Delegate Council and have no say in national events. There is no representation before the state legislature or regulators in those states. We can blame it on finances, but that isn’t the real reason. You can run an association on a few dollars. I know it’s possible as I have done it. The real reason is that no one is stepping up to restart or create an affiliate of NAMB in these states.

Some states with nearly 100 NAMB members have no active state affiliate.

You can step up and be the person to start that state chapter. You don’t need a fancy office and an executive director.

You can start with nothing, but a desire to bring people together to make things better. NAMB will help you. We have people with a wealth of knowledge at your disposal. We can guide you through the legal and financial pitfalls of the process, and even show you how to have meetings and conventions. This is how leaders are made. They see a need and rise to the occasion. What they lack in leadership skills can be developed over time.

Take the challenge. You can represent your state on the NAMB Delegate Council and be a national leader. Rise up and be a person who has a vision for your state association. It will be well worth your time.

Donald J. Frommeyer, CRMS NAMB President president@namb.org www.joinnamb.com

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

NAMB PERSPECTIVE NAMB Government Affairs Update: All Quiet on the “Eastern Front” ... or Is It?

By Rocke Andrews, CMC, CRMS NAMB recently partnered with some education providers that will allow association members discounts on classes. In addition to our NMLS education providers Mortgageeducators.com and Mortgageeducation.com, we now have access to Lorman Education that has recent legal and sales Webinars available. The July and August schedule is as follows: l July 23—New Technology and the Fair Debt Collections Practices Act

l July 24—Understanding the Basics of Bankruptcy and Bankruptcy Terminology l July 29—How to Draft a Credit Memorandum l July 30—Vicarious Liability in Collections l August 6—Defending FDCPA Claims Based On Collection Letters l August 12—The Impact of the Homeowner’s Flood Insurance Affordability Act of 2014 on Mortgage Lending and Servicing l August 14—The Fundamentals of SBA Lending: Documenting, Closing and Funding the SBA Loan

These Webinars do not have credit for NMLS continuing education, but will count towards renewing the Certified Residential Mortgage Specialist (CRMS) and Certified Mortgage Consultant (CMC) certifications if they are industry-specific.

In addition to our industry-specific Webinars, Lorman also has updated Webinars on sales, operations, IT, marketing, management, customer service and many more. Please visit the NAMB Education Members Only Web page and click on the banner for “Lorman” to receive the member discount, as well as a list of Webinars. Your discount will be

Richard M. Bettencourt Jr., CRMS, CMHS of Danvers, Mass.-based Mortgage Network is Government Affairs Committee Chair of NAMB—The Association of Mortgage Professionals.

He may be reached by phone at (978) 777-7500 or e-mail rbettencourt@mortgagenetwork.com.

applied at the check out stage.

For NMLS continuing or pre-licensing education, visit Mortgageeducators.com or Mortgageeducation.com on the same Web page. You can get individual state pre-licensing requirements from them as well.

NAMB also has 20-Hour Pre-Licensing and Eight-Hour Continuing Education classroom materials available to the states to utilize if they have instructors to present. Contact me by e-mail at randrews@lendingarizona.net if you are interested. Several states are using them as membership enhancements.

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

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n Illinois Mortgage Professional Magazine n JULY 2014

NAMB Education Committee Update: New Online Education Choices

issues, and we will be monitoring the situation very closely. We realize this would have a significant impact on many industry professionals. As the country’s only non-profit trade association truly advocating for every consumer, mortgage professional and small business, we will update you the minute we hear from the Bureau.

What else is going on? We are hoping to have a meeting with the CFPB in the near future to continue our dialogue on the ongoing disparity mortgage brokers are subjected to on a daily basis. We are encouraged by the CFPB’s previous use of their exemption authority and rule-making abilities, and are hopeful that we can convince them that a mortgage broker is, without a doubt, the most cost-effective means for a consumer to obtain a mortgage. The CFPB has always been open to our suggestions, requests for meetings, and we are excited to continue working with them in the future.

Well, that about sums it up for this article. I would like to mention that we are only two months away from NAMB National and his year is going to be our biggest Conference yet! Why not invest some money in yourself and attend this amazing Conference with your peers! I would love to see each of you in Vegas!

NationalMortgageProfessional.com

ourselves in the foot.” So, unfortunately, the last two months have been a time where we’ve seen very little public information we could Well, I don’t know about pass along. So, what have we been your market, but where I doing?

Let’s start with the Consumer am north of Boston, it’s been a crazy couple of months! It’s amazing how Financial Protection Bureau (CFPB). quickly we see the ebbs and flows of About two months ago, the CFPB the real estate market. It seems like made a request for comments on two only yesterday it was mid-February, proposals that would amend certain and we never thought summer was provisions within the Qualified coming, as we were waiting for the Mortgage (QM) §1026.43(e)(2), specifithermometer to heat up and praying cally §1026.43(e)(2)(vi)(B) which perthe home sales would follow! Then, tains to total monthly debt ratios and all of a sudden, BAM! It felt like we §1026.43(e)(3)(iii) which is the points went from no one buying at all to 40 and fees limits. The idea is to allow people at a Sunday Open House, those provisions to contain “cures” multiple offers, highest and best which when used in a limited manoffer by 6:00 p.m. Monday evening, ner, would allow mortgages originatand an offer accepted on Tuesday ed under the QM definition to remain morning. As a mortgage and real a QM loan when inadvertent calculaestate professional, we are definitely tions (points and fees/DTI calculaseeing quite an eclectic array of mar- tions) were made during the originaket conditions. I’m not sure about tion process which would otherwise the other regions of the country, but make those loans fall outside of the here in various geographic locations QM guidelines. Confused yet?

Well, it’s not as confusing as it of New England, it’s a bit oversounds. But NAMB does have conwhelming.

As far as NAMB’s Government cerns with both of these proposals, Affairs goes, it’s never really slow and in our comment letter to the then fast, and fast then slow … it’s CFPB dated July 7, we asked the CFPB always steady. There’s always some- to communicate with industry profesthing we’re working on, but quite sionals actively engaged in the underoften, much of what we’re doing is writing of residential real estate kept “close to the chest” so we don’t mortgages so the Bureau may underinadvertently “tip a hand” or “shoot stand the complex and intricate

By Richard M. Bettencourt Jr., CRMS, CMHS

process of underwriting. Let’s look at an example! We all know that the likelihood of two underwriters coming up with the same income for the same borrower is about as feasible as lighting hitting the same place twice.

So, what happens to a QM loan that is sold on the secondary market with a DTI ratio of 42.5 percent and during a post-consummation audit that could be performed by the end investor (lender, Fannie Mae, Freddie Mac, etc.), the DTI comes in at 44.5 percent because of a difference in income calculation. The CFPB is proposing that there is a “cure” provision under §1026.43(e)(2)(vi)(B). Okay … but how do we cure a DTI calculation after the loan has been closed, sold to an end investor and perhaps sold on the secondary market? I don’t know about you, but I can think of only two ways to reduce DTI. The first is a Principal Loan Reduction to an amount that would provide a 43.00 percent DTI. Yeah … that’s bad! The second would be to eliminate a borrower’s monthly liability debt so the DTI’s are now 43.00 percent. Umm, I’m not sure which is a worse idea!

There have been some trade groups that have suggested a “cushion,” but we don’t feel at this time it’s prudent to just “throw” out a buffer number.

We need research and need industry professionals supplying data, opinions and statistical data to help provide the sort of answers we and the CFPB are looking for.

The CFPB is only looking for comments and input from the mortgage industry and based on their request, are in no position at this time to act on these proposals. Let’s call it SOUL SEARCHING! NAMB is on top of these

NAMB PERSPECTIVE NAMB Communications Committee Update: 2013 Mortgage Survey: Rebates to Consumers

By John H.P. Hudson, CRMS Last year, the Government Affairs team at NAMB conducted a survey of mortgage professionals to determine the amount closing cost credits given back to consumers at closing. The data overwhelmingly showed that in 2012, mortgage brokerages gave millions of dollars to consumers to help cover closing costs. In fact, the 164 mortgage broker shops that responded to the NAMB survey provided more than $69 million back to consumers. Our estimates are that mortgage brokers gave in excess of $2 billion in closing cost credits in 2012.

Our data helped the mortgage indus-

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try get some very positive press and turn some heads in Washington, D.C. The brokerage community was given some much needed good press in the mainstream press (search for Ken Harney’s 10/11/13 article in The Washington Post on “Closing-cost credits”). In addition, regulators and lawmakers had a newfound interest in how mortgage brokers are good for the consumer.

So, here we are today … asking for your help to keep the momentum NAMB has to make subtle improvements to the regulations. We are asking for your help to gather data from mortgage brokers’ 2013 fundings.

Please visit www.surveymonkey.com/s/Brokercredits and fill out the brief five-question survey.

Are You an NAMB Lending Integrity Seal of Approval Holder?

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(No additional costs to NAMB members)

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

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

It is extremely important that we get the mortgage credit to consumer information so that we can present it to our regulators per their request.

What we are looking for is the following information: 1. TOTAL number of loans closed in 2013.

2. TOTAL dollar volume of your loans.

3. TOTAL amount of mortgage rebates that you gave to the customer to help pay their closing costs. This amount will be the sheet price of the loan, minus your lender compensation, minus any hits. This would be the net amount that you would have given back to the customer to help pay fees and reduce closing costs.

John H.P. Hudson, CRMS of Premier Nationwide Lending in Flower Mound, Texas is NAMB Communications Committee Chair.

He may be reached by phone at (817) 247-4766 or e-mail jhudson@pnlending.com.

Mortgage Lending Integrity Restoration

By Fred Kreger, CMC The mortgage industry as a whole has received a tremendous amount of bad press, black eyes and heavy government regulation over the last couple of years. Yet, when you drill down to the true core of a loan originator’s mission, you will find that it is to act in the best interest of his or her client. Loan officers will consult and act in the client’s best interest to the best of their abilities given the tools at their disposal. Even in California, we have a fiduciary responsibility to all of our clients as Bureau of Real Estate (BRE) licensees.

So, how did we rid our industry of this bad rap? One option is to point fingers at the other person, the bankers, Wall Street or government. However, at the end of the day, we all must ask ourselves … what I am doing to restore the integrity of my business and the mortgage lending industry?

I think we all need to ask ourselves every day, “Is this decision in the best interest of my client?” The answer should always be “Yes.” I recently read a great list of “Rules of Running Your Business From This Point Forward” from Doug Smith. Consider adopting these rules:

l Agree to NAMB’s Code of Ethics l Must be renewed annually

Your personal information will be kept confidential. We won’t tell the Consumer Financial Protection Bureau (CFPB) who you are. But we do want to show them the truth about credits to consumers and the service that mortgage brokers provide.

We have open lines of communication with our regulators and will continue to work with them to improve the state of housing to do what is best for the consumer and small business mortgage professionals.

Just remember, it does not matter if you are a mortgage broker or a mortgage banker, NAMB is here for you … the mortgage professional.

1. I will always offer a borrower complete disclosure of a mortgage program’s benefits and drawbacks.

2. I will never ask an appraiser to exaggerate a home’s value to make a deal work.

3. I will only recommend loan products that make sense for the borrower.

4. I will never succumb to a real estate agent’s pressure to alter facts or ignore my better judgment just to make a sale go through.

5. I will always make sure a borrower can comfortably afford the monthly mortgage payment for the program I put them in.

6. I will never overextend a borrower’s credit that may place them in jeopardy of bankruptcy or foreclosure.

7. I will always make smart decisions with the borrower’s best interest in mind.

I think we have all done amazing things for our borrowers, our communities and the industry. Now we need to step up and make sure that all of our actions never place our integrity in jeopardy.

Fred Kreger is branch manager of American Family Funding, a Division of American Pacific Mortgage. He is also the immediate past president for the California Association of Mortgage Professionals (CAMP) and currently sits on the NAMB Board of Directors and serves NAMB as Government Affairs Vice Chairman. He may be reached by e-mail at fred.kreger@affloans.com or call (661) 505-4311.

NAMB PERSPECTIVE A Message From NAMB South East Region Membership Committee Chair Linda McCoy, CRMS: Farming NAMB you are the kind of person we are looking for to add to our membership. We have a lot of good networking opportunities available with NAMB. We discuss

our ideas and try to find solutions that will help all of our members with any originator-related or mortgage-related problems. Like water and sunshine, we

Linda McCoy, CRMS is broker/owner of Mortgage Team 1 Inc. in Mobile, Ala., a member of the NAMB Board of Directors and serves as NAMB Membership Committee Chair for the South East Region. She may be reached by phone at (251) 650-0805 or e-mail Linda@mortgageteam1.com.

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I found myself thinking how I would like nothing better than to see NAMB double or even triple its membership this year.

But how, I asked myself.

This has been on my mind for quite a while now, and it seem like when I am onto something, an underwriter calls, an appraisal comes in low from an unknown appraiser … you know, the normal everyday mortgage business we go through on a weekly basic. In today’s market, this seem to prevent important topics from getting the time and focus they need, like growing NAMB, which is vital for us all to have a larger voice with Congress.

I was gathering tomatoes at our farm’s garden, and I found myself trying to decide what to write about today. I had a thought, getting a plan together for new members to join NAMB might be a lot like farming. In farming, you must till the ground, plant the seeds, fertilize the soil, water frequently, and have plenty of sunshine for the tomatoes grow.

At the farm last year, we got nothing from our tomato crop, even though we took all the steps to produce wonderful ripe tomatoes. We repeated all the same steps from the previous year and this year’s tomato crop is truly some of the best tomatoes we have ever had.

With NAMB, we are just trying to get a great crop of new members that will get better each season and will help us get to the next level at NAMB. If we do not till, plant the seeds, fertilize and have consistent sunshine by following-up with the new members, we will not have a good crop. They will begin to disappear. We are wanting to do things right to prevent losing our members like the bugs eating our tomato crop. We have to till the ground by searching everywhere for new members. We cannot let the ground or our membership just stand idle. We must give all new members our time “value” so they feel good that they joined our organization. We must assist them and their business by fighting for them and the concerns and problems they are facing and bring those concerns and problems to Washington, D.C. NAMB members should consistently reach out to the new members, fertilizing the soil. We must all keep farming so that we can have a larger, better tasting, crop every year. This will allow us to choose the best seeds to plant for next year’s crop.

If you are reading this article, you care enough about your profession and

try to continually feed our members so that they will become the best that they can be.

heard street ON THE

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

Global DMS Forms Two New Partnerships

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Global DMS, a provider of Web-based compliant valuation management software, announced that PrimeLending, a national residential mortgage lender, has successfully implemented the GlobalDMS eTrac valuation platform to compliantly automate the lender’s entire appraisal process.

“Global DMS’ eTrac platform has enabled us to streamline the appraisal process for all of our staff members,” said Tim Elkins, EVP and CIO of PrimeLending. “We have our own panel of appraisers, which eTrac allows us to efficiently manage internally. Since the implementation of eTrac, we have realized quicker turn times, greater employee productivity, workflow efficiencies and cost savings.” eTrac integrates tightly with PrimeLending’s loan origination system (LOS), CoreLogic ChannelMaster. The integration automates manual processes and ensures data consistency throughout the appraisal process. From within the LOS, PrimeLending’s users can seamlessly access eTrac to efficiently order and assign appraisals, check real-time status, and deliver loans to the GSEs via the Uniform Collateral Data Portal (UCDP) in full compliance and without missing data.

“The ability of our solution to effectively handle the type of volume that PrimeLending produces demonstrates the scalability of our platform,” said Vladimir Bien-Aime, president and CEO of Global DMS. “eTrac has a seamless interface to PrimeLending’s ChannelMaster platform, which streamlines their unique workflow and offers them the flexibility to fully control and have transparency over their in-house appraiser panel.”

Global DMS has also announced a partnership with Collateral that integrates various components of their software valuation solutions. From within

Global DMS’ single-source eTrac Enterprise platform, which compliantly handles the entire appraisal management process, users can now access Collateral Analytics’ products and services that include its automated valuation model (AVM) services, data analytics products and risk management solutions.

“There are many factors that must be taken into account in order to determine accurate property valuations and reporting in today’s market,” said BienAime. “This new partnership extends to our customer base Collateral Analytics’ sophisticated data analysis capabilities that produces precise reports on valuations, market analytics and risk scores.”

Collateral Analytics’ AVM service provides highly accurate property value estimates with supporting data for forecasting and decisioning; its data analytics products also report on historical and current home price trends as well as forecast future trends and market condition. In addition, the company’s risk assessment tool, CA Risk Profiler, determines the probability of valuation risk for BPOs and appraisals based on the use of numerous data points.

PCV Murcor Integrates With Calyx on Appraisal Compliance PCV Murcor has announced that it will begin offering compliant appraisals through Calyx Software’s Point loan origination system. Integrating the two systems enables Calyx Point users to quickly and securely order and track appraisals from PCV Murcor through the existing Calyx Point interface.

“With the MBA’s loan origination volume projections lowered again and the operational challenges lenders face in quickly originating quality loans,

every process that can be simplified is valuable. This integration will further enable PCV Murcor to assist lenders by streamlining the ordering process and helping assure that the loans being originated have compliant value-certainty and defensibility,” said Tim Scherf, COO of PCV Murcor. “Calyx is a recognized and respected leader in loan origination software. Their commitment to maintaining a regulatory-compliant system makes this integration an ideal fit for us both, given PCV Murcor’s commitment to providing compliant, high-quality appraisals.”

mote accuracy of loan data.

“Joining forces with Xerox allows our lender customers who use BlitzDocs to transmit their documents easily,” said Pete Pannes, executive vice president and chief sales officer with National MI. “It’s another option we offer our customers to transmit loan documents electronically and securely.”

Black Knight to Service Portfolios of Two New Clients

National MI Partners With BlitzDocs

National Mortgage Insurance Corporation (National MI) is now directly integrated with the Xerox Mortgage Services’ BlitzDocs intelligent collaborative network. The integration provides lenders with improved efficiency in working with National MI through a secure, enhanced document image exchange.

BlitzDocs is delivered as a cloudbased mortgage technology system and enables lenders to e-Ship or transmit documents in a paperless format, according to Ken Marlin, vice president, general manager with Xerox. Its electronic loan folder (eFolder) mirrors a traditional loan folder and only includes the documents both parties agree are needed, so unnecessary documents are eliminated. “eFolder increases productivity and accelerates the loan process while reducing paper costs and eliminating shipping fees,” Marlin said.

BlitzDocs’ advanced security settings enable all industry participants to work together on the same set of documents throughout the entire loan process to streamline process efficiencies and pro-

Black Knight Financial Services has announced that Union Bank & Trust, based in Lincoln, Neb., has signed a fiveyear contract to service mortgage loans in-house using MSP, Black Knight’s mortgage and consumer loan servicing platform. MSP, a complete, end-to-end system used by financial institutions to manage all servicing processes, including loan boarding, escrow administration, investor reporting and more, offers servicers the ability to meet all mortgage and consumer loan servicing needs for any size portfolio.

The implementation of MSP supports Union Bank & Trust’s expansion into mortgage servicing, which complements the broad mix of financial services the bank offers to businesses and individuals.

“MSP offers us the ability to centrally manage all servicing functions on a single technology platform and to easily accommodate our growing loan portfolio,” said Alan Fosler, senior vice president of Union Bank & Trust. “The powerful capabilities of Black Knight’s technology give us the confidence that MSP is the best system to support our bank’s expansion into loan servicing.”

Black Knight has also announced

continued on page 28

HECM program and may not mislead or otherwise cause a senior borrower to believe that the HECM product contains any features or limitations that are inconsistent with FHA’s requirements.

nmp news flash continued from page 16

The Federal Housing Administration (FHA) has published a Mortgagee Letter reminding lenders participating in the agency’s Home Equity Conversion Mortgage (HECM) Program to make certain senior borrowers are fully informed of all their options when applying for reverse mortgages. FHA’s Mortgagee Letter also reinforces the agency’s prohibition against misleading or deceptive advertising and that this prohibition extends to misleading or deceptive descriptions of the HECM program.

FHA’s guidance is intended to protect HECM borrowers from misleading advertising and presentations that appear to limit their options rather than informing them of the full range of available HECM offerings.

Study Finds Mortgage Firms Need to Step Up HMDA Reporting Management With heightened regulatory and media focus on Home Mortgage Disclosure Act (HMDA) data, more lenders will find themselves the subject of fair lending exams, according to Mortgage TrueView, a provider of data-driven

continued on page 51

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

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FHA Publishes Guidance on Avoiding HECM Deception

“Senior borrowers deserve freedom of choice when considering whether a reverse mortgage is appropriate for them,” said FHA Commissioner Carol Galante. “This guidance is intended to make sure lenders know we’re keeping a watchful eye on their marketing and advertising practices that might steer borrowers toward reverse mortgage options that limit their available choices.”

FHA-approved lenders are required to explain in clear, consistent language all requirements and features of the

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ing margins on the secondary sale.”

Additional findings in the first quarter 2014 trend report include the following: l The principle balance of unfunded locks increased by 40.5 percent, rebounding to levels last observed in the 3rd quarter of 2013 l Pre-tax profits improved by 0.25 percent, primarily due to increased secondary marketing gains and gains related to bulk sales of servicing rights l While production continued its decline, the rate of decline slowed in the first quarter of 2014 l Non-loan originator staffing was reduced by an average of 14 employees, or six percent of all non-loan originator staff, since the third quarter of 2013 l Per-staff productivity has declined by 1.8 units per non-loan originator staff member, and by 1.6 units per loan originator, since 2012 l Lenders cut operating expenses by 13 percent, but operating expenses increased by an average of $234 per loan, the result of higher occupancy and marketing expenses, which rose by $106 and $119 per loan, respectively Servicing revenue contributed 12 basis points to survey participants’ bottom lines during the first quarter of 2014, up from six basis points for the fourth quarter of 2013. The majority of servicing revenues resulted from bulk sales of servicing portfolios, which accounted for 83 percent of all net servicing revenues.

Despite continued rising costs, Richey May Select survey participants achieved nearly break-even pre-tax profits for the first quarter of 2014, showing a 25-basis point improvement over the previous quarter. Lenders generally compensated for heightened operating and personnel costs by increasing loan margins.

business intelligence services.

In a new independent study, the company found that many lenders are leaving themselves vulnerable to fair lending exams and significant penalties by not properly monitoring and managing HMDA reporting. Mortgage companies and banks are not taking full advantage of the insights offered in HMDA data, said Mortgage TrueView President and CEO David Moffat.

Additionally, Moffat said the company’s 2013 HMDA survey showed that many lenders are submitting their data with formatting errors, which could lead to non-compliance issues with regulators.

HMDA Survey and Case Study,

LYKKEN ON

leadership

Leaders: Who Do You Have in Your Inner Circle

By David Lykken

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A

nyone who has spent a short amount of time with me will know that I’m a huge proponent of using social media to build connections, bolster your professional image, and grow your business. I personally have received several clients and referrals from using social media, and I have many colleagues who can offer the same testimony. I believe that leaders in today’s day and age who want to be taken seriously as professionals will have the willingness to join those digital conversations and make themselves known in their industries. But for leaders who really want to be at the top of their game, I think there’s something even more important.

A few years ago, Google came out with Google+, Google’s social networking platform that served as an attempt to compete with Facebook for the precious attention of Internet users. The format is much like Facebook, with the differences being fairly subtle and nuanced. One of these small differences is the way users connect with each other. Google+ calls its groups of connections “Circles.” On Google+, you can organize your connections into various circles in order to share different content with different groups of people. You can have a “Friends” circle.

You can have a “Colleagues” circle. You can have any kind and any amount of circles you want. And, yes, you can even have an “Inner” circle.

This article is not about social networking—at least not the kind seen in this month’s issue so far. It’s not about Facebook, Twitter or Google+. It’s about your real social network—the

people you include in your real-life interactions. Sure, the people you connect with online are real people. So, you could say that they are part of your “real life” social network. But, in this article, I’m not just talking about everyone you know—I’m talking about those who are closest to you. I’m talking about the people you trust the most.

I’m talking about your inner circle.

What is an “inner circle?” I define an inner circle as a group of close-knit individuals who openly share intimate details about their lives, struggles, hopes, dreams, fears, failures, and successes with one another. These are the people with whom you share the things you wouldn’t even dream of revealing on Facebook. These are the deep relationships that shape and mold who you are as a leader. This “inner circle” of connections can be a tremendous source of inspiration and motivation. It can become the difference you need to break through to personal and professional success. On the other hand, if you aren’t careful about who you let into your inner circle, it can quickly become the path to per-

sonal and professional defeat.

The Bible, which is still my favorite business book for leaders, tells a poignant story of an inner circle gone awry. In Acts 13, Paul and Barnabas are traveling on their first missionary journey from city to city in an attempt to convert people to Christianity. At one point, they come to a city called Paphos and are invited to meet with the governor of the city, who is described as being an “intelligent man” and from what we can tell, a sincerely good man.

Here’s how the passage reads: “Afterward they traveled from town to town across the entire island until finally they reached Paphos, where they met a sorcerer, a false prophet named Bar-Jesus also known as Elymas. Elymas had attached himself to the governor, Sergius Paulus, who was an intelligent man. The governor invited Barnabas and Saul to visit him, for he was interested in hearing what Paul had to say. But Elymas, interfered and urged the governor to pay no attention to what Barnabas and Saul said. He was trying to keep the gover-

“GREAT LEADERS AND PEOPLE ASPIRING TO BE GREAT LEADERS NEED TO BE MORE THOUGHTFUL AND MORE CIRCUMSPECT ABOUT WHO THEY ALLOW IN THEIR INNER CIRCLES.”

nor from believing.” (Acts 13:6-8) What I want to call attention to is the contrast between the leader in this story and the man who becomes a part of his inner circle. Sergius Paulus is the governor of the city of Paphos—a position which in ancient times I imagine would have been quite a substantial position of leadership. We are told little of Sergius Paulus other than that he is “an intelligent man” and that he allows a negative influence to become close to him. Elymas, represented himself to be something he wasn’t and “attach himself” to the governor. This is a common problem facing good intelligent leaders today, letting individuals of questionable or bad character to get into our inner circle and “attach” themselves to us.

Lucky for Sergius Paulus, the apostle Paul saw through the Elymas/BarJesus ruse and was stricken blind.

When the governor saw this, he believed the message brought by the apostle Paul, and the story has a happy ending.

Here’s what I want you to see in this story and it is something I observe way too many well-meaning intelligent leaders today. They let bad influences into their inner circle, who you allow to “attach themselves” and disrupt or distract leaders from seeing the right path to take in their business and lives.

Remember “Enron?” Through questionable accounting methods, Enron inflated its own value and robbed billions from unsuspecting investors. The company has become the ultimate symbol of bad business ethics. Enron has been used as an example of what not to do in countless stories told by business people across the world. Well, guess what? I’m going to add another one of those stories to the mix.

whether or not we succeed or fail.

While this is true of anyone, it’s especially true of leaders, and it seems that the more authority/influence a leader has, the more they attract those with ulterior motives. This can be a real blind spot and trip up leaders on their way to success.

Great leaders and people aspiring to be great leaders need to be more thoughtful and more circumspect about who they allow in their inner circles. Sure, it’s a good idea to surround ourselves with people different than us—those with complementary personality styles and skill sets. However, it is imperative that all have as close of

a value alignment as possible. As the scripture from Amos 3:3 says, “Can any two walk together unless they agree?”

I have written much on the seven key characteristics of great leaders: character, conviction, confidence, charisma, clarity, communication and compassion. Surely, you should strive to develop these characteristics in yourself. But of equal importance is that you look for these same characteristics in other people. If you want to be a successful leader with great character and an enduring legacy of positive influence, it often comes down to building your inner

circle with people who share that same goal.

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

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As far as leadership goes, there is ironically perhaps no organization in history that has done more to raise the standards for leadership than Enron.

And that is precisely because the level of accountability demanded of Enron CEO Kenneth Lay seemed to have approached zero during his tenure.

Throughout the investigation into Enron’s unethical behavior, Lay came across as wholly incompetent and naive as a leader. Regardless of how you feel about his level of guilt or innocence, he portrayed himself as a gullible victim of things he didn’t know about—all the way up until his death in 2006. Although we may agree with the adage, “ignorance is no excuse,” that seems to be exactly what Kenneth Lay clung to.

But there was another man being investigated right alongside Kenneth Lay—his right-hand man, Jeffrey Skilling. Contrary to Lay, Skilling never came off as gullible or naive. On the contrary, he came across as devious, merciless, and unsympathetic. Rather than deny that he knew about what was going on at Enron, Skilling took credit for it and then proceeded to argue for its ethical merits. Who was the real villain at Enron—Lay or Skilling? As much as we can see, it seems Lay served as more a figurehead. Skilling ran the company and made all of the everyday decisions. So, when those decisions turned out not to be so good, did we let Kenneth Lay off the hook? No, Jeffrey Skilling dragged Kenneth Lay down with him.

Skilling, I think it’s safe to say, was part of Lay’s inner circle. Lay trusted Skilling for the multi-billion dollar organization that was ultimately his responsibility. At some point, Lay would have had to reason with himself that Skilling either would never have done the things he did or that he was too smart to get caught. Either way, by taking on Skilling as his right-hand man, Lay was opening himself up to being taken advantage of as a leader.

Jeffrey Skilling is currently serving his sentence in prison. Lay, on the other hand, died of a heart attack before he had the honor of serving his.

But when we think of the legacy of Kenneth Lay, we conjure up images of naivety, cowardice, and incompetence. These things are the antithesis of a great leader. And we attribute those characteristics to Kenneth Lay ultimately because he brought the wrong person into his inner circle.

When I get close to people, whether in business or in life, I try to be extra vigilant about the effect they will have on my ability to be a strong leader. It is amazing to me how many leaders open the door to individuals like BarJesus or Jeffrey Skilling. I have come to pay special attention to those who feel compelled to “attach” themselves to me or to leaders to whom I consult. It sets off warning lights on my “dashboard.”

Who we allow in our lives can be the biggest determining factor in

Data Privacy is a Lender’s Nightmare and a Consumer’s Biggest Fear

By Andrew Liput

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The Consumer Financial Protection Bureau (CFPB) now has rule-writing authority and enforcement authority over financial institutions, with respect to the Graham-Leach-Bliley Act (GLBA), the major federal consumer information privacy and data security laws.

The GLBA requires financial institutions–companies that offer consumers financial products or services like loans, financial or investment advice, or insurance–to safeguard sensitive data. Mortgage lenders, mortgage brokers, credit unions and banks collect personal information from their customers including names, addresses, and phone numbers; bank and credit card account numbers; income and credit histories; assets and their location, as well as Social Security Numbers. The name of minor children, marital status, birthdates and more are also found throughout a typical loan file. GLBA thus requires all lenders to ensure the security and confidentiality of this type of information. As part of its implementation of the GLBA, the Federal Trade Commission (FTC) has issued the Safeguards Rule, which requires financial institutions under FTC jurisdiction to have measures in place to keep customer information secure.

According to the Safeguards Rule, financial institutions must develop a written information security plan that describes their program to protect customer information. All programs must be appropriate to the financial institution's size and complexity, the nature and scope of its activities, and the sensitivity of the customer information at issue. Covered financial institutions must: (a) Designate the employee or employees to coordinate the safeguards; (b) Identify and assess the risks to customer information in each relevant area of the company's operation, and evaluate the effectiveness of current safeguards for controlling these risks; (c) Design a safeguards program, and detail the plans to monitor it; and (d) Select appropriate service providers and require them (by contract) to implement the safeguards.

As the recent electronic data breaches suffered by Target, eBay and industry LOS system provider Ellie Mae demonstrate, when we live in a world where private information is shared, that information is a serious temptation for criminals. Mortgage lenders and banks, who have access to so much personal and financial information of a borrower, must take significant measures to safeguard that data and manage who has access to it.

To meet these compliance expectations, all lenders should expect to: (a) Develop a written data security plan; (b) Designate responsible employees who may access sensitive data; (c) Screen all employees with access upon hire and at least annually thereafter; (d) Evaluate and monitor all third parties with access to sensitive data (including IT professionals, janitorial services, credit counselors, settlement attorneys, notaries, title agents); (e) Assess risks to customer data through breaches in security, including rouge employees; and, (f) Test and monitor safeguards.

Risk management experts and industry auditors recommend that lenders, banks, credit unions and brokerage shops conduct annual screenings of all employees with access to consumer data, credit reports and financial information, as well as any third-party vendor who may have access to some or all of the same data. Failure to adopt and enforce appropriate measures will eventually result in severe regulatory penalties and the potential for civil lawsuits for damages.

Andrew Liput is president and CEO of Secure Settlements Inc., a company he founded after nearly 10 years studying the problem of escrow and closing fraud and the uninsured risks associated with mortgage closing professionals. He may be reached by e-mail at aliput@securesettlements.com.

SPONSORED EDITORIAL

heard on the street continued from page 24

that Guaranty Bank signed a five-year contract to use its MSP platform to service the bank’s expanding servicing portfolio. Guaranty Bank recently converted 25,000 residential mortgage loans onto the MSP system.

Guaranty Bank’s conversion of its residential mortgage loans onto the MSP platform will offer the mortgage banker more system functionality, as well as provide increased support to meet federal regulatory requirements.

“We are pleased Guaranty Bank has chosen Black Knight’s industry-leading technology to meet the evolving needs of its growing business,” said Joe Nackashi, CIO and president of Black Knight’s Servicing and Default Technologies division. “We are committed to providing Guaranty Bank with both innovative technology and collaborative support needed to face compliance challenges and growth opportunities ahead.”

AnnieMac Implements ISGN’s CFPB Risk Module ISGN Corporation has announced that AnnieMac Home Mortgage, a Mount Laurel, N.J.-based residential mortgage lender, has implemented ISGN’s Consumer Financial Protection Bureau (CFPB) Compliance RiskCheck to evaluate risk against the CFPB’s requirements.

Dozens of new CFPB rules have taken effect over the past two years and more changes will continue to be released throughout 2015. ISGN’s RiskCheck is the only Software-as-a-Service (SaaS), cloudbased risk assessment tool available in the market today, and is designed specifically for lenders and servicers like AnnieMac Home Mortgage that are in need of a costeffective, efficient risk evaluation solution to comply with the new and changing CFPB requirements. CFPB Compliance RiskCheck enables AnnieMac Home Mortgage to utilize a Web-based system to conduct an end-to-end review of its policies and procedures. The platform contains a series of approximately 600 questions, which are broken out by three categories: Compliance management, originations, and servicing, and then by area of risk.

The cloud-based self-assessment tool provides several help features including best practice sample answers, live compliance assistance and links to compliance regulations when completing the answers, which are then analyzed automatically using taxonomy in line with CFPB regulatory guidelines to calculate the residual risk. AnnieMac Home Mortgage will be able to generate a detailed report including compartment risk weightings, trends and high risk items, which can then be provided to regulators and to executive management for action plans.

“Failure to comply with the CFPB’s

requirements can lead to severe consequences, and as our organization continues to grow, it is imperative that we address any risks that could result in noncompliance,” said Joseph Panebianco, CEO of AnnieMac. “Keeping up with the latest CFPB regulations is challenging, but ISGN’s RiskCheck is a practical, reliable solution that simplifies the compliance management process.”

LoanLogics Announces Integration With Radian Guaranty LoanLogics has announced that it i s integrating price/premium data from Radian Guaranty Inc. into one of the mortgage industry’s leading pricing engine platforms. LoanLogics is integrating the cost of MI from Radian Guaranty, one of the foremost providers of private mortgage insurance, into the total calculation of principal payments, interest and fees from LoanDecisions product eligibility and loan pricing technology.

“LoanLogics is dedicated to delivering cutting-edge technology that provides competitive advantages to clients and ensures that they are compliant with CFPB regulations,” said Brian K. Fitzpatrick, president and CEO of LoanLogics. “The integration of Radian MI costs into LoanDecisions pricing enables us to enhance our capabilities to include mortgage insurance, providing more complete loan payment details for compliant pricing discussions with borrowers.”

This product integration enhances and simplifies the MI rate quote, and eventually the ordering process, for both Radian’s and LoanLogics’ customers, enabling them to instantly receive an accurate rate quote in real time within the LoanDecisions best execution platform. The platform delivers accurate, real-time investor pricing and eligibility data through an intuitive and comprehensive interface.

“This is exciting news because it’s one more way Radian is working to accomplish one of our top priorities—making it easier than ever to do business with us,” said Brien McMahon, Radian’s chief franchise officer. “Partnering with a well-regarded leader like LoanLogics will simplify how MI is ordered for many of our customers, and we’re proud to deliver that.”

Mortech Joins Forces With INTEGRA Software Systems

Mortech has announced a new integration with INTEGRA Software Systems, developers of Destiny loan origination software (LOS). A new streamlined setup continued on page 48

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Top Mortgage Executives

Sound Off on the State of the Industry

Results in from MBA Conference Survey Report & Scorecard

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his is the 12th time since 2008 that the Mortgage Bankers Association (MBA) Conference Survey Report & Scorecard survey of senior mortgage banking executives has been conducted and distributed. It is completed twice annually, at the MBA’s National Secondary Market Conference in May and at the MBA’s Annual Convention in October.

The purpose of the survey is to capture some basic data and gather the opinions, attitudes, values and expectations of senior executives on many of the key issues, topics and concerns discussed and debated across and throughout the mortgage industry. The survey is funded by Tom Millon, chief executive officer of the Capital Markets Cooperative. The author serves as a money market economist for the Cooperative on a consulting basis.

For this year’s Secondary marketing Conference, I arranged 26 meetings and completed 26 surveys. The surveyed group consisted of five mortgage company presidents, six executive vice presidents, 10 senior vice presidents and five vice presidents. Exclusive of the presidents, all of those surveyed work in capital markets, operations or production. Fifteen of those surveyed are with top 50 firms (ranked by 2013 origination volume), nine are with firms in the top 20, and three are with firms ranked within the top five. The remaining 11 executives are with firms ranging from $400 million to $5 billion based on 2013 production volume. The execs represent 12 banks, 10 independent mortgage companies, two homebuilder-owned firms, and one each credit union, thrift and realtor-owned firm. One of the firms is Internet-based.

BY TOM LAMALFA Eleven of the firms originate only through retail, while the other 15 produces in at least two channels. Six of the 25 separate firms originate in retail, correspondent and broker wholesale. It is a representative group and was structured to be so.

The 75-question questionnaire was drafted several weeks before the Secondary Marketing Conference, beta tested, and run past several industry executives for comprehensiveness and clarity. Except for the beta test group, all surveys were completed face-to-face during meetings at the Conference.

About 45 minutes is reserved for each survey. The project’s objective is to record the responses to the questions, compile the information, prepare a report of the results, and distribute it to those surveyed and other interested parties.

By design, the survey group consists almost solely of industry friends and business associates. All are industry veterans. Almost all have been part of this survey since its beginning. Some are polled at this Conference and also at the Annual Convention in October. Most of those surveyed are close industry contacts who have helped keep me apprised of intra-industry trends and developments over the course of years.

Most have been colleagues for decades.

Only three of those surveyed were polled for the first time.

Given who is being polled, no thought was ever given to even suggest that the survey findings reflect the attitudes or opinions of a broad cross-section of the U.S. population. To the contrary, since it wasn’t a random survey, there is nothing scientific about the results that would necessarily apply outside the mortgage banking industry and

at a specific point in time. That being said, I believe the findings well represent the ideas, attitudes and expectations of the broader industry.

Although some of the questions are time-specific and appear on these surveys only once or twice, many others are included in each and every survey.

This polling process provides a set of responses over time. An analysis of this longitudinal data shows patterns and trends along with new developments in the business and industry. For example, the reduced demand by the government-sponsored enterprises (GSEs) for the repurchase of loans is reflected in the vast improvement noted in this survey and the last, as compared to the findings of the surveys in 2010 through the first half of 2013.

Past survey results have been the basis for several recent articles in trade publications. The objective of these articles is to bring senior execs into the public discussion of key issues and topics without drama, and despite the often-controversial nature of the underlying subjects.

This report’s author finds the information collected to be relevant, interesting, insightful, informative and instructive for policymakers at a most challenging time for the Congress, the Federal Reserve, industry regulators, the GSEs and the Obama Administration.

With that preface, it’s off to the questions, with the understanding that what follows is intended as only a skin-deep review of the responses, not an analysis of them. l Question #1 asked those surveyed what the interest rate on the 30-year fixed-rate mortgage would be at

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year’s end. The group average weighted in at 4.75 percent. The range of expectations was from 3.875 percent to 5.5 percent, but most responses were clustered close to today’s rate level.

Question #2 wanted to know how much residential origination volume they expected this year. The group average, which is not weighted by volume in any of the answers cited herein, is $1.1 trillion. The response range was from $850 billion to $1.4 trillion.

Question #3 asked how much their firm’s production was down year-todate, compared to the same period last year. The response range was from no decline to down 80 percent, with the average down 37 percent.

Question #4 wanted to know whether their firm’s volume in 2014 would be up, down or sideways. Of the 25 answering the question, 18 said down, two said up, and five expect no change from last year.

Since the new qualified mortgage/ability-to repay (QM/ATR) regulations now rule, those surveyed were asked in Question #5 what portion of their walk-in business was non-QM eligible. All of the responses were single-digit numbers, many were under two percent and the average was four percent.

Question #6 wondered how much refinance business they were now doing. On average, about half of the group’s production was refinanced loans. The range was from 15 percent to 60 percent, exclusive of the homebuilder and realtor-owned firms.

Question #7 inquired about the firm’s FHA volume and whether it

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do more, said 12 execs, compared to one whose firm will be doing less.

However, the majority, 13, will originate more or less the same amount this year as last. l The mortgage insurance companies have all introduced new Master Policies. Question #24 asked if they were an improvement. In one of the very few queries to capture a unanimous vote, 23 of the 23 who felt they could answer the question said, yes, they’re an improvement. l After being devastated in the financial crisis, mortgage brokers have made a modest comeback over the past two years. Will they grow their market share over the next several years, asked Question #25? In the

survey’s only tie, 13 respondents took each side of the question. l Questions #26 and #27 inquired about profitability at their firms. Of the 24 who responded, only one indicated that profits were higher this year than last. And by how much were they down? They are off by an average of 7.4 on the less-tomore scale of 1-10. The range was from 4-9 on the 10-point scale. l Questions #28 through #31 wanted to know about mortgage servicing rights (MSRs): Retaining versus selling them; who was buying them; whether current MSR prices were attractive; and at what multiples continued on page 38

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they’d increase again this year, and by how much. The response range was from two percent to 12 percent, with a group average of up five percent in 2014. l Question #22 asked by how much each expected the mortgage industry to shrink in size, both in numbers of operating firms and in the size of the workforce. The average was 14 percent smaller, but only three respondents thought the shrinkage would be under 10 percent. l With the government prodding and the mortgage insurance (MI) industry well capitalized and aggressive, Question #23 wanted to know if the execs planned to do more or less high-LTV lending this year. They will

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had withered since 2013’s Conference. Yes it had, reported 22 of the 25 respondents.

What portion of the firm’s convention production was of loans with LTVs exceeding 80 percent was the subject of Question #8. The answer was precisely one-third, with a response range of five percent to 70 percent.

Question #9 asked how much of their firm’s activity involved jumbo and adjustable-rate mortgage (ARM) products. The range was from zero to 40 percent, with an average of 13 percent.

Is your firm putting ARMs and jumbo into portfolio, asked Question #10? The response was that eight were doing so while 17 were not.

Question #11 wanted to know if their firms were doing more, less or the same amount of high-DTI lending this year as last. Four of those surveyed were doing more, while 10 were doing less and 12 reported no change.

Were their firms doing more lowFICO lending this year, asked Question #12, or was it less or the same as last year? Here, 10 were doing more, four were doing less and 12 recognized no meaningful change year-over-year.

Question #13 wanted to know if their FHA market share would increase, decrease or remain the same in 2014. Eleven of 24 said it would decrease, eight expect their FHA share to be flat and five expect it to increase.

Question #14, which is set against a backdrop of efforts to expand the FHA credit box, questioned whether doing so is a good idea. No, said 18, versus eight who felt otherwise.

Question #15 inquired as to whether the respondents thought that market participants would go along with any loosening of credit standards. Yes they would go along with loosening reported 18 execs, compared to eight who disagreed.

Recently, Carrington Mortgage announced that it was writing FHAs to a 550 FICO score. Question #16 wondered how many execs saw this as a financially sound idea. One respondent did, but 25 others disagreed.

Questions #17 and #18 dealt with Basel III and the new international capital framework that is coming.

By a count of 17 to nine, respondents thought that its enactment wouldn’t adversely affect their firms’ mortgage strategies in the next five years, and by a 15 to 10 count didn’t think that Basel would limit their options for selling servicing.

Are appraised values still a major concern, asked Question #19? They aren’t a major concern replied 18 of 26.

Questions #20 and #21 asked about house prices, specifically if

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economic commentary

THE

By Dave Hershman here were plenty of fireworks during the July 4th weekend but the day before the holiday started, the government provided their own fireworks with the release of a strong jobs report for the month of June.

Most analysts were expecting a decent gain in jobs at just over 200,000 and for the unemployment to remain steady at 6.3 percent. The

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MID-YEAR

EMPLOYMENT

numbers were stronger than expected, especially when considering the fact that the previous months of jobs gains were revised upwards.

In June, the economy added 288,000 jobs which is robust by anyone’s standards. The unemployment rate dipped to 6.1 percent and the decrease cannot be attributed to people leaving the workforce as the labor participation rate stayed steady.

Though these numbers are subject to revision in later months, the fact that ADP released a similar number for

UPDATE

private payroll growth the day before just confirmed the fact that the job market is indeed heating up. What does that mean?

This is just what the doctor ordered for the economy. More jobs should translate into higher levels of consumer spending and especially spending on big ticket items such as cars, furniture and houses. A stronger housing market and automobile industry should create more jobs and the virtuous cycle will be created.

The strong employment data were

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all that was needed for the stock market to continue its assault on the record books. Both the Dow and the S&P hit record territory with the Dow crossing the 17,000 mark after the release of the report on July 3.

Meanwhile, the S&P inched closer to the 2,000 threshold. The good news was accompanied by a bump in longterm interest rates, which was not unexpected.

If job creation continues at this pace, we should expect a pickup in interest rates in response. On the positive side of the ledger, the growth in home prices which has slowed somewhat should continue. We know we have said this before—the combination of low rates and low housing prices will not last forever. While the stock market has been strong, rates have remained low. However, this news might just be the beginning of the end of the nation’s sale on money. There are always risks such as natural disasters and world conflicts.

The hurricane season has started, and Iraq and Ukraine have been focal points. But if another disaster such as the cold, hard winter of 2013-2014 does not hit, the jobs market could continue to lead the way in 2014.

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

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TALES FROM THE CLOSING TABLE

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

Top industry news … housing market is still flat Hopes for improvement in home sales to rev up the mortgage market have not materialized, as inventory remains scarce across the country. In addition, after posting strong growth in April, housing starts fell in May. With the exception of the South, where land is more readily available at affordable prices, every region saw a decline in homebuilding. The multifamily market is also in the dumps according to reported figures. Many lenders saw an increase in closed loan volume in March and April and saw a silver lining, but now it is creeping back down. This see-sawing effect is causing havoc in operations as management cannot decide whether to lay off employees or hire new ones. Add to this the sharply rising cost of compliance and quality control (QC) platform maintenance, and the effect is continued consolidation and strategic alliances to share costs and gain capital for growth.

You can’t make this stuff up! l In Kansas, the senior vice president of a bank pleaded guilty to conspiring to make false statements on a loan application for an $850,000 mortgage. He pleaded guilty to one count of conspiracy to make false statements on a loan application and will be sentenced this month. What’s that saying about a wolf guarding the hen house? l An Alabama lawyer was sentenced to five years and 11 months in prison for his role in an investment fraud scheme through which he submitted a fraudulent $908,000 loan application and took more than $2.8 million from 12 investors spending the funds on a lavish home, private jets, championship football trips and island vacations. Living the high life can get expensive, so what’s a lawyer to do? l A Colorado attorney has been sentenced for stealing in excess of $300,000 from his law firm’s clients by pilfering the firm’s trust account. He transferred the funds to his personal checking account with his wife and used the money for personal expenses. Lawyers never commit fraud do they? l A California title company employee pleaded guilty to three counts of wire fraud in connection with a mortgage fraud scheme. The defendant admitted that he had prepared fraudulent HUD-1 Settlement Statements, which not only falsified the purchase prices, but the true source of downpayments.

Those pesky HUD-1s are so darn confusing.

Regulatory updates …

Fair lending and equal opportunities for women-owned and minority-owned vendor firms appear to be the two hot topic areas for regulators these days. Many lenders are reporting very aggressive fair lending audits by state regulators and the focus appears to be orchestrated by the Consumer Financial Protection Bureau (CFPB) in Washington, D.C. Issues regarding loan decisions, origination practices, marketing and advertising tactics, and employee training in the area of bias and discrimination have been at the forefront of audit questions. The Mortgage Bankers Association (MBA), anticipating movement in the area of equal opportunity vendor opportunities, has created a task force to study the issue and eventually issue a report on how banks and lenders can ensure that they are not discriminating when

choosing third-party service providers.

On the lighter side …

The mortgage loan originator had a puzzled expression on her face as she looked at the elderly looking gentleman sitting in front of her and noted that his driver’s license indicated he was not all that old. As she stared at him in disbelief, he suddenly said, “Look at me. I’m old and worn out.

You’d never believe that I used to live the life of Riley. I wintered on the Riviera, had a boat, four fine cars, dated the most beautiful women, bought tailored clothes and ate in all

the best restaurants around the world.”

The MLO asked, “What happened?”

The man answered, “One day Riley reported his credit cards missing!”

Andrew Liput has been a corporate, real estate and banking attorney for more than 25 years. He is the founder, chief executive officer and president of Secure Settlements Inc., the first data intelligence and risk analytics firm to offer specialized vendor management services addressing settlement agent risk to mortgage lenders and banks nationwide. He can be reached by e-mail at aliput@securesettlements.com.

Valuation Expo Brings Three Days of Education and Networking to Vegas

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Erik Wind is a special correspondent for National Mortgage Professional Magazine.

He may be reached by phone at (516) 663-0790.

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n Illinois Mortgage Professional Magazine n JULY 2014

It’s never easy to decide to stop your day-to-day work for a few days and inconvenience yourself by traveling across the country to attend an industry conference. But those very decisions that can make the difference between continuing with your day-to-day, or having an opportunity to look into the future and see how the industry is changing— before it can change you. That’s what happened recently in Las Vegas at the 2014 Valuation Expo, as hundreds of appraisers from across the country made that decision.

Unlike other real estate sectors, there are not many national conferences specifically for the appraisal industry. This can be advantageous, since the Valuation Expo offers the opportunity to listen to and meet dozens of thought leaders from major lending institutions, appraisal management companies (AMCs), software/data companies and government agencies, all under the same roof.

In addition to the opportunity to connect with key reps from the appraisal industry, the Expo featured important relevant topics, such as alternative valuations (AVMs, appraiser-assisted AVMs, BPOs and others), and how the appraisal business is moving from forms and data collecting, and more into data analysis and interpretation.

On top of all of this, attendees had the chance to earn up to 21 hours of CE credits. Where else would you rather get your CE than in Las Vegas? The Valuation Expo is organized and presented each year by the Alterra Group. If you are a real estate appraiser, you should strongly consider the Valuation Expo in 2015.

F or m ore tthan ears, For more han 20 yyears, tthe he preferred preffer e red loan loan o origination rigination p platform latform

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Mark Linné , MAI, SRA, CRE, CAE, CDEI, FRICS CEO and chief analytics officer for ValueScape Analytics Inc.; Bill King, SVP of valuation solutions for Platinum Data Solutions; John Brenan, director of research and technical issues for Appraisal Foundation; Brian L. Trotier, EVP and chief operating officer for NDC (moderator); and Ken DeFeo, vice president of residential appraisal services for Union Bank during the Alternative Valuations Session at the 2014 Valuation Expo in Las Vegas

Renting or Buying?

Oh, Come On, You Know the Right Answer!

10 Cities Where Buying Is a Good Bet #

U.S. Metro

How Much Cheaper is Buying Than Renting?

1

Detroit, MI

66%

2

Gary, IN

61%

3

Birmingham, AL

58%

4

Toldeo, OH

58%

5

Kansas City, MO-KS

58%

6

Cleveland, OH

56%

7

Dayton, OH

56%

8

Memphis, TN-MS-AR

56%

9)

Grand Rapids, MI

55%

10

St. Louis, MO-IL

54%

10 Cities Where Buying Is a Close Call

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#

U.S. Metro

How Much Cheaper is Buying Than Renting?

1

Honolulu, HI

5%

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San Jose, CA

9%

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San Francisco, CA

13%

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Orange County, CA

21%

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New York, NY-NJ

22%

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Oakland, CA

24%

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Los Angeles, CA

24%

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Ventura County, CA

27%

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Albany, NY

27%

By Phil Hall Take a casual glance through the real estaterelated articles in the current mainstream media and you will find a surplus amount of headlines that pose a challenge: Should people buy a home or should they opt to rent? If you put your faith in the mainstream media, the renting-versusbuying question could be as complex as a Zen Koan.

For Tom Ward, however, the media is not only asking the wrong question, but it is giving out information that is full of errors.

“I’m a Baby Boomer,” said Ward, founder and CEO of Path2Buy LLC, based in Vernon Hills, Ill. “I can remember in the film ‘All the President’s Men’ when they couldn’t publish an item unless they had a second source. Today, however, everybody is an expert—you can put out a YouTube video and be considered an expert. The problem is that nobody is verifying what is being put out.”

John Walsh, president of Milford, Conn.-based Total Mortgage Services, agreed with Ward’s concerns.

“I think that the media industry has blown up how tough the mortgage industry is, which scared a lot of people

off,” said Walsh. “People become frightened and think, ‘Oh, forget that mortgage stuff … I’ll rent for a while.’”

At face value, the arguments in favor of renting are not supported by numbers. According to data released by Trulia, homeownership was less expensive than renting on both a national scale and in all of the 100 largest metropolitan areas. Granted, the gap between buying and renting varied between markets—homeownership was five percent cheaper than renting in Honolulu and 66 percent cheaper than renting in Detroit—but, ultimately, there is no statistical evidence to support renting as being more finan-

cially prudent than homebuying.

Logan Mohtashami, Irvine, Calif.based senior loan manager at AMC Lending Group and a financial blogger at LoganMohtashami.com, acknowledged that while the current environment might encourage renters to cross over into homeownership, the question of economic feasibility is still a stumbling block for many people.

“The entry to buy a house is low for first time homebuyers,” Mohtashami said. “Rates are low, downpayments requirements are low—some programs have 0.5 percent for downpayment.

There are plenty of loans to be given.

But in this economic cycle, it is not easy

about making your next mortgage payment, but also having extra money to go out to a movie or repair something that broke down,” said Frigano.

Frigano stated that her efforts concentrate on what she called “responsible homeownership” while working to overcome the agitation that some people might carry.

“If someone can get into a house they can afford, there should be no fear,” Frigano said. “We stress that people should buy a house responsibly and not something they cannot afford.”

Susanne Livingston, co-owner/broker at San Diego-based Residential Wholesale Mortgage Inc., often works with insurance agents to educate the

rental community on the benefits of homeownership. She believed that this concentrated effort is paying off.

“Most people are at the point of understanding interest rates are at 40year lows and property values are actually on the rise,” Livingston said.

“There is more pressure on people to purchase now if they can. After all, there is nowhere for interest rates to go but up.”

Ishbia observed that much of the tumult resulting from the housing crisis is finally being laid to rest.

“People saw a lot of friends and family members that owned a $250,000 house and could not sell it for $150,000,” Ishbia said. “Now, people

are more comfortable that if they buy a house for $150,000, they can sell it in five to six years for $160,000 and not $120,000.”

And Total Mortgage Services’ Walsh observed that despite media machinations and economic hiccups, homeownership is in no danger of losing its appeal.

“At the end of the day, people want to own their own house,” Walsh said. “I think that the ultimate goal of homeownership is still here.”

Phil Hall is managing editor of National Mortgage Professional Magazine. He may be reached by e-mail at philh@nmpmediacorp.com.

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for young Americans to buy.”

Indeed, economic factors have complicated the process. Dr. Anthony B. Sanders, Distinguished Professor of Finance in the School of Management at George Mason University in Fairfax, Va., pointed to the Social Security Administration’s wage statistics for 2012, which found the “raw” average wage was $42,498.21 while the median wage was $27,519.10. Yet, Sanders added, the median existing home price is $201,700, creating a price-to-income ratio of 7.33 percent.

Sanders also noted that in his market–the Washington, D.C., area, one of the nation’s most expensive housing markets–many members of the work force have to commute from as far as West Virginia and Pennsylvania because they cannot afford to buy local housing.

“We have literally fried the middle class between damage done by the housing bubble’s bursting and restrictive government policies–Obamacare taxes, EPA mandates, FICA, outsourcing of jobs, etc,” said Dr. Sanders. “And with the Fed driving up home prices with their low rate policies – making it cheaper for investors to borrow and buy–the middle class is dead in the water.”

Still, it might appear that too many people that are hesitant about buying are genuinely unaware of what is required of them. Ward noted that on many occasions, loan officers that participate in his company’s coaching program find themselves with consumers that have been misled by incorrect information relating to the basic requirements for mortgage applications.

“Twenty-two percent of the time, the loan officers meet with customers for the first time and determine that the customers had the ability to buy right there, but did the customers did not know it,” Ward said. “They were trying to save 20 percent for a downpayment or get their FICO score to 580.”

For many mortgage professionals, the renting-versus-buying challenge is easily dismissed with proactive and user-friendly education. A number of companies are using information tools that confirm the financial evidence supporting homeownership.

“We provide our broker clients with a rent-versus-buy grid,” said Mat Ishbia, president and CEO of Troy, Mich.-based United Shore Financial Services. “If a renter has a $1,500 to $2,000 rent payment, our grid shows them for that payment, they can buy a $280,000 house.

That’s a big thing–people didn’t realize that price for rentals are rising and that it is now more expensive than buying.”

Heidi Frigano, executive vice president of marketing and business development at Levittown, N.Y.based United Northern Mortgage Bankers Ltd., created an education DVD that stressed the importance of financial counseling to ensure the mortgage transaction process is without problems.

“We explain that this is not just

Mortgage Visuals: It’s About Time

top mortgage executives sound off continued from page 31

By Matthew Dunn Ph.D. Have you noticed that the proportion of visual, infographic and video content is increasing? Visual business content is exploding, but it’s not just more decoration. Visual communication, in graphics and videos, are increasingly put to use to convey complex ideas of all kinds. I think it’s actually a matter of necessity, forced by increased complexity, information overload and lack of time.

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In 2010, Eric Schmidt of Google noted that we now create as much information in two days as we’d created in total up to the year 2003. We can search much of the two-plus million billion gigabytes (zettabytes) of that information, but then we spend less than a minute on the average Web page. We cannot read everything we should, and apparently we don’t really try, judging from Web visit durations.

This has everything to do with visuals, because as it turns out, we process and comprehend visuals far faster than text. According to Forrester: l People process visuals 60,000 times faster than text l One visual or video frame conveys as much as three pages of text l One minute of video conveys as much information as 1.8 million words Well-designed visual media can make complex subjects and relationships more clear and faster, and often better, than words alone.

From an outsider’s perspective, it’s a bit shocking to see how deeply the mortgage world swims in details—oceans of numbers, seas of words and nothing firmer than archaic Excel charts in sight.

I’d suggest thinking of your design department and media vendors more strategically (it worked for Apple). If that infographic or video seems expensive, think in terms of a 60,000-times return on attention. Your customers and employees don’t have more time … the more meaning in a minute the better.

Matthew Dunn Ph.D. is CEO of Fast Forward Stories, a video content service for the mortgage and real estate industries. He may be reached by phone at (888) 618-9088 or e-mail matthew@fastforwardstories.com.

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SPONSORED EDITORIAL

they found selling and or buying them attractive. First, servicing will be retained by 13, sold by seven, and another four will be both buyers and sellers of MSRs this year. Eleven respondents are currently purchasing MSRs, but 14 others aren’t.

Concerning prices, 19 of 23 said that current prices are attractive.

Multiples of at least 3.5-times the servicing fee is the bottom end of the attractive range, according to those surveyed.

Question #32 asked if the execs’ firms were doing more mandatory business this year than last. Yes said 15, while seven said no and four others reported no change in their mandatory business.

Questions #33 and #34 addressed agency buyback demands, how they’ve changed since last October’s MBA Annual Convention, and how large a problem this issue is today.

Sixteen execs said that repurchase demands were down, compared to four who reported an increase, and five who acknowledge no change. As to how large a problem it is, the average score was 3.2 on a 10-point scale. The range of answers was one through nine. To those who have not reviewed one of these reports before, this is the lowest ever recorded and compares to average scores of eight plus in recent years.

Are consumer attitudes toward homeownership different today than before 2008, asked Question #35? They‘re absolutely different today, said 25 of the 26 respondents answering the query.

Question #36 wondered if the execs felt that efforts to modify loans have in any way hurt the mortgage market. Fourteen replied that those efforts haven’t hurt the market, but 11 others saw it differently.

Question #37 wanted to know if the underwriting and documentation requirements of the GSEs were too stringent. Underwriting isn’t too tight said 15, but 11 others said they were too tight.

As for overly strict doc requirements, Question #38 showed 18 of the 25 respondents agreed they were too tough on mortgagors.

The same question was asked about underwriting standards at the FHA in Question #39. Here, 18 of those surveyed indicated they weren’t too tight, compared to eight who disagreed.

Question #40 asked it the GSEs’ loan limits should gradually be rolled back. No reported 17 compared to seven who thought they should be lowered.

Question #41 wanted to know how one-sided their dealings were with Fannie Mae. On the 1-10 scale, the group’s average was a 7.3. Twenty

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gave it a six or higher, compared to one who ranked it below a five.

The Johnson-Crapo Bill on housing finance reform was the subject of Questions #42 and #43. Respondents were queried about its passage either this year or next. In a second unanimous vote, those surveyed said not in 2014, and only two of 23 thought passage more likely in 2015.

At what level of production capacity is your firm operating, Question #44 inquired? The range of answers was from 60-100 percent, with an average operating capacity of 79 percent. Only three said they were operating at 100 percent, compared to nine who reported a rate under 80 percent.

Question #45 asked if the firms dealt with one or another mortgage cooperative. Sixteen execs provided an affirmative compared to 10 who did not belong to one or another.

Private securitizations are off to a slow start this year.

Question #46 wondered if they thought the pace would pick up in the months ahead. Activity will increase said 15, while 10 others remain skeptical of an acceleration of private issuance.

In Question #47, respondents were asked if they thought an expansion of the Home Affordable Refinance Program (HARP) would provide economic and societal benefits. No said 14, but the vote was close, as another 11 thought such an initiative would be beneficial.

Compliance was the focus of Questions #48 though #51. Since enactment of the Dodd-Frank Act, those surveyed said that compliance costs have increased by an average of 250 percent. The range was from 25 percent to 350 percent. They added that, on average, compliance now consumes 21 percent of operating costs; compliance has increased origination expenses to the borrower by 35 percent; and in dollar terms, compliance has added an average of $939 to the cost of a mortgage loan.

Questions #52 through #53 wanted to know if those polled thought the recovery in housing was losing momentum, and if yes, how much forward momentum was the market faltering. Yes said 21 respondents to a loss of steam, while four others begged to differ. As for how much, the question racked up a 5.1 on the one to 10 point scale. The range of responses was from two to seven.

Questions #54 through #63 inquired about regulators and regulations.

More specifically, Question 54 asked if it was possible continued on page 44

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First They Came for the Payday Lenders

By Jonathan Foxx

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First they came for the payday lenders, and I did not speak out— Because I was not a payday lender.

Then they came for the auto finance companies, and I did not speak out— Because I was not an auto finance company.

Then they came for the banks, and I did not speak out— Because I was not a bank.

Then they came for me—and there was no one left to speak for me.1 On July 18, 2014 a new Rule goes into effect, promulgated by the Consumer Financial Protection Bureau (CFPB). The Rule will be effectuated in accordance with a notice published in the Federal Register on June 18, 2014,2 which announced that the Bureau had adopted its interim final rule on the Temporary Cease-and-Desist Order (TCDO) without change. Under the Rule, the CFPB will be empowered to issue TCDOs, pursuant to Section 1053(c) of the Dodd-Frank Act (“Dodd-Frank”).3 The provision authorizes a TCDO in a Cease-and-Desist proceeding brought under Section 10534 against a covered person or service provider.5 Let’s be clear: A TCDO becomes effective upon service on the regulated entity, its executive officer, director or an entity-affiliated party, and unless set aside, limited or suspended by a court in proceedings (viz., judicial review), it remains in effect and enforceable, pending the completion of the proceedings or until the Bureau dismisses the charges specified in the notice or until superseded by another Cease-and Desist Order.

For the most part, the TCDO is issued where the Bureau believes that circumstances may cause insolvency or significant dissipation of assets or earnings of the subject entity, or is likely to weaken the condition of that entity prior to the

completion of the proceedings.

Additionally, it is issued where the Bureau requires a regulated entity or entity-affiliated party to cease and desist from any violation or practice stated in a notice of charges. The TCDO may require that the regulated entity or entity-affiliated party take affirmative action to prevent or remedy any anticipated insolvency, dissipation, condition, or prejudice pending completion of proceedings.

As to the judicial review component, a regulated entity, executive officer, director or entity-affiliated party that has been served with a TCDO may apply to the United States District Court in which the residence or principal office or place of business of the entity is located, or the United States District Court for the District of Columbia, for an injunction setting aside, limiting, or suspending the enforcement, operation, or effectiveness of such order, within 10 calendar days after such service or the judicial review will be automatically be waived. The injunction, therefore, may set aside, limit, or suspend the enforcement, operation, or effectiveness of the TCDO pending the completion of the administrative proceedings pursuant to the notice of charges served upon the entity, executive officer, director, or entity-affiliated party. Jurisdiction is given to the court to issue such injunction.6 However, if the matter is litigated, the court’s purview occurs after proceedings are concluded in the Bureau’s administrative hearing, which is held before a hearing examiner, with discovery and rules of evidence that are subject to the Bureau’s permission, and with a right of appeal therefrom only to the Bureau’s Director. This means that, in such circumstances, it is only after the Director issues the final decision that a judicial review may be undertaken.

The Bureau has had the authority to issue cease and desist orders to covered persons. A covered person may appeal a

cease and desist order with the Bureau and in federal appellate court. But, where the violation is likely to cause the covered entity to be insolvent or otherwise prejudice the interests of consumers before the completion of a cease and desist proceeding, the Bureau will be authorized to issue ex parte TCDOs.7 These TCDOs can be appealed in federal district court, and they are appealed on an expedited time frame.8 The ex parte issuance of a TCDO is a critical feature of this authority, insofar as ex parte means the legal matter is brought by one person in the absence of and without representation or notification of other parties. In other words, it invokes a judicial proceeding, hearing or order granted on the request of and for the benefit of only one party.

Under the Fifth Amendment to the U.S. Constitution, “No person shall … be deprived of life, liberty or property, without due process of law.” A bedrock feature of due process is fair notice to parties who may be affected by legal proceedings. Though ex parte would appear to violate the Constitution, the operative justification of ex parte is that issuing it is based on the proposition that irreparable harm to one or more of the parties would happen if it were not issued. The Bureau’s position would be that its ex parte TCDO would be usually reserved for urgent matters where requiring notice would, among other things, subject the consumer to irreparable harm. Ex parte matters are considered to be urgent in nature and are usually temporary orders (like a restraining order or temporary custody) pending a formal hearing or an emergency request for a continuance.9 Permit me to translate the foregoing: The Bureau is now being empowered to shut down businesses, unilaterally, on the basis of an allegation, at any time it wishes to do so, by issuing a TCDO. Put plainly, this procedure could force a covered entity to close operations entirely until permission is granted to

re-commence operations pursuant to an administrative hearing or the holding of a judicial review or the Bureau’s Director lifting the TCDO. It is unlikely that many covered entities have the ways and means to resist this TCDO through litigation. So the power to issue the TCDO, in this instance, could be viewed as the power to destroy.10 Specifically, Section 1053(c)(3) of Dodd-Frank authorizes the issuance of a TCDO, where facts pertain to the Bureau’s findings. In this procedure, the books and records of the covered entity are presumably deficient in a way that prevents the Bureau from determining the financial condition of the entity. Or, the findings of the Bureau are sufficiently substantive that it seeks to prevent transactions that materially affect an entity’s financial condition. When the Bureau has reached this conclusion, the TCDO mandates that the entity cease and desist from any alleged activity or practice to cause the deficiencies of the books and records. Since the activity and practice are the process by which the deficiencies are allegedly caused, the entity is put into the position of shutting itself down, until such time as the causes of the deficiencies have been remedied to the satisfaction of the Bureau, unless otherwise adjudicated.

In the Interim Final Rule, the Bureau claimed that “The Rules themselves do not impose significant costs upon covered persons, but, consistent with section 1053, provide a straightforward and efficient process for the issuance of a temporary cease-and-desist order, and a direct route to judicial review.”11 This statement surely confutes the financial burden imposed on covered entities that must respond to the TCDO by shutting down their operations. The Bureau further claims that “The Rules have no unique impact on insured depository institutions or insured credit unions with $10 billion or less in assets described in section 1026(a) of the

Footnotes 1-“First they came for the Socialists, and I did not speak out— Because I was not a Socialist.

Then they came for the Trade Unionists, and I did not speak out— Because I was not a Trade Unionist.

Then they came for the Jews, and I did not speak out—

2-Federal Register, Vol. 79, No. 117, Wednesday, June 18, 2014, Rules and Regulation, pp. 3462234623.

3-Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 (Dodd-Frank Act).

4-On June 29, 2012, the Bureau published the final Rules of Practice for Adjudication Proceedings. That final rule, however, does not apply to the issuance of a temporary cease-anddesist order (TCDO) pursuant to section 1053(c) of the Dodd-Frank Act.

5-Rules and Regulations, Federal Register, Vol. 78, No. 187, Thursday, September 26, 2013, pp 59163-59165. Rules of Practice for Issuance of Temporary Cease-and-Desist Orders (Rules), which govern the issuance of orders pursuant to section 1053(c) of the Dodd-Frank Act, 12 U.S.C. 5563(c). See also 77 FR 39058, 39060 (June 29, 2012).

9-Source: Legal Dictionary, Law.com.

10-A similar power to destroy is the taxing power; appeals are possible, litigation is possible, but a person or entity usually does not have the financial means to pursue its own rights under the law, by means of such appeals and litigation.

11-Op. cit. 5.

6-Section 1053(c)(2) of the Dodd-Frank Act (12 U.S.C. 5563(c)(2)).

7-Ex parte, which in Latin means “for one party,” may also describe contact with a person represented by an attorney, outside the presence of the attorney.

8-Special Report, A Working Summary of the Consumer Financial Protection Act of 2010 (Title X of the Dodd-Frank Wall Street Reform and Consumer Protection Act), Hackett, Esq., Richard P. and Frank H. Bishop Jr., Esq., page 5.

12-Ibid.

13-Op. cit. 5, Footnote 6.

14-Op. cit. 5, § 1081.502(b)(2) Judicial review, duration: “With respect to a temporary ceaseand-desist order issued pursuant to 1081.501(b) only, the Bureau determines by examination or otherwise that the books and records are accurate and reflect the financial condition of the respondent, and the Director or his or her designee issues an order terminating, limiting, or suspending the temporary cease-and-desist order.”

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

Because I was not a Jew. Then they came for me—and there was no one left to speak for me.”

Note that this is the actual poem, written by Martin Niemöller (1892–1984), who wrote about the cowardice of German intellectuals following the Nazis’ rise to power and the subsequent purging of their chosen targets, group after group (Source: Wikipedia).

NationalMortgageProfessional.com

Dodd-Frank Act, nor do they have a unique impact on rural consumers.”12 Most non-banks in the United States might disagree with the “no unique impact” effect on their operations, if and when they receive a TCDO issued by the Bureau–and, surely, small depository institutions and credit unions would probably find the added burden of administrative and litigation expenses to be quite concerning. The Bureau’s response to the burden of these costs is the following: “The manner and extent to which these provisions apply to a rulemaking of this kind, which establishes Bureau procedures and imposes no standards of conduct, is unclear.”13 The TCDO is accompanied by a notice of charges that must describe the basis for its issuance, including the alleged violations and the harm that is likely to result without the issuance of an order, and the act or acts the entity is to take or refrain from taking. Since the TCDO is effective and enforceable upon service, the effect on the entity is immediate, pervasive, and possibly devastating.

There are only two ways to respond to the TCDO: (1) the entity must prove to the Bureau that it has ceased any activity or practice which gave rise, whether in whole or in part, to the incomplete or inaccurate state of the books or records;14 or, (2) the entity must conduct affirmative action to restore such books or records to a complete and accurate state, until the completion of the adjudication proceeding.

The Bureau’s TCDO wields enormous power. It may be the power to protect the consumer and remedy loan origination operations that are not in compliance with the applicable law, or it may be the power to destroy the loan origination operations. Hopefully, it will be used sparingly and with considerable evidence in support of that use. The Roman poet Juvenal wrote in his Satires, “Quis custodiet ipsos custodies”, which literally means “Who will guard the guards themselves?” Perhaps all covered entities should realize fully that each and every covered entity, whatever its financial purpose, must stand guard over the guards themselves and share the responsibility to ensure that both the consumer and the service provider are adequately protected.

Online Reputation & Influence

top mortgage executives sound off continued from page 38

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The Eight Biggest Mistakes Salespeople Make

By Rene Rodriguez As a consultant, over the last 15 years I have consistently seen salespeople make these mistakes to hurt their business.

1. Using marketing as a cop-out to selling Marketing and selling are both absolutely necessary to build a successful business, but very different. Struggling salespeople tend to prefer marketing because of the simple fact that it reduces the amount of rejection they need to face. Marketing, in its simplest explanation, attracts prospects to call us, while selling forces us to find people to call on and to risk rejection on a daily basis.

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2. A lack of defined job descriptions Ask 100 salespeople what their job is, and I would bet that all 100 would say something like “to close deals” or “to help my clients.” The challenge with seeing the job as “selling homes” is that getting a client into or out of a home is a “result,” but not a “job.”

3. Confusing activity with productivity (results) This is a result of bullet point number two. If people don’t know what their job truly is, then they are no different than a feather in the wind, blowing in whatever direction the “winds of opportunity” decide to blow.

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4. No structured, sequenced sales system Not having a predefined, step-by-step process to take prospects from initial meeting to close, salespeople can find themselves wasting only their time, but even worse, their clients’ time.

5. No “canned” presentation of value I have seen many people go into sales calls without a prepared presentation, resulting in saying something different at every sales call. Every successful salesperson you know has perfected their scripting and presentation. And the true “sales professional” can deliver their presentation on a napkin just as effectively as using a PowerPoint presentation.

6. No training in the fundamentals of selling This was the first thing I noticed years ago. In many industries, either because of a very favorable market or because of a great marketing department, there was no great need for sales skills. Business was so abundant that anyone could make a great income. This reality is amplified during every refi boom.

7. Ashamed to be identified as salespeople People who are ashamed to be salespeople don’t engage in the habits of successful salespeople such as closing, driving commitment, countering objections, prospecting, etc. Our industry, unfortunately, is full of “order takers” NOT “sales professionals.” An “order taker” is someone who “facilitates a transaction that would have happened anyway.”

8. They ignore their online reputation As powerful as referrals are, they are no match against a negative online review.

Eighty-five percent of people check online reviews before making a purchase.

Make sure you take control of your online reputation, before someone else does!

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Rene Rodriguez is founder and CEO of BetterLoanOfficers.com, a powerful and easy-to-use online loan officer review management system. Loan officers can collect, manage and promote their reviews in order to build trust, secure more referral relationships and close more deals. He has been named to National Mortgage Professional Magazine’s “40 Under 40 Most Influential Mortgage Professionals” for five consecutive years. l SPONSORED EDITORIAL

to comply with disparate impact rules and not originate too many weak and risky loans. No we cannot, replied 16 of those surveyed, as another nine stated that you could “if you were prudent.”

Question #55 asked if the CFPB has brought clarity to the loan originator compensation issue. No it hasn’t, said 18 execs, compared to six who thought it had brought clarity to the issue.

As for the qualified mortgage (QM) issue, 16 of 26 respondents indicated in Question #56 that clarity has been provided on the QM issue.

Question #57 wondered how big a change the new RESPA/TILA integrated disclosures are for the industry. On the 10-point scale, the average response elicited a 7.6.

Twelve execs ranked it an eight or better on the one through 10 scale.

Questions #58 and #59 asked how difficult and how expensive it was to implement QM. The group’s averages were 7.1 and 7.3 respectively on the scale of one to 10.

Eighteen ranked the difficulty a seven or higher, while 15 ranked the implementation cost at seven or better.

Has QM tightened credit, asked Question #60, and by how much asked Question #61. It has tightened access to credit said 18 of 25 of those surveyed. As for how much it has tightened, the average was a 5.8 on a 10-point scale. Seven ranked the tightness at five or less.

Question #62 inquired about the appetites their firms had for nonQM lending. The average response was a three out of 10, and 15 respondents gave it a three or less.

Question #63 asked, if the outcome was determined on the basis of a cost-benefit analysis, did the execs think that consumers benefited from the advent of the CFPB. Only one respondent in 25 felt consumers benefited from the new regulator when costs were measured against benefits.

Question #64 wondered if the execs thought that housing affordability was waning. Indeed it is, as 20 said it was while only five said not.

Should the world of pre-2008 lending be restored, Question #65 asked? One of 24 responses called for such a restoration.

Question #66 asked the executives to assess Federal Housing Finance Agency (FHFA) Director Mel Watt’s first four months in office.

Exclusively on the strength of his presentation a week prior to conducting this survey, he earned a 5.4 on the 10-point scale.

Questions #67 through #69 wanted to know about the execs and GSE reform, specifically how much

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attention were they personally were paying to the topic and if they expected a broad business restructuring in the next one year and five year timeframes. The group average was 7.2 on the issue of personal monitoring of the debate and proposed legislation. A dozen respondents score the question an eight or more. As for when, certainly not in the next year said 25, but in the longer period, 22 of 26 expect a restructuring of the mortgage industry and business.

Question #70 wondered about how attractive respondents thought the mortgage banking business would be in the years immediately ahead. The answer to the question garnered a 6.3 of 10, with seven ranking it an eight or better versus three who graded the answer a three or less.

How would they grade Fannie Mae and Freddie Mac on their performances the past year was the goal of Questions #71 and #72. Both earned Cs. And, is your firm losing business to Fannie Mae, asked Question #73? Sixteen indicated they were not, compared to nine who indicated they were.

Question #74 wondered if the execs were familiar with the term “demographic cliff.” More than half the execs recognized the term to mean the drop in the size of the post-boomer population.

And finally, Question #75 inquired about the fall election and which party would have control of the Senate after November.

By better than two to one, the Republicans are expected to win the Senate.

In summary, 75 questions and answers from some of the most important voices in the industry. For now, that’s the most current take on a series of wide-ranging issues affecting housing and mortgage finance from a fairly representative cross-section of industry executives. I want to again thank all of those who participated in this survey. Their time, wisdom and candor are much appreciated.

Tom LaMalfa is a 34-year veteran mortgage-market analyst and researcher. He has done pioneering work in the areas of secondary markets, wholesale mortgage banking, mortgage brokerages, financial benchmarking and GSE reform. Tom continues since 1977 to co-author an oldfashioned mail newsletter, The Holm Mortgage Finance Report. In the aftermath of the financial crisis, his focus is on Washington, D.C. and the regulatory burden it is imposing on consumers and lenders. His 21-year old research firm, TSl Consulting, does survey research. He may be reached by e-mail at tom.lamalfa@gmail.com.

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Stop Selling Reverse Mortgages: The Need to Become a True Consultant

By Mike Suits

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Reverse mortgages should never be sold! What?

Before you start to think I am one of those antireverse mortgage zealots who believes people must be protected from their shadows, please hear me out.

What I am saying is that reverse mortgages are beneficial, yet sophisticated, financial products that require careful evaluation and utilization and should be properly matched with consumers to ensure an appropriate fit.

They cannot, much like other sophisticated financial products, simply be sold based on emotion and perceived need.

If you are “selling” reverse mortgages please find another career—you are not helping our industry or consumers.

A home is both an asset and a liability. As we have learned over the past several years, homes are an asset that can fall or rise in value. This makes a home an investment that involves risk.

The terms of a home’s financing have a

direct bearing on the level of risk involved for each borrower. The bottom line is that all home purchases and mortgages, either forward or reverse, require careful evaluation to ensure the benefits and the risks are sufficiently considered for each borrower. This means mortgage originators must be consultants rather than salespeople.

Reverse mortgages are more complex than forward mortgages in terms of their financial planning impact, as they occur at a far more vulnerable period in life. They are effective tools for financing primarily non-housing related needs. These facts make reverse mortgage origination worthy of special attention and care by those working with consumers. What should this special attention and care look like?

than to those professionals that work with sophisticated financial products and vulnerable consumers all the time—Certified Financial Planners (CFPs). The CFP is a highly respected professional designation that requires extensive education and testing to set apart those who provide counsel to clients regarding comprehensive financial matters. I do not mean to suggest that reverse mortgage originators must have the same training and expertise, but rather that we can learn from the “financial planning process” as described by the owner of the CFP® mark, the Certified Financial Planner Board of Standards.

The financial planning process is conducted in an orderly progression and consists of the following stages:

No need to reinvent the wheel

l l l l l l

Originators of reverse mortgages do not need to develop a responsible process for working with customers from scratch. They need to look no further

Setting goals Gathering relevant information Analyzing data Making recommendations Implementing a plan Monitoring the plan

If your process for working with a prospective reverse mortgage borrower resembles this—congratulations, you are on the right track! If not, then it is important you begin rebuilding your process right away.

Some of the consumers we work with on a reverse mortgage loan will have other financial advisors to help with many aspects of the financial planning process. Others will not. This lack of guidance from an outside financial planning professional does not let the reverse mortgage originator off the hook—you are a professional too!

According to the National Reverse Mortgage Lending Association’s Pledge to Reverse Mortgage Borrowers, “Your (the borrower’s) best interests are our primary consideration.” Only by guiding a prospective borrower through a comprehensive educational and decision-making process have we sought the borrower’s best interests and met our professional obligations.

As we consider a customer’s best interests it is imperative that reverse mortgage originators keep two facts in mind: 1. We are not qualified to give financial advice We should be experts in the products we offer and understand the circumstances in which they are most effectively utilized. We can help calculate costs and benefits, and explain product provisions. Yet we are not qualified to interpret whether a reverse mortgage may or may not be in the customer’s best interest. If your customer needs that type of advice, say so and be prepared to offer a referral.

2. We are not the decision-maker Our job is to educate and make clear all features, requirements, costs and alternatives. The decisions, however, are the customer’s to make. The significance of a reverse mortgage is too great to either unburden the customer of their obligation to fully evaluate the decision, or to pressure a customer to make what we believe to be the best decision. From the moment you begin to work with a prospective customer, impress upon them that you are here to help them make the right decision for them.

Stop selling reverse mortgages and start consulting. The result will have you well-positioned to be the dominant provider in your market as the demographic wave propels reverse mortgage lending for the next two decades.

Mike Suits is the Reverse Mortgage Division manager for 360 Mortgage Group LLC. The Reverse Mortgage Division, which is currently licensed for reverse mortgage loans in 35 states and the District of Columbia, has three production channels including, a growing retail branch network as well as wholesale and inside-direct sales channels. He may be reached by phone at (512) 4186011 or e-mail msuits@360mtg.com.

new to market continued from page 18

Equifax’s The Work Number Now Offering Employment and Income Verifications

NTC Makes Property Reports Available Online

Nationwide Title Clearing Inc. (NTC) is now making property reports available through an online system in order to help the industry deal with an increasing number of title defects.

“Title defects have become a major cause for concern within the real estate market,” said Nationwide Title Clearing CEO John Hillman. “Whether title defects cause wrongful foreclosures, as some claim, or stagnation of what would otherwise be a smooth transition of assets within the secondary market, these problems cost both the industry and homeowners money and time.”

The key to reducing the risk of buyback or inability to foreclose lies in accurate property records, Hillman said. Ensuring that the records are accurate requires easy access to property reports. NTC has now created a simple, fast, step-by-step process of securing these reports.

NTC obtains data from multiple sources during its process—and most importantly, the counties—and includes automation coupled with human verification—a practice that has given NTC the ability to successfully service most of the largest lenders in the U.S. under the most crucial and now heavily audited compliance regulations.

NTC officials say their process produces accurate results for what the report was intended, even recognizing a report’s financial impact if a client is ordering too many fields and additional documents that may not be of use to the end user. NTC attributes its success to having a full understanding of the end result that its clients need, and then customizing a property report with the correct data sets included.

“Our property report services are based on research conducted from actual land records and are accessible for any residential property nationwide,” Hillman said.

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

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Equifax Inc. has announced that MeridianLink is now offering employment and income verifications through The Work Number for customers using its Mortgage Credit Link Platform (MCL). The Work Number is a proprietary database owned by Equifax Workforce Solutions, a business unit of Equifax Inc. As a centralized, Web-based mortgage credit reporting system, MCL integrates its customer’s credit systems with their client’s loan origination systems, providing the seamless transmission, validation and interpretation of data between applications and organizations. By optimizing Equifax Verifications Services’ full range of tools, and leveraging The Work Number database of more than 241 million employer-direct payroll records.

“MeridianLink is excited to have this

integration as an enhancement to our current platform,” said Jason Domazet, business development manager for MeridianLink. “We continue to strive to provide our clients integrations that are an efficient means to order products from a centralized platform for our end users.”

NationalMortgageProfessional.com

speed, data integrity, and rule engines to aide in full compliance. In order to constantly maintain optimal compliance processes, Compliance EAGLE updates will be automatically applied through the cloud when new regulatory guidelines are introduced to the mortgage industry.

As a result of the interface implementation, Loan Producer users gain access to Compliance EAGLE’s automated compliance rule sets, such as Ability-toRepay/Qualified Mortgage (ATR/QM), Truth in Lending Act (TILA), Home Mortgage Disclosure Act (HMDA), Home Ownership and Equity Protection Act (HOEPA), Real Estate Settlement Procedures Act (RESPA), Office of Foreign Assets Control (OFAC), Social Security Number (SSN) checks, and much more. In addition, QuestSoft states that the Compliance EAGLE software also verifies and complies with federal, state, local consumer and high cost tests.

“The regulatory environment does not leave room for error, making automated compliance a key factor in reducing risk, simplifying the submission process and successfully meeting all necessary federal, state or local regulations,” said Leonard Ryan, president of QuestSoft. “The Loan Producer and Compliance EAGLE integration helps alleviate the stress of compliance and keeping up with constant regulatory changes, by providing users pristine data integrity to comply with the latest regulatory updates, secondary market guidelines and all applicable laws.”

FICS’ Loan Producer provides end-toend residential loan origination, document preparation, processing, tracking, underwriting, closing, funding, secondary marketing and post-closing automation.

As a result, lenders utilizing Loan Producer realize a significant reduction in errors, as well as an increase in productivity and income.

heard on the street continued from page 28

Commercial (industrial, retail, church, mixed-use, gas station, auto related, manufacturing, etc.)

• Up to 55% on refinances • Up to 60%-65% on purchases • Term 1 to 5 years Land loan (max LTV 35%, refinance, 50% purchase) call for details

877-700-3703 Office 866-318-4471 Direct Fax

www.pbfinancialgrp.com • e-mail scenarios to: info@pbfinancialgrp.com PB Financial Group Corp. NMLS #357614/PB Financial Group Corp BRE #01522495

Disclosures: per FDIC Regulations Section 6500 Part 226, Subpart C, 226.24. The amount of each payment that will apply over the term of the loan is based on simple annual interest applied to the unpaid balance. Loans range from 1 day to 60 months, are interest only and include a balloon payment due at term. Finance charges apply. Payments do not include amounts per property taxes or insurance premiums.

This is not a commitment to lend. Rates and points are subject to change without notice. NMLS #357614

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NationalMortgageProfessional.com

Resolve to attract more realtor partners in 2014

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Churchill Continues Expansion With Two New Branches Churchill Mortgage is expanding its nationwide presence and opening two new branches in Phoenix and Columbia, Md. The lender is a leader in the mortgage industry providing conventional, FHA, VA and USDA residential mortgages across 33 states.

Debbie Schmidt will manage the Phoenix branch with 13 years of mortgage industry experience. A licensed Realtor, she previously served as an originator for LendSmart in Phoenix, where she was a member of the company’s Top Team for Most Fundings in 2013.

Churchill also welcomes Mary Langdon, John Owens, Stephen Rust and Andrew Schmidt as home loan specialists, who bring nearly 50 years of combined mortgage expertise. In addition, Churchill adds Steve Engen and Deborah Reeter as processors and Sarah Hagar as a home loan consultant and transaction coordinator. In addition to Phoenix, the branch will serve borrow-

Mortgage Professionals to Watch

FERLAND

Apartments and units (5+ residential units) • Up to 70% on refinance and purchases • Stated but verified rental income of property • Loan terms: 1 year, 3 year, 5 year, 7 year and 10 year; fixed IO or fully amortized • Rates from 8.00% and up • Programs with no PP available depending on LTV, term and prepayment penalty • We have 2nd position loans available for our commercial products up to 60% CLTV • 5-7 days closing available

ers in the surrounding cities, including Avondale, Chandler, Goodyear, Mesa, Scottsdale and Tempe.

Kraig Spence will lead Churchill’s Columbia branch. Previously, Spence served as a home loan specialist for the lender’s Herndon, Va. branch, where he was inducted into the company’s President’s Club in 2013. Prior to Churchill, he was a retail branch manager for Newday USA, where he generated more than $13 million in annual revenue and was recognized as Loan Officer of the Year in 2003 and 2011. In addition, Spence was a six-time inductee into the President’s Club at Newday USA and has been a member of the Virginia Bankers Association for nearly 15 years.

Churchill also welcomes Lisa German and Katherine Wilson as processing team leaders, bringing over 30 years of combined mortgage expertise. The branch will serve borrowers in Columbia and the greater BaltimoreWashington, D.C. metropolitan area.

l Norcom Mortgage has announced the promotion of Cale Ferland to wholesale branch production manager.

MAGEE

Stated Business Purpose Loans on Residential Properties • Refinances up to 65% LTV, min loan amount 50K to 5 million • Purchases up to 70% min. loan amount 50K to 5 million • Loan term, 6 months, 3 year, 5 year, interest only or fully amortized available • Programs with no PP available • Rates from 8.50% and up depending on LTV term and prepayment penalty • We have 2nd position loans available for n/o/o and investment properties up to 55%-60% CLTV • 5-7 days closing available

process now allows any user of INTEGRA’s Destiny platform to access Mortech’s Marksman functionality, including the product and pricing engine, and secondary marketing services.

“The integration with INTEGRA gives Mortech the ability to reach a larger customer base via the Marksman product and pricing eligibility engine,” said Doug Foral, general manager at Mortech. “The new process will also make it significantly easier for an INTEGRA Destiny user to access the power of the Marksman suite to streamline their mortgage lending operations.”

INTEGRA 3-in-1 Destiny is an enterprise-level LOS. In the past, integrating an outside product pricing and eligibility engine with a platform such as INTEGRA’s Destiny was handled manually on a caseby-case basis. The new integration makes setup seamless and allows pricing data to be exported directly from Marksman into the INTEGRA LOS without the user leaving Marksman. Lenders will receive full ratespread information, including detailed information necessary for qualified mortgage and other compliance checks, with easy access to Marksman’s Lock-in Pro feature to lock the interest rate.

“Closing more loans in less time and with lower costs requires an LOS with comprehensive functionality,” said Jerry Pratt, president, INTEGRA Software Systems. “Today’s lenders are looking for a single software system to handle all of their loan origination needs. That only works when you include best-of-breed functionality from partners like Mortech.

In a complex lending environment, INTEGRA is committed to bringing the best software tools to our customers, as we’ve been doing since 1996.”

l Katya Magee has joined Mortgage Network Inc. as a loan officer in the company’s Longmeadow, Mass. branch office.

FRACHISEUR

We ar Califor e Premie nia’s r Private Direct M and Br oney idg Lender e

l Envoy Mortgage has named Keith Frachiseur to the new post of regional vice president for the Pacific Northwest territory. l eLEND/AFR continues the expansion of its leadership team with the appointment of Brian L. Pair as corporate fulfillment/operations management. l Maverick Funding Corporation has named reverse mortgage origination expert Cecilia Delgado as wholesale account executive for its continued on page 57

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The Payoffs of Being Proactive

The Long & Short: The Business of Short Sales

By Cheryl Marquez

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A few years ago, my husband and I bought a new home. It was everything we had dreamed of, right down to the large lot and sizeable backyard. The yard needed a considerable amount of TLC that included clearing a lot of dead and dying bushes and trees. We spent most of that first year getting the yard into shape, cutting, hauling and landscaping. The end result was all that we wanted and more.

This week, my husband decided to cut up some of the wood out back that had been aging, getting it ready for winter. He got out all of his equipment: Safety goggles, boots and chainsaw, and got to work. It seemed like he was outside for a while, and I heard the chainsaw, but was not seeing progress or neatly cut wood piling up. I peeked outside, and he was clearly frustrated, still working on the same large chunk he started on. When I asked what was wrong, he lamented the poor quality of the chainsaw he bought when we moved in.

“Maybe this chainsaw is too small … it’s taking too long to cut. I should have gotten a larger one with more power,” he said.

I remarked that it would have worked great last year, had we cleared the whole yard with it and finally I asked him, “Have you sharpened that saw since you bought it?”

My husband laughed and realized that he was caught up in his desire to get so much done that he neglected to look after his tools. It’s funny how this exactly mirrors Steven Covey’s parable of the woodcutter–a lesson that never grows old.

We know that we need to keep our tools sharp. We know the consequences when we don’t stay sharp. We are sometimes proactive and do it along the way. Sometimes we wait. Had my husband sharpened his saw, he likely would not have had a problem cutting the firewood. Being proactive would have saved quite a bit of effort.

As we get caught up in our day to day, it’s easy to lose sight of how and when we keep our own tools sharpened. We get busy and other priorities take over. Continuing education is the sharpener of your tools. It keeps you on top of the dos and don’ts of originating mortgages, and up-to-date on the newest regulations and loan products you may not be familiar with. You will put your knowledge to the test when you experience real life scenarios during training.

Staying current and compliant will result in a great experience rewarded by referrals, and staying off of the regulator’s radar. We shouldn’t think of continuing education as a requirement, but should approach continuing education as an opportunity to sharpen our saw.

For more information about AllRegs’ education programs, including NMLS-approved continuing education courses, visit www.allregs.com or call (800) 848-4904.

Cheryl Marquez is director of education at AllRegs. She has more than 20 years of experience in learning and development as an instructor, instructional designer and manager. She has worked in the financial services industry her entire career, spending time at both HSBC and Capital One prior to joining AllRegs.

Changes Ahead for Fannie Mae DU Version 9.1

By Pam Marron Confusion has existed for lenders since Nov. 16, 2013, when the Fannie Mae “fix” to correct the “Foreclosure Code” placed on a past short sale came out on Desktop Underwriter (DU) Version 9.1.

Lenders were unable to go into the Fannie Mae system to make the fix unless Fannie Mae saw a conflict on their end and provided verbiage on the findings that allowed the lender to go in and make a fix.

Per Fannie Mae technical support, changes occurring in the Fannie Mae DU system on the weekend of Aug. 16 should enable lenders to make the fix directly in Desktop Underwriter (DU)/(DO) when the lender sees inaccurate information on Fannie Mae findings.

Inaccurate foreclosure information When DU identifies a foreclosure on a credit report tradeline and that information is inaccurate, the lender may instruct DU to disregard the foreclosure information on the credit report. This can be done by entering “Confirmed CR FC Incorrect” in the Explanation field for Question C in the Declarations Section of the online loan application and resubmitting the loan case file to DU. When DU sees this indication, the foreclosure information on the credit report tradeline will not be used in the eligibility assessment.

Foreclosures due to extenuating circumstances When DU identifies a foreclosure on a credit report tradeline and the foreclosure was due to extenuating circumstances, the lender may instruct DU to disregard the foreclosure information on the credit report when the lender confirms that the mortgage loan meets the applicable timeframes and eligibility requirements for a foreclosure due to extenuating circumstances. This can be done by entering “Confirmed CR FC EC” in the Explanation field for Question C in the Declarations Section of the online loan application and resubmitting the loan casefile to DU. When DU sees this indication, the foreclosure information on the credit report tradeline will not be used in the eligibility assessment.

DU will issue a message stating that the foreclosure information included on the account was not used in the eligibility assessment because DU was instructed by the user to underwrite the loan casefile without the reported foreclosure information. The lender must document that the foreclosure was due to extenuating circumstances, that the foreclosure was completed three or more years from the disbursement date of the new loan, and that the loan complies with all other requirements specific to a foreclosure due to extenuating circumstances.

Deed-in-lieu of foreclosure and pre-foreclosure sale message updates In the Fannie Mae Selling Guide,1 dated June 24, 2014, “Preforeclosure or Short Sale Properties” are defined as the same. Additionally, “Deed-in-Lieu of Foreclosure and Pre-Foreclosure Sale” both appear in same line when defining criteria.

The waiting period requirements for borrowers who have had a previous deed-in-lieu of foreclosure or pre-foreclosure sale are being updated to now require a four-year waiting period; though a two-year waiting period will be permitted if the event was due to extenuating circumstances and the loan complies with all requirements specific to a deed-in-lieu of foreclosure or a pre-foreclosure sale due to extenuating circumstances, as specified in the Fannie Mae Selling Guide.

Charge-off policy message addition A new policy will apply to mortgage accounts that have been subject to a charge-off that will require a four-year waiting period after the charge-off occurred before the borrower is eligible for a new loan that would be salable to SPONSORED EDITORIAL

Fannie Mae. DU will now issue a message on mortgage accounts with a manner of payment of nine specifying that the account was identified as being subject to a charge-off and that the lender must confirm the accuracy. If the mortgage account was subject to a charge-off, the lender must document that the event was completed four or more years from the disbursement date of the new loan. The event may be completed two or more years from the disbursement date of the new loan when the lender confirms that the mortgage loan meets the applicable timeframes and eligibility requirements for a charge-off due to extenuating circumstances.

used as DU does not know the disbursement date of the new loan. For loan casefiles that will have met the waiting period requirement based on disbursement date, but not credit report date, the lender may pull a new report after the waiting period has elapsed in order to receive an Eligible Recommendation.

Stay tuned. The success of these changes will be apparent when it is known how well this works in the automated system rather than a manual underwrite. Note that different criteria2 exists for loan applications taken on or after Aug. 16, 2014 and loan applications taken before Aug. 16, 2014. Please read complete release for all information.

Previous significant derogatory events

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

When DU identifies a bankruptcy, foreclosure, deed-in-lieu of foreclosure, pre-foreclosure sale, or mortgage charge-off, and it is up to the lender to determine if the waiting period has been met, DU will instruct the lender that the waiting period is measured from the disbursement date of the new loan, not the credit report date.

On loan casefiles where DU measures the waiting period and uses that information in the eligibility assessment, the credit report date will continue to be

2014

INAUGURAL

CONFERENCE Southern California

Footnotes 1-Fannie Mae Selling Guide, Part B, Origination through Closing/Subpart 2, Eligibility/Chapter 1, Mortgage Eligibility, Loan Purpose (www.fanniemae.com/content/guide/sel062414.pdf).

2-Desktop Originator/Desktop Underwriter Release Notes, DU Version 9.1 August Update/June 17, 2014 (www.fanniemae.com/content/release_notes/du-do-release-notes08162014.pdf).

Accelerating Women in the Housing Economy.

October 27-29th, 2014 Awareness. Opportunities. Access.

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nmp news flash continued from page 25

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

n Illinois Mortgage Professional Magazine n JULY 2014

missing data fields, incomplete data fields, incomplete records and incorrect data formats.

“Regulators have made it clear that lenders face significant fines and penalties for non-compliance with HMDA reporting requirements,” Moffat said. “Our survey shows that problems with the way the data is reported could raise that risk. We strongly recommend that lenders’ senior management get more involved in monitoring and managing HMDA reporting, as well as other regulatory reporting requirements.”

NationalMortgageProfessional.com

Volume II: 2013 HMDA Data Insights details Mortgage TrueView’s findings based on 2013 HMDA date collected from nearly 400 of the country’s lenders, including seven of the top 10 lenders and 15 of the top 20 lenders.

Among the key findings: l 2013 regulatory risk indicators show a 13 percent year-over-year increase in loan denial rates l Denial rates for white applicants increased from 17 percent to 21 percent, while denial rates for non-white applicants increased from 23 percent to 28 percent l Denial rates for Hispanics increased from 25 percent to 30 percent. Denial rates for nonHispanics increased from 18 percent to 21 percent l Denial rates for female applicants increased from 21 percent to 26 percent. Denial rates for males increased from 17 percent to 21 percent For its survey, Mortgage TrueView requested the 2013 public loan application register (LAR) filings from the top 1,160 mortgage originators in the country. Notably, Mortgage TrueView found that a sizable number of the 388 respondents had critical errors in their filings, including

25 2014

MOST CONNECTED

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MORTGAGE PROFESSIONALS

Jennifer Brabson Facebook: www.facebook.com/jennifermbrabson LinkedIn: www.linkedin.com/in/jenniferbrabson SlideShare: www.slideshare.net/jenniferbrabson Twitter: @jenniferbrabson As a thought leader and influencer in social media and digital marketing, Jennifer Brabson, marketing director at Village Mortgage in Connecticut, Massachusetts and Rhode Island, brings an extensive background and approach to social media, digital marketing, social media training, development of best practices, and event and traditional marketing to the mortgage industry. Jennifer, who has only been in the mortgage and finance industry since September 2013 when she started at Village, has been instrumental in the rebuild and transformation of the Village Mortgage brand.

Ivan Choi Facebook: www.facebook.com/connivan LinkedIn: www.linkedin.com/profile/view?id=3922449 With 17 years as a retail mortgage banking executive, Ivan Choi has made a difference for communities across the U.S., most notably via a multi-billion dollar financing initiative during the foreclosure downturn. As an industry leader, Ivan currently serves as chairman of the Asian Real Estate Association of America (AREAA), board member of the National Association of Realtors (NAR), and is a contributor for the Mortgage Bankers Association (MBA).

Jody Collup Facebook: www.facebook.com/jody.collup LinkedIn: www.linkedin.com/in/jodycollup Twitter: @JodyCollup Jody Collup is currently vice president of marketing for Global DMS, where she oversees the entire marketing process. Previously, she served as marketing director for Calyx Software. Jody is a wellrespected mortgage marketing executive who has developed an extensive, high-impact network of industry professionals using a variety of social media outlets and marketing mediums.

Richard S. Donine LinkedIn (Public Profile): www.linkedin.com/pub/richard-s-donine/5/718/642 LinkedIn (FGMC Page): www.linkedin.com/company/first-guaranty-mortgage-corp Richard S. Donine brings First Guaranty Mortgage Corporation (FGMC) more than 16 years of mortgage banking marketing experience.

Richard provides a unique combination of marketing knowledge, experience and leadership skills, having built successful marketing departments from the ground up for three nationally recognized lenders, two of which were NYSE publicly traded REITs. He received his bachelor’s of science degree–business administration from the University of Southern California.

Adam Finkelstein Blog: www.lendersunited.com/mortgage-business-blog Facebook: www.facebook.com/LendersUnited Google+: google.com/+Lendersunited LinkedIn: www.linkedin.com/in/adamfinkelstein Twitter: @LendersUnited Adam Finkelstein has become one of the most respected, trusted and well-known mortgage industry professionals in the last 15 years through origination as a mortgage broker, transitioning to directing, managing and supervising the retail branch division of a mortgage company. Since then Adam founded Lenders United-The Premier Mortgage Recruiting Firm. Lenders United represents some of the leading mortgage lenders and banks throughout the country expanding their retail mortgage divisions, and assisting branch managers and loan originators with finding a new bank to call home.

Rick Floyd Blog: www.ChasingExcellenceBlog.com Facebook: www.facebook.com/RickFloydREMN LinkedIn: www.linkedin.com/in/RickFloydREMN Twitter: @Rick_Floyd As partner and executive vice president at HomeBridge Financial Services, Rick Floyd brings more than 20 years of leadership to the national lender’s sales, marketing, training and operations teams. A football fanatic and former scholastic coach, Rick utilizes the philosophies he learned on the field in motivating and empowering his HomeBridge teams to chase excellence in both their professional and personal lives.

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M O S T

C O N N E C T E D

M O R T G A G E

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

Allen Friedman LinkedIn: www.linkedin.com/in/asfriedman With more than 25 years in the mortgage industry, Allen Friedman has maintained key positions in operations and sales management, including his current position as the Western regional sales manager at iServe Residential Lending. His focus is always upon building solid relationships, including open and meaningful communication, timely follow-up, and dynamic customer service. Allen has a juris doctorate degree, and in his spare time, enjoys spending as many moments as possible with his wife and two children.

Angie Lee Facebook: www.facebook.com/nycangielee LinkedIn: www.linkedin.com/in/nycangielee Angie Lee is a senior vice president of corporate communications for MCS Mortgage Bankers Inc. Angie has had the privilege of serving as president of the Asian Real Estate Association of America (AREAA), Metro New York Chapter and the Co-chair of the 2014 AREAA Global & Luxury Summit. Her true passion is connecting people together through a wide range of projects, educational and outreach programs.

Frank Garay & Brian Stevens Web site: www.thenationalrealestatepost.com Frank Garay and Brian Stevens are the hosts of the extremely popular online show, The National Real Estate Post. Frank and Brian made the Inman 100 in 2010, a list of the top 100 most influential people in the real estate industry, along with several other notable achievements. Their mortgage and real estate commentary video blog has had 50 million-plus views in under five years.

Mark Madsen Google+: plus.google.com/+MarkMadsen1 Google Mortgage Network: plus.google.com/communities/111167855085138616592 Mark Madsen manages a network of 38,000-plus locally optimized mortgage and real estate niche Web sites for Best Rate Referrals, and he runs one of the largest mortgage professional networks on Google+ with over 1,000 members. Mark’s lending career started in 1999 as a Las Vegas originator and he was an early adopter of search engine marketing, mortgage blogging and social media back when MySpace was cool and “The Facebook” was only available for Harvard students.

Amy Goldstein Facebook: www.facebook.com/amygoldstein12 Twitter: @Amybmic Amy has been with BMIC Mortgage Inc. for 15 years as a licensed originator in Maryland; Washington, D.C. and Virginia. Amy uses social media to keep clientele up to speed with the ever changing mortgage market.

Joshua Jones Facebook: www.facebook.com/JoshuaJonesMMI LinkedIn: www.linkedin.com/in/joshuamjones Twitter: @jjmortgage Joshua Jones is a branch manager and senior loan officer for Mortgage Master’s Park Ridge Office in the Greater Chicago Area, with 10 years of experience in mortgage banking and account management with regional and national mortgage lenders. As a member of the Mortgage Master team, Josh offers a “big picture” way of thinking to provide his clients with a vision and attainable goals over monthly or yearly periods. He serves his clients in a way that goes beyond one transaction and carries over into a lifelong partnership.

Bubba Mills Facebook: https://www.facebook.com/bubba.mills.3 LinkedIn: http://www.linkedin.com/pub/bubba-%22eric%22-mills/10/508/8b7 Twitter: @BubbaMills1 Bubba Mills has been in the real estate, mortgage and servicing industry since 1988. He specializes in community branding and community stabilization. Bubba is a member of the National Speakers Association, Advisory Board Member for Equator and is a speaker for National Association of Hispanic Real Estate Professionals (NAHREP), Asian Real Estate Association of America (AREAA) and the Five Star Institute. He is a trainer, inspirational speaker, coach and consultant. Bubba has raised millions of dollars for national non-profit companies and local non-profits and churches over his lengthy career.

Eric Mitchell Facebook: www.facebook.com/ericmitchell0513 LinkedIn: www.linkedin.com/profile/view?id=2598334 Eric Mitchell is helping to revolutionize the mortgage industry with real estate agent and sales training events. Having the world’s greatest mentors has allowed Eric to bring cutting edge information to sales professionals that truly change how loan officers and real estate agents work together as a team.

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Mat Ishbia Blog: www.thebrokerlife.com Facebook: www.facebook.com/UnitedWholesaleMortgage LinkedIn: www.linkedin.com/pub/mat-ishbia/14/9a/a8a Twitter: @UWMeasy Considered an advocate for brokers and an innovative leader in the wholesale market, Mat Ishbia unveiled a blog, The Broker Life, to connect originators with helpful information and tips in a forum that allows them to share best practices. With his commitment to enhance broker communications, Ishbia and United Wholesale Mortgage (UWM) also recently created a mobile app that has proved to be a great success among their clients.

Cody Miles Blog: mortgagedashboard.com/lender-blog LinkedIn: www.linkedin.com/in/codymiles512 Twitter: @MtgDashboard Cody Miles is the inbound marketing director at MortgageDashboard, a cloud-based finance technology company dedicated to designing quality cloud-based mortgage software solutions. Cody is responsible for the inbound marketing activities as SEO of MortgageDashboard, specializing in on- and off-page optimization, as well as content creation and data visualization.

NationalMortgageProfessional.com

John H.P. Hudson Facebook: www.facebook.com/PremierHudson LinkedIn: www.linkedin.com/in/johnhphudson Twitter: @premier_hudson YouTube: www.youtube.com/user/premierhudson John H.P. Hudson serves mortgage professionals as retail and wholesale production manager for Premier Nationwide Lending and will continue his industry advocacy by serving on the Board of Directors for NAMB—The Association of Mortgage Professionals. “I don’t care if you are a mortgage broker or a mortgage banker … If you are in this industry, you are a mortgage professional,” says Hudson. “Part of my job is to help mortgage professionals encourage, engage and educate themselves and others about what they do. Social media has helped me educate thousands of mortgage professionals on industry issues affecting them and why they need to participate with their trade groups.”

Khai McBride Facebook: facebook.com/khaimcbridepage LinkedIn: linkedin.com/in/khaimcbride Twitter: @khaimcbride Khai McBride’s business and coaching skills are recognized by companies nationwide and he is regularly invited to speak at top industry events. A master of mindset, performance, influence and database marketing, his ideas are always fresh and creative, but more importantly, effective in today’s market.

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Lewis Poretz Facebook: www.facebook.com/lewisporetz LinkedIn: www.linkedin.com/in/lewisporetz Twitter: @lewisporetz Web site: www.socialyo.com An early adopter of social media and long-time mortgage industry vet, Lewis Poretz has a reach of 8,000 Linkedin connections and more than 9,200 Twitter followers. Poretz founded the popular Linkedin Groups “Social Media Basics” and “Mortgage Branch News,” is an active LinkedIn Publisher, a “Rainmaker” on activerain.com and a past contributor to the Zillow Mortgages Unzipped blog. Poretz leverages his broad industry reach and marketing skills recruiting mortgage branches and loan officers for a growing lending platform. He founded SocialYo, a digital marketing firm that helps brands and individuals understand how to identify their audience, engage effectively in the social streams and maximize efficiency using cutting edge tools and technology including CRM, pipeline management and e-mail marketing.

Rene Rodriguez Facebook: www.facebook.com/betterloanofficers Twitter: @BetterLO Rene Rodriguez is founder and chief executive officer of BetterLoanOfficers.com, the most powerful and easy-to-use online loan officer review management system dedicated to the mortgage industry. Loan officers can collect, manage and promote their reviews in order to build trust, secure more referral relationships and close more deals.

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Gerald Santoro Facebook: www.facebook.com/NJLoanMan LinkedIn: www.linkedin.com/in/geraldsantoro Twitter: @njloanman Gerald Santoro began his career as a loan officer with a local broker in Middletown, N.J. in the early 1990s. Gerald is currently a mortgage banker with Peoples Bank, an FDIC-insured direct lender, offering in-house processing and underwriting, licensed to originate conventional, jumbo, FHA, VA, USDA, Home Possible, HomePath, HARP and reverse mortgage loans in all 50 States.

M O R T G A G E

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

John G. Stevens Facebook: www.facebook.com/JohnGStevensUtah?ref=hl LinkedIn: www.linkedin.com/in/johnglenstevens Twitter: @JohnGlenStevens John G. Stevens is the Utah area manager for the Bank of England d/b/a ENG Lending. He is the married to his best friend, Mindy McClure Stevens, and the proud father of three beautiful children.

He is active as past president of the Utah Association of Mortgage Professionals (UAMP), as well as a director on the Board for NAMB—The Association of Mortgage Professionals. He has served as president of his Rotary Club, chair of both the Pleasant Grove City and Utah County Planning Commissions, and is active in many volunteer organizations.

Jeff Taylor Facebook: www.facebook.com/pages/Digital-Risk/454111754657290 LinkedIn: www.linkedin.com/pub/jeffrey-c-taylor/54/a/258 Twitter: @DigitalRiskCo As a managing partner, Jeff Taylor controls all of Digital Risk’s sales, marketing and governmental initiatives, managing all of the company’s high level client relationships. In addition to his working title, Jeff continues to play an integral role in the development of unique data and process solutions to help better overall industry practices, including exclusive data sources for lenders to make better loans, and forensic review and loss mitigation solutions to help investors manage their portfolios.

Carl White Facebook: www.facebook.com/MortgageMarketingAnimals Facebook: www.facebook.com/MasterMindRetreat LinkedIn: www.linkedin.com/in/marketinganimals Carl White began as a loan officer in October of 2000, and within eight months of opening the doors at Family First Mortgage, he became the top producing branch out of 336 branches nationwide.

Carl now trains some of the top producing loan officers across the nation, using his “paint by numbers” approach. In 2013, Carl was honored to receive the coveted “Marketer of the Year” from one of the most prestigious group of online marketers, Digital Marketing. He also has the largest Fan Page for loan officers that exists within Facebook.

Adam Stein Facebook: www.facebook.com/LoanTek LinkedIn: www.linkedin.com/in/adamlstein Twitter: @LoanTekOnline Adam Stein currently serves as chief executive officer of LoanTek Inc. Under his direction, LoanTek’s pricing engine has grown to price and deliver over one million consumer facing offers every day. These offers result in efficiencies, cost savings, funded loans and a significant return-on-investment (ROI).

25 2014

MOST CONNECTED MORTGAGE PROFESSIONALS

NMP Daily is the mortgage industry's source for news, insights, trends and tips.

It keeps subscribers informed of the regulatory and legislative updates, latest industry happenings and breaking news about the mortgage technologies and services.

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NMP M O R T G A G E P R O F E S S I O N A L

Paul Rozo

Chief Executive Officer of Paramount Residential Mortgage Group (PRMG)

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BY PHIL HALL

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ack in September 2001, a small mortgage company was started in California by Paul Rozo and Robert Holliday. Its beginnings were more than a little humble–a three-person staff kept the office running and the company’s future initially seemed a little uncertain, considering that the country was coming out of a recession and tumbling into a new era of economic uncertainty.

Today, the Corona, Calif.-based Paramount Residential Mortgage Group Inc. (PRMG) is one of the nation’s most prominent independent mortgage lenders. As CEO, Paul Rozo has guided PRMG through a market that has seen more than its share of tumult, while carefully growing the business to achieve a presence in over 44 states. PRMG co-founder Holliday currently serves as the firm’s chief operating officer.

A primary reason for PRMG’s success can be found in the clear and to-thepoint mission statement that the company has been operating under since it opened: “Our vision is to be partners with the origination team in producing a high-quality product by maintaining

“AT PRMG, WE FOSTER A CULTURE OF SUPPORT AND ENCOURAGEMENT. WE LIKE TO PLACE PEOPLE IN A JOB CAPACITY THAT COMPLIMENTS THEIR SKILL-SETS AND STRENGTHS AND ALLOWS FOR PERSONAL GROWTH AND ADVANCEMENT.” a spirit of cooperation, appreciation and understanding. To act in a fair and timely manner, while exceeding customer expectations without jeopardizing the integrity of our company.” This straightforward, cogent language is personified in Rozo’s approach to his work and his vision for the mortgage industry.

How did you get into the mortgage world? Was this the mortgage profession a career that you wanted to get into?

Rozo: No, it was not! My childhood aspiration was to become an orthopedic surgeon, with a strong focus on sports medicine. Unfortunately, my first organic chemistry class during my sec-

ond year of pre-med at U.C. Davis opened my eyes that I was not cut out for that career path. However, as a result, my focus shifted to business and finance and the goal of pursuing a career in real estate.

What was the inspiration behind starting PRMG? Rozo: I started in this industry as an originator, working the streets for purchase business. Here is a typical story: I came in not knowing much about loans, and was essentially handed business cards and told to hit the streets.

Within seven years of starting in the industry, I had worked my way up through the ranks to become a managing partner for a successful mortgage

broker that we transitioned into a mortgage banker.

After five years of this partnership and 12 years of being in the business on multiple levels, I knew exactly what I wanted and it was becoming increasingly evident that my vision and ideas did not fully align with that of my former company. In September of 2001, PRMG was born from a vision of creating a company with a unique culture that speaks to and supports the originators and top operational staff, thereby creating a proverbial “Fantasy Island” for top producers and mortgage professionals. Hence, the genesis of PRMG’s slogan: “Built by originators for originators.”

When you began PRMG, you had a three-person staff. Now you have 600 people in more than 40 offices. What did it take to get you from Point A to Point B? Rozo: By not losing focus, remaining consistent and relatively conservative during both the high times and low times, not taking unnecessary risks, and most importantly, reinvesting every cent made back into our company and into our people. This has proved over time to keep us on track while building

BORN FROM A VISION OF CREATING A COMPANY WITH A UNIQUE CULTURE THAT SPEAKS TO AND SUPPORTS THE ORIGINATORS AND TOP OPERATIONAL STAFF, THEREBY CREATING A PROVERBIAL ‘FANTASY ISLAND’ FOR TOP PRODUCERS.”

a stable and healthy company that would survive the long haul.

What do you see as the states of the retail and wholesale lending markets today?

Rozo: I feel there is plenty of opportu-

Today, we’re seeing many cases where underwriters are exceeding a six-figure annual income. To that end, we have created our own internship program, PRMG University, whereby we work hand-in-hand with students enrolled at local universities to teach them the ropes by cycling them through the various departments for several weeks at a time–from secondary marketing to accounting to postclosing to human resources to underwriting/operations to sales. By doing so, it enables them (and us) to better determine their skill set based on their strengths and interests, while teaching them how the mortgage business banking model works from “cradle to grave”. All students who make it through the intern and pass an exam for each area/department will be guaranteed employment at PRMG upon graduation from a fouryear university if meeting our minimum GPA requirement, based on the specific department we mutually deem the best fit while trying to match their career path.

On a personal note, how do you spend your leisure time?

Rozo: As a person who believes in the value treating your body like a temple, I ritualistically work out every morning to prepare myself both mentally and physically for my work day. I find time to decompress when out of the office on the ocean, cruising on my Sportfisher “Houdini” with family and friends at the islands off the California coast.

Phil Hall is senior editor of National Mortgage Professional Magazine. He may be reached by e-mail at philh@nmpmediacorp.com.

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l FormFree Holdings Corporation has appointed John Sheppard company president and chief operating officer.

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l V.I.P. Mortgage Inc. brought on Duncan Hsia as the firm’s new sales manager. l HomeBridge Financial Services Inc. continues to grow across the country with a new branch location in the Northern California city of Stockton to be led by Christin Blair, a 30-year mortgage industry veteran. l MSI Reverse has named David Cesaro to the position of vice president of reverse mortgage lending. l Carrington Title Services LLC has added three title industry veterans to its management team: Vice President of Title and Settlement Services Craig Marshall, Vice President of Legal Compliance Jack Kozak, and Manager of Curative Services Lesa Wachter. l LoanLogics has hired Leah Fox as senior vice president of customer success. l Prospect Mortgage LLC and its growth capital partner, Sterling Partners, have announced the appointment of Michael J. Williams as Prospect’s new CEO. l Fay Servicing has launched an REO division and has selected Glenn Brooks as senior vice president to lead the new business unit. l Greystone has announced that Tim Stevens has joined the company as a senior originator. l Gloria Betancourt has joined the national sales team at Landmark Network. l GSF Mortgage has named Gino Gregory branch manager of GSF’s Pittsburgh, Penn. office, and has also announced the addition of David Pelesh as branch manager in the firm’s San Diego, Calif. branch. Kelly Oatsvall has been named branch manager in the GSF’s new Sarasota, Fla. branch. Kevin Fuell has joined GSF as North Carolina branch manager, overseeing the firm’s newest addition in Greenville, N.C. l Envoy Mortgage has announced that its president, Patrick Walden, has been named president and CEO. l The Mortgage Bankers Association (MBA), the parent corporation of the

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Mortgage Industry Standards Maintenance Organization (MISMO), has appointed Peter Carroll to the MISMO board of directors.

Stonegate Mortgage has announced that Lisa Rogers has been appointed to the newly created role of executive vice president of third-party origination, to lead a consolidated TPO strategic business unit which will include the company’s wholesale and correspondent channels.

The STRATMOR Group has hired Tommy J. Finnegan III, an industry veteran with over 30 years of mortgage banking experience, as senior associate.

Mortgage Guaranty Insurance Corporation (MGIC) has announced the addition of William Todd Pittman as managing director for MGIC’s Southeast Sales Region and Geoffrey Cooper as director of customer solutions.

Gateway Mortgage Group has announced the opening of a new branch in Austin, Texas to be led by John Roach. Gateway has also opened a new branch in San Antonio, as Stefen Brooks joins Gateway as branch manager for the new San Antonio.

LRES has announced that Ann Song has been named vice president of REO asset management.

American National Mortgage Acceptance Corporation (AnnieMac) has announced the addition of two mortgage veterans to the company, Jason Fallon and Jenel Poole.

Jackson Martin has joined Austin-based commercial real estate services firm The Stone Group as vice president.

Mortgage Returns has selected Kim Goldstone as the company’s new director of marketing where she will supervise the marketing team and oversee all corporate communications.

Luxury Mortgage Corporation has announced that it has hired three new mortgage loan originators for its Garden City, N.Y. branch location, as Thomas Lupski and Thomas Kennedy have joined the firm as mortgage loan originators, and Denise Hartmann as a loan processor.

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

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On your Web site, PRMG takes pride in its “corporate culture.” What is special about this culture and how has it helped your company grow?

Rozo: You will hear all the time if you ask any employee what PRMG means or represents to them, they will inevitably answer “Family.” At PRMG, we foster a culture of support and encouragement.

We like to place people in a job capacity that compliments their skill-sets and strengths, thereby allowing personal growth and advancement, while rewarding them well financially.

At PRMG, we employ many people with diverse skill sets and educational backgrounds–attorneys, CPAs, accountants, management, marketing, advertising and sales–which, of course, has unlimited earning potential. Even those without the above specific skill set acquired by a degree have opportunities to work within the operation team.

Reverse Mortgage Network in the western region.

NationalMortgageProfessional.com

In the years that you’ve been in business, what have been PRMG’s greatest triumphs and greatest challenges?

Rozo: The greatest challenge, no doubt, was remaining in the business through the mortgage crisis of 2006 through 2009, when more than 70 percent of our competitors and other industry professionals failed and/or exited the space. PRMG managed to stay our course and remain in the game.

Ironically, I consider this same time as our greatest triumph because it was during this time that we leveraged our staying power to attract and retain the top talent that was displaced during the meltdown and grow our platform nationwide.

If a new college graduate asked about career opportunities in the mortgage world, how would you encourage them to join the industry?

Rozo: Quite frankly, I would encourage them to seek opportunities in our industry because of the excitement and buzz and the multiple opportunities and career paths available within our industry.

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SHEPPARD

“… PRMG WAS

nity for all channels to thrive in this market–retail, wholesale and correspondent–and PRMG is a supporter and advocate of all three.

heard on the street

HSIA

OF THE MONTH

“Among the various social networks, LinkedIn can be one of the most useful when it comes to fostering a referral network.”

Social Media in Today’s Mortgage Marketing Space

By Brent Emler

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I’m sure you’ve noticed that the social media craze is not going anywhere. In fact, the use of social media for communicating with friends, family, business contacts and even potential clients is steadily on the rise. With Facebook, Twitter, Google+, LinkedIn and several other social media forums, it can be an overwhelming prospect to fully develop a strong, profitable web presence.

With more options on the table, the more difficult it is to decide which ones would serve you and your business the very best. How does one quantify the success of their use of social media?

Which forums have the highest likelihood of helping you establish a strong business network and result in increased profits?

I recently sat down with the president of Social Eyes Marketing (a company specializing in social media and SEO management for business entities) and took some time to ask these questions as they relate specifically to mortgage marketing. Some incredibly useful information emerged.

Through this conversation, I was

able to make the determination that there are two main social media outlets that are more effective in the mortgage marketing space than others. Facebook and LinkedIn are proving to be the most effective social media tools for mortgage professionals. That is certainly not to say that there isn’t value in Twitter, Google+, and other popular forums, but the real returns are being seen with the studied, routine use of Facebook and LinkedIn. Facebook really started out as a way to connect with friends and family, but in recent years, has become very business-friendly. The community of businesses who use Facebook to advertise and connect with their customer base is rapidly growing. It’s important, however, to remember that communication on Facebook is best received when light-hearted, humorous or informational. Direct and “in-your-face” advertising is not as well-received. Here are some tips to garner the most attention with your Facebook presence: l Keep your posts short. Studies have shown that the response rate is 20

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percent higher when posts are 80 characters or less.

Do your posting in the late morning and late afternoon.

Include images to ensure higher engagement.

Infuse your message with humor.

Humor is “shared” more than almost any other type of communication.

Did you know that you can schedule your Facebook posts as a business?

Eliminate some of the day-to-day pressure by planning ahead and scheduling your posts.

Don’t forget to respond! Make sure that you are regularly responding to comments and shares. People deserve to be acknowledged, and it is certain to create satisfaction for your contacts.

Inspire participation in the form of competition or polls. People love to share their opinions and if there is a valuable offering, people love to compete for a prize.

I recently personally experienced the power of competition when a colleague of mine entered a Facebook challenge to win an entire year’s worth of professional photography for her family. The contest involved an elaborate riddle.

Our entire team jumped into the game to help our co-worker solve the riddle and participated daily for several weeks. As a result, the photographer gained significant visibility and popularity. The next time I need a professional photographer, I can guarantee you I’ll not be Googling photographers and know exactly who I will be calling.

This principle is true for any market niche … make it fun and keep it simple!

Among the various social networks, LinkedIn can be one of the most useful when it comes to fostering a referral network. The reason for that is because LinkedIn has a high concentration of business decision-makers. There is nothing at all wrong with using other social networks, however, the tricky part is managing to go beyond connecting with family members and school pals in order to strategically build a network of people who are potential clients.

Here are some tips for making connections on LinkedIn that can take your referral network to a whole new level: l Be subtle and friendly, not a bullhorn. Look at self-promotion as 20 percent of your communication and the other 80 percent should be value-add content, humor and asking questions to inspire input. l Take the time to genuinely get to know people. l Compliment others often. l Send personal invites. Sending a personal invitation always makes a better impression than generic requests to connect. Since an invite is your first communication on LinkedIn, it is important to make a good first impression by writing a personal request for connection. Here’s an example of a simple, yet effective connection request: Dear Jim, I noticed we’re in the same real estate group! I’m in the process of building connections with principled real estate agents and would appreciate the opportunity to connect with you. l Be sure to fill out all current and past work experiences. Why? Because you never know who might be looking for you. It could be a coworker from an old job or an old classmate. If you list all of your places of employment and educational institutions, you create a much bigger net for capturing searches. Besides, those connections could be the perfect connections to people you’ve been trying to meet. l Optimize your profile: One easy way is to update your profile picture.

LinkedIn views this kind of update as “freshness,” and it can help your ranking when others are searching for someone like you. l Let your headline work for you. Be clear and compelling, and be sure to tell people who you are and how you help them in your headline.

Headlines that communicate these points are often what gets a person’s attention when they search the site.

People should be able to read your headline and know exactly what you offer and why they should get in touch with you.

l Join targeted groups. Joining a targeted group is perhaps the most effective way to connect with like-minded professionals who are equally serious about using LinkedIn to form business connections. Participating in these groups enables you to share your knowledge as well as the opportunity to learn from other members of the group. Update your status often and consistently. If you are looking to build your network of Realtors and you’re in Florida, do a search that says “Realtor Florida” or if you’d like to connect with beginner real estate investors and hear what they’re talking about, search “Real Estate Investor.” These two groups have 10,274 and 51,306 members, respectively. Think about that. That’s 60,000 individuals who you want to talk to.

Get in those groups and start having

conversations. Start connecting with other members. Remember though, you wouldn’t walk into a conversation at a cocktail party and start pitching your products so don’t do it in your groups. l When you log into LinkedIn, pay attention to who shows up in your home feed. It is likely that you will frequently see the same few people.

These individuals are getting more visibility because they are more active, and you can do the same if you commit to staying active on the network. This is a simple but powerful way to build influence with your network connections. l Be persistent about building connections. Send an invitation to connect to at least one new person per day and always be on the lookout for connection opportunities.

l Start or participate in LinkedIn Group Discussions at least three times a week. l What you share on LinkedIn matters.

It is what will define you as a trusted authority not only within your industry, but with your target markets as well. The key here is to share news, articles or insights that will be relevant to your connections. Keep in mind that when you put something out there that is share-worthy it creates a cascade effect. Members of your extended network see it and share it, which means you increase your visibility significantly because now you have gained exposure to their connections.

LinkedIn’s network of 150 million members worldwide. As LinkedIn continues to develop and add new features, it is important to keep up with LinkedIn networking strategies in order to keep your referral network growing. Become a student of the craft.

As technology continues to evolve and provide us with access and information, we must lead the next generation of successful loan originators by evolving our marketing strategies in order to maintain a trend of success. It is up to each of us to inspire, teach and then require that strategies with proven success be adopted and maintained.

Just like expanding any social media circle, building a referral network on LinkedIn won’t happen overnight.

However, it’s well worth spending some time and effort in order to tap into

Brent Emler is director of sales and marketing at Velma.com, a customizable marketing software provider exclusive to the mortgage industry. He may be reached by e-mail at brent@velma.com.

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It’s in our DNA. radian.biz | 877.723.4261

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MI so easy, it’s fun.

“When establishing a social media strategy, acquiring fans and followers is only half the strategy, the other half is educating them.”

A Hunger for Authenticity in the World of Social Media

By Cal Haupt

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As a young child when you were sent off on the bus on your first day of school, challenged to meet new friends or joined a club to expand your social life, you probably felt apprehensive. Feeling stressed and anxious, you were most likely told by your parents not to worry and to just “be yourself.”

“Be yourself” is a phrase that is quite possibly the most commonly used phrase

in the history of advice and yet, even as adults, we sometimes don’t follow the number of one piece of advice that has the profound ability to set us apart from the rest and help us establish our true authenticity. Our hunger for authenticity guides us in every age and aspect of our life. It drives our explorations, relationships, commitments, self-image, goals

and our future. So, if authenticity is what we strive for as people, why should businesses be any different?

Businesses today have the unique advantage of social media–an ideal platform to publicly proclaim who they are as a business, what they stand for and how they’re different from the rest and, in turn, align with others i.e. consumers, employees and potential recruits who are drawn to and value who we they and what they have to offer. And while some level of anxiety is always present when we’re venturing into new territory, when it comes to social media, it’s all about being yourself.

Originate, don’t imitate An important step to build relationships with consumers, clients and employees in the world of social media is to establish your brand by identifying what makes you different. Because mortgage companies offer similar types of services, it’s especially important to establish differentiators.

Identify something that sets your company apart from others and matters in your market. Perhaps it’s the impeccable service you provide, your firm’s combined expertise, a unique loan origination process or the spirited culture of your firm.

Perhaps you want to identify how your firm offers specialized orientation to educate and ease anxieties for first-time homebuyers or how your firm provides service to the investor market. If you don’t have a specific differentiator, it’s time to identify one. Whatever it is, make it your own and promote it via social media.

Above all, be original.

Humanize your approach It’s understandable that developing an online presence can be intimidating, especially in the mortgage industry.

Compliance regulations call for careful consideration of anything posted online.

However, just because you’re regulated doesn’t mean you can’t engage. In fact, you should. As more people continue to discuss the mortgage industry through a variety of online platforms, it’s vital that we recognize the necessity of listening to and participating in these online conversations. Establish the necessary procedures and guidelines to avoid potential risks and get in on the conversation. When

posting on Facebook or tweeting on Twitter, make sure you humanize your approach. Automation has become far too common. This is an opportunity for your talk to, engage with and learn from your followers. Customize your responses and offer pertinent information your followers need and want. People trust people. Use this opportunity to present your firm as a person rather than a computer and allow the online community a chance to get to know you.

The big picture If you’re not using images to share your story online you may be missing out.

According to recent statistics Pinterest is the fastest growing social network today and Instagram has now grown to 40 million users worldwide. Perhaps it’s because most people, 65-85 percent, consider themselves visual learners and further studies have found that our brains process pictures 60,000 times faster than text.

Plain and simple, image-centric social media has become a powerful force in the online sphere. Through the use of images mortgage companies can share their story, engage with consumers, target specific audiences and bring life to its people, products and services. Photos also increase the likelihood of receiving shares and retweets on social media. And, the continued prolific use of smartphones will only further escalate this game-changer in the online community.

Embrace the culture of your firm Allow your clients a bird’s-eye view into your organization and give potential recruits a snapshot of life on the inside by digitally showcasing your firm’s culture.

People connect with people, so use this opportunity to showcase the individuality of your company’s character and culture.

Showcase your employees, the internal events and activities within the firm or the public gatherings held to express your appreciation to clients. Equally important is to pay close attention to what is written about your company online. Use your social media platforms to deflect negative comments and correct problems or gaps in service. Remember, social media is never a one-way conversation.

Educate and share When establishing a social media strategy, acquiring fans and followers is only half the strategy, the other half is educating them. You’re an expert in your field so share that expertise. Educating and sharing consistent, industry relevant, useful information with your fans and followers will turn those occasional page viewers into long-term followers and paying clients. The mortgage industry is at a particular advantage here with so much everchanging information to share. Let’s face it … purchasing a home is one of largest purchases your client will make in their lives, and according to Pew Research Center (2013), one in three Americans get their news via Facebook. Use your social media platforms to provide industry news, trends and statistics, homebuying tips and loan options. In addition to providing your fans and followers with news, generate news as well. Write your own

opinions about the latest bills that are impacting the housing market, a green renovation investment or how to strengthen relationships with real estate agents. Monitor social media to choose topics that are already being discussed in online conversations, write a timely blog and promote it via your own social media channels.

Here is a quick SEO tip: If you are writing blogs for multiple sites, that’s great, but make sure you vary your content or summarize your post and provide a link to the original blog to avoid duplicate content, which will negatively affect your SEO.

Keep ‘em coming back Now that you’ve created a loyal following, it’s important to create content that will keep them coming back. Educating and sharing information with your fans and followers is one important aspect, but it’s also a great idea to lighten it up a bit and

provide them with a weekly or monthly regular post they look can forward to.

Perhaps host a poll and ask your fans and followers questions about the housing industry to gain better insight, develop a “Mortgage Word of the Week” with a definition to enlighten viewers, post warmhearted community news to show the softer side of your business or enlist the ideas of your online community to determine what type of posts they’d like to see.

Take the time to create interesting, engaging content that matters to your audience.

Striving to reveal the true authenticity of your firm won’t happen overnight. It’s a process that involves accepting not only your firm’s greatest attributes and offerings, but also your shortcomings and weaknesses. And while many businesses fear the unknown and a possible negative outcome that may arise from engaging in social media, it’s these human qualities of the online conversation that allows you to

be yourself, unique and valuable to your fans and followers.

Cal Haupt founded Southeast Mortgage in 1993, currently serving as the company’s chief executive officer. He may be reached by e-mail at cal.haupt@southeastmortgage.com.

The Obsession With Social Media According to 2014 social media statistics, social media is a digital asset that continues to grow every year. l There are now more than 1.15 billion Facebook users l Today, there are more than one billion Google+ enabled accounts l Twitter has more than 550 million registered users 61

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“… the inherently freewheeling nature of social media has caused many mortgage lenders to question how they can balance regulatory compliance and social media in order take advantage of the many benefits of this communication vehicle.”

— George Gallinger, CIA, CFE

Social Media and Regulatory Compliance: How Mortgage Lenders Can Make Room for Both

By George Gallinger, CIA, CFE & Roberta Janel, CMB

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It is undeniable: Social media has caused a seismic shift in the way humans communicate. Many businesses—especially retailers—realized the potential of the medium early on and have successfully leveraged it to increase customer engagement and ultimately boost their bottom lines. For mortgage companies, having a presence on social media platforms can serve as a catalyst for larger volumes of leads, faster conversion rates, and ultimately, more business. However, the inherently freewheeling nature of social media has caused many mortgage lenders to question how they can balance regulatory compliance and social media in order take advantage of the many benefits of this communication vehicle.

Regardless of whether a company is already immersed in social media or is beginning to test the social media waters, it is important to take a step back and evaluate whether the organization is fully prepared to mitigate the potential compliance risks posed by the use of social media as a tool for marketing and business development. By first understanding the inseparable relationship between enterprise use of social media and regulatory compliance and then asking the right questions, a company will be able to lay a solid foundation that fosters compliance while taking advantage of the benefits that come along with the use of social media.

The relationship between social media usage and regulatory compliance There are a number of laws that apply directly to mortgage lenders which, without proper social media risk management and mitigation, can

serve as grounds for regulatory noncompliance.

For example, to be in compliance with Fair Lending Laws and the Equal Credit Opportunity Act (ECOA), all communication between financial entities and consumers must not solicit, collect or discriminate based on information related to a consumer’s race, color, religion, national origin or gender. However, since many social media platforms already collect and present this information, lenders should protect themselves from Fair Lending Law and ECOA non-compliance risks accordingly. This can be accomplished by establishing and documenting compliance training programs for their loan officers through which they are made aware of the potential consequences of inappropriate and unsanctioned practices including, but not limited to, the misuse of consumer information.

Another example that illustrates the relation between social media and compliance is the Real Estate Settlement Procedures Act (RESPA).

Section 8(a) of RESPA prohibits the acceptance of fees, kickbacks or “things of value” for the referral of settlement business. Section 8(b) prohibits the acceptance of portions, splits, or percentages of charges for real estate settlement services. These prohibitions apply to all applications taken electronically, including those taken via social media. An example of a RESPA violation would be a referralbased “contest” or “raffle” hosted online or on a social network where a loan officer’s clients send him/her referrals in exchange for an opportunity to win “things of value” or “kickbacks.” Employees involved in sales may be tempted to engage in these

“There are a number of laws that apply directly to mortgage lenders which, without proper social media risk management and mitigation, can serve as grounds for regulatory non-compliance.”

— Roberta Janel, CMB

activities to boost leads, not realizing the potential compliance risks at which they are placing themselves and their employers. Again, mortgage companies can mitigate exposure to these risks by continuously monitoring their salespeople’s activities on social media and requiring their salespeople to attend periodic training on the companies’ social media policies.

A final example of legislation that may result in conflict between social media and regulatory compliance is the Gramm-Leach-Bliley Act (GLBA), also known as the Financial Services Modernization Act of 1999. The GLBA establishes requirements related to the privacy and security of consumer information and can be contextually construed to mean that financial institutions are likely to face repercussions if they appear to be treating consumer information carelessly or are less than transparent regarding the disclosure of privacy policies that apply to one or more of the social media sites being used. The risks associated with this example can be realized through a common practice—outsourcing social media management to a third-party service provider. Third-party non-compliant practices can range from a lack of consumer disclosure in relation to privacy policies to “careless” management of consumer information or even a potentially weak information technology (IT) infrastructure that leaves vital company data and credentials vulnerable to misuse or theft. In these instances, lenders may be held liable for ensuing “foul play” or mishaps on behalf of the contractor and can, therefore, suffer the ramifications of GLBA non-compliance. This risk can be mitigated by conducting thorough due diligence prior to the contracting of these services and continuous monitoring of the third-party provider thereafter.

These are just a few examples illustrating how improper use of social media can reflect on a mortgage company’s compliance standing. The good news is that many mortgage companies already have existing compliance programs that, with some modifica-

tion and additional training, can be successfully expanded to address the risks posed by social media usage.

How should mortgage companies assess their social media compliancereadiness?

In order to assess their company’s current level of compliance-readiness in the context of social media usage and identify the steps necessary to mitigate inherent compliance risks, mortgage companies should ask themselves the following questions: 1. How does the use of social media support and fit into our current business-level strategies, goals and objectives? Which controls will we have to either update or implement in order to sustain a successful and compliant a social media program?

How will these controls be managed and who will be accountable for managing them?

2. How can we integrate our existing audit and compliance functions into these social media initiatives to ensure ongoing compliance with internal policies as well as applicable laws and regulations?

How will we execute assurance reviews to monitor continuous compliance with these policies, laws and regulations?

3. Which controls and/or processes must be instituted for content approval in order to safeguard our company from non-compliance with consumer protection laws and regulations?

4. How will we go about implementing a monitoring program to appropriately oversee content posted on these platforms by our company and/or third-party service providers as well as consumers?

5. Will we be contracting these services to a third-party provider? If so, how stringent will our due diligence process be? What contractual lan-

guage will we use in order to protect ourselves from potential liabilities?

How will we continue to monitor our third-party providers?

6. How will we conduct in-house social media training to promote company-sanctioned and compliant best practices? Will both professional and personal use of social media by employees be addressed? Will we implement an employee social media policy “sign-off” control to protect ourselves from unsanctioned, noncompliant practices performed by a “rogue” employee?

7. How will we “quantify” the results of our social media efforts to measure the program’s effectiveness in achieving originally stated objectives?

The answers to these questions will serve as a basis for developing an effective social media risk management and mitigation program. For best results, the risk management and mitigation program should be developed with input from all functions of the lender’s operational staff including, but not limited to, specialists in compliance and legal, information technology and security, human resources and marketing as well as senior-level management.

The bottom line Companies across all industries are realizing the benefits of leveraging social media in a manner that supports their strategic objectives and aligns with the efforts being made across all facets of their businesses.

While it may appear that compa-

nies—particularly financial entities— are risking compliance to some degree by connecting with customers through social media, the upside of a compliant online presence far outweighs the potential risks.

Simply put, once lenders fully understand the relationship between enterprise social media use and enterprise risk; have conducted an internal assessment by asking themselves the previously recommended questions; and have sought input from across the enterprise to assist in implementing and monitoring social media programs as appropriate; they can make huge strides in shielding themselves from non-compliance while still being able to take advantage of the infinitely-extended marketplace the world of social media has to offer.

George Gallinger, CIA, CFE, is a principal with CohnReznick Advisory Group and serves as national director of its governance, risk and compliance practice. George may be reached by phone at (973) 871-4060 or e-mail george.gallinger@cohnreznick.com.

Roberta Janel, CMB, a director with CohnReznick LLP, has more than 25 years of experience in the mortgage industry, specializing in consumer lending and mortgage finance, concentrating in federal and state compliance, enterprise risk management, government-sponsored enterprise (GSE), U.S. Department of Housing & Urban Development (HUD) interactions and Dodd-Frank Act implementation.

Roberta may be reached by phone at (9 7 3 ) 871-4027 or e-mail roberta.janel@cohnreznick.com.

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“It’s easy to see why employers are connecting on social platforms: Social recruiting “just works better” than traditional hiring methods …”

Social Media Recruiting: Are You Linked in to Talent?

By Chad Jampedro

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Not all that long ago, when mortgage companies wanted to find talent, they would turn to sophisticated recruiting firms or local newspaper to place a classified ad. Soon, newspaper ads gave way to vast, online job databases and cumbersome, paper applications —the bane of every HR department (and every applicant, really—slowly became outmoded.

None of the aforementioned recruiting methods have become obsolete— indeed, they are still often held as the de rigueur steps in the hiring process— but the options for recruiting talent has drastically changed.

Evolving communication technologies, such as the Internet and mobile devices, have put the world in users’ hands. Naturally, brick-andmortar businesses trickled onto the Web to take advantage of the e-marketplace, and in return consumers gained an unprecedented air of convenience, transparency and access to companies, employers and other leaders.

This has become no truer than with the Web’s most vanguard progression: social media. There is no denying the influence of social media channels such as Facebook, LinkedIn and Twitter. Their sheer reach, immediacy and connectivity is unrivaled by any other communication outlet.

By now it’s become clear that social media—in all of its various forms— isn’t going anywhere. And though it remains a channel with which users continue to post an oversupply of cat videos When it comes to using these platforms to build your business from the inside-out, there’s no way to spin it: social media is changing the recruiting game. Here’s why mortgage firms need to tag in.

Unlocking social potential According to a 2014 study by California-based recruiting software firm Jobvite, a full 71 percent of the U.S. labor force is on the job market, and more than half of employed workers are actively seeking, or “open” to a new job.

While the report, “Job Seeker Nation” shows that four in 10 of potential applicants found jobs through personal connections, 20 percent were found on online job boards, and slightly more—about 21 percent—landed jobs after first discovering the openings via social networks.

Despite social media being closely tied to teens and Millennials (those people born roughly between 1980 and 2000), it’s actually a higher percentage of Gen Xers who are turning to social networks like Facebook, LinkedIn and Twitter to find jobs, the survey reveals (about 62 percent of respondents).

Consider that just four years ago, in 2010, job boards accounted for about one-third (32 percent) of secured positions.

“A large group of job seekers believe they have a better chance to land a job if they are connected, proactive and prepared,” said Dan Finnigan, Jobvite president and CEO in that report. “These are some of the very qualities employers look for when hiring, and social networks are emerging as the meeting ground for like-minded innovative employers and prospective employees.”

In 2012, the company reported that 93 percent of American employers planned to use social media for recruiting in the future, and about 73 percent said they had successfully hired an applicant using the recruit-

ing process in the past.

It’s easy to see why employers are connecting on social platforms: Social recruiting “just works better” than traditional hiring methods, says Jobvite.

It not only increases the number of applicants in the hiring pipeline (due to its millions upon millions of users) but also the quality of those who may respond.

“Social job seekers are younger, wealthier, more highly educated and more likely to be employed full-time,” Jobvite noted. And so should you!

l

l

l

Dress to impress So, how can you leverage social media recruiting in your company?

For one, you have to be open and willing to invest in the practice. You must educate yourself about the various social networks, to better understand where to target your recruiting efforts.

Social media users are savvy, and if you don’t have Social Media 101 down, they are likely to skim over your job opening for a more innovative firm.

Additionally, it is important for social recruiters to understand that you—as in, the employer—must come to the process willing to “dress to impress.”

For example, as social networks increasingly contain more and more information about companies (not to mention are more easily found due to the advent of social search) applicants are more likely to judge your company based on online reviews, the quality of your Web site, the eminence of your social pages, and the profiles of your current employees and company leaders—including you.

This includes: l Having a clear, authentic message: A status update filled with jargon is useless. Keep your job posting short and snappy—but informative. It’s all about balance. l Including high-quality images, videos and graphics: Multimedia not only shows an applicant that your company is operating in the

l

21st Century, it’s a good way to introduce a potential hire to your company.

Supplying working links back to your Web site: There’s not a bigger detraction than links that don’t work. It looks hasty and unprofessional. Do a quick test before making an official post.

Making it easy and convenient to apply: Grab essential information, sure, but leave everything else for the interview later. This saves time for both parties.

Providing information pertaining to work culture: Today’s workers want more than a salary. They want feedback, flexibility, volunteering opportunities, and an overall congenial environment. Host an annual cookout? Talk about it.

Addressing opportunities for advancement: Most workers want to make an impact in the company that they are in. You’ll have a leg up if you offer training and supplementary education.

Jobvite reports that 42 percent of candidates who have had a bad applicant experience would never seek employment from that company again. Yet, 68 percent of candidates would join a company that created a great first impression, even if it meant taking a salary five percent below their lowest offer.

Only time, and a clear strategy, will help mortgage companies ensure that all of these things are in line. In other words, as tempting as it may be, don’t leave your social recruiting strategies up to your marketing intern.

Remember, just as you plan on interviewing potential candidates, potential applicants are also “interviewing” you.

Chad Jampedro is president of GSF Mortgage Corporation. With more than 20 years of experience, GSF Mortgage has embraced the next generation of homeowners with its GOGSF brand, continuing its dedication to flexible and transparent lending. He may be reached by phone at (262) 373-0790.

“That is how you use the Internet ‌ it is a tool, not an advertisement.â€?

Anti-Social Media

By Eric Weinstein

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n Illinois Mortgage Professional Magazine n JULY 2014

get a loan once from Yelp! But, that that was one loan over a one-year period. It was not enough to put my daughter through college, but, hey, every bit helps.

In Star Trek, whenever they run into a problem, the answer is always something like, “Captain, we just need to reverse the polarity and invert the tachyon field on the Heisenberg compensator.� It sounds impressive, but it is just a bunch of made up words and concepts. People are always looking for a simple solution to a complex problem. How do I generate more loans? Start a really good Twitter following. That should do it. Case closed.

What’s for lunch?

Now don’t get me wrong. I am not saying DO NOT build all this social media stuff. When I was starting out, if you were not in the Yellow Pages, you were not a real company. Today, if you don’t have a Web site, a Fan Page and an iPhone app, you are not a real company. The thing people forget is that this does not draw traffic ‌ it is just an accommodation to the public already searching you out.

Go to Google and type in “Eric Weinstein Carteret Mortgage.� You will get 441,000 Web sites. I have NEVER gotten a loan from any of this.

Yet, I have a small personal Web site where I drive my borrowers to fill out their information on a secure 1003, as I am sure you do. That is how you use the Internet ‌ it is a tool, not an advertisement.

Here is a crazy idea. How about getting up from your computer, going outside and actually talking to some people? I know that is not the current social trend, but it seems to work for me.

So, what is the focus of this entire article? I have tried blogging, I have all the required social media paraphernalia and for me, it is only a prerequisite for being a loan officer. It is

Eric Weinstein worked in banking, on the commercial real estate side until 1991, when he fell in love with residential lending. In 1995, he started a small mortgage company in his basement called Carteret Mortgage Corporation, which in 2003, grew to one of the largest mortgage broker companies in the United States.

These days, Eric is semi-retired, doing mortgages by referral only. As he likes to put it, “He is either saving people money per month or helping them buy a new home. What a great job!� He may be reached by phone at (703) 505-8692 or email eweinstein4u@gmail.com.

NationalMortgageProfessional.com

“Well, I finally got done reading the entire Internet the other night. It took me a while, but I just read the last Web page.�

My kids think that statement is hilarious. There are probably a trillion Web pages.

Now, compare that to a Super Bowl ad I saw a few years ago. A startup company of three guys builds a Web page in their garage. Instantly, the orders go from five to 300 to 16,000 to 300,000 to over one million in the span of the TV commercial. Now they are worried how they are going to take care of all this business. That is when the IBM logo displays across the screen. Mortgage brokers subconsciously think that is exactly what is going to happen when they launch their new Facebook Fan Page or start blogging.

Try Googling the word “Mortgage.�

No exaggeration, you literally get 117 million hits (type it incorrectly, “Morgage� and you get the exact same amount of hits). The first three names that come up are major lender advertisements. They probably pay what your house is worth each month to be in that spot. How many people do you think will scroll down to spot 10,045,983 to find your Web site?

Face it, your Web site is one grain of sand on an endless beach.

I have been on Facebook, Linked In and Twitter for years. Occasionally, I will post something reminding my friends what I do for a living. I have never gotten a deal out of it ever. On the other hand, I have never bought nutritional supplements from a friend because she posts it on Facebook either. I go on those social media networks to connect with friends.

Shopping is not the number one thing on my mind.

Now, I am on several product review Web sites, and I do admit, I did

not the end all, be all of my advertising wares. All too often, people fall in with companies promising total mortgage success with their expensive social media advertising campaigns.

There is no magic wand that gets you tons more business. That has just been my experience.

Use it as one more arrow in your quiver. Don’t stop doing what you are currently doing or bet the farm on this fancy technological concept that you really don’t fully understand.

As Mr. Spock would say, “It is only logical.�

“Once your blog is branded to you or your company, it becomes marketing piece and loses much of the benefits of having a blog.�

Blogging for Apps: 10 Tips for a Successful Blog

By Ricardo Cobos

Why did you start blogging?

It is said that necessity is the mother of all invention. For me, blogging was born of my own personal necessity.

Let’s face it, the mortgage business in 2014 is not your father’s business, and for better or worse, it isn’t even the

business it was just a few years ago.

In 2007, I relocated from Northern Michigan to Raleigh, N.C., seeking more fertile ground to ply my profession. Little did I know that the conditions in Michigan would soon spread like a cancer across the country.

Not knowing anyone in Raleigh,

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but equipped with 10 years of lending experience, I was just like any other brand new loan officer. But I had a niche. I would be mobile! To prove my commitment, I invested in a broadband mobile Internet card for my laptop and a passenger’s seat desk for my car and branded myself “Your On-Call Lender.� I got in my car and began knocking on doors of real estate offices. It wasn’t long before I discovered that modern real estate offices are nearly devoid of real estate agents! The few I could connect with, although happy to talk to me, were leaving the business faster than I could call them a partner. With gas prices skyrocketing, I had to find a new way to reach a larger audience.

That’s when I began blogging.

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How long before your blogging efforts paid off?

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My early blogging was on a national platform dedicated to connecting real estate agents, mortgage lenders and home inspectors. Without naming them, let’s say they were a Canadian company whose name included the word “rain.� It wasn’t long before I was considered a “Rainmaker,� a moniker assigned to bloggers on the platform who were the most active in their markets.

Most of what I blogged about were topics that were of interest to me and others in the industry. I soon began getting a few leads from my efforts, but truth be told, I wasn’t that good at blogging, therefore, the leads were not very good or consistent.

What are some of the challenges to starting a blog?

Revenue is essential to all businesses, and Google loved this platform! It consistently returned organic search results from bloggers which were nearly always on top of the results page, yet it didn’t cost a dime! The platform soon realized that with thousands of bloggers producing unique content daily, they could monetize it by charging bloggers for access to Google. They

shut off the platform to Google’s Web crawlers and created a premium membership that cost about $50 per month. Simply put, the content that I had created was no longer visible to Google or the world without paying for it. It felt like my intellectual property was being extorted. I learned a valuable lesson, and never again would I produce and publish original content for a platform that I didn’t own and control the End-User License Agreement (EULA).

After taking a year off from blogging, in 2010, I set up a free WordPress.com blog called “The Raleigh Mortgage Guy.� It wasn’t hard at all, but the refinance boom was consuming most of my time, so I didn’t do much with it. Instead, I copied my content from the other site and posted it there. But nothing happened. Traffic to my blog was practically nonexistent. My blog was useless, and worse yet, it was a waste of my time.

What is the best advice you could give someone starting a blog?

I was about to give up when I stumbled across a formula that worked.

Instead of blogging about topics that were of interest to me, I began writing about things that were of no interest to me whatsoever. That’s about the time that I posted about an obscure pending rules change to USDA loans, and overnight, my site traffic doubled! Sure, it was only 380 page views, but it was double! It took me another four months before I swallowed my pride and stopped writing for me and began writing for my potential clients. Instead of trying to be everything to everyone, I began providing answers to specific questions that had been presented to me. In other words, I stopped writing marketing pieces and began providing value. That’s when I got serious about blogging.

How has blogging helped your business?

Leads generated from my blog repre-

giarism. Our industry has taken enough body-blows. Failing to properly cite your work will only hurt your reputation so give credit where credit is due!

Ricardo Cobos, The Raleigh Mortgage Guy, has twice been named among National Mortgage Professional Magazine’s Top 25 Most Connected Mortgage Professionals in America.

He has more than 16 years of retail lending experience. In addition to being a licensed loan officer, he is also the director of Internet marketing and all things digital at AES Lending in Cary, N.C., supporting more than a dozen loan officers. He may be reached by phone at (919) 526-0183 or e-mail rcobos@aeslending.com.

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off and blogged again as a current sent about 50 percent of my annual with keywords such as my city and topic. closings. The leads I get from my mortgage. Once your blog is brandblog are generally better quality ed to you or your company, it than those referred by partners. But becomes marketing piece and loses 8. Stop talking about rates: Do we really need to talk about this? more important, the sales cycle has much of the benefits of having a been dramatically reduced while the blog.

9. Get local: Talk about your market conversion rate is significantly highand your favorite subdivisions. If er. People calling me from my blog 3. Be committed (give it a year): It’s there’s something worth noting have already done their due dilieasy to throw in the towel when we that’s happening in your market, gence. The call is simply what I like don’t see immediate results. Like blog about it. It won’t take long to refer to as a “proof of life” call. In any other business practice, consisbefore Google recognizes you as a other words, they just want to make tency is the key. For me, I simply local expert. Don’t be surprised sure that I am The Raleigh Mortgage transferred some of the cost of either when your local media Guy. driving and marketing to real begins calling you for content. estate agents to producing content 10 tips for a successful for my blog. Initially, I committed mortgage blog at least one hour per day. Today, 10.Give credit where it’s due: Imitation is said to be the sincer1. Start cheap (but not too cheap): it’s far less. est form of flattery, but when it Web developers charge thousands comes to intellectual property, if of dollars to develop a flashy Web 4. Where’s your Call to Action?: it hasn’t been cited, it’s called plasite with blogging capabilities.

Someone once said that if your The trouble is that you still have blog doesn’t have an active lead to fill it with content, and to be capture system, then what you frank, most are built on the open have is a public library. I ruminatsource (free) WordPress platform ed on that statement for months which has become the industry before I did something about it. It standard. Although you can start required me to move my blog from with a free WordPress.com-hosted a free WP.com site to a self-hosted blog, I recommend using site. Once I did, subscribers to my GoDaddy.com’s Managed Wordblog surged from a paltry 600 to Press Hosting. Believe it or not, over 3,300 in just three months. the $1 per month plan is what I use, and unless you plan on hav- 5. Answer questions instead: I’m ing more than 25,000 monthly lazy, which is why Frequently visitors or more than one Web Asked Questions (FAQs) are my site, this is all you will need to get favorite blog posts because they started. Just like WP.com, answer questions, and let’s face it, GoDaddy managed hosting gives we don’t browse Google. Instead, you access to literally hundreds of we ask Google questions hoping to fee templates which are easy to find answers to specific questions. set up and customize. But the priBut SAQs (questions that SHOULD mary benefit is that the site is 100 be asked) are an opportunity to percent yours, no ads and you showcase my superior skills. These have access to hundreds of thirdare a super easy source of conparty plug-ins, many which are tent. Anytime I find myself restricted from on a WP.com. answering a unique question that required me to check underwrit2. It’s not about you (or your coming guidelines, that inquiry pany): Apart from an “About Me” becomes the basis for my next page which should include links to blog post. your social media profiles such as LinkedIn, Facebook and Twitter, 6. Keep it brief: Americans have the your blog shouldn’t be branded. attention span of a gnat. Three The harsh reality is that your readhundred to 500 words are the perers won’t care one bit about you or fect length. Breaking longer posts your company until they have into multiple parts will allow you determined that you can solve to create additional content for their problem. In fact, my blog your blog. doesn’t have a picture of me or my name anywhere in the title. 7. Reuse and recycle: Content that Instead, I chose to pack my title has proven popular can be dusted

“Among the various social networks, LinkedIn can be one of the most useful when it comes to fostering a referral network.”

Social Media: Compliance Risks of the Emoticon?

A social media policy can help manage the risks

By Thomas Morgan

Corporate concerns with social media may be over-emphasized when you look at the real utility of social media platforms. For a loan

originator, using Facebook or other social media platform to try and get business, marketing efforts focus more on developing name recogni-

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tion and improving search engine placement through search engine optimization (SEO) efforts than actual customer relationship management.

Potential applicants do not simply seek out mortgage lenders on social media sites. However, the appearance of a lender or particular loan officer on a search engine result, particularly at a very specific search engine result, can result in new business generation.

The concerns of lenders run from simple compliance to privacy, fair lending and reputation risks. So, will loan originators use a social media sites to divulge corporate information? Or, could they unintentionally accept a loan application without providing the appropriate loan disclosures in a timely manner? Or, could he or she engaged and prohibited types of communication that may appear to be a discriminatory or expose a lender to other potential compliance risks?

In fact, the greater risk potential for may exist in the area of reputation. For example, in the midst of the mortgage crisis, as foreclosure activity soared, activists accessed lenders through their social media.

To this point, lenders enjoyed a certain amount of anonymity.1 But, as the number of foreclosures escalated, the victims no longer remained faceless. Mortgage lenders became the enemy and public exposure through blogs and social media sites quickly became a vehicle for the public to pile onto. Bank of America, which became a target through its purchase of the Countrywide powder-keg portfolio, had to resort to “bot-like” responses simply to keep up with the volume of communication, further inflaming the antimortgage sentiment.

Among the compliance concerns, fair lending issues may take precedence as social media vehicles give “testers” wide open, anonymous access to originators, in a perfect “matched-pairs” testing environment.2 In this case, disparate impact—today’s hot button issue—

figures less than a direct correlation to a discriminate act. A loan originator may simply ignore a request from an individual with a racially specific profile and invite a claim.

By definition, public communication through social media represents a form of advertising. Ensure any messages have met your requirements for advertising.

The compliance officer and production staff must really understand how social media advances marketing efforts. Simply, do not use it as a bi-directional communication tool, but as a farm for sprouting keywords and relevant topics.

Content shouldn’t come directly from loan originators, but a stream of suggestions for content to a central source can achieve this goal.

Allowing or requiring content from employees (particularly originators) creates an unnecessary burden for employees to participate in social media and could create more pressure on non-compliant activity than necessary. Even re-posted material should be vetted against an advertising checklist.

Perhaps the best solution revolves around providing a social media content provider—someone who will provide pre-approved content to post on social media sites. This can add to both corporate search engine optimization benefits, as well as allowing individual loan originators to improve their own business results.

Thomas Morgan specializes in mortgage quality control plans, lending policies and procedures. He may be reached by phone at (877) 918-7246 or e-mail thomasmorgan@mortgagemanuals.com.

Footnotes 1—Juris, J. S. (2012), Reflections on #Occupy Everywhere: Social media, public space, and emerging logics of aggregation. American Ethnologist, 39: 259–279.

2—”All Other Things Being Equal.” A Paired Testing Study of Mortgage Lending Institutions (Executive Summary). Web. 19 June 2014. www.urban.org/publications/1000504.html.

“…video really makes an impact by letting people get to know you before they ever know you.”

How Do You Video?

By Adam P. Smith

Adam P. Smith is president of The Colorado Real Estate Finance Group Inc., a commercial and residential real estate finance firm. He may be reached by phone at (303) 770-2262, ext. 112 or email adam@corefinancegroup.com.

www.mortgagenewsnetwork.com

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consumer. “What to expect when applying for a loan?” Boring. “What documents you will need to provide you lender.” Snoozer. “How the closing will go.” Ugh … enough. So, what I really struggled with was the video content.

Then I had an epiphany, or someone did for me, anyway. Someone asked why I wasn’t doing the video blog content to match the classroom material I had been teaching to the real estate agents for years on end already. The light bulb went off!

I have been teaching “Zero Cost Marketing” and “Contact Management for a Repeat and Referral Business” for as long as I could remember. It’s great material for real estate agents, mortgage brokers/bankers, insurance agents, financial planners, and so on …basically anyone with a direct to consumer relationship. We have also been doing classes specifically on social media and even on video blogging, so this is the material I know.

So, I really hit the gas on these new videos with all the content I would need, and it really is all the content I need, and believe me, there is all the content you need if you really think about it. To get started, I took something small right out of the classroom material, started with a little camera in my laptop, shot a video, did some minor editing and up to YouTube it went. The response was far better than I expected, so I did another, and another, and now it’s been a video every week for a few years. Before I knew it, there were hundreds, and eventually thousands, of people subscribing to the videos via e-mail and watching me every week. Like a celebrity, right? Well, maybe not yet, but when I am at events now, people do say something along the lines of, “Hey! You’re the guy in those videos every week.” Now that’s celebrity status, isn’t it? I can pretend.

In any case, it has snowballed from there. Now we use content from the

videos directed at the real estate community or to your clients, or that you follow what I am doing to the letter, but you should be doing this in some manner. Some of the great ideas we have come up with in the video blogging classes we teach include things like doing a video of the buyer client making an offer on a home and sending it to the seller and their agent. That one has been working really well. I even think I heard a tale of a seller’s agent telling the buyer’s agent that the video was the reason they chose that offer. Or maybe making a video of a family that’s not having any luck finding a home to suit their needs and sending it out to your circle. Or making a video of a property they are going to be listing so that their clients can have it and send out in their social media circles. Can you imagine what a rock star that agent looks like when all of their clients’ friends see how much work they are doing to help them sell their home?

Whatever it is, we just want it to be creative, unique and fun to do with little cost and great traction.

So, how can video be used to build relationships? In about a million different ways. It can be used with referral partners, like we do, or with clients and their offers or sales, or with clients regarding their loans … many ways.

But there is no doubt, that video really makes an impact by letting people get to know you before they ever know you.

Cool, right? You better believe it is.

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So, I am writing this from a plethora of experience, both hands-on and that witnessed from some of my greatest friends and colleagues. I have been video blogging to the real estate community for a few years now, and it has been great! Great in the level of fun and entertainment I get from doing it. Great in the level of response it gets and the credibility is builds. And great in making me feel like a celebrity in some rare cases. Okay, well maybe not a celebrity, but you’ll see what I mean.

This all started because I was getting some pressure from those aforementioned friends and colleagues to get started on video blogging before it became a dying technology. Now don’t be fooled, all of these things we are doing from a social media standpoint are dying technologies. Facebook, Twitter, LinkedIn, etc. have all peaked.

Now, I’m not saying they’re dead, and it may be years or even decades before they die out, but make no mistake; they have all peaked and are now dying. I am excited to see what the next great “social media” platforms will be, though.

In any case, some of these friends and colleagues are the pioneers of this video blogging stuff. They do videos every day, on all sorts of subjects, broadcast to a really broad audience and they do it really well. Well, then this should be easy to mimic, right? Not so much. I speak publicly all the time. I teach classes to real estate agents on a pretty frequent basis. I don’t mind being in front of the camera, and I don’t even mind the sound of my own voice. This is a rare combination in our society, I guess. However, the content is what was killing me. What to actually say in the videos is the hang up? You’ve got to be kidding me.

I’m not kidding … I could not figure out for the life of me what to say in my video blog. I started by making a video blog series directed at the mortgage

classroom material sometimes, but most of the time, we use good salesrelated content from our experiences over the previous week. A clerk in a store with a great attitude … a server in a restaurant with a bad one … a charity or networking event new event to meet people. Whatever the experiences have been, we can usually find a way to relate to the idea of building relationships and eventually clients and referral partners.

We also went from the laptop camera, to a slightly better Web camera and now use a true HD video camera. We still use free Windows Movie Maker software for all the editing of music, photos, captions, etc. We also still use a free YouTube Channel to host the videos, so this has been fun and inexpensive and has given me some of my own paparazzi following me around. I’m sure they’re just hiding in the bushes.

But why is all of this even of any importance whatsoever? Well, we discussed the credibility factor, but you don’t need video blogging for that. You could write articles for trade publications for that, for example. But, we all know that it takes time and many interactions to build a proper referral relationship with someone. We are talking about the single greatest investments and transactions of people’s lives, after all. The video blog truncates that time frame. People get to see you, hear you, learn how you speak, your tone, your inflection and so on. They even get to know your wardrobe and maybe see what your office or home look like.

They get to know you. That makes people feel like they actually do know you.

You might cut that time frame in half by letting people get to know you via video. What a great concept!

Now, I’m not suggesting that you do

“Whether you’re a lender, title company, real estate agent or other participant in the mortgage finance industry, you should create a social media and content marketing strategy to stay relevant and competitive.”

How to Engage Customers and Earn Business Via Social Media

By Moses Keshishian Unless you’ve been stranded on a desert island for the past decade, you know that consumer behavior has changed drastically when it comes to researching and making purchase decisions. In this era of social media, blogs, online reviews, and search engine optimization, traditional marketing and

advertising tactics have far less influence on consumers than they once did.

The current digital marketing game is all about empowering consumers to independently research products, companies, services and reputations to guide them toward a purchase decision. Most importantly, customers des-

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perately seek to have their questions answered—and their anxiety diminished—before they part with their hard-earned cash.

Consider how someone might choose an auto mechanic or a restaurant. In the past, they might have simply seen an ad in the newspaper or found a listing in the phone book, and that was enough to give the business a try. Now, the first thing consumers do is look at the company’s website, check out the menu of services, and search for prices.

Once they’ve found that information they’ll visit the company’s Facebook page for specials and third party customer testimonials. After that, they might do some comparison shopping— reviewing local competitors, their menus and prices. Reviews on Yelp or Angie’s List go a long way in terms of reputation.

If consumers do this level of deepdive online and social media research on everyday purchases, it’s pretty safe to assume that they would do all of that, and more, when shopping for a mortgage loan, a realtor, or other servicer that will be managing one of the most important purchases of their lives.

Make it easy for them to find you With historically low interest rates now a thing of the past, refinancings have all but evaporated. However, with home values slowly rising and lenders moving away from ultra-strict credit underwriting requirements, originations, home equity loans and reverse mortgages could begin trending upward.

Regardless of what happens, the market will remain highly competitive.

Whether you’re a lender, title company, real estate agent or other participant in the mortgage finance industry, you should create a social media and content marketing strategy to stay relevant and competitive. It’s a key component to staying ahead of your competitors by getting your content, and your brand, in front of potential customers.

Prospective borrowers are using, and will continue to use social media and Google to research loan products, interest rates, special programs and incen-

tives—and most importantly—a company’s reputation before they even begin to make a move. Interestingly enough, there’s not a whole lot of information and answers available online from the people consumers want to hear from directly: Your firm.

Many of the nation’s top lenders have little or no presence on social media representing their consumer mortgage lending divisions. And if you search the types of questions borrowers would ask in a Google search, like “How do I find a good real estate agent” or “What should I do to find the best mortgage,” the results come from trade media, industry associations or bloggers, not from your company.

The best way to get in the game, and gain the trust of potential borrowers, is to become discovered by creating great content, and distributing that content through your social media channels like Facebook and Twitter.

Establishing yourself and your company as a trusted authority A true leader, in any walk of life, is someone who can engender trust in others. People seek out transparent and honest answers to their questions online so they’ll know what to expect. If consumers are researching and asking their friends for opinions on local restaurants, it’s because they want to know they will have a great dining experience with no surprises when the check comes.

It’s important to understand that, according to an article on Google’s Zero Moment of Truth blog, 70 percent of a buyer’s purchase decision is made before they even contact you or your company. Your blog and social media channels are your tools to boost consumer confidence by having an open dialogue with them.

Ask yourself: “What are my potentials clients reading about me and my business when they’re searching online?” You should be a part of the conversation no matter what it is they find, and you should be answering their questions on your website and social media platforms. It’s okay to be proac-

Facebook is the world’s largest social network with more than one billion users. But why is it valuable for a mortgage company? The platform’s value is in its power to connect people and help brands establish a human voice.

You can build an expert connection.

l Four posts from sources that your audience will regard as valuable. l One post about work accomplishments. For example: Share pictures and stories about your staff, share your blog posts, or photos and videos from special events. l One post for pure entertainment value. Show your audience that you’re part of their community.

If you’re past the beginner stage and ready for more advanced tips, like learning how to cross promote your content, two great resources are: Social Media Examiner: www.socialmediaexaminer.com or Content Marketing Institute: www.contentmarketinginstitute.com.

Other important tactics and strategies We spent a good deal of time discussing Facebook because it has the largest potential reach, but other networks cannot be ignored.

Twitter is a real-time medium for connecting with your customers. When a person tweets a company, they expect an answer in an hour. Being responsive is incredibly important because these public conversations influence the way people view the effectiveness of your customer service.

Like Facebook, Twitter is also a publishing platform for your blog content.

Using relevant hashtags (#) with your tweets makes your content easier to find. Another benefit is that you can see what your competitors are doing and you learn from their successes or mistakes.

Although Yelp isn’t mentioned as often in this industry as Facebook and Twitter, it’s a platform everyone should consider. Yelp has 60 million registered users, more than 20 million reviews posted and dominates the social review space. In fact, Yelp reviews are one of the highest ranked search results on Google.

Yelp helps consumers find the best business for their needs. If your approach to business begins and ends with customer satisfaction, then Yelp should be an absolute must-have marketing tool for your business.

People are going directly to the social media sources that deliver exactly what

they’re looking for. Respond to complaints and accolades on Facebook because this is where they want to engage with your business on a personal level. Listen to customer feedback on Twitter and proactively search relevant hashtags to participate in industry conversations. Create and manage a Yelp profile because this is where most people go to determine a company’s reputation.

No matter where you start on social media, it’s all about customer service.

Show your customers you care about them and want to earn their business.

Moses Keshishian is the social media specialist for the National Notary Association.

He has expertise in retail banking having worked for Wells Fargo and Professional Business Bank. He may be reached by phone at (818) 739-4079 or by e-mail at mkeshishian@nationalnotary.org.

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Getting started on Facebook

The easiest way to get started is by creating a Facebook business page and sharing your knowledge, insight and expertise. For the first time ever, the majority of active Facebook users are older, more affluent, and all potential clients you want to reach.

You can build a direct connection with your customers and an indirect connection with their entire social network of friends and family members, when they like, share, or comment on your Facebook posts. When Facebook users engage like this with your posts, it increases your chances to get discovered by their “friends of friends.”

Facebook has broken down barriers by revealing the human side of businesses. It’s allowed businesses to visually share real customer success stories.

Facebook has demonstrated how powerful one video, one piece of content or one photo can be.

Use the “Social Media 411” posting strategy throughout the week to help you look credible:

NationalMortgageProfessional.com

tive and answer questions they don’t even know to ask.

Consumers get frustrated if they can’t find answers to simple questions about pricing, procedures, and tips on how to get started. If you’re a mortgage professional just getting started on social media, create content about how your loan processing works. Discuss your pricing structure. Provide tips on what to prepare for when they apply and what they need to do throughout the life of their loan. Share your thoughts about the lending market and signs a borrowers should look out for when shopping for a loan. Other topics can be very simple, like the best times to buy or sell and how to monitor lending rates.

If you’re stuck on what you should be writing about, ask your customer service professionals what questions they consistently get asked. Then all you have to do is convert those questions into blog posts.

You can also ask your own social media audience questions about their experiences, and turn the conversation into blog content. For instance you can ask your customers about the best lending experiences they’ve had, and then feature a few of the responses you received in your article.

Your fans and followers on social will be overjoyed to see that you’ve used their responses and stories in your post and will more than likely share your content with their friends and family. These kinds of conversations will earn you loyal repeat customers who will spread your message by talking about their good experience working with you.

If you produce great content on your blog, engage with your followers and show responsiveness on social media— all while establishing yourself as a trusted authority—the next time someone does a Google search for the questions you’ve answered, your blog articles will become a top search result. The result will be higher traffic flow to your website and more business leads.

“Social sites are now the prime stomping grounds of the well-informed, Web-savvy buyer.”

Five Must-Know Tips to Finding Customers on LinkedIn

By Marc

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“Social media is a waste of time for small businesses!”

Just the other day, as I sat enjoying a latte at my local Starbucks, I overheard someone shouting those words to a colleague. My latte suddenly tasted a lot less sweet.

You see, it wasn’t the first time I’ve heard that statement uttered—and I’m sure it won’t be the last. The problem is that it’s completely untrue.

People who refuse to take advantage of the latest tools for business growth have a right to stagnate, but the winners of today’s market must maximize every opportunity to find new cus-

customers will be there, too, and they’ll be off their guards and willing to talk with you. Would you accept that party invitation? Of course you would!

Now, there may not be an open bar, but LinkedIn is just like that party full of Wayshak potential customers, and it’s raging all the time. So put your party shoes on tomers. And where are the new cus- and join the social media festivities. tomers? They’re signed on to their Here are five must-know tips to finding social media accounts. customers on LinkedIn. As more and more small businesses are finding out, social media isn’t just for Make sure customers can chatty teenagers anymore. Social sites find you are now the prime stomping grounds of Your potential customers are using the well-informed, Web-savvy buyer. The LinkedIn to find service providers perfect example of this is LinkedIn. A through search. When they search for social tool with enormous business your category of service or product, do potential, LinkedIn is one social media you show up? Very few LinkedIn users platform that today’s small business are optimizing their profiles for the keyowners ignore at their own peril. words they want to be associated with Imagine for a moment that you’ve in search. For example, if you’re a combeen invited to a party. You find out mercial insurance agent, the term that hundreds of your best potential “commercial insurance” should be sprinkled throughout your profile and in your job description. Only with the right attention to keyword placement will your profile show up early in the results of a LinkedIn search.

Get introductions from your connections Ever wanted to be introduced to a particular person, but didn’t know where to start? LinkedIn is your answer. The site shows you how you are connected—whether it’s through mutual friends, colleagues, jobs or other connections—to everyone else. You can also see the names and job titles of those who are connected to people in your network. With just a little research, you can identify who knows the person you want to meet, and then you can ask for a direct introduction. Remember, the introduction itself doesn’t have to be through LinkedIn, but it’s always an effective starting point.

Join the group Do your customers come from particular industries? Do you look for certain types of companies when prospecting?

If so, you need to get involved with LinkedIn groups. There are groups for every kind of industry or interest that

you can imagine. Just search for groups that your potential customers would be involved in and join the action! Get involved by sharing content and information that you know your customers want. Answer their questions and connect with them.

Advanced search Think of LinkedIn as the Match.com of business-to-business connections. Do you want someone with brown hair, blue eyes and an adventurous personality? In the business world, how about all the CIOs at companies with revenues between $80 million and $200 million, located within a 50-mile radius from your doorstep? With the “advanced search” option on LinkedIn, you can identify people within a wide array of parameters. Once you’ve identified who your potential customers are, you can often find great additional information about them through Google, Twitter or list companies.

InMail your top prospects Now that you’ve done the legwork to find customers, wouldn’t it be nice to have a way to contact them directly?

You’re in luck! With LinkedIn’s premium services, you can send “InMails” to those higher-level prospects. InMails are direct e-mails which go right to the individual’s inbox. Best of all, these messages often get rerouted to personal e-mail addresses, which are more likely to get a reply.

Now that you have your five mustknow tips to finding customers on LinkedIn, it’s action time. Test out just a few tips at a time and get a sense for how this powerful social business tool can connect you with customers that you’d otherwise never meet.

Marc Wayshak is the author of two books on sales and leadership, Game Plan Selling and Breaking All Barriers, as well as a regular contributor for Entrepreneur Magazine and the Huffington Post Business section. He may be reached by phone at (617) 2032171, e-mail info@marcwayshak.com or visit www. marcwayshak.com.

“What you say CAN and WILL be held against you! Your future boss, clients, partners, voters and vendor are watching.”

What You Need to Know About Social Media Etiquette

By Margaret Page

Rules of engagement

Do I know you?

In this world of connectivity, how connected are we really? Has the word “connected” lost its meaning? With our ability to connect to anyone, anytime, anywhere through social media, the term “connected” has been watered down. Think about how many of the generic “I’d like to add you to my professional network on LinkedIn” invitations to connect you receive each month. Very few of them are from people you have truly “connected” with outside of social media. It feels a little like “the person with the most fans and followers” wins. But do they really?

Before there was LinkedIn, you wouldn’t dream of asking a new acquaintance to buy something from you just minutes after you met. And, you certainly wouldn’t show up at a networking event in yesterday’s outfit.

Just like offline networking, building relationships online, follows the same basic etiquette rules.

Here are a few to keep in mind: l Be professional. On Twitter, don’t be the egg. Post a professional photo of yourself on your profile. This holds true on all social media sites. A business colleague should recognize you from your online picture. Include

Whether you are connecting with people in the online world, or at a dinner party, knowing how to present yourself in a positive way is the same.

Think before you speak translates to “think before you tweet.”

Margaret Page is a recognized etiquette expert, speaker and coach, who helps people and organizations be more professional. She is the author of The Power of Polite, Blueprint for Success and Cognito Cards—Wisdom for Dining & Social Etiquette. She is the founder and CEO of Etiquette Page Enterprises. For more information, visit http://etiquettepage.com or call (604) 880-8002.

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Without guidelines on how to use social media, disaster is just a tweet away.

Many people—and companies—have found this out the hard way.

Embarrassing gaffs, impulsive rants and misguided comments have ensued.

What you post on social media sites is out there forever. The Internet never forgets a “selfie” posted after a night on the town or a tweet about a colleague can cause more damage than you think. It’s dangerous to assume privacy settings protect you. Even if you’ve locked down your Facebook page, once it’s posted to the Web, you can guarantee someone who is not directly connected to you will find it. All it takes is for one of your friends to share it with their friends. What you say CAN and WILL be held against you! Your future boss, clients, partners, voters and vendor are watching.

A good rule of thumb, whether you are engaging on social media for personal or in business is this: If you wouldn’t say it loudly, in front of your mother (or boss!), you shouldn’t post it online—anywhere!

With so many companies supporting BYOD (Bring Your Own Device), it’s more important than ever that a clear social media policy is in place for employees. Your employees are representatives of your brand, and in business, perception is everything. To protect yourself from the embarrassment of a social media faux pas, create a policy that clearly states what you expect from your employees when it comes to social media use. Set clear boundaries, especially for those who are part of your brand building process.

you found them and why you want to connect. In turn, they will know that you aren’t connection for the sake of just adding to their numbers. l Listen.

Building connections through social media isn’t just about pushing out content on this network or that. If you’re not taking time to listen and engage with influential people (the ones you are hoping to connect with), you’re missing an opportunity. Choose a handful of key people you want to build a business relationship with, read what they are posting, and where there is an opportunity for you to add value—jump in!

NationalMortgageProfessional.com

Like children with a shiny new toy, adults introduced to social media jump right in and start playing: Posting personal photos to Facebook, accepting requests for “friendship” from long-lost high school pals, and checking into everywhere from the coffee shop to their favorite local eatery. What fun!

Suddenly, we were getting an inside look into the lives of people we hadn’t connected with in years!

But unlike a new toy, social media didn’t come with any real instructions. We unwrapped it, signed up and off we went, sharing our world with … the world. As more and more people glommed onto this new way of communicating, the seeds of chaos were planted.

information about yourself. Your social media profiles are the equivalent of your business card, so be sure you keep it updated as your professional information changes. Always keep your basic contact information updated and link to your other professional profiles. l Introduce yourself. Want people to get a sense for who you are? Post interesting, value-added content on your social media accounts to showcase your professional expertise. This is especially true with LinkedIn; when you update your status with useful information, you’re building trust among your network – opening doors for introductions to new connections. l Be authentic. Just like in real life, no one wants to connect with “that guy.”

You know the one: The guy in the sleazy suit who spends his time schmoozing. One of the biggest mistakes people make when connecting on LinkedIn or Facebook is not personalizing the message in the invitation. Swap out the default message with something like “George. I really enjoy your blog at xblog.com. The leadership content you share is so valuable. I’d like to add you to my professional network and get to know more about your business.”

This will let the recipient know how

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MARKETING/NEWSLETTERS

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HECM Loans: The New Retirement Planning Component

By Ralph Rosynek Recently, a variety of sources are reporting that more than 8,000 Americans turn 62 years of age each day. This number nears 300,000 as the monthly maturing group of “Baby Boomers” is definitely changing the traditional definition and profile of senior borrowers.

While for many, 62-years-old no longer represents a viable retirement benchmark due to various economic, social, age and financial needs, loan originators are delivering a more flexible government-insured loan program, the Home Equity Conversion Mortgage (HECM), to the retirement discussions being had at today’s kitchen tables and with other trusted advisors.

A new set of reverse mortgage products?

Today’s reverse mortgage program is much different than the original program which began in 1989. Enhanced HECM features, benefits and options, including lower costs and fees, can greatly assist in retirement planning strategies.

Basically, borrower eligibility requires all borrowers to be at least 62 years of age, occupy the property as their primary residence and have equity available to generate proceeds. Borrowers may extinguish property liens and debts through a refinance transaction or consider using the HECM for Purchase program to perhaps downsize or relocate.

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FHA insures fixed-rate and adjustable-rate HECM products Fixed rate HECMs are limited to a Single Disbursement Lump Sum payment option at the loan closing with no future draws. Adjustable-rate HECMs provide five flexible payment options, and allows for future draws.

Mortgage proceeds are subject to an initial disbursement limit during the first 12 month disbursement period, and the amount of funds available is determined by the age of the youngest borrower. The borrower(s) has the ability to change the method of payment at any time throughout life of loan if the HECM provides for future draws and funds are available.

Loan not due as long as a borrower(s) occupies the property Regardless of the loan balance or the future value of the property, the loan does not become due and payable as long as a borrower(s) occupies the property as their primary residence. A HECM requires no monthly loan payments. However, borrowers are required to keep current and pay all real estate taxes, insurance premiums and property assessments for the term of the loan. The property must also be kept in good condition.

While a reverse mortgage is not for all borrowers or a cure for all financial situations, very positive media coverage and growing support by financial planners, realtors and aging in place advocates is appearing daily. New prospective borrowers can tap into a growing network of reverse mortgage providers who assist with accessing the product.

Now is the time to look at this growing opportunity to reach more borrowers. Your market entry can be very scalable and requires an initial sales commitment to product education. Most importantly, efficient market entry should be partnered with the strengths of a recognized lender support and training program for the guidance and assistance needed to achieve your success.

Ralph Rosynek is senior vice president and director of marketing and communications and a seasoned HECM Direct Endorsement Underwriter. For additional information, he can be reached at rrosynek@rmsnav.com or call (281) 404-7970.

SPONSORED EDITORIAL

MBA’s Mortgage Action Alliance A Message From MAA Chairwoman Amy Swaney

The outreach done by Mortgage Action Alliance (MAA) members is a crucial component of the overall lobbying efforts of the Mortgage Bankers Association (MBA). Members of Congress and your local officials are inundated by competing voices in Washington, D.C. and in your State Capital every day. However, the people they really want to hear from are you—their constituents.

Our elected officials work on our behalf, and it is our civic duty as engaged citizens to engage them in discussions about how the decisions they make will affect our well-being and the well-being of the communities we serve.

MAA is your opportunity to have your voice heard. While elected officials are debating policies that will impact the real estate financial industry, it is increasingly important that they understand what matters to you and your business. MAA is a free, simple and effective tool to exact legislative and regulatory changes that will make it easier to do business and better our communities. MAA is also a non-partisan source of information, and the best way to stay informed about the ever-changing political landscape that our industry must navigate each day.

In order to make our grassroots lobbying network even stronger, MAA recently established a “grass top” program, to add another layer of effectiveness to our existing efforts. Our grass tops advocacy model leverages existing relationships between MAA members and elected officials at both the state and federal level. These relationships can be the difference between getting a key vote or legislative push to advance our combined goals for the real estate financial industry.

Relationships with members of Congress can span the social gamut.

They may be a former co-worker, childhood friend or fellow PTA member at your child’s school.

Other times, grass tops have devel-

oped their relationships by keeping in consistent contact with their elected officials through in-district meetings, or through lobbying events like MBA’s National Advocacy Conference.

No relationship is too small or insignificant. We are looking to capitalize on these connections to get the attention of key decision makers on the issues our industry is currently facing. Through engaging our elected officials at yet another level, grass tops allow us additional opportunities to work with them in order to employ innovative solutions to bolster our industry.

If you would like to identify yourself as a grass tops contact, simply sign into the MAA Web portal by visiting www.mba.org/Advocacy/MortgageActio nAlliance. Once you’ve logged in, look to the side bar located on the left of the screen. Underneath “Mortgage Action Alliance,” click the link that says “Key Contact Survey.”

From there, fill out the information to let us know about your relationships with any of your elected officials. Again, no relationship is too small or insignificant. Your voice matters.

Real estate finance industry professionals who wish to join or learn more about MAA can do so at, www.mortgageactionalliance.org. If you need assistance accessing the grass tops survey or have any questions regarding MBA’s grass top advocacy program, please contact MBA’s Assistant Director of Political Affairs Annie Gawkowski at (202) 557-2816 or e-mail agawkowski@mba.org.

Amy Swaney, CMB is governmental relations officer and branch manager with Scottsdale, Ariz.-based Citywide Home Loans. Amy is also chair of the Mortgage Action Alliance (MAA), a voluntary, nonpartisan and free nationwide grassroots lobbying network of real estate finance industry professionals, affiliated with the Mortgage Bankers Association (MBA). Amy may be reached by phone at (480) 822-6262, ext. 2164, e-mail amy@amyswaney.com or visit http://mba.org/Advocacy/MortgageActio nAlliance.

David vs. Goliath in the World of Reverse Mortgages “In the life of every person, both professionally and ethically, there comes a crossroads moment when you have to stand for something that is bigger than your own self-interest.”

By Phil Hall

How did you first get involved with reverse mortgages?

Agbamu: I came into the mortgage industry in 1998 from a 14-year stint in education in New York City, and I accidentally ran into reverse mortgages around 2001 when my boss at People’s Choice Mortgage asked me to research the product. Up to that time, I knew nothing about reverse mortgages. As I researched reverse mortgages, I was fascinated and hooked.

What hooked you so quickly and attracted you to the reverse product?

Agbamu: The counter-intuitive nature of

the product was a draw for me. It is a product that seniors can use to get cash without having to make monthly repayments as with other types of home equity loans, and they can still retain every vestige of ownership. It seemed like the greatest product for seniors who need extra cash to meet their needs.

I’m particularly drawn to seniors because my grandmother had a role in my upbringing in Nigeria. The African adage, “When we honor our elders, we honor ourselves,” was drummed into my head early in life. So for me, reverse mortgages was an opportunity to do good and do well.

Reverse mortgages have been around for many years, but are still a niche product within the mortgage world. In your opinion, why haven’t they become more popular?

Agbamu: Perhaps, it is the too-good-tobe-true nature of the product. Perhaps, we don’t hear the word “reverse,” we just hear the “mortgage” part. The product also attracted some unsavory actors in past who would prey on seniors.

Compared to 2001, reverse mortgages have come a long way in popularity, especially through televisions ads with famous actors and politicians.

Let’s talk about Mortgagee Letter 08-38.

What was your reaction when you first learned that HUD made this significant change?

Agbamu: It struck a nerve. It made everyone of us in the industry a liar. Here was a product that came with controls for a vulnerable demographic of the public— the product was designed and sold to protect seniors. HUD said from day one that borrowers and their heirs were not liable for more than the value of the home at loan termination. Then they changed that cardinal promise initially without public notice. Unconditional non-recourse was, and remains, an integral part of the pieceof-mind promise we make to seniors who take reverse mortgages. It was a travesty.

But there was no great hue and cry

across the industry over this. Why did you take the leadership role in arguing against ML 08-38?

Agbamu: As an advocate for consumers, a product champion, and a visible thought leader with a communication platform, I knew deep down that this was where the rubber met the road. Silence, in the face of obvious wrong against the weak by a powerful unit of our federal government, was not an option for me. In the life of every person, both professionally and ethically, there comes a crossroads moment when you have to stand for something that is bigger than your own self-interest. The so called “clarification of HECM non-recourse,” or ML 08-38, was that moment for me. The recall of ML 0838 and the resulting failure-to-protect lawsuits by non-borrowing spouses have completely vindicated the stand I took.

And for that, I am grateful to the Author of all victories!

How did your outspoken actions impact your work?

Agbamu: When you are wrongly perceived as a troublemaker, it doesn’t help.

There were times when influential businesses and associates would not return my calls. No one wanted to offend HUD, and I accepted that. It was a price I knew I had to pay for the stand I took. Like the proverbial city hall, picking a fight with a powerful arm of the federal government that controls your industry is not fun.

What is your role in the reverse mortgage world today?

Agbamu: Today, I am essentially an advocate for seniors: They call me, they send e-mails, and share their worries about losing their homes when their borrowing spouses die. I do substitute teaching and some reverse mortgage consulting work as well. Regulators call me, as do attorneys in litigation, for advice on the world of reverse mortgage.

Phil Hall is managing editor of National Mortgage Professional Magazine. He may be reached by e-mail at philh@nmpmediacorp.com.

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Skalet were fighting HUD in federal courts, Agbamu was doing the same thing in the media through his blog (www.thinkreverse.com) and in op-eds in the financial media.

In a January 2013 op-ed in National Mortgage News, Agbamu framed and proposed four options for resolving the NBS problem. His option four, which called for reworking HECM’s actuarial assumptions to cover the risk of non-borrowing spouses for prospective loans, has been adopted and codified by HUD in Mortgagee Letter 2014-07 released on April 25, 2014.

Effective Aug. 4, every disclosed and certified non-borrowing spouse will be protected from displacement when their borrowing spouse dies for the first time in the program’s 25-year history.

Because HUD has yet to come up with a satisfactory solution to the plight of existing non-borrowing spouses who are facing foreclosure and displacement and those who are expecting the same fate when their spouses die, Agbamu continues his media campaign through his blog and other channels, calling on HUD to remove obstacles to assignment, the only viable solution to the existing NBS cases.

Today, Agbamu’s occupational focus is primarily in education, but he still has time to offer consulting services on reverse mortgages and to author his ThinkReverse blog. We spoke with the Oakdale, Minn.-based Agbamu about his career in reverse mortgages and his thoughts on the state of the product.

NationalMortgageProfessional.com

Few people have made a more vibrant impact on the reverse mortgage sector than Atare E. Agbamu. In his work as a broker, originator, columnist, book author, activist and consultant, Agbamu has been a champion of the reverse mortgage product and a tireless advocate for older consumers the product was designed to support.

Among Agbamu’s achievements is his successful campaign for the repeal of Federal Housing Administration (FHA) Mortgagee Letter 2008-38 (ML 08-38), which redefined the non-recourse feature of the home equity conversion mortgage or HECM. Whereas the U.S. Department of Housing and Urban Development (HUD) initially mandated that the borrower or the borrower’s heirs and estate would not owe more than the home’s value at loan termination. Under ML 08-38, if the borrower or the heirs/estate sold a home at loan termination, then all that was owed was nothing more than home’s market value; but if the property was kept, the full loan balance must be repaid, even if it is more than the market value.

In his writings—including his longrunning column for The Mortgage Press (the first regular monthly column on reverse mortgages in America’s financial media), the forerunner of National Mortgage Professional Magazine, in his ThinkReverse Blog posts, and in interviews, Agbamu warned that ML 08-38 would create undue hardship for borrowers and tie up HUD and lenders in endless litigation. In both cases, Agbamu was on target.

Three years after Agbamu called for its repeal, and in the face of a highly publicized lawsuit initiated by AARP on behalf non-borrowing spouses facing foreclosures and displacements upon the death of their borrowing spouses, HUD rescinded ML 08-38 in 2011.

Following the ML 08-38 recall, Agbamu turned his advocacy to a related senior-protection issue in reverse mortgages: foreclosure and displacement of non-borrowing spouses (NBS). While AARP Foundation Litigation and the Washington, D.C. law firm of Mehri &

What Will The Second Half of 2014 Bring?

First Half of 2013

Second Half of 2013

Net production income

80 basis points

27 basis points

Total loan production expenses

$5,743 per loan

$6,539 per loan

95%

69%

2013

2012

Total loan expenses

$5,948 per loan

$5,137 per loan

Personnel expenses

$3,910 per loan

$3,285 per loan

The "net cost to originate"

$4,298 per loan

$3,323 per loan

Secondary marketing income

254 basis points

260 basis points

$1.75 billion (7,857 loans) per company

$1.72 billion (7,699 loans) per company

Firms posting pre-tax financial profits

Average production volume

Source: MBA’s Annual Mortgage Bankers Performance Report

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By Phil Hall Independent mortgage banks and mortgage subsidiaries of chartered banks made an average profit of $1,242 on each loan they originated in 2013, down from $2,199 per loan in 2012, according to the Mortgage Bankers Association’s (MBA) Annual Mortgage Bankers Performance Report.

“Full-year 2013 net production profits were respectable,” said Marina Walsh, MBA’s vice president of industry analysis. “In fact, they were the second highest recorded since inception of the Performance Report in 2008.”

However, Walsh noted that last year saw a decided split on how the industry operated.

“Net production profits in the second half of 2013 were substantially lower than those in the first half of 2013,” said Marina. “While secondary marketing gains remained relatively strong throughout the year, per-loan production expenses escalated in the second half of 2013.”

On June 10, the MBA released data that found independent mortgage banks and mortgage subsidiaries of chartered banks experienced a net loss of $194 on each loan they originated in the first quarter of 2014, down from a reported $150 in profit per loan in the fourth quarter of 2013. In basis points, the average production loss was 8.31 basis points in the first quarter of 2014, compared to an average net production profit of 8.72 basis points in the fourth

quarter of 2013. This marks the sixth consecutive quarter that production income has decreased.

Furthermore, average production volume was $274 million per company in the first quarter of 2014, down from $367 million per company in the fourth quarter of 2013. The volume by count per company averaged 1,238 loans in the first quarter, down from 1,641 in the fourth quarter of 2013.

While this year seemed to get off to a rocky start—the MBA did not have second quarter data ready as this magazine went to press—there was cautious optimism on how the second half of 2014 would compare with the six months that preceded it.

For John Walsh, president of Milford, Conn.-based Total Mortgage Services (TMS), the continued uncertainty on the national economy will continue to have a profound impact on the housing market’s ability to regain its stability.

“I don’t think the economy is where it needs to be,” John said. “I think the housing market is still not truly recovered and I don’t think it can handle five percent interest rates.”

Yet Ruth Lee, executive vice president of sales, marketing and business development at Denver-based Titan Lenders Corporation, believed that the viability of the housing market can be measured in individual locations rather than as a solid whole.

“Certain markets still languish behind the rest,” Lee said. “Certain big markets like Las Vegas, Denver, D.C. are not only heating up, but are getting white hot.”

Lee added that the housing markets experiencing stronger activity are reflecting the general health of their local economies.

“It depends on economic development,” Lee continued. “States that invested heavily in tech tend to be stronger. From what I see, manufacturing economies are languishing a little bit softer than the tech ones.”

Nonetheless, Lee does not believe that a new housing bubble will be forming in areas that are enjoying very strong performances.

“I think we’re right-sizing,” Lee said.

“We’re not seeing the ridiculous push we did before. I think it is very premature to call any types of bubbles.”

But, originators have more than a few distractions to deal with in the second half of the year.

“Lenders are so focused on compliance now that there is not a lot of innovation taking place in other parts of the business,” said Brian Benson, CEO of La Jolla, Calif.-based ClosingCorp. “It is hard to get too positive when you are struggling through compliance concerns.”

Brian Koss, executive vice president of Danvers, Mass.-based Mortgage Network Inc., pointed out that the first half of 2014 was also disrupted by erratic weather patterns that threw many housing markets out of kilter.

“The East Coast had one of the worst winters in a long time, and it delayed the spring market,” Koss said. “Last year, the spring market came to a screeching halt at Memorial Day. This

year, it was still going through July 4th.”

Koss also noted that some originators are now trying to stay in the game during the second half of the year, rather than attempt to draw ahead from the competition.

“People continue to sacrifice to keep retained share,” said Koss. “They are not making money–and that is not a long-term business solution. But, if you don’t have share, you have no chance of making a profit.”

Alice Sorensen, chief investment officer at Phoenix-based LRES, observed that a highly profitable Wall Street is among the brighter lights in the current financial picture, but she warned that this could easily change.

“The stock market is doing great,” Sorensen said. “But you know Newton’s Law of Physics: What goes up must come down.”

Sorensen added that in terms of looking ahead through the remainder of the year, she has heard both pessimism and optimism.

“I had lunch with an originator and he said, ‘I never thought I’d be in a condition where break even would be considered successful,’” Sorensen recalled.

“To me, that’s not what I would call a rosy future. However, I am also hearing people say, ‘If I don’t buy something now, I won’t have anything to chose from.’”

Phil Hall is managing editor of National Mortgage Professional Magazine. He may be reached by e-mail at philh@nmpmediacorp.com.

calendar of events N A T I O N A L

AUGUST 2014

Thursday-Friday, August 7-8

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

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

SEPTEMBER 2014

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

Thursday-Friday, September 11–12

Sunday-Tuesday, September 28-30

Mortgage Bankers Association’s (MBA) Human Resources Symposium 2014 Agenda Mortgage Bankers Association Headquarters 1919 M Street NW Washington, D.C. For more information, call (800) 793-6222 or visit www.mortgagebankers.org.

Mortgage Bankers Association’s (MBA) Regulatory Compliance Conference 2014 Grand Hyatt 1000 H Street NW Washington, D.C. For more information, call (800) 793-6222 or visit www.mortgagebankers.org.

Saturday-Monday, September 13-15* NAMB National 2014 Luxor Resort and Casino 3900 Las Vegas Blvd South Las Vegas For more information, call (860) 922-3441, e-mail vvalvo@agilityresourcesgroup.com or visit www.nambnational.com.

Thursday-Saturday, September 18-20* National Association of Professional Mortgage Women (NAPMW) Central Region Fall Education Conference Courtyard by Marriott 2 West Reno Avenue Oklahoma City, Okla.

For more information, visit www.napmw.org.

Sunday-Tuesday, September 7-9

Wednesday, September 24

Mortgage Bankers Association’s (MBA) Risk Management and Quality Assurance Forum 2014 InterContinental Miami 100 Chopin Plaza Miami, Fla. For more information, call (800) 793-6222 or visit www.mortgagebankers.org.

2014 Northwest Real Estate Summit & Mortgage Expo Tulalip Resort & Casino 10200 Quil Ceda Boulevard Marysville, Wash.

For more information, call (206) 484-6442 or visit www.mywamp.net.

Tuesday-Thursday, October 14-16* 2014 Northeast Conference of Mortgage Brokers Trump Taj Mahal Casino Resort 1000 Boardwalk Atlantic City, N.J. For more information, call (732) 596-1619 or visit www.mbanj.com.

Wednesday-Saturday, October 15-18 American Land Title Association (ALTA) 2014 Annual Convention The Westin Seattle 1900 5th Avenue Seattle, Wash.

For more information, call (202) 296-3671 or visit www.alta.org.

Thursday-Friday, October 16-17* Virginia Association of Mortgage Brokers (VAMB) 26th Annual Convention Hilton Garden Inn Richmond Innsbrook 4050 Cox Road Glen Allen, Va. For information, call (804) 285-7557 or visit www.vamb.org.

To submit your entry for inclusion in the National Mortgage Professional Calendar of Events, please e-mail the details of your event, along with contact information, to newsroom@nmpmediacorp.com. * Looking for additional exposure at key industry events?

Call 516.409.5555, ext. 4 to discover how to maximize your event coverage.

MBA’s 101st Annual Convention & Expo Mandalay Bay Hotel & Casino 3950 South Las Vegas Boulevard Las Vegas For more information, call (800) 793-6222 or visit www.mortgagebankers.org.

NOVEMBER 2014

Wednesday-Friday, November 19-21 Mortgage Bankers Association’s (MBA) Accounting and Financial Management Conference 2014 Westin St. Francis 335 Powell Street San Francisco, Calif.

For more information, call (800) 793-6222 or visit www.mortgagebankers.org.

MARCH 2015

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

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n Illinois Mortgage Professional Magazine n JULY 2014

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

OCTOBER 2014

Sunday-Wednesday, October 19-22*

NationalMortgageProfessional.com

Thursday-Saturday, September 4-6*

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United Northern Mortgage Bankers Limited, DBAs: Senior Security Home Advantage, Senior Security Advisors 3601 Hempstead Turnpike, Suite 300, Levittown, NY 11756 Licensed Mortgage Banker NYS Department of Financial Services B50040 • NMLS # 7230 • AL Consumer Credit license #21761 • CO Mortgage Company Registration • CA DBO Finance Lenders Law license # 603K800 • CT Dept of Banking Mortgage Lender license #20372 • FL Dept of Financial Institutions Mortgage Lender license #MLD273 • GA Dept of Banking and Finance Mortgage Lenders license #39919 • MD Mortgage Lender license • MA Div of Banks and Loan Agencies Mortgage Lender & Mortgage Broker license #MC7230 • NJ Dept of Banking and Insurance Mortgage Lender license #L0046623 • NC Commissioner of Banks Mortgage Lender license #L140365 • PA Dept of Banking Mortgage Lender license #20887 • SC State Board of Financial Institutions • TN Mortgage Lender license #MLS7230 • TN Mortgage license #115610 • TX - SML Mortgage Banker Registration • WA Consumer Loan Company license #CL-7230 - Direct Endorsed FHA Lender

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